Whistleblowers Gain More Protection

The shrill blast of the whistleblower has caught the attention of the New Jersey Supreme Court, which has issued an increasing number of rulings to redefine workers’ rights and the employer-employee relationship. Whistleblowers are workers who find — or who think that they find — wrongdoing by their employer, and who report it to state or federal authorities.

Attorney John Sarno pays close attention to each blast of the whistle, knowing full well that members of his organization, the Employers Association of New Jersey (EANJ), will turn to him for his advice on how best to respond to the latest court ruling and whether it will affect day-to-day operations.

Sarno, a labor law attorney for over 20 years and president of EANJ, says each succeeding opinion helps to clarify workplace rules and regulations as defined by the New Jersey Conscientious Employee Protection Act (CEPA). He considers it to be the most powerful whistleblower law in the nation.

“What we try to do is fold the law into good practice,” says Sarno. A July 25 Supreme Court ruling, which focused on a complaint filed by a part-time contractual worker fired by Prudential Casualty and Insurance, has expanded the CEPA definition of an employee to include part-time contractual workers.

Sarno examines how this ruling will affect New Jersey employers during an hour-long audio conference, “Understanding the Expansions of New Jersey’s Whistleblower Law,” on Friday, August 24, at 10 a.m. Register at www.eanj.org. The talk covers issues including what employees the law protects, the type of conduct that is legally protected, how the legislature has expanded the law, and what training and supervision the prudent employer will undertake.

In D’Annunzio v. Prudential Insurance Co., the Court found that workers hired as independent contractors may be entitled to CEPA’s protections. This broad interpretation has included an expansive definition of who is a CEPA covered “employee.” In the 5-1 decision, the Supreme Court found workers entitled to CEPA’s protections include more than those traditionally thought of as employees.

The number of whistleblower suits against employers in New Jersey has doubled between 2001 and 2006, according to Sarno, a reflection of the increasing body of case law and a warning to employers that they must be vigilant and adopt policies and practices that encourage open and honest dialogue and minimize the adversarial confrontations that increasingly lead to litigation.

Whistleblower suits have resulted in the highest jury awards among all types of employment litigation, according to Sarno, who says the average settlement is $250,000.

New Jersey’s whistleblower law has more “teeth” than the federal law and than those in other states, according to Sarno:

Few hurdles. It provides private right of action, which allows the aggrieved employee to file suit in Superior Court, while many other states require the whistleblower to first exhaust administrative remedies through the Department of Labor. That government buffer between employer and employee can weaken some outcomes, according to Sarno.

Larger penalties. Because New Jersey’s law provides for a jury trial, there is a likelihood that compensatory and punitive damages could be greater;

More time to file a complaint. In New Jersey the employee has one full year to file suit directly in Superior Court. Federal law allows a six-month period from the time the employee is fired.

No need to prove hardship. Federal law requires the whistleblower to provide evidence of economic hardship as a result of being fired. The New Jersey law does not.

Demotions included Under the New Jersey law, cause to file suit is expanded beyond firing. Adverse action can also be defined as a demotion or an undesirable transfer. “Retaliation is defined in a broader sense,” Sarno explains. “That’s what makes the New Jersey statute quite unique.”

Though vulnerable, employers can take several proactive measures to protect themselves against suits from whistleblowers, according to Sarno. They can update and revise the whistleblower law as required by the state, with wide distribution to all employees. They can ensure that supervisors are role models of integrity and high ethical standards, and can train them to be good listeners.

While a complaining employee can be annoying, Sarno counsels that these workers not be ostracized, because any one of them could be a genuine whistleblower. Rather, he suggests, treat that employee as your ally, probe what he has to say, engage in a prompt investigation if necessary, and keep that employee in the loop.

Instead of going it alone, a supervisor with an unhappy employee, complaining of any sort of wrongdoing by the company, should consider getting advice from legal counsel, and should bring in the human resources department.

Going forward, if a decision is made that is adverse to the employee, there must be a plausible explanation.

“The most difficult part of this statute is that the whistleblower has to have an objective, reasonable belief — some knowledge that’s objective and reasonable — but who defines it, that’s the problem, that’s the difficulty here,” says Sarno.

“The whistleblower does not have to be correct,” he says. “Let’s say I’m a billing processor at a large physician’s practice and I’m submitting bills to the federal government for payment for treating older people under Medicare. I believe the bills are inaccurate or inflated, or we’re billing for a procedure that doctor didn’t perform. I could be wrong about that, but the court says I don’t have to be precise, the only things I need are facts and the knowledge that a reasonable person would believe constitutes wrongdoing.

“The court must decide whether the employee has this belief before going forward,” says Sarno. “The challenge employers have is probing the employee and knowing whether he understands what he is talking about.”

Sarno says that it is common for employees to believe that wrongdoing is going on, and that the employer should try to correct it. The biggest challenge, he says, is “distinguishing between the chronic complainer seeking to preserve his job by cloaking himself with whistleblower protection from the employee who honestly and genuinely thinks his employer is engaging in wrongdoing.”

Sarno expects that CEPA will continue to undergo rigorous argument and debate. “It is such a prominent and powerful statute,” he says. “It is a part of almost all wrongful termination suits.”

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