Whistleblower bill will balloon frivolous lawsuits

Jan 28, 2021
Written by Rose Gundersen, VP of Operations & Retail Services

For the third year in a row, a “worker whistleblower” bill (HB 1076) is being considered in Olympia. This bill will allow whistleblowers to file suits directly instead of going through Labor and Industries to investigate workers’ safety, wage complaints, and other employment law mandates.

Proponents claim that there is a lack of enforcement and workers’ fear of retaliation deters them from filing complaints with government entities. A private right of action through attorneys would empower them to blow the whistle. The prime sponsor, Democrat Representative Drew Hansen, compared this bill to the successes of the Federal False Claims Act passed in 1986 and the California Private Attorney General Act of 2004.

However, this proposal is fraught with holes, according to a number of attorneys, legal scholars and employers who testified at the House Labor Committee hearing on January 22nd. Key elements of their testimony demonstrate the risks this proposal would bring to both employers and workers.

  • Frivolous lawsuit – The Federal False Claims Act requires the complainant to demonstrate that the employer “knowingly or was in reckless disregard” of the violations. This bill allows filing a suit when workers merely believe there is a violation. Employers’ experiences under the California Private Attorney General Act are quite chilling.
  • A family business laid off workers and stopped flexible work hours after a frivolous $1 million lawsuit found that their safety incentive program calculation was off by pennies and the flexible schedule did not comply with California’s meal break requirements. Both the business and their workers considered themselves victims of this suit. This business has since joined the CA Business & Industrial Alliance that advocates to fix the law and lists attorneys who are frequent flyers of bringing frivolous suits.
  • Structural problem – A Stanford legal scholar who conducted rigorous empirical research on the Federal False Claims Act pointed out flaws in this proposal: complaints should be limited to workers who are substantively aggrieved, and the percentage of the split between workers and attorneys should be capped and limited.
  • Alaska Airlines’ testimony confirmed the need for cap and limit. A technical finding that Alaska’s paystub formatting failed the California state requirements resulted in a $25 million judgment. Their employees, however, only received $6.2 million while attorneys pocketed 75% of the judgment.
  • No opportunity to cure. Employment laws are burdensome with requirements that sometimes need lawyers to apply their hair-splitting skills. Current agency process allows employers to cure without a civil penalty and to repay workers for their lost wages. Even the Defense Trial Lawyers Association opposed this bill for not giving employers the right to cure before filing suits.
  • Data does not support agency backlog or lack of enforcement. Workers’ testimonies and the intent section of this bill portrayed delays and backlogs to the investigation, but L&I’s testimony provided data that neither justified workers’ sentiments nor the language in the bill. In fact, 50% of L&I’s safety investigations result in no-violation findings that already implies half of safety complaint files are unfounded.

If this 50% no-finding trend is true for suits filed under this proposed bill, innocent employers would be saddled with at least $10,000 to $25,000 in attorney fees just for representation for each case filed against them. Besides, the California experiment shows that most employers would settle a suit just to move forward regardless of the validity of the suit.

Washington Retail urges our advocates to contact their legislators to consider the substantive concerns expressed in their hearing and vote “no” on HB 1076.