In 1986, the New Jersey Legislature enacted the Conscientious Employee Protection Act ("CEPA"), to protect employees from retaliatory actions by employers when an employee "blows the whistle" on an employer's illegal or harmful activities.
The New Jersey Supreme Court recently held in Abbamount v. Piscataway Twp. Bd. of Ed., that employers are liable under CEPA for the actions of supervisory employees without regard to fault; i.e. employers will be held liable even if they do not "consent" or have knowledge of the CEPA violation by their supervisor.
The Court in Abbamount also held that in addition to the liability an employer incurs for its supervisor's action, it may incur additional liability if it fails to exercise reasonable care in preventing retaliation. You may recall that this is similar to the analysis the Court used in the sexual harassment case of Lehman v. Toys 'R' Us. One step which the Court encourages employers to take is the adoption of a preventative policy; e.g. in employee handbooks and elsewhere.
The Abbamount decision also provides that punitive damages can be awarded under CEPA. A jury will be asked to make a determination on whether an employer participated in the CEPA violation or exhibited "wilful indifference." A failure to adopt a preventative policy may constitute such indifference.
