Employers Shouldn’t Be Able to Use Severance Agreements to Bypass Employee Rights to Whistleblower Awards

Employers Shouldn’t Be Able to Use Severance Agreements to Bypass Employee Rights to Whistleblower Awards and the Right to File Whistleblower Retaliation Claims

Employees who file whistleblower claims need to be extra-careful about signing a severance agreement with their employer. As a general rule, employees who disclose fraud, such as the submission of false claims to Medicare and Medicaid, can file a whistleblower claim against the employer through the False Claims Act. Skilled whistleblower lawyers help the employees file the correct claims with the Department of Justice or other appropriate agencies. If the Department of Justice, other agency, or the lawyer obtains an award against the employer, the employee is typically entitled to a percentage of the recover – normally somewhere between 10 and 30 percent.

Employers, generally, cannot retaliate against an employee by firing the employee, failing to promote the whistleblower, or punishing the employee in any way – because they disclosed the employer’s fraud. Employers who wrongfully fire an employee for asserting his/her whistleblower rights can be entitled to lost wages and benefits due to the firing, statutory and punitive damages, and legal fees.

The role of the severance agreement

Employers offer severance agreements for several reasons which are almost always for the benefit of the employer, not the employee. Any employee who is offered a severance agreement should immediately arrange to speak with an experienced employee rights attorney. The reasons employers offer these agreements are:

  • They are required to do so according to the terms of an employment agreement
  • They wish to downsize and the offer of a severance agreement is meant to give workers an incentive to quite the company
  • They want to try to avoid having to pay unemployment compensation benefits
  • They want the employee to waive his/her rights

Employees often can negotiate for more pay and more benefits before signing the agreement

Employees need to be especially careful about waiving their rights. Employers have successfully argued that an employee who waives his/rights:

  • Waives the right to a whistleblower award
  • Waives the right to file a retaliation lawsuit against the employer for asserting any legal right – including the right to file a whistleblower claim

While there are cases and laws that may favor the employee – allow the employee to receive the whistleblower award and file a retaliation lawsuit – the better remedy is not to rely on courts and laws. The better remedy is to have a skilled lawyer review the agreement. Any waivers should be completely compensated for based on what the employee is giving up financially – such as the percentage of a False Claims Act award. Lawyers can help redraft the agreement so the employee reserves his/her whistleblower and legal rights claims.  Sometimes, the better remedy is to let the employer fire the worker and then claim the award AND file a retaliation lawsuit against the employer.