On Monday, June 2, 2014, the Department of Labor (DOL) closed the comment period on a new set of regulations concerning the procedure for bringing whistleblower complaints under the Consumer Financial Protection Act (CFPA). Now in effect, these regulations define key terms relating to anti-retaliatory provisions which protect employees who report violations of myriad federal consumer financial protection laws. Although procedurally similar to other whistleblower protection regulations, the DOL cast a markedly wide net in defining the scope of coverage. This expansion of whistleblower protection will likely result in more complaints against employers for alleged retaliation, which, in turn, will raise employers’ costs in avoiding and defending the claims.
In most respects, the new regulations are familiar. They prohibit “covered persons” and “service providers” from terminating or retaliating against a “covered employee” who engages in protected activity. What is remarkable, however, is the contemplated breadth of coverage. For example, a “covered employee” is defined as an individual who performs tasks related to the offering or provision of a consumer financial product or service, including individuals who merely applied to work for such an employer. In addition, the term “consumer financial product or service” includes a far-reaching array of activities, including “extending credit and servicing loans,” “engaging in deposit-taking activities,” “collecting debt,” and, most importantly, “such other financial product or service as may be defined by the Bureau.” This final provision allows the Bureau to include any financial service or product it deems suitable for regulation, guaranteeing the scope of the term “covered employee” room to grow.
While most existing whistleblower regulations limit protection to claims made under a single federal law, these regulations include a vast breadth of laws which covered employees may allege their employers have violated. Protected activity will not only concern reporting violations under the CFPA, but also “any other provision of law that is subject to the jurisdiction of the Bureau.” This potentially covers over 18 separate federal consumer financial protection laws, such as the Fair Debt Collection Practices Act, the Truth in Lending Act, and the Electronic Fund Transfer Act.
Next Steps for Employers
It may be prudent for affected employers to tweak existing mechanisms for handling whistleblower complaints. Much like the context of workplace harassment, these mechanisms should include policies designed to communicate the employer’s position on anti-retaliation. The policies must also allow for the reporting of violations of the myriad laws which are contemplated by the regulations, as well as a process for investigating the reports, taking appropriate actions based on the results of the investigation, and rectifying any acts of retaliation. Employee and management education is critical given the breadth of coverage. Education leads to increased awareness, which in turn, can improve an employer’s bottom line.
Philip R. Heleringer