(This is part 3 of Federal News Radio’s investigative series, “Discouraged and Disrespected at SBA.”)

Karla Saunders is preparing to sue the Small Business Administration in federal court.

She said she has exhausted every other means to stop agency managers from retaliating against her for blowing the whistle on alleged abuse and for testifying on behalf of another employee against SBA senior officials for mistreatment.

The Office of Special Counsel sided with Saunders, determining she was discriminated against and retaliated against for blowing the whistle. She has written several letters to current and past SBA administrators and senior officials asking for help. But, she said, her situation only has deteriorated.

And as of Feb. 8, OSC decided to launch an investigation into Saunders’ most recent complaints of retaliation from SBA chief human capital officer Kevin Mahoney. Saunders said Mahoney never returned her to her previous position as head of training as OSC instructed.

“He asked me to come back as an advisor and I said, ‘No,'” Saunders said. “But he virtually made me an advisor anyways because he altered the position. They have folks outside of the training division doing training, including a GS-9 who is running training sessions, including one for managers, developing a work plan for training and scheduling meetings with contractors.”

Saunders is a GS-15 with more than 25 years of experience in federal HR training.

Vincent Melehy, Saunders’ attorney, said he will file a complaint on behalf of Saunders in federal court in the next few months.

“My own litmus test for federal court cases is the case is strong and that the damages are significant because the resources required to litigate in federal court are substantially greater,” he said. “Taking an agency to federal court doesn’t happen very often.”

Melehy, who also represents four other SBA employees who are facing similar management reprisals, said SBA’s actions are systemic and the only way to get swift and decisive action is to escalate the case.

Settlement is in the works

Saunders said she has been facing retaliation for about three years. After spending most of her career in human resources and training, SBA managers put her in two positions she wasn’t qualified for: the Office of Faith-Based Initiatives and the Office of Entrepreneurial Development.

When OSC ruled in her favor and ordered SBA to make her head of training again, Saunders said the agency gutted her position by taking away staff and budget.

“My focus is not to fix the overall problem at the agency, but to fix the situation for my client,” Melehy said. “She wants a federal court jury to say she was retaliated against and discriminated against and award her damages for what the agency has done to her.”

But Saunders said she isn’t pursuing the case for money. If so, she would have settled with SBA already.

Melehy confirmed settlement negotiations took place, but they didn’t go so well. He would not offer specific details about SBA’s proposal.

“The settlement negotiations concerned her continued status at the agency, monetary sums and some other details regarding her employment,” Melehy said. “The agency significantly changed its position during the settlement discussions a couple of times and at the last minute when we were close to something, they pulled major provisions out of the offer. And, it frankly was a little bit troubling. It created some trust issues.”

He added that Saunders and SBA recently have gone back to the bargaining table to settle her case, but a suit in federal court remains in the works if an agreement can’t be reached.

“This is about standing up for what’s right,” Saunders said. “It’s about change. It’s about treating employees fairly. It’s about appreciating the talents employees bring and protecting employees rights and not mistreating them for being brave enough to stand up for what’s right.”

SBA’s Jonathan Swain, the assistant administrator for communications and public liaison, in e-mailed responses to questions said, “Many of your questions relate to ongoing personnel matters pertaining to a few employees. Out of respect for individual employee privacy and to ensure the integrity of the dispute resolution process including potential mediation or settlement, it is the agency’s policy to not discuss ongoing or pending personnel matters publicly.”

Swain said more generally that one of SBA Administrator Karen Mills’ top priorities has been investing in the SBA workforce through training and professional development opportunities. He said SBA has put additional budget resources to training. Last year, he said, more than 1,000 of the agency’s employees participated in training and professional development opportunities.

“The administrator and senior management have also shared the results of the [Office of Personnel Management’s annual] 2010 Viewpoint Survey with the agency’s managers, drawing attention to several areas for improvement, including stronger communication between managers and their employees with respect to performance expectations and opportunities for professional development,” he said.

Retaliation is hard to prove

Debra Roth, a partner with the law firm of Shaw, Bransford and Roth and a federal HR expert, said accusations of retaliation are difficult to establish whether before the Office of Special Counsel, the Equal Employment Opportunity Commission or in federal court.

Shaw, Bransford and Roth also produce the Fed Talk radio program on Federal News Radio.

Roth said proving discrimination or retaliation is difficult “because you are proving a person’s state of mind, why they did this to you. You are trying to prove someone’s motivation.”

But if the OSC takes on the case, at the very least, they see something more is going on, she said.

Roth said the fact the agency offered to settle is another sign of how strong the case is.

She said sometimes agencies will settle just so they go away. The settlement offer could be as little as $1,000 or as much as six figures.

“For many employees the offer that comes from the agency is, ‘If we write you a check for X amount of dollars, will you leave?'” Roth said. “Some employees are very insulted by that. ‘How dare they ask me to leave? I have a right to my job. Why are they trying to force me out?’ I think I would feel personally disliked also if my employer asked me, ‘For a sum of money, would you leave?’ There are other employees who are more than happy to leave. They’ve had it. They are eligible to retire or not eligible to retire, but have other opportunities in the private sector and see it as an opportunity to make a new start.”

In Saunders case, she doesn’t want to leave because she likes working at SBA. And even over the past few years when she applied for new jobs, Saunders said she found a new form of retaliation.

“There have been opportunities where I’ve applied for positions and then the situation where I was interviewed, I was asked, ‘Why were you detailed? Why were you reassigned from the position as head of training into a position as senior advisor in the Office of Faith-Based and Community initiatives?’ when I had no experience in it?” Saunders said. “I couldn’t answer those questions.”

She said the agency also is engaging in “character assassination designed to destroy my career.”

SBA’s Swain said Mills is focused on strengthening agency management and oversight.

“She and Deputy Administrator Marie Johns have an open-door policy when it comes to concerns and issues employees may have and are committed to addressing those concerns and issues promptly and appropriately,” he said. “As you know, the administrator has said publicly that she has no tolerance for fraud, waste, abuse or mismanagement of the agency’s programs or resources. If there is an indication that any manager or employee has attempted to abuse agency resources or processes, those individuals and actions will be investigated and appropriate action will be taken based on the result of that investigation.”

End result

As for the other SBA employees who claim retaliation for blowing the whistle, Ethel Matthews, Stevie Gray and Diane Sellers said they want to be returned to their previous positions with previous duties and responsibilities. And they want a better environment to work in.

“Some of the people in there [SBA] are good people, but it’s just that you get some people who are just like, ‘whatever,'” Sellers said. “All I know is HR. This is what I do well. Whether I go somewhere else, this problem is still going to happen. When you select someone and we are waiting for them to come on board, if another agency gives them an offer, they always take that offer. SBA has a bad reputation.”

Matthews is waiting for the EEOC to rule on her complaint. She also contacted SBA Deputy Administrator Johns in late 2010 for a reassignment, but is still waiting to hear from her.

Gray has seen some changes since filing his complaints. While he still is not back in his job as lead employee labor relations specialist, some of his complaints have been addressed, such as being able to work an alternative work schedule.

“I’m not necessarily looking for any monetary compensation,” Gray said. “My character has been assassinated, I believe, and I need to rectify that. Before I move on to anywhere else, I need to get back my reputation. I’ve been a Chief Master Sergeant in the Air Force for quite a few years. I get a lot of respect in that position. I had a lot of respect in this position. I would like to get that back.”

Read more of Federal News Radio’s exclusive “Discouraged and Disrespected at SBA” series.

Part 1: Four employees claim retaliation from SBA managers

Part 2: SBA employees allege fake positions created

Part 3: SBA whistleblowers weigh resolution options

Part 4: SBA’s contracting practices under close scrutiny

Part 5: SBA responds to whistleblower series

Update: SBA assures senator it’s fixing management problems

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