Whistleblower Protection Extended to Post-Employment Activity

The U.S. District Court for New Jersey extended whistle-blower anti-retaliation protections to a brokerage firm employee who reported alleged misconduct internally but did not report it to federal regulators until after his dismissal, according to Bloomberg Law.

The employee sued his former employer, TD Ameritrade, claiming that the company “violated the Dodd-Frank Wall Street Reform and Consumer Protection Act by wrongfully terminating him for complaining to management about alleged securities law violations,” said the article. The employee, who was an investment oversight officer, reported to a supervisor that one of Ameritrade’s offerings was not in compliance with securities regulations. The supervisor told the employee not to make corrective changes and later fired him after he pressed the issue further. The employee only contacted the SEC to expose the situation after Ameritrade fired him.

The defendants moved to dismiss the case, saying that the was not a whistle-blower because he did not blow the whistle until after he was fired. The Court disagreed, holding that “internal reporting of potential violations is sufficient to qualify as a whistle-blower under the Dodd-Frank Act’s anti-retaliation provision.”

Whistleblower protection is afforded under various federal and state laws. If your employer is engaging in conduct which you believe may be unlawful, unethical, or against public policy, contact an employment lawyer to discuss how to best handle the situation.

Court Finds Facebook Post a Breach of Confidentiality Agreement

KEEP IT QUIET MEANS KEEP IT QUIET

We frequently advise clients to be mindful of what they post on social media, particularly when they are involved in litigation with a current or former employer. Unfortunately, Mr. Patrick Snay learned this lesson the hard way, when his daughter’s Facebook status update cost him the $80,000 settlement he obtained in an age-discrimination lawsuit.

Mr. Snay, 69, a former headmaster at Gulliver Preparatory School in Miami, sued his former employer for age discrimination when the school did not renew his contract. The parties settled the matter and entered into a settlement agreement where Gulliver agreed to pay Mr. Snay $80,000. The agreement contained a standard confidentiality clause, requiring that Snay and the school keep the terms and existence of the agreement private.

However, Snay’s daughter, Dana, a college student in Boston, couldn’t resist bragging about the case on Facebook. “Mama and Papa Snay won the case against Gulliver,” she wrote. “Gulliver is now officially paying for my vacation to Europe this summer. SUCK IT.”

Dana apparently had about 1,200 Facebook friends, many of whom are current and former Gulliver students, and news of the post made its way back to the school’s lawyers, who told the Snays they’d violated the deal. Mr. Snay won a Circuit Court ruling to enforce the deal, but a Third District Court of Appeal Judge just overturned that decision. “Snay violated the agreement by doing exactly what he had promised not to do,” the Judge wrote in her decision. “His daughter then did precisely what the confidentiality agreement was designed to prevent.”

Although Snay can appeal this decision to the Florida Supreme Court, the lesson here is quite simple: When involved in legal proceedings, don’t disclose anything on social media. It is not worth it.

NJ Bans Employers From Retaliating Against Employees Who Discuss Their Pay

It is now illegal in New Jersey to retaliate against an employee who talks about his or her salary or those of others in the company if it is related to litigation.

On August 29, 2013, Gov. Chris Christie signed a law that makes it a violation of the New Jersey Law Against Discrimination (“LAD”) for an employer to retaliate against a worker who discloses information regarding job titles, occupational categories and compensation rates of other employees if the information disclosed is to be used in any legal action alleging discriminatory treatment in pay, benefits or bonuses.

The amendment to the LAD protects employees who divulge pay and benefit information when asked to by anyone who has a good-faith belief that they are subject to pay discrimination, but does not protect those who merely want to find out what other employees are paid and what benefits they receive. The LAD makes it illegal to compensate employees differently based on their membership in a protected class, such as gender, race, disability status, national origin, sexual orientation, or religion. Employers, of course, are still able to base pay decisions on merit.

Under the new law, employees are not protected from an adverse employment action unless the discussion of salary is somehow related to gathering information about possible discrimination. Because it can be difficult to ascertain whether an employee’s motives for discussing pay and benefits are protected under the new law, we strongly recommend that competent employment counsel be consulted.

US Supreme Court Narrows Definition of “Supervisor” for Discrimination Claims

In the recent decision Vance v. Ball State, the United States Supreme Court has made it more difficult for workers to sue their employers for workplace discrimination. The Court’s 5-4 decision narrowed the definition of the term “supervisor” for purposes of discrimination law.

For the last fifteen years or so, employers have been liable for the conduct of their supervisory employees when the supervisors engage in specific, tangible acts of discrimination. During this time, there has been a lot of litigation over the proper definition of the term “supervisor.” Some courts have employed a broader definition, some a narrower one.

The EEOC — the federal agency charged with enforcing the anti-discrimination laws — has published guidance which adopts a broader definition. According to the agency, supervisors are employees who exercise “significant direction over another’s daily work.”

This definition is now out the window. According to the Vance case, the law of the land is now that “supervisors” are only those management-level employees who “are empowered” to take “tangible employment actions” against lower-level employees, “such as” having the authority to hire and fire.

The conservative majority of the Supreme Court handed a victory to employers in this case. It will now be much harder for victims of discrimination in the workplace to hold their employers accountable for actions of supervisory employees. The purpose of these anti-discrimination laws, i.e., to end discrimination in employment, has been undermined.

SEC Whistleblower Gets Hefty Settlement

The Securities and Exchange Commission is paying almost $600,000 to resolve a whistleblower retaliation lawsuit by a former employee. The employee was fired after raising concerns about computer security and his boss’s inappropriate relationships with several females in the office. The interesting thing about this lawsuit is that, apparently, sexual harassment was one of the complaints that the employee had raised. Although sexual harassment is clearly against the law, it is usually not the basis for a whistleblower claim. This case shows that a whistleblower is not limited to reporting the usual misdeeds, such as fraud, corruption, or public health dangers. Personal conduct of a supervisor is also fair game if such conduct rises to the level of unlawful discrimination.

Regus Group Liable for Retaliation Against Whistleblower by Traub Law

A federal court jury in San Diego recently awarded over $4.6 million dollars to a former employee of Regus Group, the office rental company. The plaintiff in the case, Denise Steffens, was employed as a building manager but was fired in July of 2007 after reporting wage-and-hour violations. Ms. Steffens alleged that after she complained to her supervisors that Regus’ staffing plan didn’t allow her to give her staff legally required lunch and rest breaks, her boss gave the order to “get rid of her.” Ms. Steffens alleged that she had good performance for the prior 11 years, but after blowing the whistle, her employer wrote her up for poor job performance and gave her impossible sales goals.

You can see from this case that coming forward as a whistleblower takes a lot of courage. You never know what an employer may do. Some employers will retaliate and some, like Regus, will do it in a rather obvious way. Some will not. Fortunately, there are laws out there that protect whistleblowers, and attorneys, courts, and juries who are willing to see that these laws are enforced. Congratulations to San Diego employment law attorneys Hadsell, Stormer, Richardson & Renick LLP on their victory.

Government Attitudes Towards Whistleblowers Slowing Improving

National Public Radio‘s Morning Edition reports that the federal government’s attitude towards whistleblowers has been slowly improving over the last few years. In the not too distant past, employees who blew the whistle on government fraud or waste risked losing their jobs or even their entire careers. However, after years of lobbying by good government groups, the U.S. government passed a whistleblower protection enhancements law last November. The new law makes clear that federal employees can challenge policy decisions without losing their jobs, and also directs agencies to appoint an ombudsman to help whistleblowers understand their rights and to protect them from retaliation.

I believe these incremental changes reflect a growing consensus among government and employers both public and private, big and small, that whistleblowers perform an important public service by exposing fraud, waste, unethical conduct, and criminality — often at the risk of their jobs and future careers.

Whistle blowers should be encouraged, not punished. The federal government’s movement in this direction is a positive sign.

Whistleblower Rights Trump Discretion of the Court

The Appellate Division of the New Jersey Superior Court, in Zehl v. Elizabeth Board of Education, et al., recently overturned a lower court’s appointment of a discovery master in a case involving whistleblower rights, on the principle that requiring the plaintiff to pay for an expensive litigation process would undermine equal access to the courts and deter litigants from pursuing these types of claims.

This case involved Catherine Zehl, who worked as a cook for the Elizabeth School District. While on the job, she reported a teacher’s misconduct to the school. Ms. Zehl claimed her employer retaliated against her for speaking up by placing her to work in another school. While at the other school, Ms. Zehl complained about mice, gnats, cockroaches, and feces in the kitchen and stock room. She alleged she was retaliated against again when the school board eventually informed her that they were not renewing her contract.

Ms. Zehl subsequently filed a lawsuit against the school board under the Conscientious Employment Protection Act (CEPA), alleging that she faced illegal retaliation. The lawsuit resulted in voluminous and repeated motions being filed by both parties during the discovery stage. Ultimately, the trial judge appointed a discovery master to address and resolve the parties’ discovery-related disputes and motions. The discovery master was appointed at the rate of $450 per hour, to be divided between the parties. The judge stated that a discovery master was warranted due to the “rancous and contentious nature” of the litigation. Ms. Zehl objected to using a discovery master arguing that there were no extraordinary circumstances warranting the appointment.

In reaching its decision to overturn the appointment of the discovery master, the Appellate Division reconciled two important policy objectives. First, the Court analyzed the continuing need for tools and procedures to ensure that litigation is conducted in an orderly and efficient manner. Second, the Court analyzed the safeguarding of judicial access for litigants prosecuting remedial actions pursuant to CEPA. The Court concluded that public policy evinced in remedial litigation, such as those brought under CEPA, must be at the forefront of any decision involving the appointment of a discovery master. The Court found that public policy would be thwarted if litigants bringing these lawsuits had to face significant costs. The Court stated that significant costs can deter litigants, who often have limited resources, from pursuing CEPA claims.

We believe that the Appellate Division made the right call. Employees who have faced retaliation for exposing misconduct should not have to face an additional burden of paying for an expensive discovery master. This decision is significant as the Court clearly understood the important policy objectives of CEPA and acted to ensure that the path to prosecuting these types of claims remains easily navigable.

Former Police Detective Receives Nearly 1 Million in Settlement

Former Jackson Police Officer, Detective Howard Bogan, recently received a settlement of nearly 1 million dollars from Jackson Township. Bogan’s complaint in the Superior Court of New Jersey alleged that after he was called to testify against two officers charged with perjury in connection to a narcotics case, other officers in the police department began to harass him. Bogan states that the other officers repeatedly called him a “rat,” “snitch,” and “untrustworthy.” One instance of harassment referenced in the complaint included Bogan coming into work one day and finding a toy mouse which represented a “rat.” Bogan claimed that due to the unlawful, illegal, and unethical conduct of his fellow officers, he suffered mental stress including panic attacks, anxiety attacks, and post-traumatic stress disorder. The harassment started in November 2007 and by August 2008, Bogan stated that he could no longer take the harassment and go into work. Bogan remained out of work from August 2008 to September 2009.

Bogan’s complaint resulted in Jackson Township signing a settlement in the amount of $950,000. It is reported that Jackson had to borrow $500,000 from the Ocean County Municipal Joint Fund in order to obtain payment for Bogan.

Jackson’s Mayor, Michael Reina, comments that hopefully this is a lesson learned for Jackson and other towns, and harassment and bullying is not something any township would condone.

Choose Your Forum Wisely

The Appellate Division of the New Jersey Supreme Court recently affirmed a dismissal of a plaintiff’s complaint based on the Conscientious Employment Protection Act (CEPA). The plaintiff, David Schmidt, alleged retaliation after he blew the whistle against his employer, Celgene Corporation, and CVS/Caremark Corporation, one of Celgene’s distributors. The primary reason why the Appellate Division affirmed the dismissal of the complaint was based on the fact that Mr. Schmidt first filed his lawsuit in Texas, and when he received an unfavorable ruling on the choice of law, he then filed in New Jersey. Mr. Schmidt’s actions appeared to look like “forum shopping,” a practice the courts strongly frown upon. Further, filing the CEPA claim in Texas first made Mr. Schmidt miss the one year filing deadline in New Jersey.

It is unusual that Mr. Schmidt filed his CEPA claim in Texas before considering New Jersey as New Jersey law provides stronger CEPA protections for employees. When there is more than one acceptable venue for a claim, it is important to keep in mind strategy and evaluate which jurisdiction your claim is more likely to prevail in.