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.
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.
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.
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.
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.
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.