Court Finds Employer’s Failure to Investigate Employee’s Alleged Harassment Complaints Could Be Retaliation

A federal district court in Chicago recently held that an employer’s failure to investigate an employee’s harassment complaints could constitute retaliation under the False Claims Act (the FCA), which imposes a civil penalty upon any person who presents “a false or fraudulent claim for payment or approval” to the United States government. Howard v. Urban Investment Trust, Inc. et. al.

In Howard, the plaintiff worked as an accountant for defendant Urban Investment Trust, Inc. (Urban), which served as the property manager for residential and commercial properties owned by the Chicago Housing Authority (the CHA). Co-Defendant Synergy Affiliates, LLC, (Synergy), a professional employer organization, contracted with Urban to provide human resource services to Urban and its employees. Because of this relationship, the plaintiff was on Synergy’s payroll, but Urban and Synergy operated as the plaintiff’s co-employers. During her employment, the plaintiff discovered that Urban was embezzling money from a CHA bank account under its control. When the plaintiff spoke to an Urban manager regarding the missing money, he allegedly directed her to alter the CHA bank account to appear as if the money had never been withdrawn. The plaintiff reconciled the bank account as instructed only once, and when she refused to further reconcile the bank account, Urban hired another employee to perform many of her responsibilities. She then spoke to the Synergy field representative assigned to Urban regarding the alleged fraud and embezzlement and also complained that she was being harassed and pressured to participate in the alleged fraud. Despite indicating that she would investigate the situation, the Synergy field representative failed to do so. The plaintiff later met with investigators from the CHA’s Office of the Inspector General to discuss the alleged fraud and embezzlement and, thereafter, notified the Synergy field representative of the meeting. A short time later, the plaintiff left her employment at Urban because she felt she was being harassed.

The plaintiff subsequently filed a lawsuit against Urban and Synergy alleging, among other claims, retaliation and constructive discharge under the FCA. In denying summary judgment to Synergy, the court held that a jury could find that Synergy’s failure to investigate the plaintiff’s harassment complaints constituted retaliation that ultimately resulted in the plaintiff’s constructive discharge. The court reasoned that under the FCA, an actionable retaliation claim is established if an employee is discriminated against in any manner in the terms and condition of the employee’s employment. According to the court, Synergy’s failure to investigate the plaintiff’s harassment complaints met this standard.

This ruling is significant because plaintiffs may attempt to apply the court’s holding to other statutes that contain provisions prohibiting retaliation by employers. This case, therefore, underscores the importance of conducting a prompt investigation into employee harassment complaints and, if warranted, implementing appropriate remedial measures, as failure to do so could itself be construed as unlawful retaliation.