WaMu ordered to pay fired manager

Seattle-based Washington Mutual has been ordered to pay more than $1 million to a former employee who was fired after expressing concerns about risky construction loans.

Administrative Law Judge Gerald Etchingham, in a 53-page decision released Tuesday, said Theresa Hagman faced an "abusive work environment" after repeated attempts to notify supervisors about her concerns. He agreed with an earlier decision that her firing amounted to retaliation.

Hagman worked at WaMu for three years in Chatsworth, Calif., as a construction-loan disbursement manager.

She began warning about default risks in December 2003 after noticing an increase in "short-funded" loans, those in which borrowers were not given enough money to finish construction.

WaMu fired her about three months later, saying it was eliminating her position. She then sued under the whistle-blower-protection provisions of the 2002 Sarbanes-Oxley Act.

The award includes $642,941 in front pay equivalent to more than three years' salary and bonus; $125,515 in deferred compensation such as stock options; and $305,748 in attorneys' fees and costs.

In an earlier decision by the Occupational Safety and Health Administration (OSHA), WaMu was ordered to pay Hagman $167,902 in back pay, interest and attorney's fees, bringing the total to more than $1.2 million.

Etchingham gave WaMu until Jan. 4 to appeal the decision with the Department of Labor's Administrative Review Board.

Decision studied

On Friday, WaMu said it was reviewing the decision and would not say what action it might take.

"WaMu does not tolerate retaliation of any kind," the company. "We are committed to maintaining an inclusive work environment where all employees can work together comfortably and productively."

Hagman's New York attorney, Marc Susswein, said the decision marks the first time that a whistle-blower has successfully sued for front pay under the Sarbanes-Oxley Oct. Whistle-blowers previously have received back pay and reinstatement, Susswein said.

Appeal made

In OSHA's May 2005 ruling, the agency ordered WaMu to rehire Hagman. She appealed that portion of the ruling a month later, saying reinstatement was impossible because of animosity between her and the company. She wanted to be awarded pay she would have earned instead.

"I knew that if I went back and I ever had a credit issue, or even if some of the people were still there, that I would be at risk for the rest of my career with that organization," Hagman testified in April. "I knew that I could not trust them."

Etchingham agreed, citing managers' hostility toward Hagman and the "likelihood of a dysfunctional work environment upon reinstatement." Etchingham said WaMu had refused to "accept the consequences of its actions to prevent any further sabotage" of Hagman's career.

Hagman, who lives in California, joined Countrywide Financial a year ago as a first vice president of fulfillment-resource operations, making $115,000 a year with a bonus capability of 15 percent.

At WaMu, she made $127,000 a year, with bonuses and incentives of about $50,000.

Amy Martinez: 206-464-2923 or amartinez@seattletimes.com