Tonkon

Legal Updates & Alerts

Enhanced Whistleblower Protections for Nonprofit Employees

March 21, 2017
By Kristin Bremer Moore

In the wake of Governor John Kitzhaber's resignation last year, the Oregon Legislature amended Oregon's "whistleblower" protection statute (ORS 659A.203) by expanding it to include Section 501(c)(3) nonprofit organizations that receive public funds from grants or contracts. Effective January 1, 2017, the new law protects employees and board members of nonprofit organizations who, based on a "good faith and objectively reasonable belief" that a violation has occurred, disclose "lawfully accessed information related to" a violation of law by the nonprofit organization. The new law also requires nonprofit employers to establish and implement a policy explaining an employee's rights under the statute and how to report any violation to state authorities.
 
The new "whistleblower" statute provides two protections:
 
  • An affirmative defense against any civil or criminal charge related to the employee's disclosure of certain documents, and
  • A protection against discrimination or retaliation against the employee for reporting or disclosing information that evidences a violation of law by the employer.
 
The Affirmative Defense
 
If criminal charges or a civil lawsuit is brought against an employee for wrongfully disclosing information, the new law provides the employee an affirmative defense, which may be used to defeat the claims against the employee. To be eligible for the affirmative defense, an employee must show that he or she disclosed documents that the employee accessed lawfully to:
 
  1. A state or federal regulatory agency,
  2. A law enforcement agency,
  3. A manager employed by the nonprofit, or
  4. An Oregon-licensed attorney in furtherance of the employee's seeking professional legal services connected to the alleged violation of law;

and the employee has a "good faith and objectively reasonable belief" that the employer violated federal, state, or local laws, rules or regulations. The affirmative defense also applies to an employee's disclosure of information related to a coworker or manager if such a disclosure relates to the course and scope of the coworker's or manager's employment.
 
An employee loses the affirmative defense if the information he or she discloses is:
 
  1. Disclosed to a party not listed above,
  2. Is stated in a "commercial exclusive negotiating agreement" with the nonprofit, provided the agreement is not related to the employee's employment, or
  3. Is stated in a "commercial nondisclosure agreement" with the nonprofit, provided that the agreement does not relate to the employee's employment.
 

The affirmative defense protections also applied to "whistleblowing" board members.
 
Prohibition on Retaliation
 
The amended "whistleblower" statute also includes anti-retaliation protections that prohibit employers from discouraging employees from reporting violations of the law. It further prohibits employers from disciplining or threatening to take disciplinary action against an employee for disclosing information that the employee reasonably believes is "evidence of" a violation of the law or "[m]ismanagement, gross waste of funds or abuse of authority or substantial and specific danger to public health and safety resulting from action of the" employer.
 
Next Steps for Nonprofit Employers
 
In light of these changes, nonprofit employers should do the following:
 
  1. Employers should review and revise their "whistleblower" policies to ensure that they are consistent with the new law.
  2. Whistleblower policies should:
     
    • Encourage employees to report violations of the law to management and/or other designated authorities.
    • Offer an "open door" policy and/or describe the procedures for reporting concerns to management.
    • Notify employees of their rights under the new "whistleblower" amendments, including the grant of an affirmative defense.
    • Express that any employee who exercises his or her rights under the "whistleblower" laws will not be discriminated or retaliated against in any way.
 
You can find a copy of the amendment here.
 
This client alert is prepared for the general information of our clients and friends. It should not be regarded as legal advice. If you have any questions regarding this update, or for more information about this topic, please contact any of the attorneys in our Nonprofit & Tax-Exempt Entities practice group, or the attorney with whom you normally consult.