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Thursday, April 10, 2008

On Law and Loyalty

My article, Citizenship, Organizational Citizenship, and the Laws of Overlapping Obligations, forthcoming California Law Review 2008, is now posted on ssrn. The article explores a deep ambivalence in the law about the role of individual dissent within public and private settings and offers a way to reconcile the conflicting demands of organizational loyalty and legal compliance. It describes the vast inconsistencies that currently exist in the laws of private sector wrongful discharge, public employee First Amendment rights, and the fiduciary duties of institutional players. Broadening the inquiry beyond employment law contexts to legal debates over family privileges, community ties, civic disobedience, and professional roles, I try to bring some analytical clarity to recurring dilemmas regarding following rules while maintaining independent judgment. In particular, I propose a sequenced approach to protecting dissent within groups, forming a reporting pyramid which prioritized internal problem-solving over external opt-outs when feasible. I very much hope to get feedback on the article.

Citizenship/Organizational Citizenship is the first step in a broader project of mine, employing the lens of conflicting obligations to analyze the broad range of laws on retaliatory discharge, immunities, and protections for informants, including post-Enron legislation (SOX) and other recent legislative reforms, such as the 2006 Tax Relief and Health Care Act authorizing federal offices to enhance their whistleblower programs, together with recent Supreme Court adjudication, such as Garcetti v. Ceballos (2006), which limits the First Amendment rights of public employees, and Rockwell. v. United States(2007), which narrows the scope of qui tam claims by employee informants. These questions are facing rapid changes in the statutory arrangements at both the federal and state levels. Current legislation has been approved by the House of Representatives that would cancel the effect of Garcetti. In December 2007, the Senate passed the Federal Employee Protection of Disclosures Act designed to enhance the protection for federal employee whistleblowers by expanding the scope of protected activity to cover complaints within an employee’s chain of command. A 2008 conference between the House and the Senate is attempting to agree on final legislative language. State law has similarly witnessed rapid developments and increased attention to whistleblower protections in the past three years. For example, in January 2008, New Jersey became the twentieth state to pass its own version of the federal False Claims Act, which provides informants with a share of the recovered “bounty.” Less than five years ago, only a handful of states had passed such laws. Moreover, from a litigation perspective, retaliation for reporting misconduct is the fastest growing claim in employment and labor law cases.

Citizenship/Organizational Citizenship tries to bring together the legal questions with recent empirical insights of new governance studies, including the findings of my recent experimental studies with my collaborator, social psychologist/behavioral law-econ professor Yuval Feldman. In our article Behavioral Versus Institutional Antecedents of Decentralized Enforcement: An Experimental Approach, forthcoming Regulation & Governance, we analyze experiments we conducted in United States and Israel, examining the behavior of individuals when confronting workplace unlawful conduct. We find that the likelihood and the manner of reporting will vary depending on the type of illegality and is strongly correlated to perceptions of legitimacy, job security, and voice within the workplace. Comparing illegalities, employees prefer to report clear violations by rank-and-file employees rather than violations by managers. At the same time, external reporting to government or media entities is most likely when violations involve the organization as a whole or implicates top management. The study also finds cultural and gender differences in reporting patterns. Finally, the study provides support for the understanding that social norms are more predictive of social enforcement than expected organizational costs.

Again, I welcome your reactions, ideas and discussion of related projects and areas.

Posted by Orly Lobel on April 10, 2008 at 10:53 PM in Orly Lobel | Permalink

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