Does a generally worded arbitration or mediation clause in your employment contracts cover whistleblower retaliation claims? Not according to the outcome of a recent case, explains Calfee Halter & Griswold partner Virginia Davidson.
On Lexology, she discusses a U.S. Court of Appeals for the Sixth Circuit decision in which the court ruled that BAE Systems Technology Solutions & Services Inc.’s contracts didn’t hold enough water.
She says the case involved a retired Army major and an illustrator that worked for BAE. Both signed nearly identical employment contracts allowing for termination with or without cause. Davidson says the two filed a federal whistleblower suit alleging violations of the False Claims Act, stating that BAE fraudulently falsified time sheets on government cost-plus contracts, among other things.
They argued that when the issues were raised with management, they were demoted, transferred, harassed and, eventually, terminated. Davidson says the “terms and conditions” section of their contracts provided that any dispute that couldn’t be handled through the company was to go to arbitration/mediation.
She says that although federal courts usually resolve any doubts about arbitrability in favor of arbitration, the Sixth Circuit found [PDF] that under the agreement’s language, the plaintiffs’ False Claims Act retaliation allegations were not included.
Davidson advises companies to make needed revisions to employment contracts so they cover whistleblower retaliation claims.