I. INTRODUCTION
A little recognized provision in the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) is designed to provide additional protection from retaliation for financial services industry employees.
Section 1057 of the Dodd-Frank Act prohibits banks, savings and loans and other consumer financial services providers from retaliating against an employee for providing information to an employer, a regulatory agency, or law enforcement agency about a reasonably perceived violation of a consumer financial protection law or a regulation of the Consumer Financial Protection Bureau (CFPB).
II. WHISTLEBLOWER PROTECTIONS FOR FINANCIAL SERVICES INDUSTRY EMPLOYEES
Section 1057 of the Dodd-Frank Act creates a new whistleblower protection and cause of action for employees who perform tasks related to the offering or provision of consumer financial products or services. These provisions prohibit retaliation against employees who provide information to their employers or the government (Federal, state or local) that they reasonably believe constitutes a violation of the Consumer Financial Protection Act of 2010 or any other provision of the law that is subject to the jurisdiction of the CFPB. Protection also extends to whistleblowers who (1) testify in any preceding, resulting from administration or enforcement of the Consumer Financial Protection Act of 2010 or any other law or rule of the CFPB; (2) file, institute or cause to be filed or instituted any preceding under any Federal consumer financial law; or (3) object or refuse to participate in any activity, policy or practice that the employee reasonably believes to be in violation of any law or rule of the CFPB.
Section 1057 employs a burden-shifting framework that is generally favorable to employees. To prevail in a Section 1057 whistleblower action, the employee must prove by a preponderance of the evidence that the protected activity was a contributing factor in the employer’s decision to take the adverse employment action. The employer may only avoid liability by proving by clear and convincing evidence that it would have taken the same adverse employment action in the absence of the employee’s protected conduct. Remedies for violations of Section 1057 include reinstatement of the employee to his or her former position; recovery of backpay by the employee; and recovery of compensatory damages and attorney’s fee and litigation costs, including expert witness fees. Determination that a complaint is frivolous or has been brought in bad faith may result in the recovery of a reasonable attorney fee, not exceeding $1,000 to be awarded to the prevailing employer. Any employee who believes that they have been discharged or otherwise discriminated against by an employer in violation of Section 1057 must file a complaint with the Department of Labor within 180 days of the occurrence of the retaliatory adverse employment action.