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Court Gives Whistleblowers New Remedy

January 26, 1999
Related Topics: Wrongful Discharge, Featured Article
Your company is being investigated for Medicare fraud. One of your employees was at the courthouse ready to testify in grand jury proceedings, but he was not called as a witness. The grand jury indicted the company and two of its former officers. A criminal trial is forthcoming and the employee is once again expected to testify. Although barred from participating in the affairs of company, the indicted officers want to send the employee a message by having him terminated—he is, after all, an at-will employee. What is the risk of going along with their plan?

It is always risky to take action against a whistleblower (an employee who discloses information that he believes proves the employer guilty of corporate wrongdoing) and the US Supreme Court recently increased that risk. A whistleblower who has been discharged can sue for damages under a number of state and federal laws—now including a little known Reconstruction Era civil rights law that prohibits conspiracies to injure federal witnesses in their person or property (42 USC 1985(2)). And this new risk is not to the company, but to those who play a role in the conspiracy.

Property right in employment.
Federal courts have disagreed as to whether an individual has a "property" right in employment, particularly when the employment relationship is "at-will." At-will employees have no expectation of continued employment. Some courts thought this meant that such employees had no constitutionally protected interest in continued employment and, therefore, could not have suffered a property injury when discharged.

The Supreme Court explains that a constitutionally protected property interest is not a requirement under Section 1985(2), the gist of which is protection for federal witnesses not deprivation of property. The harm to the employee is essentially third-party interference with an at-will employment relationship. Such harm has long been a compensable injury under tort law, and the Supreme Court saw no reason to ignore this tradition. Those who conspire to terminate a federal witness’s employment may be sued for damages.

Encourage whistleblowing.
Prudent employers will set up mechanisms to find out about internal wrongdoing while there is still time to correct the situation and decrease their exposure to liability. This can be done through a corporate code of conduct that sets up procedures to protect the legitimate whistleblower. This does not mean that a whistleblower can never be disciplined; employees can be disciplined or discharged as warranted. Discipline can never be based an employee’s participation in protected proceedings. Since unlawful motive is the key, employers must be careful not to create an appearance of unlawful motive.

Cite: Haddle v. Garrison, US SCt Dkt. No. 97-1472, 136 CCH Labor Cases 58,497, decided December 14, 1998.

Source: CCH Incorporated is a leading provider of information and software for human resources, legal, accounting, health care and small business professionals. CCH offers human resource management, payroll, employment, benefits, and worker safety products and publications in print, CD, online, and via the Internet.

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