RULE 36

The Boss Must Make You Whole

Introduction

Maximize your compensation for whistleblowing. If the court rules in your favor, you may be entitled to various forms of compensation beyond damages alone. This can include reinstatement to your former position, front pay, back pay, benefits, compensatory and exemplary damages, attorney’s fees, and other types of relief.

Familiarize yourself with the range of options available to you by reviewing Rule 36, and take steps to secure the full scope of compensation that you deserve from your employer.

Practice Tips

Before filing a claim, review the relief available under each statute or under the common law.
The reward laws permit whistleblowers to obtain significant compensation without having to suffer any adverse employment action. This is why a majority of whistleblowers are now using the reward laws both to protect themselves and to obtain compensation for the risks they take.
Hobby v. Georgia Power Co., 90-ERA-30 (ALJ, Sept. 17, 1998), affirmed DOL Administrative Review Board (Feb. 9, 2001) and U.S. Court of Appeals for the 11th Circuit (Sept. 30, 2002), carefully reviewed the full range of damages available to employees under Department of Labor–administered whistleblower laws.

Resources

Damages for Employees

All state and federal laws contain their own rules governing the types of damages permitted under whistleblower protection laws. The following list spotlights some of the major categories of damages permitted under various laws:

General damages available under whistleblower laws:

Reich v. Cambridgeport Air Systems, 26 F.3d 1187 (1st Cir. 1994)
Nord v. U.S. Steel, 758 F.2d 1462 (11th Cir. 1985)

Hobby v. Georgia Power Co., 90-ERA-30 (ALJ, Sept. 17, 1998), affirmed DOL Administrative Review Board (Feb. 9, 2001) and U.S. Court of Appeals for the 11th Circuit (Sept. 30, 2002), carefully reviewed the full range of damages available to employees under Department of Labor–administered whistleblower laws. In Wooten v. BNSF Railway Co., No. 16-cv-00139 (D. Mont. Apr. 23, 2019), the court extensively reviewed damage award standards and upheld awards of $1.4 million in front pay, $500,000 for emotional distress, $650,000 in attorney fees, and $233,000 in expert witness fees.

“Affirmative relief,” equitable or preliminary relief:

NLRB v. Gissel Packing, 395 U.S. 575 (1969)
Florida Steel Corp. v. NLRB, 620 F.2d 79 (5th Cir. 1980)
Donovan v. Freeway Constr. Co., 551 F.Supp. 869 (D.R.I. 1982)
U.S. v. Montgomery, 744 F.Supp. 1074 (M.D. Ala. 1989)

Back pay:

NLRB v. J.H. Rutter-Rex, 396 U.S. 258 (1969).

Compensatory damages:

Walters v. City of Atlanta, 803 F.2d 1135 (11th Cir. 1986)
Neal v. Honeywell, 995 F.Supp. 889 (N.D. Ill. 1998)
Smith v. Atlas Off-Shore Boat Service, 653 F.2d 1057 (5th Cir. 1981)
Heaton v. Weitz Co., 534 F.3d 882 (8th Cir. 2008)

Front pay:

McNight v. General Motors, 908 F.2d 104 (7th Cir. 1990)
U.S. v. Burke, 504 U.S. 229, footnote 9 (1992)

Interest:

Parexel International v. Feliciano, 2008 U.S. Dist. LEXIS 99348 (E.D. Pa. 2008)
Donovan v. Freeway Constr., 551 F.Supp. 869 (D.R.I. 1982)
Clinchfield Coal v. Federal Mine Safety and Health Comm., 895 F.2d 773 (D.C. Cir. 1990)

Lost overtime pay:

Blackburn v. Martin, 982 F.2d 125 (4th Cir. 1992)

“Make whole” remedy:

Most laws mandate that an employee who prevails in a retaliation case be made fully “whole.” Under this remedy, “compensation shall be equal to the injury” and the “injured party is to be placed, as near as may be, in the situation he would have occupied if the wrong had not been committed.”

Albemarle Paper Co. v. Moody, 422 U.S. 405, 418–19 (1975), quoting from Wicker v. Hoppock, 6 Wall. 94 (1867)

Promotions:

Edwards v. Hodel, 738 F.Supp. 426 (D. Col. 1990)

Punitive damages:

Smith v. Wade, 461 U.S. 30 (1983)
BMW v. Gore, 517 U.S. 559 (1996) (explaining constitutional standards for calculating)
Parexel International v. Feliciano, 2008 U.S. Dist. LEXIS 98195 (E.D. Pa. 2008)
Weidler v. Big J. Enterprises, 953 P2d 1089 (N.M. App. 1997)
Howard v. Zack, 637 N.E.2d 1183 (Ill. App. 1994)
Anderson v. Amtrak, 2009-FRS-3 (DOL ALJ, Aug. 26, 2010)

Reinstatement:

Reeves v. Claiborne County, 828 F.2d 1096 (5th Cir. 1987).

Restoration of pension:

Blum v. Witco Chemical Corp., 829 F.2d 367 (3rd Cir. 1987).

Restoration of seniority:

Sands v. Runyon, 28 F.3d 1323 (2nd Cir. 1994).

Special damages:

Neal v. Honeywell, 191 F.3d 827 (7th Cir. 1999).

Stock options:

Hobby v. Georgia Power Co., Civil Action No. 1:01-cv-1407 (N.D. Georgia, Feb. 15, 2006).

“Tort liability” for First Amendment claims filed under:

42 U.S.C. § 1983: Carey v. Piphus, 435 U.S. 247 (1978)

Mitigation and Reduction of Damages

Damages can be reduced if an employee fails to “mitigate” the harm caused by the retaliatory discharge. For example, courts have reduced awards where an employee failed to seek other comparable employment after being fired. Similarly, an unconditional offer of reinstatement can act to cut off back-pay liability.

If an employee obtains a new job after being fired, wages from that new job can be deducted from a back-pay award:

Phelps Dodge Corp. v. NLRB, 313 U.S. 177 (1941)
Tubari Ltd. v. NLRB, 959 F.2d 451 (3rd Cir. 1992) (explaining the mitigation rule)
Grocer Co. v. Holloway, 874 F.2d 1008 (5th Cir. 1989)
Donovan v. Commercial Sewing, Inc., 562 F.Supp. 548 (D. Conn. 1982) (offers of reinstatement)

Tax Issues

Under current law back pay, punitive damages, and compensatory damages may be subject to taxation. The Attorney Fee Civil Rights Act exempts employees from being taxed on the attorney fees awarded to their counsel:

26 U.S.C. § 62(a) (20), (21), and (e)

As part of the settlement process, employees can have their companies establish tax-deferred compensation or annuity plans that help reduce the amount of tax. These plans were approved in the Tax Court case of:

Childs v. Commissioner of Internal Revenue, 103 T.C. 634 (1994)

Congress also passed special laws exempting whistleblowers from having to pay federal taxes on attorney fees paid in cases where rewards are obtained under state False Claims Acts, the Dodd-Frank Act, and IRS reward cases.

Frequently Asked Questions

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