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OSHA Issues Interim Final Rule for FSMA Whistleblower Claims

February 25, 2014

The new rule contains important guidance regarding several aspects of the Food Safety Modernization Act’s whistleblower provision.

The Occupational Safety and Health Administration (OSHA) has issued an interim final rule[1] that establishes procedures for handling whistleblower complaints under section 402 of the Food Safety Modernization Act (FSMA).[2] OSHA crafted the interim final rule, released on February 13, 2014, with the express intent that the procedures be consistent with its other whistleblower regulations to the extent possible given the specific statutory language of the FSMA. The interim final rule provides clarification and guidance regarding several aspects of the FSMA’s whistleblower provision. Below are some of the most significant aspects of the interim final rule.

Coverage

The interim final rule provides that an employee is protected under the FSMA if he or she works for a “covered entity.” A covered entity is defined as “an entity engaged in the manufacture, processing, packing, transporting, distribution, reception, holding, or importation of food.” The rule further clarifies the coverage of the FSMA whistleblower provisions by defining the word “food” as “articles used for food or drink for man or other animals, chewing gum, and articles used for components of any such article.”

The Reasonable Belief Standard

The rule also elaborates on the FSMA’s “reasonable belief” standard. It requires, consistent with Administrative Review Board (ARB) decisions in the context of Sarbanes-Oxley whistleblower complaints, that the complainant hold both (1) a subjective, good-faith belief that the conduct violates the Federal Food, Drug, and Cosmetic Act (FD&C Act) or any order, rule, regulation, standard, or ban under the FD&C Act and (2) an objectively reasonable belief that the conduct violates the FD&C Act or any order, rule, regulation, standard, or ban under the FD&C Act. Objective reasonableness is determined “based on the knowledge available to a reasonable person in the same factual circumstances with the same training and experience as the aggrieved employee.”

The Prima Facie Showing

FSMA complaints are first adjudicated by the Assistant Secretary of Labor for Occupational Safety and Health (the Assistant Secretary). Upon receipt of a FSMA complaint, the Assistant Secretary must provide written notice to the respondent of the filing of the complaint, the allegations contained in the complaint, the substance of the evidence supporting the complaint, and the rights afforded the respondent throughout the investigation. Within 60 days of receipt of the complaint, the Assistant Secretary must afford the complainant and respondent an opportunity to submit a response. Through the complaint and any interviews of the complainant conducted by the Assistant Secretary, FSMA complainants must make a prima facie showing that protected activity was a contributing factor in the employer’s adverse action. If the complainant fails to do so, the Assistant Secretary must discontinue the investigation and dismiss the complaint. Even if the prima facie showing is made by the complainant, the investigation must be discontinued and the complaint must be dismissed if the employer demonstrates by clear and convincing evidence that it would have taken the same adverse action in the absence of the protected activity.

The Assistant Secretary’s Findings

If the case proceeds beyond the prima facie showing phase, the Assistant Secretary must determine whether there is reasonable cause to believe that protected activity was a contributing factor in the alleged adverse action. The Assistant Secretary may not award relief if the employer proves by clear and convincing evidence that it would have taken the same adverse action in the absence of the protected activity.

The interim final rule provides that the Assistant Secretary will issue written findings and a preliminary order based on the complaint, the respondent’s response, and the Assistant Secretary’s investigation. Prior to the issuance of findings and a preliminary order in favor of a complainant, the Assistant Secretary must contact the respondent to give notice of the substance of the relevant evidence supporting the complainant’s allegations as developed during the course of the investigation. This evidence includes any witness statements, which may be redacted in appropriate circumstances. The respondent must then be given the opportunity to submit a written response, to meet with the investigators, to present statements from witnesses in support of its position, and to present legal and factual arguments.

If the Assistant Secretary concludes that there is reasonable cause to believe that the complaint has merit, the Assistant Secretary will order appropriate relief, including preliminary reinstatement, affirmative action to abate the violation, back pay with interest, and compensatory damages. The Assistant Secretary may also award the complainant all costs and expenses, including attorney fees and expert witness fees.

Significantly, OSHA’s summary and discussion of the regulations provides that, in lieu of preliminary reinstatement, the Assistant Secretary may, in appropriate circumstances, order “economic reinstatement,” which reinstates the complainant’s pay and benefits without returning the complainant to work. OSHA explains that actual reinstatement is preferred unless the evidence establishes that it is inadvisable for some reason, in which case, economic reinstatement may be used to compensate the employee while adjudication is completed before the Administrative Law Judge (ALJ). This is a significant power because the interim final rule further states that “[t]here is no statutory basis for allowing the employer to recover the costs of economically reinstating an employee should the employer ultimately prevail in the whistleblower adjudication.” Thus, an employer will not be able to recoup any monies paid pursuant to an economic reinstatement order by an ALJ, even if the employer succeeds on appeal before the ALJ or the ARB.

Where the Assistant Secretary does not find reasonable cause to believe the complaint has merit, the findings will advise the respondent of the right to seek an award of attorney fees not exceeding $1,000 from the ALJ if the respondent alleges that the complaint was frivolous or brought in bad faith.

ALJ Proceedings

If a party timely files objections and a request for hearing, all provisions of the preliminary order are stayed, except for any portion related to preliminary reinstatement. The respondent may move to stay the preliminary order of reinstatement, but the ALJ may only grant that motion in exceptional circumstances.

In proceedings before the ALJ, the Assistant Secretary may choose to prosecute the case or to otherwise participate in the proceedings. The Food and Drug Administration also has the right to participate as amicus curiae.

The rule clarifies that the Assistant Secretary’s determinations on whether to proceed with an investigation under the FSMA and whether to make particular investigative findings are discretionary decisions not subject to review by the ALJ. Rather, the ALJ hears and decides cases de novo and, therefore, as a general matter, may not remand cases to OSHA to conduct an investigation or make further factual findings.

Before the ALJ, the complainant must demonstrate, by a preponderance of the evidence, that the protected activity was a “contributing factor” in the adverse action. If the employee meets this burden, then the employer must demonstrate, by “clear and convincing evidence,” that it would have taken the same action in the absence of the protected activity in order to escape liability. The ALJ has the authority to order the same remedies as the Assistant Secretary.

ARB Proceedings

Both parties have 14 days from the date of the ALJ’s decision to petition the ARB for review of the decision. Parties do not have a right to an ARB appeal, and the ARB has discretion to choose the cases it will hear. If the ARB chooses to hear an appeal, the ALJ’s decision is inoperative unless and until the ARB issues an order adopting the decision, except that orders of reinstatement are effective while ARB review is pending. The respondent may move for an order staying the ALJ’s order of reinstatement pending ARB review, and the ARB may grant such a motion in exceptional circumstances.

Judicial Review

Within 60 days after the issuance of a final order by the ALJ or the ARB, a party may file a petition for review of the order in the U.S. Court of Appeals for the circuit in which the violation allegedly occurred or in the circuit in which the complainant resided on the date of the alleged violation.

Judicial Enforcement

If a respondent fails to comply with an order of the Assistant Secretary, ALJ, or ARB, the Secretary of Labor or the complainant may file a civil action in district court seeking enforcement of the order.

District Court Jurisdiction

The interim final rule states that a complainant may only seek de novo review in a federal district court under the following circumstances: (1) within 90 days after receiving a written determination from the Assistant Secretary, provided that there has been no final decision or (2) if there has been no final decision and more than 210 days have passed since the filing of the complaint. OSHA’s commentary clarifies that no judicial action may be filed after a complainant has received a final decision, even if the final decision was not issued within the FSMA’s prescribed time limits.

Implications

Companies in the food industry should update their policies and training materials to ensure that supervisors and managers are properly educated about protected whistleblower conduct under the FSMA. In addition, companies should ensure that they have implemented a process for reporting any concerns or complaints about food safety and that any such reports are documented.

Contacts

If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers:

Labor and Employment
Irvine
Daryl S. Landy


New York

Andrew J. Schaffran
Samuel S. Shaulson


Philadelphia

Sarah E. Bouchard

Joseph J. Costello


Princeton

Thomas A. Linthorst


FDA

Washington, D.C.

Robert G. Hibbert



[1]. Procedures for Handling Retaliation Complaints Under Section 402 of the FDA Food Safety Modernization Act, 79 Fed. Reg. 8619 (Feb. 13, 2014) (to be codified at 29 C.F.R. pt. 1987), available here.  

[2]. For a comprehensive summary of FSMA, see our January 9, 2013 LawFlash, “FDA Releases Major New Food Safety Proposals,” available here.