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Settlements and Alternative Dispute Resolution

Alternative Dispute Resolution

The MSPB and OSC have each recently adopted new alternative dispute resolution procedures. To agencies, this clears dockets. Alternative dispute resolution is similar to arbitration in that the parties hire non-government employees to perform quasi-judicial functions. The hope is that this will end cycles of workplace retaliation and escalation fueled by personality clashes, and short-circuit litigation. But whistleblowers start in an unfavorable situation because of the hostile work environment, their relative lack of information concerning the mediator (including continuing relationship with th agency or attorneys involed), and the continuing delays. Private attorneys favor ADR either because it increases their involvement or speeds settlements and money in their pockets. No one has studied the aftereffects even a few years out. Earlier studies often showed whistleblowers worse off in the next job or two, and their former co-workers afraid to speak out.

The Limits of Confidentiality Agreements

Silence is not always to the employee's benefit. Of course most employees value their confidentiality and their wallets and also want avoid appearing a naive victim of an oppressive bureaucracy. Thus, some employment attorneys advise clients to wait before contacting law enforcement or OSC because such will get the whistleblower a better deal. While the rationalization seems attractive, it never has been proven, in part because silence is in the agency's interest even more. It holds the cards. There is no guarantee the agency will fulfill its part of the bargain.

Despite the chilling effect of confidentiality agreements upon workplace speech, and common agency breaches, the MSPB has never set aside a whistleblower settlement for fraud or as against public policy (although it has set aside non-whistleblower settlements where the agency has mislead the employee). Nor has it found agency breach. At the very least, nondisclosure and nonenforceability provisions discourage later judicial remedies as well as legislative oversight. This allows agencies to continue hardball--adding another litigation stage, raising the former whistleblower's costs.


The drafting attorney is supposed to explain the settlement agreement. Some refuse. If the retaliation case has reached a court instead of the MSPB or OSC, a judge will usually ask the employee about whether he or she understands what the agency is agreeing to do, and the rights he or she is giving up. Clients of attorneys disposed to settlements rarely allow this judicial double-check, assuring clients' dependence on the attorney's expertise: concerning what terms are customary, potential consequences, and distinguishing necessary protections from unreasonable demands.

A lazy attorney may simply try to sell a "good deal," even though he is supposedly getting paid for advice about all the legal consequences to his client. Because clients are most likely to take notes about advice and promises just before the settlement, the vagueness is self-, not client- protective. Until the MSPB or a court awards a client damages or significant legal fees, or refer these attorneys to disciplinary authorities, this practice will continue. Theoretically, a client can fire the attorney for refusing to explain, or for no reason whatsoever. This helps little in practice--the lack of zeal may have already compromised the client's position. In any event, the bills have probably piled up, and friends and family are awaiting the "fresh start" the attorney promised months earlier.

Clients may also not realize that many attorneys customarily stop contact with clients immediately after a settlement. Attorneys do have busy schedules, and additional fees are unlikely at this point. However, this policy may also mean that the attorney refuses to learn about problem areas or drafting mistakes for the benefit of future clients.

Reference-protecting provisions

A supervisor who retaliates may well be contacted by future employer, particularly if he or she remains in the employment chain on the employee's resume. Thus, reference-protecting provisions are essential, but usually ineffective in the federal employer context.Thus, the employee faces a dilemma of waving a red flag by attaching a qualification to potential employers. Plus, lying about employment history can be a grounds for termination by a new employer. On the other hand, few potential employers will tell a candidate not hired because of a bad reference. One study estimated that for whistleblowers, the impact of the whistleblowing declined in the third job after the whistleblowing and retaliation, but was unable to link that to the employee's own recovery from the trauma, or the end of managerial gossip.

Thus, dealing with references becomes a key element in any well-drafted settlements. An employee and manager (usually with the attorney's assistance) may write out a reference all agree as adequate; the employee then hopes the script is adhered to. Less diligent attorneys refuse to draft reference protecting provisions, offering bland reassurances instead, then nonavailability when the promises prove untrue. No one has published studies (or perhaps even conducted research) about whether employees resigning in connection with settlement agreements can find future federal employment.


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