Appellate Court Ruling Could Affect New Jersey Whistleblowers’ Rights

Government regulators enforce a wide variety of laws, from statutes prohibiting employment discrimination to those that deal with securities fraud and other fraudulent activities. They rely on information provided by business insiders, but many employees might hesitate to report potential legal violations by their employers for fear of losing their jobs. New Jersey’s Conscientious Employee Protection Act (CEPA) is one of many whistleblower protection statutes that prohibit retaliation by employers against employees who report their concerns. Proving that an adverse employment action constituted unlawful retaliation can be tricky, and different statutes have different requirements. A federal appellate court recently ruled on a whistleblower claim under the Sarbanes-Oxley Act (SOX). It found that this statute has a more difficult standard of proof than CEPA. If you fear retaliation or discrimination for reporting legal violations in the workplace, reach out to a New Jersey employment lawyer to review your options.

CEPA provides rather broad protection for whistleblowers in New Jersey. It applies to employees who:
– Report alleged violations of a statute or regulation, either internally or to a regulatory agency;
– Provide information or testimony as part of an ongoing investigation into a possible violation of the law; or
– Object to or decline to participate in an activity that they reasonably believe would violate the law or go against public policy.
The statute’s definition of a “retaliatory action” includes termination, suspension, demotion, and other adverse actions.

An employee claiming unlawful retaliation under CEPA must show a causal connection between their whistleblowing activities and the adverse action against them. New Jersey court rulings have held that a plaintiff can establish this element by producing enough evidence to allow a judge or jury “to infer that discrimination was more likely than not a motivating or determinative cause” of the employer’s adverse action. The recent appellate court decision regarding SOX found a much stricter burden of proof for plaintiffs.

Congress enacted SOX in 2002 in the wake of corporate scandals like Enron. The statute imposes various recordkeeping and reporting requirements on publicly-traded companies. Section 806 protects employees who provide information or testimony to the Securities and Exchange Commission, Congress, or other government agencies.

The plaintiff in the recent appellate decision claimed that he resisted pressure from his employer to publish research reports that, he alleged, would not have reflected his conclusions accurately. He claimed that his employer eventually fired him because of his resistance. The trial court instructed the jury that it could find that the plaintiff’s protected whistleblowing activity was a “contributing factor” in the employer’s decision to fire him. The jury found for the plaintiff, and the defendant appealed.

The Second Circuit Court of Appeals vacated the jury verdict, largely due to the instruction regarding retaliation as a “contributing factor.” The court held that the plain language of § 806 required the plaintiff to prove that the defendant intended to retaliate against him because of legally-protected activities. This is a stricter standard than CEPA, which allows juries to infer retaliation as a factor in an adverse employment action.

The decision creates a split between federal appellate circuits. The Fifth and Ninth Circuit Courts of Appeal have ruled that proof of discriminatory intent is not required. A future dispute over SOX whistleblower protection may end up in the U.S. Supreme Court.

Employment disputes that involve alleged retaliation for whistleblowing or other legally protected activities require skilled and knowledgeable legal advocacy. The employment attorneys at the Resnick Law Group represent New Jersey and New York workers in claims for violations of state and federal law. Please contact us online, at 973-781-1204, or at 646-867-7997 today to schedule a confidential consultation to see how we can assist you.

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