Financial Services Whistleblower Protection

Posted over 4 years ago. 1 helpful vote



What law protects whistleblowers in the financial services industry?

Section 1057 of the Dodd-Frank Act prohibits consumer financial services providers from retaliating against an employee who reports information to an employer, a regulatory agency, or law enforcement agency about a reasonably perceived violation of a consumer financial protection law or a regulation of the Bureau of Consumer Financial Protection (CFPB).


What are the elements of a Section 1057 whistleblower retaliation claim?

To prevail on a Section 1057 claim, the whistleblower must prove that he or she (1) engaged in protected conduct; (2) the employer knew that she engaged in protected conduct; (3) the employer took an adverse action against her; and (4) the protected conduct contributed to the employer's decision to take the adverse action.


What conduct is protected?

Section 1057 protects disclosures about unlawful conduct related to a consumer financial product or service if the employee: (1) discloses the information to an employer, the CFPB, or a government authority; (2) participates in a judicial or administrative proceeding concerning a violation of a consumer financial protection law or a CFPB regulation; or (3) objects to any act that the employee reasonably believes is a violation of the law or is prohibited by the CFPB. Examples include reporting, participating in a proceeding on, or objecting to fraudulent: o Loan underwriting; o Credit rating practices; o Real estate settlement services; o Property appraisals; o Financial advisory services; o Credit counseling; or o Any other practice related to a consumer financial product or service.


Are employees protected when they blow the whistle in the course of performing their ordinary job duties?

Section 1057 expressly protects employees who blow the whistle in the ordinary course of performing their job duties.


What acts of retaliation are prohibited?

Section 1057 prohibits a broad range of adverse employment actions, including termination, demotion, suspension, threatened adverse employment actions, harassment, and any conduct that would dissuade a reasonable employee from whistleblowing.


What is the burden to establish causation?

To prevail in a CFPB whistleblower action, an employee must prove by a preponderance of the evidence that her protected activity was a contributing factor in the unfavorable action. A CFPB whistleblower need not show that the protected conduct was a significant or motivating factor in the adverse action. Upon the employee meeting his or her burden, the employer can avoid liability by clear and convincing evidence that it would have taken the same action in the absence of the employee's protected conduct.


What remedies are available?

A prevailing employee is entitled to "make whole" relief, which may include: (1) reinstatement or front pay; (2) back pay; (3) compensatory damages; and (4) attorney fees and litigation costs, including expert witness fees.


Are Section 1057 claims subject to mandatory arbitration?

Section 1057 whistleblower retaliation claims are expressly exempt from mandatory arbitration agreements.


What procedures govern 1057 whistleblower retaliation actions?

The complaint must be filed with the Department of Labor (DOL) within 180 days of the employee becoming aware of the retaliatory adverse action. OSHA investigates the claim and can order preliminary relief, including reinstatement. Either party can appeal OSHA's determination by requesting a hearing before a DOL Administrative Law Judge (ALJ). Either party can appeal an ALJ's decision to the DOL Administrative Review Board (ARB) and can appeal an ARB decision to the Circuit Court of Appeals in which the adverse action took place. If DOL does not issue a final decision within 210 days of the employee filing the complaint, the employee can remove the claim to federal court and can request a trial by jury.

Additional Resources

The Federal Reserve

Whistleblower Provisions Of The Dodd-Frank Act

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