Opinion: Handle With Care: Whistle-Blower Claims

By Eric Emerson, Chairman and Donald Elder, Partner

Transportation Law Group

Tressler LLP

This Opinion piece appears in the June 17 print edition of Transport Topics. Click here to subscribe today.

An ever-increasing legal risk faced by interstate motor carriers, transportation intermediaries and private fleets involves disciplined or discharged drivers lodging whistle-blower claims against their employers. Disgruntled drivers and their legal counsel are becoming increasingly adept at targeting transportation and logistics providers — and taking advantage of the retaliation penalties under the Surface Transportation Assistance Act of 1982.

As whistle-blower claims increase and high-dollar settlements and penalties are afforded significance by media and advertising, employees are becoming more aware of their rights and remedies under the STAA.

According to the most recent Occupational Safety and Health Administration report, STAA claim filings are up almost 10% from 2011 and more than 30% since 2006.

These claims pose an immediate financial threat because they rarely are covered by insurance policies, requiring the employer to bear the cost of defense and subsequent settlement or judgment.

An employee successful under the STAA is entitled to affirmative action to abate the violation, reinstatement to his or her former position with the same pay, terms and privileges of employment and attorneys’ fees and costs reasonably incurred. He or she also may be awarded compensatory damages, which are designed to compensate the employee not only for a direct loss such as back pay (with interest), but also for such harms as loss of reputation, personal humiliation, mental anguish and emotional distress.

In some instances, where an employer has exhibited a “reckless or callous disregard for the plaintiff’s rights, as well as intentional violations of federal law . . .” the STAA allows for an award of up to $250,000 as punitive damages.

The STAA was created to provide “whistle-blower protection” to “employees” of commercial motor carriers and, potentially, transportation intermediaries. Under the STAA, an employer may not retaliate against an employee for refusing to operate a vehicle based on a reasonable apprehension of serious injury to either the employee or to the public in connection with the vehicle’s safety or security condition.

Transportation intermediaries, such as third-party logistics firms, leasing agents and/or brokers, also are potentially exposed to liability under the STAA, based on their perceived or actual “control” over employees. Critical to determining whether an intermediary is a “joint employer” is the degree of control the third-party company has over the employee. The ability to hire, transfer, promote, reprimand or discharge the employee, or to influence another employer to take such actions against him or her, is evidence of the requisite degree of control.

In short, if a company is engaged in transportation and has employees (or has the effect of exerting control over employees), it is susceptible to STAA whistle-blower claims — and each person in that organization is a potential whistle-blower.

The STAA prohibits discriminatory action by an employer because an employee has engaged in activities falling into two categories:

• Complaints, which can be as minimal as reporting a violation to a supervisor.

• Refusal to operate a vehicle.

There appears to be a growing trend in STAA-related cases concerning a complainant’s refusal to operate a vehicle, which qualifies as a protected activity under two STAA provisions.

The first provision requires that an employee show that he or she refused to operate a vehicle because the operation violated a regulation, standard or order of the United States related to commercial motor vehicle safety, health or security. The second focuses on whether a reasonable person in the same situation would conclude that there was a reasonable apprehension of serious injury to the employee or the public because of the vehicle’s hazardous safety or security condition. Refusal-to-drive cases often implicate both STAA provisions.

To prevail on a whistle-blower claim under the STAA, an employee must prove by a preponderance of the evidence that:

• He or she engaged in activity or conduct that the statute protects.

• The employer took unfavorable action against the employee.

• The protected activity was a contributing factor in the adverse personnel action.

Protected activity includes filing a complaint or initiating or participating in a proceeding related to a violation of a commercial motor vehicle safety or security rule; cooperating with certain federal safety or security investigations; or providing information in an investigation by a federal, state or local regulatory or law enforcement agency relating to any accident or incident resulting in injury or death or property damage.

Many are under the impression that an “adverse personal action” only constitutes employment termination. However, the STAA is not so narrow. In addition to being fired or laid off, an employee may suffer “adverse action” in the form of being: blacklisted; demoted; denied overtime or promotion; disciplined; denied benefits; not being hired or rehired; intimidated; a recipient of threats; reassigned affecting promotion prospects; and a recipient of reduced pay or hours.

Should the employee meet his or her burden of proof in a whistle-blower claim under the STAA, the employer can still avoid liability if it demonstrates by clear and convincing evidence that it would have taken the same adverse action regardless of the whistle-blower claim.

To avoid STAA claims altogether, it behooves employers to focus on best practices. This includes creating policies and procedures that encourage employees to report incidents of perceived noncompliance with regulations or unsafe conditions. Employers also should have formal written procedures on handling internal employee complaints and responding to formal STAA claims.

In addition, employers should be prepared to vigorously and strategically respond to such allegations when lodged. In the event of the notice of an STAA claim, defense counsel should be retained immediately to coordinate investigations, draft responses to OSHA inquiries, preserve available privileges and represent the employer before the administrative tribunal.

With offices nationwide, the Tressler LLP transportation law group provides services for motor carriers, logistics companies and private fleets. The authors are with the Chicago office.