The Public Policy Tort; setting aside the At Will default rule, sometimes firing is tortious Flashcards
Public Policy Exception
Protects employee from termination, even in at-will relationships (most courts apply this to demotion and discipline too).
- (COMMON LAW) Traditional “protected activity” categories when public policy was recognized:
o Refusing to commit unlawful acts (perjury)
o Exercising a statutory right (filing a medical or legal claim)
o Fulfilling public obligation (jury duty)
o Whistleblowing
o Waiving a non-waivable right
o Catch all? (employer conduct that shocks conscience and has important effect on public) - State Public policy protection runs along a spectrum of jurisdictions, from most protective (Illinois & NJ) to least protective (New York does NOT have public policy exception).
Need a source of PP:
some limit it to statutes or constitutions.
others broader and allow admin decisions and common law.
Limitations to the theory that courts have split on:
when an employee blows the whistle or refuses to participate in unlawful conduct, does the employee have to be right or does it only have to be reasonable?
most courts say reasonableness is enough.
b. “Public” must be violation of something public (i.e. affects 3rd parties)
* Reporting of an internal violation does not count UNLESS it affects the public
c. State of Mind does employee have to actually be correct when he blows the whistle, or is belief enough?
* Broad view subject belief is enough
* Middle view (MAJORITY) reasonable belief is enough (most jurisdictions)
* Strict view an actual violation of public policy must have occurred for the employee to be protected
d. State v. Federal: because it is public policy “tort,” it deals with state law claims.
* Could a believed violation of federal law also be protectable? most courts say yes, but depends
e. Does this apply to discharge or discipline?
Only wrongful discharge or other “adverse employment actions” (demotion)
f. Internal vs. External: some courts make whistleblowing protections depend on whether employee does it internally or externally.
* Some favor internal reporting (NJ – CEPA) while other favor external (MN)
g. “Substantial” public policy: technical legal violations are not enough there is not a sufficient “public” violation
h. NOTE –public policy does NOT protect an employee’s conscientious performance of his duties to his employer this is consistent with the idea that a public policy must concern the public interest, not just a private matter between a worker and employer.
* The employer is free to structure its internal operations and reward or punish those who serve it private interests.
* When, however, actions taken against employees have effects on third parties, it is appropriate to constrain the employer’s freedom of action.
o Treatment of attorneys. They need to maintain confidentiality so will not protect them when the whistle blow.
VI. “Source” of public policy is IMPORTANT many jurisdictions will only derive policy from state constitutions, statutes, sometimes regulations, could be ethical codes/conduct codes
Statutory Public Policy Exception
STATUROY PUBLIC POLICY EXCEPTION
* Specific anti-retaliation protections were precursor but today many states have enacted general public policy statutes.
* NJ – CEPA
o Categories of protected activity
Whistleblowing, refusals, testimony or participation
o Sources: (Broad approach)
Laws,
Rules
Regulations
Fraudulent or criminal conduct
Clear mandate of PP (catch-all)
o Reasonable or must be right?
“reasonably believes”
o Internal v. external whistleblowing
Both, BUT internal exhaustion requirement for external
- MN – Whistleblower act
o Categories of protected activity
Whistleblowing, refusals, testimony or participation
o Sources: (Fairly Broad, but no catch-all)
Federal or state law
Common law
Rule
NO catch-all
o Reasonable or must be right?
“good faith” for whistle blowing. “objective basis in fact” (might be slightly higher than reasonable belief) for refusals
o Internal v. external whistleblowing
Both, NO internal exhaustion requirement for external
NJ:
PP sources include broad laws, rules, regs, etc and any “clear mandate” of PP.
Employee must “reasonably believe” violation.
MN:
* PP sources limited to federal/state law, common law, no PP catch-all.
Employee must have “good faith” for whistleblowing & “objective basis in fact” (similar
to reasonable belief) for refusals.
Common Law Exception Cases
Fitzgerald:
Standard articulation of the 3 standard elements:
* Engagement in a protected activity (must be a clear and substantial public policy)
* Discharge of employee (some states allow for demotion/discipline)
* Causal connection between the conduct of protected activity and the discharge.
(i) The protected conduct must only be a determinative factor (does NOT have to be the “but for” cause of the termination)
Disagreement is not a PP.
Possibly testifying is a PP.
look to impact on society.
Reasonable or Right?
Rackley
Plaintiff alleges termination based on informing resident of care facility of receipt of funds. Plaintiff claims she was entitled to tell resident under administrative regulations.
a. In this jurisdiction, the public policy claim must be tied to “clear and substantial” ** public policy.
i. The recognized sources of public policy are limited to 1) statutes, 2) the constitution, and 3) judicial rulings ** there’s a fear of opening the floodgates for public policy claims if they are not grounded in particular sources.
b. While administrative codes expressly state that nursing home residents have the right to manage their own affairs, administrative regulations alone do not constitute expressions of clear public policy.
* Public policy must be clear and substantial.The administrative rules here were clear, but not substantial. The court was not willing to find public policy in administrative regulations.
* Some states allow federal statutes, regulations, common law, while others do not.
Statutory PP Case
Maimone:
CEPA claim brought by detective against PD for them not enforcing the prostitution laws. The Code of Criminal Justice constitutes a clear mandate of public policy concerning the public health, safety, and welfare. Employee sent letter regarding specific businesses. Employee was later transferred
CEPA c(1) - Plaintiff did not need to show that the police department’s failure to prosecute prostitution laws (contravening Code of Criminal Justice) was actually incompatible with a clear mandate of public policy rather, π only needed to show that he had an objectively reasonable belief of such incompatibility.
CEPA c(3) – plaintiff need not show violation, but must show a reasonable belief that employer’s policy is incompatible with “clear mandate of public policy regarding the health, safety, welfare, or environment. (C(3) is a catch-all)
* This was merely an internal questioning of an adverse public policy decision, and yet that was enough for the court here.
(a) The CEPA statute essentially took this case out of the normal public policy analysis.
(i) NOTE – Maimone was not even terminated (most courts require termination for a common law public policy tort), but the court found the requisite adverse employment action (transfer) as required by the statute.
(ii) NOTE – π may have to choose between a common law public policy claim and the CEPA statute.
Dissent was worried about breadth of claim said cop can always challenge employer’s discretionary decisions.
Federal Approaches
No Fed Law for Whistleblowing but can use Sarbanes Oxly (SOX) or False Claims Act (FCA) or Whistleblower Protection Act (WPA)
SOX 4 factor Test:
* Employee engaged in protected activity or conduct;
* Employer knew of the protected activity;
* Employee suffered an unfavorable personnel action; and
* Protected activity was a contributing factor in the unfavorable personnel action.
FCA:
also has a robust whistleblower protection, in that it prohibits retaliation for lawful acts done by an employee in furtherance of an action under the FCA or other efforts to stop FCA violations. Any employee who suffers an adverse employment action for furthering of FCA actions is entitled to all relief necessary to make the employee whole.
* FCA – offers bounty of 15-30% of monies recovered for those who tell government of false claims.
Dodd-Frank: protects reports to the SEC.
WPA: only covers Fed. employees
Protected activity definition is broad;
Reasonable belief standard;
Any disclosure is ok (internal or external & doesn’t say who external needs to be);
Violation of law, rule, or regulation.
* Also, like CEPA catch-all, covers gross mismanagement, abuse of authority,
or substantial/specific threat to public health/safety.
WPA limitation (narrow)
Such a disclosure is not allowed if prohibited by law and subject to specific executive order to be kept secret
* This is a balance. On one hand Congress sees need to be broad, but on other hand also sees how things might need to be kept secret for national security reasons.
* Twist here: The agency rules DO NOT COUNT as this limitation. Unless a LAW or Executive Order specifically prohibits disclosure then the limitation does NOT apply.
Cases for Fed Approach
Genberg
Maclean
Genberg
Involves SOX claim arising from two emails that address shareholder voting rights and insider trading. SOX covers any reports related to federal securities law in publicly traded corporation. SOX covers internal and external reports.
- SOX gives whistleblower protection to employees of publicly traded companies. SOX isn’t as protective as CEPA, but its protection is quite broad.
- Reports to be covered protected activity under SOX need not identify an exact federal securities violation, rather they need only implicate those to be sufficient.
- “But for” causation does NOT have to be shown the protected activity only need be a contributing factor (which basically means any factor which tends to affect in any way the outcome of the decision)
- There is a “would have fired them anyway” type of defense but it is narrow and the standard is clear and convincing (so pretty rare that it will apply).
(a) NOTE – SOX protects only employees’ disclosures to federal regulatory and law enforcement agencies
(b) NOTE – SOX also only reaches publicly traded companies.
Maclean
Whistleblower Protection Act (WPA) (WPA applies to most federal government workers) Whistleblower disclosures that are specifically prohibited by a regulation are not also specifically prohibited by law.
o Court holds that the limitation in agency rules does NOT apply. Court drives home the separation of powers, says the fix is with Congress or the President.
