Overview: More Whistleblowers?

Overview: More Whistleblowers?
New Jersey Law Journal

The following overview looks at some of the employment-law areas where there have been significant developments and where we perceive trends.

These developments and trends come from practical experience and legislative and judicial action.

Not everything is addressed, nor is the examination comprehensive. Some issues, such as insurance coverage, have been omitted because there is inadequate space to identify and discuss such a broad topic. Other issues, such as after-acquired evidence, recently have been discussed in the Law Journal. In addition, laws on sexual harassment, which have been analyzed frequently during the past couple of years, and reductions in force do not require further discussion here.

With those qualifications, employment law practitioners and managers should be aware of developments in the following areas.

Page one of the Law Journal on March 28 trumpeted "Whistleblowers Wins $7M - For Now." (136 N.J.L.J. 1225.) Although in the case discussed in the article the trial judge vacated the jury's award of compensatory damages under the Conscientious Employee Protection Act, N.J.S.A. 34:19-1 et seq., or "CEPA," the case should not go unnoticed.

Statutes designed to protect whistleblowers employees make it unlawful for an employer to retaliate against a worker who discloses or refuses to partake in actions the employee reasonably believes are illegal or against public policy.

Whistleblowers lawsuits in the past generally were limited to protecting government employees. Recent statutes and case law have increased the potential of such claims, and we have seen the increased use of whistleblowers claims in wrongful-discharge cases where the plaintiff alleges that the discharge was caused by his or her objection to a superior's unlawful conduct.

A recent Michigan decision found that a plaintiff alleging that he had been terminated in retaliation for filing criminal charges against a fellow employee stated a claim under the Michigan Whistleblowers' Protection Act. Dudewicz v. NorrisSchmid, Inc., 503 N.W. 2d 645 (Mich. 1993). The court rejected the notion that whistleblowers claims are restricted to instances in which the activity involves the violation of laws closely connected with the employment setting, such as health and safety violations. (The plaintiff alleged that his coemployee had assaulted him).

Whistleblowers statutes are generally construed liberally by courts to accomplish the remedial purpose of those laws. See e.g. Texas Dept. of Human Services v. Hinds, 860 S.W.2d 893, 897 (Tex. App. 1993)(interpreting Texas' Whistleblowers Act).

In addition to CEPA, many discrimination and employment-related statutes have anti-retaliation provisions such as the ADA's prohibition of an employer's retaliation against someone who opposes a practice made unlawful by the ADA or who exercised rights under the ADA.

The specter of attorneys bringing whistleblowers claims against their clients/employers also is becoming more prevalent. Recognized in New Jersey in Parker v. M & T Chemicals, Inc., 236 N.J. Super. 451 (App. Div. 1989), these claims are made particularly problematic because of an attorney's concurrent ethical and fiduciary responsibilities to the client. But see Chilingirian v. Fraser, 504 N.W.2d I (Mich. App. 1993)(attorney's whistleblowers claim against municipality for whom he performed 40 percent of his work dismissed because he was an independent contractor).

As conduct at the workplace becomes increasingly regulated, the potential for whistleblowers and retaliatory discharge claims similarly grows. The parameters are far from defined. One issue which probably will often arise in the context of a state CEPA-type statute is whether it applies.

With so many people employed by multistate and international companies having responsibilities outside the state, New Jersey's CEPA may not always apply to suits brought by New Jersey residents. Conflict and choice-of-law rules will have to be carefully considered. D'Agostino v. Johnson & Johnson, Inc., 130 N.J. 396 (1992).

Arbitration of Discrimination Claims

Since the U.S. Supreme Court's decision in Gilmer v. Interstate/Johnson Lane Corp., 111 S. Ct. 1647 (1991), employers have become increasingly interested in using alternative dispute resolution procedures, particularly arbitration, to resolve employment claims.

In Gilmer, the Court held that the employee's age-discrimination claim under ADEA was subject to arbitration as a result of a New York Stock 'Exchange registration agreement providing that the plaintiff would arbitrate any disputes between his employer and him.

In so holding, the Court dispelled the belief that civil rights/employment complaints could not be made subject to mandatory arbitration. The question remains, however, whether and under what circumstances claims brought under the Civil Rights Act of 1991, the LAD and other anti-discrimination laws can be made subject to arbitration.

Relying on Gilmer, recent decisions have held various claims subject to arbitration. They include, for example, (1) a Tide VII claim of sexual harassment when there was a statute requiring arbitration (Hirras v. National R.R. Passenger Corp., 10 F.3d 1142 (5th Cir. 1994); (2) an ADA claim pursuant to a collective bargaining agreement (Austin v. Owens-Brockaway Glass Container, Inc., 2 A.D. Cases 1649 (W.D.Va. 1994); (3) an age discrimination claim under ADEA and the Missouri Human Rights Act pursuant to an "employment contract" - Hull v. NCR Corp., 826 F. Supp. 303 (E.D.Mo. 1993); and (4) Tide VII and Section 1981 claims of a law firm partner of race, sex and religious discrimination pursuant to an arbitration clause in the partnership agreement (Williams v. Katten, Muchin & Zavis, 837 F. Supp. 1430 (N.D.M. 1993).

There is a growing trend toward acceptance of arbitration as a means of resolving employment disputes. The Civil Rights Act of 1991 and the ADA encourage the use of ADR to resolve complaints. Nevertheless, the trend does not march along unchallenged, nor does mandatory arbitration come to employers without a price.

The EEOC is in the process of preparing an ADR policy statement regarding mediation of discrimination complaints. According to the EEOC's legal counsel, mediation must remain a voluntary process. B.N.A. Daily Labor Report, No. 56, March 24, 1994 at p. A-5. Whether the courts will give the EEOC's policy deference remains to be seen. Plaintiffs also are questioning whether mandatory arbitration is inconsistent with the right to a jury trial and the public policy against discrimination.

Mandatory arbitration provisions can be incorporated into employee handbooks and standard or individually negotiated employment contracts. With the exception of a new employee, however, such provisions require additional consideration. Moreover, if the provision is contained in a handbook, the entire handbook must be contractually enforceable if the arbitration provision is to be enforceable. See Fregara v. Jet Aviation, 764 F. Supp. 940 (D.N.J. 1991).

Another serious question remains. In Gilmer, the Court found that the Federal Arbitration Act applied to the NYSE registration. The FAA provides, however, that "[n]othing herein contained shall apply to contracts of employment of seamen, railroad employees or any other class of workers engaged in foreign or interstate commerce." Some have interpreted this clause to include all "contracts of employment." Because the Court did not decide the issue, employers may find themselves relitigating claims that were submitted to arbitration if a court should later hold the FAA's exclusion applicable to all employment contracts.

Defamation Claims

Increasingly, we are seeing plaintiff employees make defamation claims, often in the context of a wrongful termination or discrimination suit where defamation is one of several causes of action pleaded. False statements that call into question a person's integrity, honesty or competence concerning one's trade, profession or business are slanderous per se.

For example, the plaintiff may allege that defamation has occurred by: (1) references made by a former employer to a prospective employer (Erickson v. Marsh & McLellan Co., 117 N.J. 539 (1990)); (2) an employer's responses to requests for information made by governmental agencies (such as the unemployment division) concerning the reasons for an employee's termination (Rogozinski v. Airstream By Angell, 152 N.J. Super. 133 (Law Div. 1977), mod. on other grounds, 164 N.J. Super. 465 (App. Div. 1979)); (3) statements made by supervisors in the course of pretermination investigations or in the course of terminating an employee (Sodolay v. Edlin, 65 N.J. Super. 112 (App. Div. 1961)); and (4) explanations to coemployee about the reasons for the discharge (Jorgensen v. Pennsylvania R.R. Co., 25 N.J. 541 (1958)).

It will be interesting to see how courts react to these types of claims because their responses may directly affect how and if employers may discipline their employees and obtain information about prospective employees. If defamation becomes easy to prove, the employment at will doctrine will be seriously eroded.

Employers may avoid liability for defamation by proving that the defamatory statements are true, or that they are the opinion of the defendant; however, mixed opinions, which do not provide the listener with the underlying factual assumptions of the speaker, are not necessarily protected. Kotlikoff v. The Community News, 89 N.J. 62 (1982).

Statements made in the employment context generally enjoy a qualified privilege because the defendant has a legitimate interest in the subject matter of the statement and the statement is made to a person having a corresponding interest in the subject. Erickson v. Marsh & McLellan Co., 117 N.J. 539 (1990). The qualified-privilege defense is an affirmative defense.

An employer may lose the protection of a qualified privilege if a plaintiff establishes by clear and-convincing evidence that the privilege was abused. To prove abuse, the plaintiff must show the statements were made with malice or there was excessive publication.

Employee Workplace Privacy Rights

Workplace privacy - too broad to be covered entirely here - is an increasingly important employment issue. This is especially true in New Jersey where the state Supreme Court has recognized that there is not only a state constitutional right of privacy but also a common-law right which applies to the workplace. Hennessey v. Coastal Eagle Point Oil Co., 129 N.J. 81 (1992).

There also have been important legislative initiatives in the privacy area. The issue of privacy seems to be one that has a particular fascination for the American psyche. Although there have been few judicial decisions on employees' rights to privacy to date, we expect this to change.

The right of privacy potentially has far-ranging implications for the workplace. To identify only a few of the areas where a right to privacy is arguably affected: (1) drug testing (which was the Hennessey issue); (2) searches of employee offices, lockers or persons; (3) monitoring employee telephone conversations; (4) the reading of electronic mail; (5) the regulation of off-duty conduct (e.g. anti-fraternization policies); and (6) monitoring employee productivity.

The reading of E-mail recently has attracted media attention. For example, newspapers reported in December 1993, that the Los Angeles Times had reassigned, as a disciplinary action, one of its correspondents after he was discovered reading a colleague's E-mail. The rapid rise in the use of E-mail, and the expectation of many employees that these communications are private, may cause disputes to arise over whether a supervisor may monitor a subordinate's E-mail.

There already are several lawsuits, primarily in California, in which employees are claiming that their employers have breached their right to privacy by reading their E-mail. There have been no reported decisions on the subject, but there was an unpublished California decision rejecting a privacy claim for E-mail messages. Bourke v. Nissan Motor Corp., (1993). In addition to a right of privacy being breached, plaintiffs may well claim that the laws regulating monitoring of telephone conversations also prohibit the monitoring of E-mail, unless one of the identified exceptions apply.

There also is currently pending in both houses of Congress a bill, the "Privacy for Workers and Consumers Act,' which would require that any computer monitoring be relevant to the employee's job performance and that employers inform prospective employees of its monitoring policies and notify existing employees when they are being monitored. Not surprisingly, this approach is consistent with that taken by many courts on various employment issues.

Communicable Diseases

AIDS in the workplace is becoming an increasing reality. Magic Johnson's testing positive for the HIV virus brought home the threat of AIDS, and many people in the nation empathized with Johnson's fellow athletes' fear of bodily contact with an AIDS victim. More recently, the movie "Philadelphia" delivered to the forefront of popular culture the issues of dealing with AIDS in the professional office setting. In addition to AIDS, the disturbing reemergence of tuberculosis adds to a private sector employer's dilemma of how to manage the threat, perceived or real, of disease in the workplace.

Individuals infected with HIV or AIDS fall within the Americans With Disabilities Act's definition of "disabled" and are thus protected from discriminatory employment practices. Employees with other infectious or communicable diseases may be "disabled" if the disease substantially limits their ability to perform major life activities (e.g.manual tasks, walking, seeing, hearing, speaking, breathing, learning and working). The ADA encompasses private sector employers with 25 or more employees, and as of July 26, 1994, also will apply to employers with 15 or more employees.

The ADA provides for restriction of employment opportunities only if continued employment of the diseased employee results in a "direct threat" to fellow employees which cannot be removed with "reasonable accommodation," e.g., permitting the employee sufficient leave to recover from the infectious stage or allowing the employee to work at home.

We have yet to have published judicial decisions defining when a communicable disease becomes a "direct threat." Congressional action on this issue in the context of the food-handling industry, however, does provide some insight on how courts may deal with the issue.

Unfortunately, we have yet to have published judicial decisions defining when a communicable disease becomes a "direct threat." Congressional handling of this issue in the context of the food-handling industry, however, does provide some insight as to how courts may deal with the issue.

In drafting the ADA, Congress rejected an amendment that would have allowed employers to remove employees simply because they had a communicable or infectious disease of "public health significance. " Instead, as enacted, the amendment prohibits a food-handler employer from removing or terminating an employee with an infectious or communicable disease, unless the U.S. Secretary of Health and Human Services identifies the disease as one that can be transmitted through food handling. Notably, AIDS has yet to be defined as an infectious and communicable disease in the food-handling business.

Nor can employers bar or restrict employment of a diseased/disabled employee or applicant on the grounds that the job poses risk of injury to the employee's own health and safety, absent a direct threat to co-employees or individuals serviced by the employment, e.g., health-care patients or food patrons. Employers also are barred from @g noninfected employees who are "associated" with victims of communicable diseases in response to complaints from co-employees that they are at risk of contracting the disease through contact with the associated employee.

The ADA provides for restriction of employment opportunities only if continued employment of the diseased employee results in a "direct threat" to follow employees which cannot be removed with "reasonable accommodation."

According to the example provided in the statute's appendix, an employer is prohibited from firing an employee who does volunteer work with AIDS patients or lives with an AIDS victim simply because of the fear that the employee may contract the disease. Thus, the employer must educate its workforce and seek to minimize the concerns of the co-employees.

Commuting Statute

Many New Jersey employers will need to develop transportation programs for their employees as a result of recent federal and state legislation, Section 182(d)(1)(B) of 42 U.S.C. 751la(d)(1)(B) and N.J.S.A. 27:26A-1 to -14, which requires employers to reduce the number of vehicles commuting to the workplace.

The New Jersey Department of Transportation has adopted regulations, N.J.A.C. 16:50-1.1 to 13.1, requiring employers to develop and implement programs to reduce vehicle trips and miles traveled to the work location by encouraging employees to use public transit, share rides in carpools and vanpools, or use another commuting alternative, such as working at home or beginning work after 10 a.m.

Affected employers are those that have work sites with 100 or more workers per location in 18 counties with severe pollution levels (excluding Atlantic, Cape May and Warren counties). An employer may apply to the department for an exemption if- (1) it employs 100 or more workers for fewer than six months of any consecutive 12 month period or (2) fewer than 33 of its 100 or more employees arrive at the work location during the peak commuting period (6 a.m. to 10 a.m.). There will be no exceptions based on the nature of the business unless the employee petitions the department for an extreme financial hardship waiver, which would allow the implementation of a reduced compliance plan.

The department has defined the average passenger occupancy, or APO, as the number of employees arriving at a work location between 6 a.m. and 10 a.m., divided by the number of vehicles in which they arrive, Qualified vanpool vans, transit vehicles, nonmotorized vehicles, and clean-fuel vehicles are counted as zero vehicles in the calculation.

Affected employers must submit an initial plan by Nov. 15, 1994, documenting the employer's starting APO and specifying the actions the employer is taking to increase its APO to the target APO set by the transportation department. The act establishes a Nov. 15, 1996, deadline to achieve a target APO. The department has established four target APOs, one in each of four distinct geographic areas of the state.

Employers will be required to pay filing fees (depending on size) and civil penalties ranging from $250 to $5,000 per month for noncompliance. An employer that has acted in good faith but is unable to Meet the target APO may petition the department for a waiver.

The act will force employers to think differently about the schedules and work habits of their employees. Employers also will have to consider purchasing vans, the increased risk of vanpool programs (e.g. a single accident injuring several employees), financial incentives for employees who use alternatives, and how to decide who can drive alone and who cannot, to name a few issues. In the long run, this law also may affect where employers decide to locate (e.g., city vs. suburb; New Jersey vs. South Carolina).