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One threshold issue in whistleblower cases involving alleged retaliation is whether a complainant who is not a direct employee is nonetheless a “covered employee.” Under the employee protection provisions found in the several environmental statutes administered by the US Department of Labor (DOL), including, but not limited to, the Clean Air Act, Safe Drinking Water Act, Solid Waste Disposal Act, and Toxic Substances Control Act (collectively, the Environmental Statutes), the DOL’s Administrative Review Board (ARB) has applied two tests to answer this question.

While the same issue also arises in cases under Section 211 of the Energy Reorganization Act (ERA), the ARB has clarified which test to apply in those cases. Under the Environmental Statutes, however, which test to apply is less clear. A recent ARB decision examined—but avoided answering—this question, creating some uncertainty about the circumstances under which a company could be liable in cases brought under the Environmental Statutes. In its discussion of the two tests, the ARB’s decision also raises questions for nuclear companies in cases under the ERA.

In Green v. Opcon, Inc., ARB No. 2018-0007, ALJ No. 2017-TSC-00002 (ARB Apr. 9, 2020), the ARB upheld the dismissal of a complaint because the complainant, a subcontractor employee providing services to the respondents, contractors to the US Department of Veterans Affairs on a renovation project, failed to show that he was a “covered employee” under the Environmental Statutes. In upholding the dismissal, the ARB approved the administrative law judge’s (ALJ’s) use of a common-law test but also applied a second test to arrive at the same conclusion. In doing so, the ARB recognized that there is an open question over which test should apply under the Environmental Statutes, but stated that because the complainant could not establish an employment relationship with respondents under either test, the ARB need not decide which test should have been applied. Green, ARB No. 2018-0007, ALJ No. 2017-TSC-00002, slip op. n.3.

The test applied by the ALJ in the proceeding below is derived from the common law of agency, which the US Supreme Court set out in Nationwide Mutual Insurance Co. v. Darden, 503 US 318 (1992). The Darden test focuses on the extent of the respondent’s control and supervision over the worker, including scheduling and performance of the work. The Darden test also looks at other factors such as the occupation and skills required, responsibility for the cost of operation, method and form of payment, and length of the job or commitment.

The ARB upheld the ALJ’s use of the Darden test, finding insufficient evidence that the respondents controlled or supervised the complainant’s day-to-day work. The ARB also found that the respondents did not provide the complainant with training or development and did not pay his salary. As a result, the ARB agreed with the ALJ that no more “than just a temporary and indirect relationship” existed. Green, ARB No. 2018-0007, ALJ No. 2017-TSC-00002, slip op. at 5. In other words, the requisite employment relationship did not exist, and the complainant was not a covered employee.

On appeal, the complainant argued that the ALJ erred by using the Darden test and should have applied the “control test” outlined in Seetharaman v. General Electric Co., ARB No. 03-029, ALJ No. 02-CAA-21 (ARB May 28, 2004). The control test examines whether a respondent acted in the capacity of an employer by exercising control over the terms, conditions, or privileges of the complainant’s employment. This control includes the ability to hire, transfer, promote, reprimand, or discharge the complainant. Applying this test, the ARB held that the complainant did not show that the respondents controlled the terms and conditions of his employment. Id. at 6-7.

Although both tests look at the extent of control exercised by the respondent over the complainant, the control test more narrowly focuses on the respondent’s ability to hire, transfer, promote, reprimand, or discharge the complainant. The Darden test can include some or all of the factors under the control test, but can also include others, as described above.

Notably, in applying the control test in Green, the ARB held that “[i]n the context of putative indirect employers like [r]espondents, the power to order an individual’s removal from a particular contract or project, without more, is not tantamount to control over the terms and conditions of the individual’s employment.” Green, ARB No. 2018-0007, ALJ No. 2017-TSC-00002, slip op. at 6.

Significantly, however, the control test is applied in cases brought under the ERA, and under the ERA, directing the removal of a contractor can be actionable if it is deemed retaliatory. Such actions also are subject to enforcement action by the NRC under its employee protection regulations, which are promulgated under the ERA.

Although the ARB’s holding in Green calls into question how the ARB might apply the control test in future ERA cases, nuclear companies subject to the ERA should remain mindful of the potential liabilities associated with taking action against their contractors, and carefully review such actions to ensure they are being taken for legitimate, nonretaliatory reasons.

Taking actions to address the conduct and/or performance of contractors, including directing the removal of contractor personnel from a project, can be necessary. Indeed, the NRC holds licensees liable for the actions of their contractors and encourages them to take appropriate corrective actions when their contractors do not meet certain expectations. See, e.g., Freedom of Employees in the Nuclear Industry to Raise Safety Concerns Without Fear of Retaliation, 61 Fed. Reg. 24,336, 24,339 (May 14, 1996) (providing that licensees should take remedial actions in response to their contractors when their contractors are negatively affecting the work environment).

One way to ensure such actions are not retaliatory is to establish and administer an executive review board (ERB) process in which contemplated personnel actions, including actions impacting contractors, are independently reviewed by the ERB to ensure they are being taken for legitimate, nonretaliatory reasons.

We will continue to follow this issue for any updates.