DOL no longer a roadblock: Floodgates open for more federal whistle-blower lawsuits — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily
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DOL no longer a roadblock: Floodgates open for more federal whistle-blower lawsuits

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in Human Resources

Until recently, there was a predictable destination for most whistle-blowing cases filed by disgruntled employees who reported corporate wrongdoing under the Sarbanes-Oxley Act: a large pile of folders languishing at the U.S. Department of Labor (DOL).

But now the 4th Circuit Court of Appeals has changed all that. The court just allowed an unhappy former employee to go directly to federal court with his lawsuit—even though his case was still pending at the DOL.

The appeals court judges said the law was very specific: Employees who don’t get satisfaction at the DOL within 180 days of filing their complaints can go straight to federal court.

Recent case: David Stone filed a complaint with the DOL after he complained up the chain of command at his employer, Instrumentation Laboratory. Stone believed the company was defrauding customers and partners by withholding money they were entitled to.

After 180 days had passed and no DOL decision on his Sarbanes-Oxley Act whistle-blower claim seemed imminent, Stone went to federal court.

The company urged the 4th Circuit Court of Appeals to delay the lawsuit, pending the DOL process, but it refused. Stone’s federal lawsuit will now proceed. (Stone v. Instrumentation Laboratory, No. 08-1970, 4th Cir., 2009)

Final note:
Expect expensive federal litigation if you don’t effectively deal with internal complaints about possible wrongdoing. Your best bet is to investigate all such claims and fix the problem if it turns out the complaint is valid.

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