Federal whistleblowers are entitled to damages for missed future pay, court rules

Federal employees who face retaliation after blowing the whistle at their agencies are entitled not just to back pay, a federal court has ruled, but also financial compensation for the loss of potential future wages. 

The new precedent, set by the U.S. Court of Appeals for the Federal Circuit in Perlick v. Veterans Affairs Department, establishes that federal whistleblowers can receive compensatory damages if their firings caused harm to their earning capacities in the future. Those workers do not have to prove they had guaranteed jobs lined up, but rather can merely show the reprisal they faced caused defamation that hurt their chances at some future employment. 

Deborah Perlick brought her case after VA fired her in 2017, shortly after she alerted officials in the department that $78,000 was missing from a study on which she was working related to traumatic brain injury. Perlick worked on one-year contracts that had been renewed since 2010, and the Merit Systems Protection Board ruled she was entitled to back pay dated to March 2020 when the project on which she was working ended. 

She pressed for additional compensation—including $500,000 in compensatory damages—saying whistleblower protection laws entitled her to the recovery of future lost earnings. MSPB ruled in 2022 that Perlick was not entitled to that money because she had no guarantee of future employment with VA, given the term-limited nature of her research. 

The Federal Circuit noted it must first clarify whether federal whistleblowers can receive compensatory damages for future lost earnings, and found that they can. When Congress updated whistleblower protection laws in 2012, it added that federal employees were eligible to receive “reasonable and foreseeable consequential damage” and “compensatory damages.” The latter category has long been interpreted to include future lost earnings, the court said, including when reputational harm can hurt employees’ earning potential. 

In Perlick’s case, her lawyers argued her firing interrupted her research, prevented her from publishing on it and damaged her reputation in a way that could have impacted her future employment. Patrick Walsh, one of Perlick's attorneys, said the case could have far reaching impact. 

"The Federal Circuit’s decision in Perlick is an important victory for federal whistleblowers who have been fired in retaliation for coming forward," Walsh said. "In addition to losing their jobs, these whistleblowers can suffer reputational harm, career disruption and other impediments to future employment."

The court noted Congress’ intent in updating whistleblower protection law was to ensure employees are provided “make-whole relief,” which it said included future lost earnings. That interpretation is supported by other laws, the court said, such as Title VII of the Civil Rights Act that allows for damages for future lost earnings in cases of discrimination. 

The court also said MSPB erred when it ruled Perlick was not entitled to compensatory damages because she was not guaranteed a job after her research concluded. Instead, the judges ruled, Perlick needed only to show that a preponderance of the evidence that she was likely to have future employment. That standard does not require certainty, the court ruled, and therefore Perlick—or any future federal employee litigants arguing the reprisal they faced in some way damaged their future earnings—did not need to have a guaranteed job lined up. 

VA argued Perlick was entitled only to back pay, but the court said that form of payment was “separate and apart from” compensation. 

“The back pay award is irrelevant to the inquiry of whether Perlick could establish lost future earnings by a preponderance of the evidence,” it said.

The court remanded Perlick's case back to MSPB for a final decision. 

Walsh said that going forward, the court has confirmed that "lost future earnings are recoverable to make a whistleblower whole, and that a whistleblower does not have to 'guarantee' future employment to prove these damages."