Federal Circuit: Future Lost Earnings Are Recoverable for Employees Subject to Retaliation for Whistleblowing
Last week, the United States Court of Appeals for the Federal Circuit held that future lost earnings are potentially recoverable as compensatory damages for whistleblowers seeking corrective action for retaliation. This decision means that an employee filing a whistleblower appeal can seek monetary damages for the future employment opportunities they lost as a result of retaliation. The decision also makes clear that a whistleblower does not need to prove they had “guaranteed” future employment to receive these damages.
The case involves a researcher hired by the Department of Veterans Affairs (“VA”) as a temporary Research Health Science Specialist for a one-year term, subject to renewal. The appellant’s term was renewed each year, coinciding with the duration of the federally funded project that the appellant worked on.
In 2017, the appellant reported that a substantial amount of funds was missing from her study’s funding, and she was terminated shortly thereafter. She then filed a complaint with the Office of Special Counsel to seek corrective action for the retaliation against her, received no response, and subsequently filed an Individual Right of Action appeal with the Merit Systems Protection Board (the “Board”).
The appellant prevailed on her request for corrective action, and the Board determined that she was entitled to back pay through March 31, 2020, which was the completion date of the last federally funded project that she worked on. However, the Board found that the appellant was not entitled to her other claimed damages for lost future wages. The Board’s conclusion was based on two theories: first, that the appellant had not met her burden of proving the claimed damages because she had “no guarantees of future employment,” and second, that under Federal Circuit precedent, 5 U.S.C. § 1221 was not intended by Congress to permit damages for lost earning capacity. The Federal Circuit rejected both of these arguments.
On review, the Federal Circuit took issue with the Board’s interpretation of § 1221 and vacated and remanded the Board’s decision. The Court held that based on the rules of statutory interpretation, future lost earnings are recoverable under § 1221(g)(1)(A)(ii). The Board looked to the common law definition of “compensatory damages,” the legislative history of § 1221(g)(1)(A) reflecting Congress’ expansion of damages available to whistleblowers, and interpretations of similar statutes. In concluding that future lost earnings are recoverable under this statute, the Court noted that such damages fall into the category of “compensatory damages,” and not the separate category of “consequential damages,” which are analyzed under a different framework unaffected by the Court’s decision here.
The Federal Circuit also clarified that a whistleblower does not need to prove “guarantees of future employment” to be entitled to damages for future lost earnings. Because they are only required to prove damages by a preponderance of the evidence—that is, evidence that would lead a reasonable person to accept a fact as more likely true than untrue—whistleblowers do not have to prove their future lost wages with absolute certainty.
The Court ultimately rejected the Board’s conclusion that the appellant was required to show she had guaranteed employment in the future to be entitled to lost future wages. In vacating and remanding the case, the Court directed the Board to consider whether the appellant’s affidavit, letters of support, and expert report in support of her lost wages claim were sufficient to prove entitlement to damages for future lost earnings.
Read the full case: Perlick v. Department of Veterans Affairs
