Senator McCaskill’s bill, S.795 “A Bill to Enhance Whistleblower Protection for Contractor and Grantee Employees,” is on President Obama’s desk for signature. According to the Senate Report, the bill would make permanent the current pilot program, expiring this month, that ensures that employees of civilian contractors are protected from retaliation, namely that “anyone who reports the misuse of federal funds could not be demoted, discharged, or discriminated against because of the disclosure.”

While the pilot program has been in place for several years, the frequency of whistleblower reprisal actions has increased recently. Whistleblower protections have also been the subject of recent Congressional interest, and the Government Accountability Office is auditing the current pilot program. Rather than wait for the results of the audit, however, Congress chose to push forward with the current legislation (which has received bipartisan support) in the waning days of the Obama Administration. Should the bill become law, contractors and grantees might take the opportunity to reexamine their compliance with the pilot program, as well as review how whistleblowers are treated and how their allegations are investigated and documented in order to mitigate the risk of liability in face of rising pressure to sustain allegations.

Whistleblowers (and those who might claim that status following a negative employment action) have many methods of seeking government help to address their concerns, including qui tam lawsuits, wrongful termination litigation, and whistleblower reprisal allegations brought before various government agencies. Each of these actions invites the government into a contractor or grantee’s operations, as well as records, and increases pressure on the company.

Defending against a whistleblower retaliation allegation can be particularly challenging because the programs are run out of Offices of Inspector General. The Inspector General investigates allegations and, if they are validated, recommends specific remedial actions to the agency head. That is worth saying again – the head of the agency, who is also in charge of procurement and grant spend, will receive records of a company’s supposed retaliatory conduct and be asked to do something about it. These cases delve deeply into the oftentimes emotionally charged arena of labor and employment law, and contractors and grantees are rightfully troubled by the prospect of having to “air their dirty HR laundry” before a customer. Moreover, building a record to convince an Inspector General’s office is a different exercise than building a record to convince an agency head. Successful defense efforts require a focused, nuanced approach.

Specifically, defending these actions requires an awareness of: the types of protected “whistleblower” activities that may arise in the workplace; the benefits of appropriate investigation of any allegations and corrective action where necessary; the process for documenting such actions; the need to prevent retaliation against employees who raise potential concerns; and, the imperative to present an accurate record of a responsible contractor acting reasonably under the circumstances. Contractors can improve their chances of positive outcomes through training and robust policies and procedures. When reviewing relevant policies, procedures, and training, contractors and grantees should assess their internal complaint and investigation processes, as well as train managers and supervisors about how to address and properly report complaints or concerns raised by employees without retaliation.

Contractors and awardees are also well advised to consider the interplay between (1) the statements and representations made in mandatory disclosures that can oftentimes follow integrity related actions that involve whistleblowers, (2) the claims made directly and through counsel when defending wrongful termination lawsuits, and (3) the potential “free discovery” available to employees through whistleblower reprisal investigations conducted by an Inspector General’s office in order to avoid making potentially conflicting statements about the same facts in parallel proceedings. Doing so can potentially give rise to integrity and responsibility concerns.

This increasingly challenging dynamic requires close alignment internally between Human Resources, Legal, and Ethics/Compliance and alignment among outside counsel supporting these functions. We are closely monitoring developments in whistleblower legislation and litigation, and are available to assist contractors and grantees with addressing these concerns, managing this emerging area of parallel proceeding risk, and developing appropriate investigation, compliance, and anti-retaliation programs.