Whistleblower Protection Extends to “Watchdog” Employees

The New Jersey Supreme Court issued an important decision this week which is being hailed as a great victory by plaintiff’s employment lawyers.  The issue before the Court was whether so-called “watchdog” employees were entitled to protection under the Conscientious Employee Protection Act, New Jersey’s whistleblower protection statute.  “Watchdog employees” are those whose regular job duties include blowing the whistle, such as an internal auditor, a quality assurance professional, or a retail store manager.  Under a previous decision of the Court, some employers successfully argued that such employees are not entitled to whistleblower protection — they were merely doing their job.  However, in the recent case of Lippmann v. Ethicon, the Court rejected that argument, reasoning that the nature of an employee’s position and job duties does not take away their whistleblower rights.

The Court’s decision upholds the legislative intent behind the whistleblower statute, which is to encourage as many employees as possible to report actions of their employer which are unsafe or illegal.  If your employer is engaging in conduct which you reasonably believe to be reportable or objectionable under the whistleblower law, you should consult with a knowledgeable employment attorney before taking action.

Retaliation Claims Top EEOC’s List of Most Frequently Asserted Claims

According to the Insurance Journal, retaliation claims by employees were the most frequently asserted type of employment claim in fiscal year 2014.  The data comes from the Equal Employment Opportunity Commission, the federal agency which investigates claims of employment discrimination.  In fiscal year 2014, the percentage of claims which asserted that an employer retaliated against an employee for participating in a complaint of discrimination reached an all-time high of 42.8%.  Next on the list were, in order, race, sex (including pregnancy and sexual harassment), disability age, national origin, religion, color, equal pay act, and genetic information.

The EEOC data shows that employment discrimination claims in general are decreasing nationwide.  I see this as a positive development because it indicates that, at least to some degree, employers appear to be getting the message that discrimination is wrong, both from a moral and an economic perspective.  However, the rise in retaliation claims is troubling.  This could indicate that the reason why discrimination claims are in decline is not because there is less discrimination going on, but because employees are fearful of retaliation if they report discrimination.  We would like to see a decline in discrimination coupled with a decline in retaliation.

TD Ameritrade Whistleblower’s Case Dismissed Due to Arbitration Clause

The Third Circuit Court of Appeals, in Khazin v. TD Ameritrade Holding Corp., No. 14-1689, December 8, 2014, recently upheld the dismissal of a whistleblower claim brought by a former employee of TD Ameritrade, because his claim was barred by an arbitration agreement.  The employee was responsible for performing due diligence on financial products offered by the company.   When he discovered that one product was priced in an unlawful manner, he reported it to his supervisor.  She instructed him to analyze the “revenue impact” of pricing the product properly.  He did so, finding that fixing the product would save customers $2,000,000 but cost the company $1,150,000.  The supervisor then told him to not correct the problem.  Thereafter, the supervisor and the Company found a pretextual reason to terminate his employment.

The employee brought a claim under the whistleblower section of the Dodd-Frank Act.  The employer answered that these claims were barred by the employee’s agreement to arbitrate.  The trial court agreed and dismissed the claim.  On appeal, the Third Circuit agreed with the lower court.  Although the Dodd-Frank whistleblower statute contains an “anti-arbitration provision,” the court found that this provision did not apply to this particular employee’s whistleblower claim.  Thus, the plaintiff’s only remedy is to submit his claim to arbitration.

Arbitration is not an ideal forum for whistleblower and discrimination claims.  Besides the fact that there is no jury to hear the case properly, there is no record of the proceedings or any appeal if a mistake is made.  In our view, lawsuits which seek to vindicate a social good, such as eradicating discrimination or corporate corruption, should be exempted from arbitration.  These cases are too important to be kept in the dark.

Whistleblower Fired at Lafayette College

As reported in The Pennsylvania Record, a recently filed complaint alleges that Lafayette College terminated an in-house health inspector just days after he took pictures of unsanitary conditions in the college kitchen.  The employee was responsible, among other things, for monitoring and auditing the College’s food safety practices in accordance with FDA regulations.  After a change in the food services management company, the College’s food safety practices became deficient, according to the plaintiff.  The unsanitary conditions included “dirty coolers, uncovered, unlabeled and undated food, raw products stored above cooked products, onions stored on the floor, rotting fruit and more.”  The employee photographed the kitchen and storage areas on September 1, 2013 and sent the pictures to his supervisors the same day.  The College suspended his employment five days later, and then terminated him after another five days.  The College alleges that it terminated the whistleblower because he shared the pictures with third parties, a charge that the employee denies.

This case is interesting in that the defendant employer does not seem to contest the fact that it fired the plaintiff because of his whistleblowing activities.  Rather, the employer is arguing that the plaintiff blew the whistle to the wrong people.  In our view, this is not much of a defense.  Whistleblowers frequently report their employer’s wrongdoing to third parties; in fact, some employers have argued that “internal whistleblowing” does not trigger whistleblower protection at all.  We will monitor this interesting case and report any new developments.

Summary Judgment Dismissal of Retaliation Claim Reversed on Appeal

In a recent decision of the New Jersey Superior Court, Appellate Division, the court reversed a grant of summary judgment in favor of the employer, PSE&G.  The employee, a female manager in her forties, had made numerous complaints of a “glass ceiling” (my words) at PSE&G to her supervisors and Human Resources over a number of years.  According to the decision, the employee alleged that her supervisor finally had enough of her complaints and began “investigating” her for violations of the company’s expense reimbursement policy.  PSE&G then fired the employee based on its finding that she had, it alleged, violated the policy in certain respects.  The employer filed a motion for summary judgment, arguing that the termination was proper.  The employee argued that the investigation and firing were pretextual; in other words, that these actions were retaliatory and false.  The trial judge agreed with the employer, and the case was dismissed.

The appellate court reversed this decision and reinstated the complaint.  The court noted that the employee had provided evidence that at least one male peer had also “misused” his company expense accounts, without repercussion.  The company argued that this male peer had permission to do so, and that the female employee did not.  However, since questions of fact like this can only be decided by a jury, and not by a judge, the appellate court ruled in favor of the employee.

The takeaway from this case is that discrimination and retaliation claims can rise and fall upon one crucial detail.  If you have experienced discrimination or retaliation at work, you need a smart employment attorney who can identify these crucial facts and use them to their advantage.

Whistleblower Case Involving Belleville High School Football Goes Forward

A whistleblower case filed by a former athletic trainer for the Belleville High School football team is moving forward, after surviving a motion for summary judgment. As reported by the NorthJersey.com, the complaint alleges that the team physician, Dr. Michael Russonella, was attempting to profit from his position by steering student-athletes to his medical practice. The lawsuit further alleges that Dr. Russonella would inject players with “numbing agents” to get them back into action quicker. The whistleblower objected to these and other practices. The team trainer alleged that after she objected to these practices, she was retaliated against in numerous ways, including verbal abuse and harassment, reduction of her hours, and termination of her employment.

As with all cases, the plaintiff’s claims here are only allegations until a jury decides whether or not they are true. We will continue to follow this interesting case.

We recommend that employees who are whistleblowers or potential whistleblowers contact an experienced employment attorney early on in the process, in order to provide them with legal advice and guidance. Blowing the whistle is a major life decision that should not be undertaken without careful consideration of all the ramifications for your career, finances, and emotional health.

NJ Legislators Consider “Bridgegate” Addition to Whistleblower Law

nspired by the Bridgegate scandal, New Jersey legislators have introduced an amendment to New Jersey’s whistleblower statute which would extend whistleblower protections to employees who disclose “any waste of public funds or incidents of governmental abuse or mismanagement.” The bill’s sponsor, Sen. Loretta Weinberg, noted that the atmosphere of intimidation at the Port Authority kept many potential whistleblowers from exposing the four day lane tie-up at the George Washington Bridge last year. Said Sen. Weinberg: “We need to encourage public employees who suspect or witness government abuse or waste to come forward. Extending whistleblower protections will provide state and local workers with the rights they need to safely report government corruption and wrongdoing without fear of retaliation.”

The bill would extend current statutory whistleblower protections to employees who disclose waste of public funds or incidents of governmental abuse or mismanagement. Under the present law, such incidents may not rise to the level of illegality needed to trigger whistleblower protection.

Kudos to our legislature for attempting to extend the rights of whistleblowers in our state. Whistleblowers take huge risks with their careers when they come forward with legitimate complaints about corporate wrongdoing. The state government should be held to the same standards as private industry.

H1-B Whistleblower Files Lawsuit Against Infosys

Whistleblower Jack “Jay” Palmer has sued his former employer, Infosys, in the United States District Court for the District of New Jersey. The complaint alleges that Infosys, an Indian company which operates in the United States, retaliated against Mr. Palmer because he blew the whistle on the company’s alleged widespread abuse of the B-1 visa system.

B-1 visas are issued to foreign nationals who wish to enter the U.S. temporarily for business purposes, such as consulting with business associates, attending conventions, negotiating contracts, or receiving training. Mr. Palmer alleged that Infosys abused this system by having B-1 visa holders perform actual work while they were here, including programming and coding. The complaint alleges that Infosys paid $34 million to the U.S. Government “as part of the largest visa fraud case in American history.” Mr. Palmer alleges that, after he blew the whistle on the visa fraud scheme, Infosys blacklisted him, put him on leave, denied him work, denied him promotions and bonuses, demanded his resignation and denied him re-hire.

A similar case brought by Mr. Palmer in Alabama several years ago, under a different legal theory, was dismissed because the court found that Alabama does not have a whistleblower law which applied to Mr. Palmer’s situation. The present lawsuit is being brought pursuant to the Sarbanes-Oxley act and the False Claims Act.

If a company violates visa laws, it not only hurts American workers — who are replaced with cheaper non-immigrant workers — but competing businesses who adhere to the law and thus incur greater labor costs. Whistleblowers like Mr. Palmer are absolutely essential in bringing unlawful visa practices to light. If you are working at a company which is violating visa laws, please speak to an experienced employment attorney about your legal rights and options before coming forward as a whistleblower. You may be able to “do the right thing” and still be able to work in the career of your choice.

Whistleblowing Nurses Lose Appeal

In a recent unpublished Appellate Division case, Kimera v. Wanaque Convalescent Center, A-5119-T4 (N.J. App. Div. Sep. 19, 2014), the court upheld a grant of summary judgment in favor of the employer in a whistleblower retaliation case. The plaintiffs, who worked as nurses in a health care facility, claimed that they were fired in retaliation for complaining about events which led to the demise of a patient.

The facts of the case, as recounted by the court, indicated that the nurses raised some concerns regarding the circumstances surrounding the unfortunate event to their supervisors. They were fired several months later. During the litigation, the employer introduced evidence that the nurses were fired for disciplinary reasons, and not for their whistleblowing.

The court upheld the dismissal of the case, reasoning that the nurses had not established that they were whistleblowers within the meaning of the law. The law, as interpreted by recent case law, requires a plaintiff to identify which law, rule, regulation, public policy, or code of ethics was violated by the health care employer. These plaintiffs did not meet this burden. Moreover, the plaintiffs could not overcome the employer’s evidence of their poor job performance, which is a legitimate reason for termination.

The moral of this story is that whistleblowers should seek legal counsel and guidance very early into the process . . . even before they blow the whistle. In the absence of this advice, whistleblowers and potential whistleblowers risk losing not only their careers, but their legal claims as well.

Bill Prohibiting Discrimination Against the Unemployed Passes NJ Legislature

Both houses of the New Jersey State Legislature have passed a bill making it unlawful for New Jersey employers to discriminate against the unemployed. The bill prohibits employers from making decisions regarding hiring or terms and conditions of employment based on whether an applicant is unemployed. Employers are still permitted to inquire into an applicant’s prior employment, including the reasons for separation from a former employer. However, employers cannot, in a blanket way, decide to hire only candidates who are currently employed.

In terms of penalties, the bill provides for fines assessed by the New Jersey Department of Labor and Workforce Development. Employers who violate the law may be fined up to $1,000 for the first offense, $5,000 for the second offense, and $10,000 for each subsequent offense.

There is no private cause of action in this law, meaning that private citizens cannot bring lawsuits if they believe the law has been violated. Rather, they would file a complaint with the NJ Department of Labor and Workforce Development. A full text of the bill is available online.