President Bush recently signed into law (P.L. 107-174) the Notification and Federal Employee Antidiscrimination and Retaliation Act also known as the No FEAR Act. The legislation contains four primary provisions. The main provision requires federal agencies that lose judgments, awards, or compromise settlements in discrimination and whistleblower cases in the U.S. courts to pay for the settlements or judgments out of their own budgets rather than the general federal judgment fund. While this provision will not have any direct impact on administrative decisions or settlements, it may discourage agencies from settling court cases as they have free legal representation by the Justice Department. The General Accounting Office is required to study the effects of this provision on the operation of federal agencies and on costs incurred by the Treasury Department in its administration.

There is a reporting provision that requires agencies to send out annual reports to Congress listing, among other things, the number of cases in which the agency is alleged to have violated the any of the covered discrimination or whistleblower statutes, the disposition of each of the cases, the total of all monetary awards charged against the agency from the cases, and the number of agency employees disciplined for discrimination and retaliation. A comprehensive study will take place to determine the best practices relating to appropriate disciplinary actions against employees who commit discrimination or whistleblower reprisal. Agencies will also have to provide enhanced notification to their employees about all applicable discrimination and whistleblower protection laws, similar to that already required under the Whistleblower Protection Act. However, the legislation will not limit the ability of federal employees to exercise other rights available to them under federal law.

The No FEAR Act contains an extension for the federal agencies whose budgets may be adversely affected by reimbursing the Treasury Department, if the amount of the reimbursement is large relative to the annual appropriations. The purpose is to avoid RIFS, furloughs, other reductions in compensation or benefits, or an adverse effect on the mission of the agency. The GAO also is required to study the effects of eliminating the requirement that federal employees exhaust administrative remedies within their agencies before filing complaints with the Equal Employment Opportunity Commission and to study the methods that could be used for ascertaining the personnel and administrative costs incurred by the Justice Department in defending discrimination and whistleblower cases.

While this legislation is obviously well intentioned, the judgment fund has proven to be an incentive for settling court cases although it has had no impact on administrative cases. Another approach would be to charge back agencies for the EEOC administrative judges’ salaries as is now done with court reporters. This would level the playing field and encourage settlements in the administrative process. There could be an exception if the agency prevails on summary judgment, indicating that the case was lacking in merit.

** This information is provided by the attorneys at Passman & Kaplan, P.C., a law firm dedicated to the representation of federal employees worldwide. For more information on Passman & Kaplan, P.C., go to http://www.passmanandkaplan.com. **