Legal Issues and Recent Developments, Published by the Lurie Law Firm LLC

Posts Tagged ‘Conscientious Employee Protection Act’

Employee Not Entitled to Unemployment for Gross Misconduct, Even If Following Orders

Monday, April 5th, 2010

According to a recent unpublished Appellate Division decision, an employee is not entitled to unemployment benefits where she engaged in gross misconduct, even if she did so at the direction of her employer. 

In Fore v. Board of Review, Docket No. A-0830-08T2 (App. Div. Apr. 5, 2010), the employee-nurse was terminated by Robert Wood Johnson University Hospital (the “Hospital”) after she admitted that she had made various notations and assessments on a patient’s chart, even though she had not actually seen that patient.   The employee acknowledged that standard nursing practices prohibited making notations without seeing a patient, that she recorded verbatim the doctor’s assessment of the patient, and that she simply did what she was instructed to do.  In this regard, she claimed that her actions were consistent with the procedure that was in place in the department.  She further testified that she had complained about this procedure to various supervisors, but that she was criticized if she did not complete the report as directed.

Despite this testimony, both the Board of Review and the Appellate Division held that the employee was not entitled to unemployment benefits.  Initially, the court noted that employees are not eligible for unemployment if they are terminated for “‘gross misconduct.”   Here, the employee created records which falsely indicated that the employee and Hospital had provided certain benefits; the Appellate Division held that this constituted gross misconduct, and possible criminal violations.

Thus, the primary issue before the court was whether the employee should be excused because she was following orders.  The Appellate Division found that there was ample evidence to support the Board of Review’s decision to deny the employee unemployment benefits: 

There is substantial evidence in the record to support the findings of the Appeal Tribunal and, in turn, of the Board of Review. The Tribunal added that claimant had her professional obligations not to follow improper or inappropriate instructions from people (including the chief radiation technician Foley) who were not nurses. The Appeal Tribunal also expressly added it did not “doubt that the claimant was told to complete the charts as she had been” or that her “workload was possibly too much for one person to handle.” It stated that “[n]one of that[,] however, relieves the claimant of the obligation to act in a manner consistent with her licensure,” or excuses the indication on medical records “that she had performed the assessments” which she had not.

Therefore, the record also includes sufficient evidence that claimant misrepresented that she performed professional assessments that she had not and, that by doing so, she violated a section of the New Jersey Code of Criminal Justice, N.J.S.A. 2C:21-4.1. There is no requirement or policy requiring a conviction to preclude unemployment benefits, cf. In Re Election Law Enforcement Comm’n, __ N.J. __ (2010) (use of campaign funds not proper to defend indictment for crime), and even if Robert Wood Johnson or its staff was not deceived or mislead, we can take notice that pain assessment reports can be reviewed to evaluate regulatory compliance and insurance recoveries.  Accordingly, the record supported the denial of benefits under N.J.S.A. 43:21-5(b) for “gross misconduct.”

After finding that there was substantial evidence of misconduct, the Appellate Division rejected the employee’s “Nuremberg Defense” that she was simply following improper — and potentially illegal — orders.

Were we to accept claimant’s argument that she should receive unemployment benefits when discharged for falsifying a report, or because she did not “deceive or mislead any person as to information . . . concerning the patient,” we would be permitting wrongdoing and suppressing the truth about misconduct by encouraging employers to retain wrongdoers who follow their supervisors’ unlawful commands——and would be acting inconsistent with public policy established in legislation such as the Conscientious Employee Protection Act, N.J.S.A. 34:19-1 to -8, and our common law jurisprudence. See, e.g., Tartaglia, supra, House v. Carter-Wallace, Inc., 232 N.J. Super. 42 (App. Div.), certif. denied, 117 N.J. 154 (1989). Stated differently, if we took the position advanced by appellant we would encourage employers to retain wrong doers as a means of avoiding unemployment compensation losses.

Finally, the court noted  that, while the employee was not entitled to unemployment benefits, she might be entitled to recover against the Hospital for alleged violations of the New Jersey Conscientious Employee Protection Act (“CEPA”), which prohibits employers from taking retaliatory action against employees who complain about violations of law or public policy.  See here for more information regarding CEPA.

Although the Appellate Division’s insistence on personal responsibility may be laudable, in practice it may put an employee in an untenable Catch-22.  An employee has the option of objecting to perceived illegal conduct but, if the complaint falls on deaf ears, the employee’s options are limited, and unpleasant.  1.  Continue to follow orders, with the understanding that the employee may be personally liable for illegal activity and, if then fired, not be able to receive unemployment benefits; 2. refuse to follow orders, and suffer potential retaliation, including ostracism and termination for insubordination; 3.  quit and try to find another job (which may be difficult in the current economic situation).  An employee who is facing potential retaliation or dismissal for raising concerns of illegal activity should therefore seriously consider consulting an attorney before the situation devolves into the one at issue in Fore.  

The employer in Fore may have also won a Pyrrhic victory.  Although it prevailed on the unemployment compensation dispute, it has received a judicial ruling that one of its employee engaged in potentially illegal conduct,  and it appears that it is facing a fairly substantial CEPA claim, with the employee claiming that the Hospital routinely directed her to routinely engage in this misconduct.  Further, the opinion indicates that the Hospital may have routinely and falsely billed insurance companies, and the government, for work that was not performed (possibly in violation of the False Claims Act, as well as other statutes).  In this regard, it is unclear exactly what happened to the employee’s complaints, and whether they were ever elevated and/or whether the Hospital ever investigated these issues.  As a result, the Hospital may have also put itself into a Catch-22: if they didn’t terminate the employee for improper activity, it may have looked like they endorsed the conduct; by terminating her, however, they may have bought a CEPA claim, as well as a judicial opinion publicizing potential illegal systemic activity.  This is  a strong reminder to employers to take complaints seriously, and to act on them promptly, in the hope of avoiding precisely this type of situation.

A copy of the Fore decision is available from the author, upon request.

Overview of New Jersey’s Conscientious Employee Protection Act

Sunday, March 28th, 2010

A few weeks ago, I commented on a recent New Jersey case concerning New Jersey’ Conscientious Employee Protection Act (CEPA), and the need to allege that the employee was either terminated or “constructively terminated,” that is, that the employer made the employee’s working conditions so intolerable that the employee feel that he or she had no recourse but to quit.

A few readers have asked for more information regarding CEPA. 

Brief Overview

It is often difficult for employees to put the public good ahead of their own interest and to complain about their employer’s potentially illegal activity. Recognizing this difficulty, and the importance of ensuring lawful business conduct, New Jersey enacted the Conscientious Employee Protection Act (CEPA), N.J.S.A. 34:19-1 et seq., which has been described as one of the most far reaching whistle-blower protection laws in the county. It protects employees from retaliation for disclosing illegal conduct, testifying before a public body and for refusing to participate in an unlawful activity

Disclosure of Illegal Activity

CEPA prohibits employers from retaliating against an employee because the employee discloses, or threatens to disclose, an activity, policy or practice of the employer that the employee reasonably believes is in violation of a law, or a rule or regulation. CEPA protects disclosures made to either a supervisor and to a public agency or official.  An employer also cannot retaliate against an employee who raises concerns about potential illegal activity by a company with whom the employer has a business relationship.  Licensed or certified health care professional are also protected under CEPA for raising concerns about improper quality of patient care.

Not all complaints are protected, however. The complainant must reasonably believe that the conduct is in violation of law. CEPA also protects employees who disclose, or threaten to disclose, fraudulent or criminal activity, including potential fraud against shareholders, investors, clients, patients, customers, employees and other persons. Mere disagreement with management, however, is not protected by CEPA.  Unreasonable complaints are also not protected.  While the complainant is not required to be correct, he or she must demonstrate a reasonable belief that the conduct at issue was illegal or fraudulent.

Testimony Before a Public Agency

CEPA also prohibits an employer from retaliating against an employee who provides information to, or testifies before, any public body conducting an investigation or hearing into a potential violation of law by the employer or its business associates. Protected activity also includes investigations and hearings into potential deception or misrepresentation by the organization to shareholders, investors, clients, patients, customers and other individuals. CEPA also protects licensed or certified healthcare professionals who provide information to, or testify before, a public body investigating the quality of patient care.

Objection and Refusal to Participate

CEPA also prohibits employers from retaliating against employees who object to, or refuse to participate in any activity, policy or practice which the employee reasonably believes:

(1) is in violation of a law, or a rule or regulation promulgated pursuant to law or, if the employee is a licensed or certified health care professional, constitutes improper quality of patient care;

(2) is fraudulent or criminal; or

(3) is incompatible with a clear mandate of public policy concerning the public health, safety or welfare or protection of the environment.

Mere disagreements with management decisions are not protected; the whistle-blowing activity in question must serve a public interest, and should be able to point to some law or public policy that is being violated. The employee must also have a reasonable basis for his or her allegations.

Retaliatory Action

CEPA protects employees from discharge, suspension, demotion or other adverse employment action affected the employee’s terms and conditions of employment. Courts have found that a series of abusive conduct by supervisors, veiled death threats, multiple disciplinary investigations and job transfers can constitute retaliatory action.

Civil Proceedings

Complainants must file civil actions within one year, and have the right to a jury trial.  Damages may include reinstatement, back pay, front pay, emotional distress, punitive damages and attorneys fees.

Other Statutes Prohibiting Retaliation

There are, of course, other statutes that also prohibit retaliation.  For example, under both federal and New Jersey discrimination laws, employers cannot retaliate against employees who complain about unlawful discrimination or harassment.  Other laws also have anti-retaliation and whistleblower provisions, including Sarbanes-Oxley (“SOX”) and the recently enacted Patient Protection and Affordable Care Act of 2009.

No Economic Damages In CEPA Case without Actual or Constructive Discharge

Sunday, February 28th, 2010

Under the New Jersey Law Against Discrimination (NJLAD), victims of discrimination may be entitled to  front or back pay (economic damages) if their employer fires them or makes their working conditions so intolerable that a reasonable person would feel that they have no option but to quit (a “constructive discharge); they are not entitled to damages if they voluntarily quit.  Last week,  the Appellate Division ruled that victims of retaliation under the New Jersey Conscientious Employee Protection Act (CEPA) likewise cannot recover economic damages unless they were fired or constructively discharged.  Although DuPont may have avoided liability, the case is a stark reminder that retaliation is all too common in response to complaints, the need for employers to take these allegations seriously, and juror sympathy to workers who have suffered retaliation.

In  Donelson v. Dupont Chambers Works, the New Jersey Appellate Division threw out a jury verdict of over $1.2 million ($724,000 in economic damages and $500,000 punitive damages) under the New Jersey Conscientious Employee Protection Act, because plaintiff never argued that he was constructively discharged.   In Donelson, the plaintiff claimed that his employer and co-workers retaliated against him after he complained about potential  Occupational Safety and Health Administration (OSHA) violations.  More specifically, .he  claimed that Dupont imposed restrictions on him, not imposed on others, concerning his use of vacation, sick time and personal leave days; falsely ccused him of failing to complete required employee training; accused him of failing to attend some of the safety meetings in the summer, even though DuPont had always excused him from such summer meetings in the past; falsely accused him of being lazy and described him in an internal memorandum as “not [one of] our best performers”; ordered him to notify a supervisor when and where he was going to lunch, a rule not imposed on other operators; and described him in an e-mail as a “very high maintenance” employee over whom management should maintain a “watchful eye.”

The plaintiff alleged that the retaliation escalated over time.  He claimed that he was wrongly disciplined for failing to perform required tasks.  He also alleged that DuPont failed to investigate other hotline complaints that he raised. Plaintiff also claimed that his employer required him to undergo a humiliating mental status examination, which resulted in an eight week mandatory disability leave of absence based on the clinician’s conclusion that plaintiff was too emotionally stable to work.  After plaintiff returned from the two month leave in June 2004, he claimed that this mandatory leave made him feel “kicked to the curb” and worthless, and that he  worried about new allegations.

Plaintiff filed suit in February 2005, and went on a voluntary leave of absence in January 2007, from which he never returned.  Instead, he retired from DuPont in December 2007.  At trial, plaintiff claimed that, since that time, he earned $50,000 to $60,000 less per year than he had earned at DuPont.

At trial, the jury found that DuPont had retaliated against plaintiff in violation of the New Jersey Conscientious Employee Protection Act, resulting in economic damages of $724,000.  The jury found that there was no emotional distress damage, but also awarded $500,000 in punitive damages.

The Appellate Division vacated this entire award.  CEPA defines “retaliatory action” as “the discharge, suspension or demotion of an employee, or other adverse employment action taken against an employee in the terms and conditions of employment.” The Appellate Division also recognized that retaliation is not limited to a single discrete action, but may include “many separate but relatively minor instances of behavior directed against an employee that may not be actionable individually but that combine to make up a pattern of retaliatory conduct.”  Nevertheless, the Appellate Division held that, because plaintiff never claimed that he was forced to leave his job, DuPont could not be responsible for the economic damages resulting from plaintiff’s voluntary resignation.  The Court did recognize, however, that plaintiff would have been entitled to emotional distress damages, even if he had not been forced out.

Interestingly, the trial court judge suggested that the facts might support a constructive discharge claim. 

It is likely that this decision will be appealed to the New Jersey Supreme Court.