About Teachers Sent to Reserve Positions

The New Teacher Project, one of the methods used to push NYC teachers out of the system through reserve status, is just another part of the rubberization process. The fact of the matter is that excellent, dedicated public school teachers and staff are being eliminated from the lives of our children for improbable cause and without justice or due process. Schools are closed, opened, moved, changed, or whatever as part of a massive real estate take-over by the powers that be in New York City and a political strategy to re-direct huge amounts of dedicated federal funds into the pockets of the few who have been able to buy/influence/strongarm themselves into positions of power. Then, these people buy/shut down the media and the court system so that they can get away with their plans.

If we, parents, teachers, journalists, or whoever, keep exposing what we know (and can prove, folks!!!)we will bring change.

April 29, 2008
$81 Million for Reserve of Teachers
By JENNIFER MEDINA, NY TIMES

New York City is paying $81 million over two years in salaries and benefits for teachers without permanent teaching jobs, according to a report being released on Tuesday.

The teachers are part of the so-called reserve pool, which holds teachers whose positions have been eliminated, but who have yet to secure a new permanent teaching position at another school.

The reserve is an outgrowth of the city’s contract with the teachers’ union, which ended seniority rights in staffing decisions as well as the automatic transfer of teachers who had been cut because of shrinking enrollment, the closing of large schools or the elimination of particular programs. At the time, Chancellor Joel I. Klein said he would rather absorb the cost of the teachers in the reserve pool than saddle principals with teachers they did not want.

Under the contract, teachers whose positions have been eliminated from one school and cannot find another to hire them, or who simply do not look for a new job, are assigned to schools to fill in as substitute teachers or temporary replacements. They collect full teacher salary and benefits.

Teachers at those schools are required to show up every day at regular school hours and are available for principals to use as substitutes, but the principals are not required to do so. Officials at the Education Department said they did not track how often the principals used the assigned substitutes, or whether they did at all.

Since 2006, when the contract took effect, more than 600 teachers have been placed in the reserve after failing to find new positions, according to the report by the New Teacher Project, which recruits and trains teachers for school systems across the country, including New York City. The report found that nearly half the reserve teachers had not applied for any vacancies through the city’s new online job posting system.

Timothy Daly, the president of the New Teacher Project and the lead author of the report, called the elimination of automatic transfers a resounding success that enjoyed widespread support among teachers who chose to switch schools. But he said the payments to the reserve pool were a flaw in the system.

“I don’t think anybody thinks that the system can keep paying for this in the long term,” he said. “It would undermine all the good stuff that is happening.”

The report drew praise from city officials. But Randi Weingarten, the president of the United Federation of Teachers, dismissed it, calling the New Teacher Project a “wholly owned subsidiary” of the Education Department.

The New Teacher Project runs the city’s Teaching Fellows program under a $4 million contract that expires in 2010. It also has relationships with other cities and has studied staff systems in several districts, including Portland, Ore., Milwaukee and Chicago.

“The most repulsive part of this report is that the D.O.E. is abdicating its responsibility to help the teachers who, through no fault of their own, have lost their positions,” Ms. Weingarten added. “It’s the quintessential blame-the-victim strategy.”

In the past, Mr. Klein has suggested that most teachers in the reserve pool are so undesirable that no principal would hire them or that they simply do not try to find a job. The report said reserve teachers who had not found a permanent place were six times as likely as other teachers to have received an unsatisfactory rating sometime in their careers, although that rating had nothing to do with why their prior jobs had been eliminated.

More than 90 percent of the roughly 2,700 teachers whose positions were cut in 2006 found jobs at other schools within several months, the report said.

“This shows how well the open-market system has worked,” said Dan Weisberg, the schools’ chief executive for labor policy. “We’re able to retain more talented teachers, and principals are extremely happy to be choosing their own teams.”

The report said veteran teachers were not “inherently disadvantaged” in finding new spots. But recently the union filed a lawsuit accusing the schools of age discrimination, pointing to the new policy, coupled with a new system that makes veteran teachers more costly for principals to hire.

When the teachers’ contract was revised in 2005, many veterans of the school system, including union officials, warned that it would be extremely difficult to place teachers in new assignments. Ms. Weingarten said Monday that those fears had come true.

She said Mr. Klein had broken apart the structures that once efficiently reassigned teachers. Local district offices that could balance the changing needs of different schools no longer exist, and principals in many cases are effectively operating on their own, as chief executives of their schools, she said.

During a conference call with reporters, Ms. Weingarten had four teachers in the reserve at Evander Childs High School in the Bronx speak of their experiences. Each said they had applied for several jobs, though not all had used the new online system.

The report comes as the city and the union are preparing to battle further over school budget cuts. In recent weeks, the relationship between Ms. Weingarten and Mr. Klein has soured even more as they have increasingly clashed over the cuts as well as teacher tenure rules. The teachers’ contract is scheduled to expire in October next year, on the eve of the mayoral election — making it unlikely that a deal will be struck with the Bloomberg administration.

“The danger here is that at some point these excess teachers will be forced into vacancies and into schools,” Mr. Weisberg said. “There’s no question what’s the most efficient thing to do. Obviously it’s very tempting, but it would be an awful thing for kids.”

Also on Monday, the union released an analysis suggesting that the city had misspent some of the $152.7 million in new state money meant to lower class sizes.

The analysis found that 48.5 percent of 390 elementary and middle schools that received state class size reduction money did not lower class sizes, and that the average class size at more than a third of the schools had increased over the past year.

William C. Thompson Jr., the city comptroller and likely mayoral candidate, said he would conduct an audit to determine where the money had been spent. The state also is planning to monitor the spending.

Elissa Gootman contributed reporting.

Mutual Benefits report

April 30, 2008
Editorial
Idle Teachers, Wasted Money

New York City and its teachers’ union deserve praise for abandoning a rule that once guaranteed senior teachers the right to switch schools whenever they wanted by bumping younger teachers out of their jobs. The new system, which allows principals to refuse teachers that they do not want, has put an end to the perpetual transfer dance.

But it has also created a new set of very costly problems that the city needs to solve very soon. Those problems surfaced this week in a report by a New York research group known as The New Teacher Project, which estimates that the city has been paying $81 million over two years in salaries and benefits for teachers who have not been able to find permanent jobs.

Under the new free-market system, teachers who lose their jobs because of budget cuts, program curtailments or school closings are supposed to go into a reserve pool for a short time before they are hired elsewhere in the system. An overwhelming majority of more than 2,700 teachers sent into the pool in 2006 did just that.

But according to the study, 235 of the teachers who entered the pool in the summer of 2006 still had not found permanent teaching jobs by December 2007.

The reserves are required to show up at school hours and are available for use as substitutes. But no one really knows how reserves are being used or what they are actually doing.

The city, which seemed content to ignore this issue until the budget picture turned grim, needs to focus on this group much more closely. It needs to make sure that the pool members are actually looking for work. Beyond that, it needs to make sure that teachers are not being discriminated against by age or because they once worked at schools that were closed. If that becomes the case, the city could find it difficult to staff struggling schools that are candidates for closure.

The union disputes the report’s claim that the reserve teachers are much more likely to have had negative job ratings than teachers in general. But it is surely the case that some teachers in the pool will never find permanent jobs within the system. The city and the union need to explore new avenues for easing those teachers out of the system. Given the costs, this issue should be high on the agenda in the coming contract talks.

Study Shows State Courts Vacating Many Arbitration Awards for Employees, but Not for Employers

Marcia Coyle
The National Law Journal
04-21-2008

As consumer, employee and other groups carefully build momentum in Congress for changes in the nation's arbitration landscape and business groups just as carefully organize their opposition, a new empirical study reports a "disturbing trend" at the state level: state courts vacating many arbitration awards for employees, but not for employers.

The new study, conducted by labor and employment law scholar Michael LeRoy of the University of Illinois College of Law, is another and important piece in the complex arbitration mosaic, whose various parts are being re-examined by members of Congress and others for legislative "fixes" before the end of this year or early next year -- depending on the November election outcome.

The legislation in Congress focuses primarily on the front end of the system and would prohibit mandatory, predispute arbitration in consumer, employee and franchise agreements. LeRoy's study focuses on the back end of the system: federal and state court review of employment arbitral awards.

LeRoy's data reflects a sense of "snowballing futility for employees," said the author.

"When courts vacate many awards that rule for employees, the individual must either return to a lengthy and costly 'do over' arbitration -- or worse, be stuck with a useless award, and no other recourse" because a Supreme Court ruling prevents them from suing, the study said. Court review is becoming "an insurance program that protects employers from costly awards."

LeRoy's findings did not surprise lawyers at the Washington-based Public Justice (formerly Trial Lawyers for Public Justice), which has a mandatory arbitration abuse prevention project. In preparing a manual for that project, the organization did a less exhaustive review of challenged arbitration awards, recalled staff attorney F. Paul Bland.

"You almost never see a court overturn the arbitrator's decision in consumer cases, but you do see it in employment cases and almost overwhelmingly where the arbitrator ruled for the employee," he said.

REPEAT PLAYERS

LeRoy's database includes 443 federal and state court rulings on arbitration awards -- four levels of review, two in the federal court system and two in state systems -- from 1975 to 2007.

The data set is five years in the making and it is an ongoing project, he said, explaining, "It started with my interest in how employers and employees were responding to mandatory arbitration programs, implemented in the mid- to late-1990s."

His study found a "statistically significant" difference in the rates for confirmation of employer and employee victories by state appellate courts:

"Remarkably, state appellate courts confirmed only 56.4 percent of employee wins in arbitration. But when the same courts ruled on employer victories, they confirmed 86.7 percent of awards," the study found.

The lower state courts acted like the state appellate courts: 87.2 percent of employer awards confirmed; 77.6 percent of employee wins confirmed.

By comparison, federal appeals courts upheld 85.7 percent of employer wins and 85 percent of employee victories. Federal district judges enforced 92.2 percent of employer awards and 92.7 percent of employee wins.

The main reason for the difference between the state and federal court rates, said LeRoy, is that federal courts are essentially following the limited standards of judicial review established by the Federal Arbitration Act (FAA) and state courts are not.

"The problem is that the number of award-reviewing standards is growing, due to new state laws and creeping expansion of common law standards," said LeRoy. "This causes judges to deviate from the FAA's extremely deferential principles."

The "remarkable irony" in what is happening is that employees are losing under these state laws and standards, which were enacted to protect the weaker party in the relationship -- here the employee, said LeRoy.

"Other arbitration scholars have identified what they call the 'repeat player effect,'" he said. "Corporations are repeat players in either the employment or credit card arbitration systems and they learn the system. Even if they lose, they are smarter about how to make system work to their advantage. In any given dispute, they go up against a one-shot player."

Using examples drawn from his database, LeRoy shows in his study how these new laws and standards create pitfalls for arbitrators, or "trip wires," that employers learn to use to their advantage in challenging awards against them.

"Arbitrators tend to be highly experienced neutrals and they often cross state lines and are unaware of varying state laws," he said, adding, for example, a state law prohibiting an award of attorney fees. "I rule for a party and after I rule, the loser does research and finds I have not complied with that or another requirement under state law and gets the award vacated."

If state courts followed the four main elements for judicial review in Section 10 of the FAA, there would be 10 percent or fewer awards overturned, said LeRoy (picture below).

"The door was cracked open by the Uniform Arbitration Act and further opened by the Revised Uniform Arbitration Act, and then furthered opened by piecemeal arbitration statutes," he said.


LEGISLATING FAIRNESS

LeRoy is no foe of arbitration. In fact, he believes due process recommendations adopted by the American Arbitration Association and others have eliminated many of the egregious horror stories emanating from arbitration programs in their early incarnation.

"In my opinion, these changes have not received adequate credit for reforming the system without legislating," he said.

Legislation to prohibit mandatory arbitration now pending in Congress doesn't reflect the fact that many private systems now have opt-out provisions for individuals, added LeRoy.

"One can fairly complain the provisions are cosmetic and designed to be overlooked by individuals," he said. "In some sense, the legislation doesn't appear to account for the fact the market is moving away from mandatory agreements in the employment area. It's a different matter when you look at consumer agreements."

There are two main bills in Congress that are the focus of pro- and anti-mandatory arbitration interest groups: S. 1782, whose prime sponsor is Sen. Russell Feingold, D-Wis., and H.R. 3010, whose chief sponsor is Rep. Henry "Hank" Johnson, D-Ga.

The bills are identical in prohibiting mandatory predispute arbitration in consumer, employer and franchise agreements as well as in any dispute arising under any statute intended to protect civil rights or to regulate contracts or transactions between parties of unequal bargaining power.

House and Senate hearings have been held on the bills which, not surprisingly, have drawn combat lines between business interests, such as the U.S. Chamber of Commerce, on one side, and trial lawyer and consumer interests, such as the American Association for Justice and Public Citizen, on the opposite side.

Lobbyists and Hill staffers following the legislation now say nothing of substance is likely to happen on those two bills this year because of the expectation of a presidential veto.

"If the election goes well from the Democrats' perspective, I expect to see a significant ramping up of efforts -- early introduction in the new session and a big push," predicted one lobbyist.

Two possible scenarios surround the two bills, some say. They could end up like the Family Medical Leave Act, which was vigorously opposed by business and took nine years to enact, or they could gain immediate traction because of the economy.

Consumers are now squeezed by an ailing economy, high credit card debt and an anti-consumer bankruptcy law. There also has been widespread publicity about the National Arbitration Association and criticism that it is a badly rigged system against consumers.

"The credit card companies are the principal people funding support for current use of arbitration clauses," said a consumer representative. "If that industry has too many more people angry with it, then this bill will move faster than people thought."

But Larry Akey, spokesman for the U.S. Chamber's Institute for Legal Reform, said the Chamber and its supporters believe there will be an attempt to move something on arbitration before the end of this congressional session.

"We keep hearing rumors emanating particularly from the Senate that Feingold would like to get a [committee] markup on his bill sometime before summer," said Akey.

CARVE-OUTS

What may happen before the end of the session, both sides agree, is legislation to prohibit mandatory arbitration in industry-specific areas, most likely nursing homes and car buyers.

There currently are bills pending to prohibit mandatory arbitration clauses in nursing home admittance policies, livestock and poultry contracts, homebuilding contracts, predatory tax refund anticipation loans and consumer auto purchases.

"It's what I call carve-outs," said Mark A. de Bernardo, partner in the Vienna, Va., office of Jackson Lewis and executive director and president of the Council for Employment Law Equity.

That strategy, he said, makes it difficult for the business community to oppose the bills because it fragments the business community and the piecemeal effort makes the issue appear less controversial.

"What's particularly negative is three things: If we're saying mandatory arbitration is bad for Joe and Sally and then for Bob and Judy, that sets in motion a mindset that is harmful to the very nature of arbitration," he said.

Two, he added, the piecemeal effort has a tendency to lock in some legislators who may vote for one bill that they consider noncontroversial.

"The leap from taking a small step to a larger step may not seem as significant," he said.

Finally, the strategy gives momentum to the bills' proponents.

The U.S. Chamber and other business groups would rather not be divided by that strategy, he said, adding, "It's like sniper fire picking off individual soldiers. As a fighting force, we're less effective."

There may be hearings on, and a push for, the nursing home legislation this year. That area, say the bill's proponents, is rife with horror stories of abusive arbitrations. There also is the possibility of movement, they say, on the car-buyer legislation. Congress several years ago exempted car dealers from the FAA after complaints about their unequal bargaining power in arbitrations with car manufacturers.

"We are getting an ever-mounting number of complaints from consumers and employees who have endured awful treatment in the arbitration system," said Public Justice's Bland. "It would not surprise me if the intense and growing level of anger and unhappiness we are seeing translates into significant pressure on legislators."

There is little hope for compromise in any of these areas.

"We see it as one big package by the trial lawyer association to advance it as in many separate proposals as possible in the hope they can demonstrate this is a wide-ranging problem," said the U.S. Chamber's Akey.

"I think it's hard to compromise when the goal of other side is to effectively eliminate arbitration."

Labor & Employment
State Courts Vacating More Arb. Awards for Employees than Employers
Posted Apr 21, 2008, 06:55 am CDT
By Molly McDonough
LINK

State courts are vacating many arbitration awards for employees these days, a pattern that reveals a "disturbing trend" according to one recent study.

The University of Illinois College of Law's Michael LeRoy took a look federal and state court review of employment arbitral awards. The National Law Journal reports that the data suggests a "snowballing futility for employees."

"When courts vacate many awards that rule for employees, the individual must either return to a lengthy and costly 'do over' arbitration—or worse, be stuck with a useless award, and no other recourse" because a supreme court ruling prevents them from suing, the study said. Court review is becoming "an insurance program that protects employers from costly awards."

According to the NLJ, LeRoy's database includes 443 federal and state court rulings on arbitration awards from 1975 to 2007. His findings reveal statistically significant differences in victories in the state appellate courts.

In the federal courts, where judicial review is more consistent under the Federal Arbitration Act, employer and employee awards are being upheld more evenly.

LeRoy theorizes that employers are benefiting by a "repeat player effect," because they have learned the system and know how to better make it work to their advantage.

Also of interest to anyone who may be going to arbitration:

U.S. Supreme Court
Supreme Court Limits Judicial Review of Arbitration Awards
Posted Mar 25, 2008, 10:20 am CDT
By Debra Cassens Weiss
LINK

The U.S. Supreme Court has ruled that parties to an arbitration agreement may not agree to broader court review than allowed by federal law, SCOTUSblog reports.

The case involved a lease dispute between toymaker Mattel Inc. and the owner of a polluted factory site. The two parties had provided in their arbitration agreement that courts could review an arbitration decision for errors of law, the Associated Press reports.

Justice David H. Souter wrote in the opinion for the majority (PDF posted by SCOTUSblog) that the Federal Arbitration Act "confines its expedited judicial review" to narrow circumstances that are the exclusive means for vacating or modifying an arbitration finding.

Souter noted that the factory and amici had contended that parties will flee from arbitration if expanded review is not an option. On the other side, Mattel and amici argued the decision could result in flight from the courts.

“We do not know who, if anyone, is right, and so cannot say whether the exclusivity reading of the statute is more of a threat to the popularity of arbitrators or to that of courts,” Souter wrote. “But whatever the consequences of our holding, the statutory text gives us no business to expand the statutory grounds.”

Souter added that the parties may be able to obtain expanded court review using avenues outside the FAA, such as state statutes or common law.

The case is Hall Street Associates v. Mattel.

Defining a Whistleblower: Who Are These People?

The International Association of Whistleblowers is holding their annual conference at the Senate in Washington DC May 11-17. Betsy Combier, Editor of Parentadvocates.org.,(see article on Whistleblowers and IAW) is Secretary of the IAW, an organization that focuses on the need to restore our public trust in our government, our employers, and our colleagues.

The whistleblower's unending story
From: AP Online Date: April 27, 2008 Author: ADAM GELLER

The guest lecturer steps to the front of classroom 322 with a lesson plan, but it's not drawn from any textbook.

Instead, Dave Welch comes with a story to tell, edgy and very personal. The names have been changed, he says, "to protect the guilty."

He directs students in this class, focused on preventing white-collar crime, to look at corporate financial forms he's projected on to a screen. Years ago, working at a small-town bank in the Virginia mountains, Welch combed through these figures and saw things that made him suspicious. He was certain they pointed to problems that could not be ignored.

When he confronted the bank's president with his doubts, it cost him his job.

In another time, the story might have ended there. But this time - the months after titanic scandals capsized Enron and WorldCom - things would be different.

There ought to be a law, Congress decided, to protect workers who blow the whistle on what might be the next Enron. Who could've imagined the fight between the little bank and the fired accountant would become the new measure's most unlikely _ and most strenuous _ test?

That was more than five years ago, and more than 1,000 self-professed whistleblowers have come forward since.

The great majority have seen their cases rejected; about 160 settled before an initial ruling. Only six workers have won before a Labor Department judge _ and the review board that hears appeals has not ruled in favor of a single whistleblower. (From Editor Betsy Combier: Mr. Welch lost his case before the Arbitration Review Board, May 31, 2007. This is in our opinion a major loss for whistleblowing employees who seek to remain in their jobs and who sue to obtain protection under the Sarbanes-Oxley Act (SOX)).

Now, standing in the darkened classroom, Welch is ready to bring his story to a close. It's not easy, though, to conclude something that winds on without an ending.

"This is the message the courts are sending to whistleblowers," Welch says, the Tennessee in his voice taking on a chill. A new image beams on to the classroom screen _ a pack of hounds in pursuit of blood. Right in their midst is the prey, a very nervous fox, his head down low.

"When you're in deep trouble, keep your mouth shut and your eyes straight ahead."

Six years ago, Americans embraced whistleblowers as a new kind of hero.

If only Sherron Watkins' warning had been heeded, Enron might have survived, some said. Then an auditor, Cynthia Cooper, stepped forward and exposed massive bookkeeping fraud at WorldCom.

The "year of the whistleblower," one business magazine crowed. The two women, together with FBI whistleblower Coleen Rowley, were crowned by Time magazine as its people of the year.

Congress, too, took note.

In July of 2002, President Bush signed a new law, known as Sarbanes-Oxley, requiring top executives to stand behind their companies' financial statements and work to prevent fraud and abuse.

But the new law also spoke to corporate foot soldiers, offering them whistleblower protection - albeit with loopholes.

The law "is a breakthrough that means we've reached the promised land!" said Tom Devine of the Government Accountability Project, a whistleblower advocacy group, in an interview at the time.

From the start, though, the scope of the law's protection came into question. Hours after Bush signed, a White House spokeswoman said the administration believed it applied only to whistleblowers who talked to a Congressional committee pursuing an investigation.

"I don't see any room for interpretation here," responded one of the measure's authors, Sen. Chuck Grassley, R-Iowa. "Our intent was plain, to protect corporate whistleblowers, period."

Months later, a world away from both Beltway politics and big-money scandals, tensions began to flare inside the three-story brick offices of Cardinal Bankshares Corp. Cardinal is a holding company for the local bank in the one-stoplight town of Floyd, Va., population 432. It had 53 people on its payroll.

Welch was the chief financial officer. In the fall of 2002, he refused to approve financial statements, saying they appeared to overstate profits. He told the bank's president he suspected him of insider trading in Cardinal stock. The president, Leon Moore, was furious when Welch compared his bank to Enron.

In late September, the bank's board suspended Welch, and days later it fired him.

Welch turned to the federal Occupational Safety and Health Administration, which enforces whistleblower protection. An OSHA investigator determined that the bank was not at fault.

But a federal administrative law judge saw it differently. The new law "was expressly enacted by Congress to foster the disclosure of corporate wrongdoing and to protect from retaliation those employees, officers and directors who make such disclosures," the judge wrote in early 2004, ruling the bank should reinstate Welch.

The decision made Welch the first worker to win protection under the new law. Now came the acid test: What was that protection worth?

There's not much call for accountants in the small towns of the Blue Ridge, much less for one battling his former employer.

But Welch, attached to life on a 22-acre farm he and his wife had bought from her grandparents, was determined to stay. He spent six months sending out resumes and going to job interviews.

At least a few seemed to go well. But afterward, employers and their jobs seemed to vanish "into a black hole not to be heard from again," he says.

With state unemployment aid running out, Welch listened when a friend recommended a finance job at a hospital 3 1/2 hours away in the mining town of Grundy. He rented an apartment there, driving his Subaru with more than 200,000 miles on it back home on weekends.

The job was eliminated in cost-cutting a little more than a year later. But shortly before, the Labor Department's judge ruled in Welch's favor. The couple, who stumbled on the decision while checking e-mail during a vacation, hugged each other in the hotel lobby. Welch felt vindicated.

But the bank - denying Welch's accusations and accusing him of insubordination and incompetence - had no intention of giving in.

"We determined through a thorough and fair investigation that there was no merit to Mr. Welch's complaints," the board of directors wrote in an "open letter" published in the weekly Floyd Press, soon after the ruling. "We believe our decision was right then and we believe even more firmly now that our decision was correct."

The bank appealed, investing heavily in a case that it and other banks saw as setting a crucial precedent.

Before Cardinal fired Welch, the bank spent about $100,000 a year on professional and legal expenses, according to its filings with the Securities and Exchange Commission. Since then, its bill has jumped to more than $400,000 a year, substantial for a company with annual profits of about $2.5 million.

"We just said, look, we're not going to set back on this," says Moore, the bank president. "We're going to fight it."

Moore's bank is local in more than just name. At the time, it had just 600 shareholders, nearly all of them living in and around Floyd. The board - which includes a pair of dentists, a dairy farmer and a local school official - sent a letter to all of them, explaining its actions.

Moore says people came up to him at the bank's annual meeting and urged the company not to give in. He took his viewpoint on the road, speaking about the case to banking industry groups.

Meanwhile, it was becoming clear to Welch that if he was going to find work, the couple would have to move. He became convinced of his status as an exile the afternoon he ran into a former co-worker from the bank, at the counter of the Floyd Pharmacy.

"She looked around to see if anybody was watching her," Welch recalls, "and she said, 'Excuse me, I can't talk to you,' and she walked away."

Congress sent a straightforward, and sweeping, message to would-be whistleblowers.

A worker didn't have to be right. As long as the worker "reasonably believes" the company had broken securities law or harmed investors, and could show they'd been retaliated against for speaking up, that was enough. The government could then step in to resolve the dispute by ordering the company to take the worker back, and pay damages, even if the company chose to appeal.

But when the Labor Department judge ruled for Welch 16 months after he was fired, the promise of resolution dissolved in a protracted tug-of-war.

The bank argued that the judge's ruling was not a "final" order. Taking Welch back would be impossible. He'd already been replaced and bringing him back would severely disrupt life inside a company where everyone knew their co-workers and he was clearly not wanted.

Nearly 2 1/2 years after Welch was fired, the judge again ordered reinstatement and back pay, and the company refused. The question of what to do next bounced back and forth between Labor officials, federal court and the Administrative Review Board that has the Labor Department's final word on such matters. See USDC Judge Glen E. Conrad's decision, January 4, 2006, dismissing Welch's case.

Federal lawyers backed Welch, arguing that the bank had to take him back, even if temporarily.

In spring 2006 - more than three years after Welch was fired - the ARB, too, ordered Cardinal to take Welch back on a temporary basis. The bank again refused.

In October 2006, a U.S. District Court judge in Roanoke, Va. declined to enforce the reinstatement order, while expressing concern.

Lawmakers expected the Labor Department to resolve whistleblower cases in "a matter of days," Judge Glen Conrad wrote. Four years after Welch's firing, the case was still not settled. "The delay in the administrative process has been inordinate."

By now, the accountant had long given up finding another job locally. Down to one paycheck, the Welches say they burned through $115,000 in investments. In late 2004, they sold the farm where they'd hoped to retire. They moved close to Liberty University, the school founded by evangelist Jerry Falwell, where Welch had taught a class or two. He thought the school might hire him full-time.

Meanwhile, there was a growing debate over whether Congress' effort to protect whistleblowers was working.

Lawyers for companies say many corporate whistleblower cases have failed because they are frivolous, brought by angry workers looking to settle a score.

In the few cases like Welch's that moved forward, the government has investigated carefully, determining that much of what workers allege is beyond the scope of the law, said Michael Delikat, a New York attorney who represents employers in such cases.

But critics disagree.

Instead of protecting workers who suspect fraud, the Labor Department has been "defining more and more whistleblowers out of protection," said Richard Moberly, an assistant professor of law at the University of Nebraska who analyzed the outcomes of such cases.

Labor Department officials say they are administering the law as it was written.

"We're trying to apply things and understand them," said Nilgun Tolek, director of OSHA's office of whistleblower protection.

The law, she says, applies to workers who report suspected wire fraud, bank fraud and other specific misconduct: "While some people may see that as reading the statute too narrowly, that is what the statute says."

The Labor Department's success should be measured, at least partly, in the settlements it has helped broker between workers and employers, officials say.

But Moberly is skeptical because he has been unable to review details of those settlements. Critics say they are concerned to see the Labor Department issuing so few decisions favoring workers. Through February, the government has ruled in 1,091 Sarbanes-Oxley cases, coming down on the side of workers just 17 times in initial rulings.

"The carefully targeted legislation that you've described is legislation that has failed to protect people," Rep. Tim Bishop, D-N.Y., said at a House hearing last year.

The promise to protect whistleblowers after Enron is falling well short of expectations, Moberly says.

The prime example, he says, is the odyssey of Dave Welch.

When he couldn't find work, Welch went back to school.

A classmate - an accounting professor also continuing his studies - encouraged him to apply for a job at the Ohio campus where he worked.

By then, Welch had grown skeptical about job interviews. Employers seemed reluctant to gamble on him, and he figured their rejections were based on his whistleblowing past. When Franklin University in Columbus called about a job on its accounting faculty early last year, he said a prayer.

At the end of his interview at Franklin, Welch was shown in to the office of Paul Otte, the school's president at the time.

Otte is a blunt-spoken long-ago Marine who sits on two corporate boards. He'd heard about Welch. The case, Otte says, reminds him of an article he'd written, a few months before the interview, on the need to challenge corporate authority.

He invited Welch to take a seat across a coffee table in the desk-less office.

"Let me ask you," Otte said. "Did you refuse to certify (the bank's financial statements) or did you sign them and then blow the whistle?"

"I refused to sign," Welch said, unsure which was the right answer.

It was good enough for Otte, whose article preaches this message: "The greatest failures resulting from unchallenged authority have occurred when people reporting directly to the CEO lacked the courage to challenge their boss."

Welch got the job.

Last July - nearly five years after Cardinal fired Welch - the Labor Department's review board ruled in favor of the bank. As a trained accountant, Welch could not have "reasonably believed" that the financial reports he objected to were problematic, the board said.

The ruling came just weeks before Welch started his new job in Ohio, supervising introductory accounting classes.

He makes the rounds of most of those classes, and others on accounting fraud and investigation, offering his own experience as a window into the real-world choices students will be expected to make.

Welch once promised that he would go back to his desk at the bank if God opened the door. But while he has moved on, he and the bank have continued battling.

Soon after the review board ruled, Welch appealed. The case is set to be heard by a federal appeals court in Richmond, Va. in mid-May.

Both the accountant and the bank say they deserve to win. Both say they expect that, whatever the court decides, the case is likely to go on.

Moore, the bank president, acknowledges that Cardinal has spent heavily to defend itself in the case, but says the bank never considered settling with Welch. The stakes are too high to compromise.

"If you don't stand up for what you think's right, then you don't really need to be in this business," Moore says.

At least on that, the two men can agree.

Defining a Whistleblower: The Legal Precedents

CIR WEB EXCLUSIVE REPORT , NOVEMBER 1, 2007

The Whistleblower Protection Act—the modern legal shelter for federal whistleblowers—was last strengthened by Congress in 1994. Since then, the U.S. Court of Appeals for the Federal Circuit—currently the only appeals court that can hear government whistleblower cases—has single-handedly changed the meaning of whistleblower protections. When the Federal Circuit rules on a case, it often creates new standards that whistleblowers must abide by in order to be protected under the law. Below are some of the most frequently cited legal precedents, which critics argue, have made it nearly impossible for federal employees to blow the whistle. Laws currently circulating the House and Senate seek to overturn many of these precedents:

John D. Horton v. Department of Transportation, September 1995

John D. Horton alleged retaliation after complaining to his boss about misconduct in the office. The Federal Circuit said that while misconduct may have occurred, Horton was not protected from retribution because he spoke out to his boss, who he also alleged was involved in the misconduct. The Court said that the purpose of the law is “to encourage disclosure of wrongdoing to persons who may be in a position to act to remedy it, either directly by management authority, or indirectly as in disclosure to the press.” This precedent has been criticized for encouraging employees to first go outside of their chain of command, instead of raising concerns internally.

William E. Willis, II v. Department of Agriculture, April 1998

Willis was not protected from retaliation after uncovering wrongdoing, because uncovering wrongdoing was part of his day-to-day job responsibilities. The Federal Circuit said that even if Willis suffered retaliation for speaking out, he did nothing “for the benefit of the public good” and “did no more than carry out his required everyday job responsibilities.” Critics argue this precedent could subject government employees like meat inspectors or law enforcement officials—whose job it is to uncover wrongdoing—to retaliation if what they uncover is unpopular with managers of political appointees.

Larry Meuwissen v. Department of Interior, December 2000

Meuwissen was not protected from retaliation because while what he spoke out about may have been unlawful, it was a common practice at his agency. The Federal Circuit said that “ a disclosure that is publicly known is not a disclosure.” The purpose of the law, the court said, is to “protect employees who possess knowledge of wrongdoing that is concealed or not publicly known, and who step forward to help uncover and disclose that information.” Critics argue this precedent dissuades employees from coming forward if others already know about the wrongdoing.

Kenneth D. Huffman v. Office of Personnel Management, August 2001

The Huffman case codified precedents set earlier in Horton and in Willis, saying that the employee cannot prove retaliation after blowing the whistle as part of his job duties or to the alleged wrongdoer himself.

John E. White v. Department of the Air Force, December 2004

White faced retaliation after he blew the whistle on gross financial mismanagement at his agency. While his allegations were eventually proven, the Federal Circuit ruled White was not protected because at the time he spoke out, the allegations were “debatable by reasonable people.” This decision softened a related decision whereby the employee must have “irrefragable proof” of gross mismanagement. Critics argue this precedent requires that whistleblowers come forward with an unrealistic and unattainable level of proof.

Garcetti v. Ceballos, May 2006

This U.S. Supreme Court decision regarding a state employee’s case codified the precedent set in Willis whereby an employee is not protected from retaliation if he blows the whistle during the course of his normal job duties. As such, Garcetti limits the degree of public employees’ free speech rights while they are on the job.

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War on Whistleblowers

The war on whistle-blowers
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U.S. officials have long retaliated against employees who speak out, burying the dangers they expose. Now, Congress wants to give whistle-blowers greater protection -- but President Bush vows to stop it.
By James Sandler

Nov. 01, 2007 | If there is any doubt about how the Bush administration treats government whistle-blowers, consider the case of Teresa Chambers. She was hired in early 2002, with impeccable law enforcement credentials, to become chief of the United States Park Police. But after Chambers raised concerns publicly that crime was up in the nation's parks, she was rebuked by superiors and fired. When Chambers fought to regain her job through the legal system meant to protect whistle-blowers, government lawyers fought back, and associated her with terrorists. Despite a multiyear legal struggle, she is still fighting for her job.

Whistle-blowers have faced hostility not only under Republican administrations. During President Clinton's tenure, Bogdan Dzakovic, an undercover security agent with the Federal Aviation Administration, suffered retribution for speaking out about weak airport security -- three years before Sept. 11, 2001. Dzakovic was passed up for promotion time and again, and today, he says, he remains consigned to data entry duties for the Transportation Security Administration.

Every year, hundreds of federal workers sound the alarm about corruption, fraud or dangers to public safety that are caused or overlooked -- or even covered up -- by U.S. government agencies. These whistle-blowers are supposed to be guaranteed protection by law from retaliation for speaking out in the public's interest.

But a six-month investigation by the Center for Investigative Reporting, in collaboration with Salon, has found that federal whistle-blowers almost never receive legal protection after they take action. Instead, they often face agency managers and White House appointees intent upon silencing them rather than addressing the problems they raise. They are left fighting for their jobs in a special administrative court system, little known to the American public, that is mired in bureaucracy and vulnerable to partisan politics. The CIR/Salon investigation reveals that the whistle-blower system -- first created by Congress decades ago and proclaimed as a cornerstone of government transparency and accountability -- has in reality enabled the punishment of employees who speak out. It has had a chilling effect, dissuading others from coming forward. The investigation examined nearly 3,600 whistle-blower cases since 1994, and included dozens of interviews and a review of confidential court documents. Whistle-blowers lose their cases, the investigation shows, nearly 97 percent of the time. Most limp away from the experience with their careers, reputations and finances in tatters.

Legal experts and lawmakers say the system is badly in need of reform. In fact, new legislation to strengthen whistle-blower protections has been moving through Congress this year, with strong bipartisan support, and is expected to come before the Senate this session. But in the latest setback to the system, the Bush White House has vowed to veto the legislation, citing among its criticisms a risk to national security.

"Whistle-blowers are treated like a skunk at a picnic, and there's no excuse for it," Sen. Charles Grassley, the Iowa Republican, said after being provided with details of the CIR/Salon investigation. Grassley has long sought stronger whistle-blower protections and is backing the new legislation toward reform. "It's whistle-blowers who can help us truly understand problems at government agencies. They stick their necks out to speak the truth. They don't take the easy way out."

"It's imperative that there are whistle-blower protections for civil servants when they see something that is wrong," said Lynn Jennings, an attorney who served during the Clinton administration as general counsel for the special whistle-blower court, known as the Merit Systems Protection Board. "They need to know that if they speak out they are going to be protected. Ultimately, it is to save lives, to save money, to save the integrity of the federal government."

To be sure, some cases brought by whistle-blowers are frivolous. Recent cases included one in which an employee sought protection after reporting missing candy bars at a government commissary. In another case, a worker complained about colleagues using a drinking fountain as a spittoon. One government worker was discovered by investigators to have fabricated his entire complaint. Most such cases, however, are weeded out of the system.

But the apparently legitimate cases -- some involving serious issues such as aviation security or tainted meat in the U.S. food supply -- have long been undermined by a lack of resources and case backlogs. And legal precedents created by the Federal Circuit Court of Appeals in Washington -- the sole appeals court that hears and interprets the law for the special whistle-blower system -- have made it virtually impossible in recent years for whistle-blowers to win their cases.

The beginnings of modern whistle-blower protections can be traced to the U.S. Senate floor in April 1951, when the junior senator from California proposed a new law, telling his fellow lawmakers that "it is essential to the security of the nation and the very lives of the people" that employees do not become "a parade of yes-men for administration policies." The senator was Richard Nixon, and his proposed law eventually stalled. It might have faded away forever, if not for the scandal that shook public confidence in the federal government under Nixon's own administration two decades later.

In the wake of Watergate, Congress passed the Civil Service Reform Act of 1978. It established the Office of Special Counsel, with a staff of investigators to look into complaints of retaliation against employees who spoke out. The new law also created the Merit Systems Protection Board, the administrative court with a bipartisan panel of three judges, and it assigned a special federal appeals court to interpret the law in the most complex cases.

But year after year, whistle-blowers complaining of retaliation lost their cases. Some faced insidious tactics by their co-workers and superiors.

Joseph D. Whitson Jr. was a civilian chemist in the Air Force who spoke out about superiors falsifying drug test results. His desk was moved to a room in the basement and his job duties stripped.

Vernie Gee Sr. was an agricultural inspector who sounded the alarm about tainted meat in the U.S. food supply and inspectors taking bribes from slaughterhouses. Gee was beaten up by a plant worker during an inspection -- and then reprimanded by superiors for fighting.

George Randall Taylor, a chief of police at a Navy base in Bermuda, exposed coverups of rapes on the base. He was then forced into a psychiatric hospital.

Before Teresa Chambers was fired from the Park Police, she found used condoms on her car, and someone pepper-sprayed her office door.

"One of the great tricks in whistle-blowing is to get rid of someone for a reason that doesn't seem like it was for whistle-blowing," said Fred Alford, a professor of government at the University of Maryland. "You do all the things you can to get someone to quit, to get them enraged, to get them to act out. Then you can fire them."

Government managers and attorneys almost always argue that measures taken against whistle-blowers were justified because of bad behavior or poor performance by the employee.

"It is usually not that hard for [agencies] to build up a case against somebody if they want to," said Elaine Kaplan, who headed the Office of Special Counsel under President Clinton. "They start looking at your e-mails, they start nitpicking you … It is difficult to prove whistle-blower retaliation."

Details of Chambers' case reflect that struggle.

Prior to becoming chief of the Park Police, Chambers had a distinguished 28-year career in law enforcement. She was a Republican, was eager to serve the nation in the wake of the 9/11 terrorist attacks, and would be the first woman to lead the force. But her pedigree apparently would no longer matter once her public comments created political embarrassment for the Bush administration.

After 9/11, the administration feared terrorist attacks on high-profile U.S. landmarks, and ordered Chambers to double the number of officers standing guard at icons like the Statue of Liberty and those on the National Mall in Washington. But the Park Police force already faced staffing shortages, and Chambers was forced to pull officers who were patrolling other national parks, leaving those areas vulnerable. Drug dealers soon moved in, and rapes more than tripled. In August 2002, when one of Chambers' patrolmen was handling a traffic accident with insufficient backup, he was run over and killed.

In the fall of 2003, when a Washington Post reporter contacted Chambers for a story about the growing peril in the parks, she responded candidly. The Park Police, she told the Post, needed twice as many officers and millions of dollars to cover overtime expenses. She said officers had been working grueling 12-hour shifts, and department morale was plummeting. "My greatest fear is that harm or death will come to a visitor or employee at one of our parks," she said.

Retaliation against her began almost immediately. Chambers' supervisor, Donald W. Murphy, then the deputy director of the National Park Service, ordered her in an e-mail to never again "reference the President's '05 budget under any circumstances" and summoned her to his office. In court documents later filed by Chambers she described how armed federal agents suddenly appeared and surrounded her in Murphy's reception area, and took away her gun and badge. She was then paraded in front of media when escorted to another building to collect her belongings.

During the course of her case, Bush officials and attorneys attacked Chambers from multiple angles, documents show. One high-ranking official at the Interior Department, which oversees the Park Police, said Chambers was no longer "trustworthy" and that she "potentially endangered large numbers of citizens" by speaking to the media. Murphy, her former boss, said Chambers had been "communicating to the criminal elements," signaling to them that national parks had become their "free territory to exploit." A lawyer for the Bush administration asserted that Chambers had made reconnaissance operations easier for "America's enemies in the world."

In a recent interview, Chambers questioned whether raising concerns about an understaffed force angered Bush officials who were talking up policies for securing the U.S. homeland. "Was it just a bad day at the White House where I said we needed more officers, when somebody else was standing at a podium saying we've never been safer?" asked Chambers, who now teaches part-time at Johns Hopkins University and maintains a Web site documenting her case. "I don't know."

One advocacy group that assists whistle-blowers, the Government Accountability Project in Washington, has scrutinized past rulings to determine how whistle-blowers fare. GAP's pioneering work showed that whistle-blowers seldom win. But until now, no comprehensive study has been done on whistle-blower cases. The Merit Systems Protection Board does not specifically keep track of cases, but using records obtained through the Freedom of Information Act, the CIR/Salon investigation reviewed 3,561 whistle-blower cases filed since 1994, when the Whistleblower Protection Act was last revised by Congress. The cases often traversed a costly and drawn-out series of legal steps prior to a decision. During the Clinton administration, in cases from 1994 to 2000, whistle-blowers won only 3.5 percent of the time. During President Bush's tenure, from 2001 through June 2007, 3.3 percent of whistle-blowers won. Most whistle-blowers spent several years fighting in court.

"Whistle-blowers are overly confident in the law, but in most cases there is no recourse," said University of Maryland's Alford, who has studied the issue. "We have this idea of whistle-blowers from television -- from '60 Minutes,' from Time magazine. But most whistle-blowers live and die in anonymity."

"If you are looking at that record and advising [a whistle-blower], I would suggest seeking out a different venue," said Robert G. Vaughn, a law professor at American University who has written extensively about the Merit Systems Protection Board.

Beth Slavet, a former judge on the Merit Systems Protection Board during the Clinton and Bush administrations, said of the court's record: "It has a chilling effect. Why would you bring a case that you don't think you can win?"

The system's track record has left some whistle-blowers wondering whether their cases were tainted by partisan politics. In the 2003 case of Craig F. Johns, a former special agent for the Department of Veterans Affairs, confidential court documents obtained by CIR and Salon reveal such meddling -- by a Republican judge on the court itself.

Johns' case, which alleged forged training records and anti-gay harassment inside his agency, had crawled through the whistle-blower courts for seven years. In 2003, his case reached its final appeal at the Merit Systems Protection Board. At the time there was a vacancy on the bipartisan three-judge court. Johns' case was being heard by a Democrat and a Republican -- two judges with sharply different interpretations of the whistle-blower law. Beth Slavet, the Democrat, was a former staffer for Sen. Ted Kennedy and had an extensive career practicing labor law. Her Republican colleague, Susanne T. Marshall, had never been an attorney or even graduated college, but had been appointed to the court after a long career as a Republican staffer on the Senate committee for governmental affairs.

The two judges had in fact battled for more than three years over the Johns case, the court documents show, clashing over, among other things, how to address Johns' claims of anti-homosexual harassment. Discrimination laws do not cover sexual orientation, but Slavet felt Johns' case underscored such a need and drafted a decision that would grant Johns' case a new hearing. But Marshall disagreed, and she used a procedural tactic to stall the case until an incoming Bush-appointed judge arrived to replace Slavet, whose term was almost over.

Slavet wrote a scathing memorandum to Marshall in response: "It is fundamentally unfair to the parties and destructive of the process to hold up these cases pending my departure and Mr. McPhie's confirmation," Slavet wrote in the m