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Stimulus Funds Safeguards and Public Entity Whistleblowers

February 26, 2009

The economic stimulus bill passed by Congress on February 12, 2009 includes whistleblower protections for employees of private contractors and state and local governments who disclose fraud or mismanagement regarding the use of stimulus funds.  Protected conduct includes disclosures to a person of supervisory authority over the employee when the employee reasonably suspects and reports mismanagement or waste of stimulus funds.  This whistleblower provision is known as the McCaskill Amendment.

To prevail on a whistleblower action, the employee's burden of proof is fairly low – he or she must merely prove that the protected conduct was a "contributing factor" to the reprisal.  An employer, such as a school district, city or college, can avoid liability by demonstrating through "clear and convincing evidence," a fairly high evidentiary burden, that it would have taken the same action in the absence of the employee engaging in the protected conduct.  The amendment includes an administrative exhaustion requirement through the U.S. Inspector General, and the right of a jury trial in federal court should the action not be resolved at the administrative stage.