Does an employee whose job functions include the duty to address concerns of wrongdoing in the workplace have grounds to assert a whistle-blower lawsuit under the Conscientious Employee Protection Act (“CEPA” or the “Act”) when the employee is terminated following the report of wrongdoing? By denying certification in April 2012 and letting stand an Appellate Division decision ruling against a terminated employee as a matter of law, the New Jersey Supreme Court, in essence, provided a victory to employers facing such situations.
CEPA is a New Jersey statute that, among other things, prohibits an employer from retaliating against an employee who engages in protected whistle-blowing activities, such as objecting to or disclosing or threatening to disclose to a supervisor an activity that the employee reasonably believes is in violation of a law.
In December 2011, the New Jersey Appellate Division decided White v. Starbucks Corp., A-3153-09T2, and affirmed the trial court’s ruling that an employee has not engaged in whistle-blowing activity under CEPA if the employee’s job-related duties require her to report the whistle-blowing activity in the first place. In that case, the plaintiff, a district manager for Starbucks Corporation, reported concerns to her boss involving violations of company policy and alleged illegal activity. For example, she reported missing merchandise at one store, missing thermometers in the refrigerated food and beverage cases at two stores, and cleanliness issues at yet another location. Thereafter, some of the store managers began complaining about her management style through Starbucks’ helpline. When the regional manager confronted the district manager about the feedback he had received from her reports, she suggested that the complaints were possibly in retaliation for her having reported concerns about their stores.
Following this meeting, the district manager continued to report workplace activities that she believed were in violation of company policy and the law. She claimed that after-hours sex parties were occurring at one store, that a customer had been “physically attacked” by an employee at another store, and that pornographic images were being circulated via e-mail involving two store employees. She also directed a store manager to reconfigure tables and chairs to avoid a violation of the Americans with Disabilities Act.
After the regional manager received additional complaints about the district manager’s conduct from store managers within her district, the regional manager gave her “a choice” to either resign or be terminated. The employee resigned. Shortly thereafter, she filed police reports with the police department in one town regarding the store’s missing inventory and with another town’s police department regarding after-hours sex parties and pornography.
The employee then filed a claim under CEPA. The trial court dismissed her CEPA claim as a matter of law on the ground that the whistle-blowing fell within her job-related duties and therefore did not constitute a protected activity under the Act. Because the plaintiff’s job duties as district manager included managing the operations of the six stores in her district, overseeing management-level employees, making staffing decisions, monitoring safety and security at her stores, maintaining customer satisfaction and product quality, and ensuring that employees adhered to legal and operational compliance requirements, the court concluded that by reporting her concerns to management, the plaintiff had not engaged in protected legal activity; she simply was doing her job.
Given the tension that often can occur in situations involving reports by compliance officers, in-house counsel, and midlevel management, this decision solidifies the view that such individuals have not engaged in protected legal activity under CEPA for simply reporting concerns of wrongdoing to their superiors. Rather, if it is an employee’s job function to report, object to, or challenge possibly unlawful activity, the employee will not have a cause of action simply for having done his or her job and then experiencing an adverse employment action at some point thereafter. Of course, employers contemplating the termination of an employee or any other possible adverse action following a report of wrongdoing should consult with counsel before engaging in such action.