2013 was a busy year for whistleblowing and retaliation law in New Jersey. This blog post summarizes noteworthy statutory and judicial developments for employers to consider in the new year.
Pay Equity Amendment
New Jersey amended the Law Against Discrimination (“LAD”) to include a non-retaliation pay equity provision to protect employees who discuss compensation with one another. Under the amendment, an employer may not retaliate against an employee for requesting from another employee, or former employee, information regarding job title, occupational category, and rate of compensation, or the gender, race, ethnicity, military status, or national origin, of any current or former employee, if the purpose of that inquiry is to assist in an investigation into discriminatory treatment regarding pay, compensation, bonuses, other compensation, or benefits. The amendment makes it clear that an employer is not required to release protected information in response to an employee’s request, but only prohibits reprisals against any employee who makes such a request.
An aggrieved employee may seek a range of monetary damages and equitable relief under the LAD, and also may try to assert a claim under Conscientious Employee Protection Act (“CEPA”) for retaliation as a result of objecting to or disclosing violations of the new amendment. For more on the amendment, please see our client alert.
New Jersey has a new law that forbids employers, with exceptions, from requiring or requesting that prospective or current employees disclose user names and passwords to their personal social media accounts. The law specifically provides employees with expansive protections against retaliation. The law does not provide a private right of action, however; rather, for non-compliance, an employer is subject to a modest fine of no more than $2,500. Nevertheless, there is concern that employers which engage in the type of conduct the new law prohibits may violate the CEPA and incur damages in court. For more information on the anti-retaliation protections afforded by the new law, please see our client alert.
Domestic Violence Leave
New Jersey now provides employees affected by domestic or sexual violence with up to 20 days of unpaid leave. Should an employer discriminate or retaliate against an employee or otherwise deny an employee his or her rights under the law, the employer may be subject to a suit in court, as well as a fine ranging from $1,000 to $5,000. For more information on the anti-retaliation protections under the new law, please refer to our client alert.
Sick Leave (Jersey City only)
As of January 24, 2014, Jersey City employers with 10 or more employees must provide paid sick leave, while employers with fewer than 10 employees must provide unpaid sick leave. The law contains expansive anti-retaliation protections and a private right of action; employers also face fines of up to $1,250. For more on the anti-retaliation protections set forth in the Jersey City ordinance, please see our client alert.
Within the past year, New Jersey federal and state courts have issued important rulings in several whistleblower and retaliation cases.
New Jersey Supreme Court
In Battaglia v. United Parcel Service, Inc., 214 N.J. 518 (2013), the court concluded that a plaintiff engaged in protected activity sufficient to support a retaliation claim under the LAD when he allegedly complained about discriminatory comments made about women in the presence of male employees only. Significantly, there was no evidence that the defendant committed “demonstrable acts of [gender] discrimination” against “any particular woman.” Thus, according to the Court, even where a plaintiff did not directly witness or experience discrimination or report discrimination against identifiable persons, he or she may qualify for protection under the anti-retaliation provisions of the LAD.
In Longo v. Pleasure Productions, Inc., 215 N.J. 48 (2013), the trial judge instructed the jury that it could award punitive damages under CEPA against the employer “to punish defendants who have acted in an especially egregious or outrageous manner.” The Supreme Court reversed the lower court’s award of punitive damages for failure to include an upper management charge in the jury instructions. Specifically, the Court emphasized that to assess punitive damages under CEPA a jury must conclude that upper management actually participated in, or acted with willful indifference to, the wrongful conduct (which must be especially egregious).
New Jersey Appellate Division
Over the years, several Appellate Division opinions had suggested there was a “job-duties” exception to qualifying as a whistleblower under CEPA, i.e., an employee may not qualify as a whistleblower where the complaint arose from the employee’s performance of his or her job duties. In 2013, the Appellate Division issued a decision that went in a different direction. In Lippman v. Ethicon, Inc., 432 N.J. Super. 378 (App. Div. 2013), the Appellate Division concluded that CEPA protection is not necessarily based on an employee’s title or the “core functions” of the employee’s position. Rather, according to the court, a so-called “watchdog” employee may assert a CEPA claim so long as “he or she either pursued and exhausted all internal means of securing compliance; or refused to participate in the objectionable conduct.” This decision concerning the protections afforded to “watchdog” employees could have significant implications.
Third Circuit Court of Appeals
In Wiest v. Lynch, 710 F.3d 121 (3d Cir. 2013), the Third Circuit held that a whistleblower does not have to “definitively and specifically” relate his or her complaint to shareholder fraud to make out a claim under Section 806 of the Sarbanes-Oxley Act (“SOX”). In rejecting the “definitively and specifically” standard, the Third Circuit split from the First, Fifth, Sixth and Ninth Circuits. The Third Circuit also diverged from the Fourth Circuit in holding that communications about a potential violation of Section 806 are protected so long as the employee reasonably believes the violation will occur. Applying these standards, the Third Circuit held that plaintiff’s communications about improper business expenditures constituted protected activity. For more on Wiest, please refer to our post on the Proskauer Whistleblower Defense post.