Proposed Whistle-Blowing Ordinance Packs a Punch

An ordinance making whistle-blowing on fraud against the city safe and potentially profitable for public workers and employees of the thousands of firms that do business with Los Angeles was proposed by Mayor Tom Bradley on Thursday.

City officials said that employees of firms, ranging from international airlines and shipping companies and giant auto manufacturers down to neighborhood hardware stores, would be able to collect money under the ordinance if they could prove in court that their companies were defrauding the city.

In addition, the ordinance would protect such workers from firing, suspension, threats, harassment or loss of promotion. An employer who acts against a whistle-blowing employee could be ordered by a court to reinstate the worker with double back pay, plus interest, damages, court costs and reasonable attorney fees.

Thousands of Firms

Officials said that thousands of firms do business with the city every day. The General Service Department, for example, has a list of about 12,000 companies that supply goods to the city or perform work for it. Los Angeles International Airport deals with hundreds of firms, as does the Harbor Department and the Department of Public Works, officials said.

Mayoral counsel Mark Fabiani, who wrote the proposal, said he knows of no other city that has such a law. A federal law rewarding people who turn in those defrauding the U.S. government has been on the books since 1863, when it was enacted to help stop Civil War profiteering. It was strengthened last year and has resulted in citizen actions against a number of aerospace contractors suspected of trying to defraud the government.

The proposal, announced by the mayor at a City Hall press conference, comes during an investigation of a top city official, Sylvia Cunliffe, head of the General Services Department, who was placed on involuntary leave after she was accused of harassing a department employee who complained of what he considered department improprieties.

The proposed ordinance, which must be approved by the City Council, goes far beyond a simple strengthening of the present city law to protect employee whistle-blowers. The law now “doesn’t have any teeth,” the mayor told a City Hall news conference. City officials said there is no record of any employee seeking protection under the law now, although there have been instances of whistle-blowing, with some of the reports confirmed, through use of a special telephone “hot line.”

Bradley’s proposal, he said, has been under study for a year, developed with the help of the Center for the Law in the Public Interest, which has filed claims for whistle-blowers under the federal law.

Describing the plan, the mayor said: “If, for example, someone sells to the city some plumbing fixtures and those fixtures are never delivered, but the bill is delivered and paid, and an employee of that company calls it to the attention of the city, that contractor can be fined up to $10,000 and can be required to pay back three times the amount of the contract.”

Asked if the proposal was prompted by the Cunliffe incident, Bradley said, “I am not going to talk about the Cunliffe case” because it is under investigation by a committee that he has appointed.

Asked if fraud was widespread, he said: “I am not aware there is any specific case. . . . If there is (even) one case, it is too widespread as far as I am concerned.”

The ordinance would:

- Impose civil penalties of up to $10,000, plus triple damages, for each case of cheating the city, with the money going to the city.

- Give private citizens, including public employees, the power to bring civil actions against suspected cheaters. Mayoral aide Fabiani said the overwhelming number of private citizen whistle-blowers who have taken advantage of the federal law have been company employees or retirees.

- Reward those whose claims are upheld in court with up to 33% of the amount collected by the city, if the city attorney handles the case, or up to 50%, plus reasonable costs, if the citizen takes the case to court. (A judge would determine how much successful whistle-blowers would receive.)

- Make it illegal for employers, including the city, to adopt rules or policies discouraging whistle-blowing.

- Authorize private employees penalized for whistle-blowing to go to court for relief. If successful, the employee would be reinstated in the same job, with the same seniority, plus double back pay, reasonable costs and, in some cases, punitive damages.

Fabiani said an individual suspecting fraud would first file a claim in civil court, alleging the misconduct. This legal step, which Fabiani said is simple enough to be done without a lawyer, would protect the person’s right to a reward. Under the law, the claim would be sealed for 60 days for protection against employer retaliation.

The next step would be for the complainant to go to the city attorney. If the city attorney turned down the case, the whistle-blower could hire a lawyer and pursue the case by filing a lawsuit.

There was no immediate comment from a major business organization, the Los Angeles Area Chamber of Commerce. A spokeswoman said the proposal would be studied before the chamber comments.