• A New Era for Whistleblowers
  • February 25, 2004 | Author: Anne M. Radolinski
  • Law Firm: Fredrikson & Byron, P.A. - Minneapolis Office
  • Employment law concepts and protections historically mirror changes in societal and business norms. In the wake of the 9/11 investigations and the failures of major business enterprises, women professionals, including here in Minnesota, have emerged as prominent whistleblowers, bringing new focus to legal protections for employees who take a stand on suspected illegal activity.

    Federal employees, such as the FBI agent based in Minnesota who raised concerns regarding the handling of the Moussaoui investigation, are protected under federal law. In addition, the Enron and related troubles resulted in the passage of the federal Sarbanes-Oxley Act of 2002. The Act protects employees of publicly-traded companies and certain related entities against termination or other adverse action for reporting or assisting in an investigation of conduct that the employee reasonably believes to be a violation of the Act. See 18 U.S.C. § 1514A. The aggrieved individual may file a complaint with the U.S. Department of Labor and also has certain rights to bring a private lawsuit. The remedies available to the aggrieved employee are extensive. The Act provides that the individual is entitled to all relief necessary to make the individual whole, including reinstatement, back pay and interest, litigation costs, expert witness fees, and attorney's fees.

    States provide varying degrees of protection for whistleblowers employed in the public and private sectors. Minnesota courts have long recognized protections for whistleblowers, most notably in a seminal decision of some fifteen years ago. See Phipps v. Clark Oil & Refining Corporation, 408 N.W.2d 569 (Minn. 1987). In Phipps, a cashier at a Clark Oil station was terminated when he refused to dispense leaded gasoline into a car that required unleaded gasoline. Phipps believed that to do so would be a violation of federal law and regulations.

    Phipps instituted a civil action for "wrongful termination," among other claims. The trial court dismissed the case, reasoning that Minnesota law allowed the employer to terminate an at-will employee for any or no reason. Phipps appealed. The Minnesota Court of Appeals reinstated his claims, recognizing a "public policy exception" to the at-will rule.

    The Court reasoned that an employer's authority does not include the "right to demand that the employee commit a criminal act," and ruled that an employer is liable if an employee is terminated for "reasons that contravene a clear mandate of public policy." The Minnesota Supreme Court agreed. In the interim between the decisions, our legislature enacted a state whistleblower statute, which has governed such claims ever since.

    The Minnesota Whistleblower Act, Minnesota Statutes § 181.932, et seq., applies to all employees who perform services for hire in Minnesota, and to all employers with one or more employee in Minnesota, including the state and political subdivisions of the state. The Act prohibits an employer from terminating or taking any other adverse action against an employee because:

    • the employee or someone acting on his or her behalf has in good faith reported a violation or suspected violation of any federal or state law, rule or regulation;
    • the employee is requested by a public body or office to participate in an investigation, hearing or inquiry;
    • the employee refuses the employer's order to perform an act that the employee has an objective basis in fact to believe violates any federal or state law, rule or regulation; or
    • the employee in good faith reports a situation in which the quality of health care provided violates the law or a professionally-recognized or ethical standard and potentially places the public at risk.

    Similar to the federal Sarbanes-Oxley Act, the Minnesota Whistleblower Act offers substantial remedies to aggrieved individuals. Individuals may bring a civil action to recover "any and all damages recoverable at law" in addition to litigation costs and attorney's fees. The individual may also seek injunctive and other non-monetary relief from the Court, such as reinstatement and/or an order preventing future violative practices and procedures.

    Whistleblower cases have abounded in Minnesota since passage of the Act, and particularly in recent years. Individuals have brought cases alleging termination or other adverse action based on internal and external reports of safety violations, accounting irregularities, harassment and discrimination, compensation and benefit irregularities, fraud, and licensure violations, among many others.

    Minnesota Courts have, particularly in the last two years, confirmed the breadth of the Act's protections. For instance, in Anderson-Johanningmeier v. Mid-Minnesota's Center, Inc., 637 N.W.2d 270 (Minn. 2002), the Minnesota Supreme Court upheld a whistleblower claim where employees complained about the organization's alleged failure to provide vacation pay to an employee. The report by a secretary-bookkeeper in the Anderson-Johanningmeier case to the Department of Labor did not involve a larger public policy concern but the vacation pay of a single employee. The Court held that such a claim was viable under the whistleblower act and that a report need not involve public policy concerns.

    Events of the last several years have brought whistleblower protections on both the federal and state levels to the forefront of public consciousness. Businesses, as well as individual managers and executives, are encouraged to examine policies and practices regarding employee concerns and complaints brought to the company's attention to ensure compliance with federal law and avoid liability under state whistleblower statutes.