The American Recovery and Reinvestment Act of 2009 (the “Recovery Act”) is an economic stimulus package enacted by Congress and signed into law by President Obama on February 17, 2009. The Recovery Act is based largely on proposals made by President Obama and is intended to provide a stimulus to the country’s economy in the wake of the recent economic downtown. The Recovery Act includes federal tax relief; expansion of unemployment compensation benefits and other social welfare provisions; and domestic spending in education, health care and infrastructure. Often overlooked, but of particular importance to employers and employees, are the powerful “whistleblower” protections created by the Recovery Act. The Act’s whistleblower provisions apply to employers that receive a contract, subcontract, grant or other payment funded in whole or in part by the federal stimulus package.

The Recovery Act protects both traditional whistleblowers who report fraud or illegal activity as well as employees who complain about mismanagement, waste, dangers to public health or safety, or an abuse of authority. The terms of the Recovery Act’s protections are broader in scope than other whistleblower statutes such as the New Jersey Conscientious Employee Protections Act (“CEPA”) or Sarbanes Oxley. For example, the Recovery Act protects employees who informally complain to their direct supervisor or to any other employer representative with the authority to investigate, discover or remedy misconduct. Specifically, it protects complaints made by employees in the ordinary course of their job duties.

Not only does the Recovery Act expand the scope of protected employee activity, but it also sets forth a relatively easy burden for employees to satisfy to establish they were the subject of retaliation. The Recovery Act provides that employees need only demonstrate that their protected activity was a “contributing factor” in the adverse action taken against them. Employees can meet this burden through the use of “circumstantial evidence.” On the other hand, employers have quite a difficult burden to defeat a whisteblower claim, since under the Recovery Act they must prove by “clear and convincing evidence” that they acted for a legitimate purpose unrelated to any protected whisteblower activity. Due to the scope of the protections provided to employees under the Recovery Act as well as the respective burdens of both employers and employees, employers must be aware of their potential liability.