IRS Whistleblowers Have New Remedies for Employer Retaliation

Some IRS whistleblowers have significant new administrative and legal remedies against employer retaliation. Employee whistleblowers can now:

  • File retaliation complaints with the Department of Labor, and/or
  • Seek relief in the federal courts.

These remedies took effect on July 1, 2019. They are largely based on remedies for employer reprisals against whistleblowers under the False Claims Act.

IRS Whistleblower’s Administrative and Judicial Remedies

To challenge employer retaliation, an employee whistleblower must first file a complaint with the Department of Labor (DOL). The employee may then seek judicial relief from a contrary DOL decision or the DOL’s failure to act.

Administrative Whistleblower Remedy

An IRS whistleblower has 90 days after an employer reprisal to file a complaint with the DOL. The DOL then has 60 days to investigate. If it concludes that there is reasonable cause to believe the employer retaliated against the whistleblower, the DOL issues a preliminary order to grant relief.

The parties have 30 days to object to the order. If no one objects, the preliminary order becomes final, and cannot be challenged in the courts.

Any party to the proceeding may object to the preliminary order and request a hearing. The DOL has 120 days after the hearing to issue a final order that either provides relief to the whistleblower or denies the complaint.

The DOL and the parties can terminate the administrative process at any time by entering into a settlement.

These administrative procedures are based on anti-reprisal remedies for whistleblowers who report violations of federal aviation laws and regulations.

Judicial Whistleblower Remedies

An IRS whistleblower may also seek judicial remedies for employer reprisal in two circumstances:

  1. If the DOL does not issue a decision within 180 days after the whistleblower files a complaint, the whistleblower may sue the employer in the U.S. District Court.
  2. If the DOL holds a hearing after a party objects to its preliminary findings, the whistleblower or the employer may appeal the DOL’s final order in the U.S. Court of Appeals.

In addition to these judicial remedies for the parties, the DOL can also sue in district court to enforce its own orders.

Broad Reach for IRS Whistleblower Remedies

These employer whistleblower remedies apply to an informant who provides information or otherwise assists in investigations and actions related to:

  • tax underpayments, or
  • conduct that the informant reasonably believes violates internal revenue laws or any federal laws related to tax fraud.

The whistleblower remedies are not limited to employees who cooperate with the IRS. They also apply when an informant provides information or assistance to:

  1. the Treasury Secretary, Treasury Inspector General for Tax Administration (TIGTA), U.S. Comptroller General, or Department of Justice;
  2. the U.S. Congress;
  3. a person with supervisory authority over the employee; or
  4. any other person who works for the employer and has the authority to investigate, discover or terminate misconduct.

Similarly, the employer is not just the party that employs the whistleblower. Employers include officers, employees, contractors, subcontractors and agents of the informant’s employer.

Finally, employer retaliation includes discharge, demotion, suspension, threats, harassment, and any other discrimination against an employee in the terms and conditions of employment, including acts in the ordinary course of the employee’s duties.

Whistleblower’s Redress After Employer Reprisal

An employee whistleblower who prevails in an employer reprisal complaint, either with the DOL or in the district court, is entitled to all relief necessary to make the employee whole. This relief includes:

  • reinstatement with the same security status;
  • 200% of back pay and 100% of all lost benefits, plus interest; and
  • compensation for special damages, including litigation costs, expert witness fees, and reasonable attorney fees.

However, if the DOL concludes that a complaint is frivolous, the whistleblower may have to pay up to $1,000 of the employer’s legal fees.

Employees Can’t Waive Whistleblower Remedies

These new rights and remedies do not diminish or limit any employee’s rights, privileges or remedies under any federal law, state law, or collective bargaining agreement.

Perhaps even more importantly, these new remedies cannot be waived by any agreement, policy form, or condition of employment, including a predispute arbitration agreement. In fact, a predispute arbitration agreement is not valid or enforceable if it requires arbitration of an employee whistleblower dispute that arises under these rules.

Kelley Wolf, JD, LLM

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All stories by: CCHTaxGroup