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Whistleblowing has grabbed headlines and the public’s attention over the past few years. The public’s collective outrage over the Enron and WorldCom scandals prompted congressional action and passage of the Sarbanes-Oxley Act of 2002, which not only protects whistleblowers, but also establishes obligations regarding investigation of alleged securities violations and related retaliation. These scandals undeniably influence jurors’ perception of workplace retaliation. Reported jury research reveals potential jurors believe that individuals should be permitted to express and stand up for their beliefs, including in the workplace. Potential jury pool members have also indicated that in a dispute between an employee and a large organization, they are significantly more likely to believe the employee than the company. Perhaps most troubling for employers in today’s environment, approximately half of potential jurors surveyed in one study agreed that it is common for a supervisor to retaliate against an employee who participates in an investigation of unlawful conduct. While recent attention has focused on accounting scandals at HealthSouth and WorldCom, the protection afforded whistleblowers under Sarbanes-Oxley is consistent with retaliation protection employees already possess under federal and state employment laws. For example, Sarbanes-Oxley makes it illegal to retaliate against an employee who provides information or assists in an investigation regarding conduct that he “reasonably believes” violates an SEC rule, or wire, bank or shareholder fraud laws. Sarbanes-Oxley also makes it illegal to retaliate against an employee who files, or participates in, a proceeding related to alleged SEC violations. Similarly, Title VII prohibits retaliation against an employee who opposes any employment practice prohibited by the act, or, who “has made a charge, testified, assisted, or participated in any manner in an investigation, proceeding, or hearing” regarding unlawful employment practices. 42 U.S.C. �2000e-3(a). The Americans with Disabilities Act and Age Discrimination in Employment Act contain similar antiretaliation provisions. See 42 U.S.C. �12203(a) and (b); 29 U.S.C. �623(d). The Family and Medical Leave Act, the New Jersey Family Leave Act, National Labor Relations Act, Fair Labor Standards Act, ERISA and workers compensation statutes also provide antiretaliation protection for employees. For New Jersey employment lawyers, New Jersey’s Conscientious Employee Protection Act protects employees who disclose, object to or refuse to participate in actions they reasonably believe are either illegal or violate public policy. The New Jersey Law Journal has reported that the filing of CEPA suits has doubled since 2001 [177 N.J.L.J. 1097]. New Jersey management-side employment lawyers also frequently litigate claims of retaliation by employees who have complained about acts of harassment or discrimination under the New Jersey Law Against Discrimination. To establish a prima facie case of discriminatory retaliation under the LAD, as well as CEPA and the federal antidiscrimination statutes, a plaintiff must establish that: (1) he or she engaged in “protected activity”; (2) the employer subsequently took an “adverse employment action” against the employee, and (3) the protected activity was the cause of the adverse employment action. See generally, Craig v. Suburban Cablevision, Inc., 140 N.J. 623, 629-30 (1995). Once a plaintiff establishes a prima facie case of retaliation, the employer can overcome the presumption of retaliation by articulating a legitimate nonretaliatory reason for the action. The plaintiff then must show a retaliatory intent motivated the employer’s actions, either indirectly by proof that the proffered reason is pretextual, or directly by demonstrating that the allegedly discriminatory reason more likely than not motivated the employer’s decision. Notably, a plaintiff does not need to prove an actual violation of law to establish a prima facie case. Rather, the employee must have a reasonable, good faith belief that the activity he or she complained about was unlawful. For example, internal complaints of harassment or discrimination are recognized as protected activity. Courts have also recognized complaints about racial slurs, alleged discriminatory hiring practices, and support for another employee’s complaint of discrimination as protected activity. Protected “participation” activities also include serving as a witness in an internal investigation of an EEOC complaint or in a co-worker’s lawsuit. General complaints, however, about unfair employment conditions, boorish bosses and lawful company policies or practices have not been deemed to constitute “protected activity.” A battleground area in litigating retaliation cases is what constitutes an “adverse employment action” necessary to establish the second prong of the prima facie case. With respect to CEPA claims, an adverse action is defined 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.” N.J.S.A. 34:19-2(e). Generally, the action must be a formal personnel action that impacts compensation or job rank. For example, in a Sarbanes-Oxley whistleblowing opinion issued last year, the court found that negative performance evaluations, without tangible job consequences such as a lower salary or reduced job security, are not adverse employment actions. The definition of adverse employment action is more ambiguous in LAD claims. The alleged retaliatory conduct must be sufficiently “serious and tangible” to alter an employee’s “compensation, terms, conditions, or privileges employment, deprive her future employment opportunities, or otherwise have a ‘materially adverse’ effect on her status as an employee.” Hargrave v. County of Atlantic, 262 F.Supp.2d 393, 427 (D.N.J. 2003). What about the case where an individual receives a negative performance evaluation? Or consider a situation where an individual is assigned a change in job responsibilities? Courts have determined that pay reductions, suspensions and reduction of overtime opportunities can constitute adverse employment actions. In contrast, lateral transfers, changes in job assignments or supervisors, and placing an employee on a performance improvement plan were not found to be adverse employment actions. In a recent case in the Law Division, the court rejected an allegation by the plaintiff, a Superior Court Judge, that her reassignment to Criminal Division, which denied her an opportunity to sit in a “better class of cases,” and her loss of the “Executive Judge” title, constituted an adverse employment action under the LAD. Schott v. State of New Jersey, Docket No. L-1157-03 (Law Div. 2004). The third prong of the prima facie case, the causal link between the protected activity and adverse employment action, requires analysis of a number of factors. As a start, the “temporal proximity” of the complaint and the adverse employment action is closely scrutinized. The United States Supreme Court has indicated that the temporal proximity must be “very close.” Clark County Sch. Dist. v. Breeden, 532 U.S. 268, 273-74 (2001). This begs the question, what is very close? Recently, periods from two months to one year have been determined not to suggest a causal link. In contrast, other opinions have suggested that two days to two months is sufficient, standing alone, to establish causation. In one instance several years ago, the Appellate Division held that eight years between the protected activity and the adverse employment was not sufficiently long for the employer to secure summary judgment because a sophisticated employer might very well wait such a long period to retaliate. Courts and juries, however, clearly take other factors into account when analyzing the issue of a causal link between the protected activity and the adverse employment action. Evidence of positive feedback, favorable assignments and encouragement regarding performance occurring in the time period between the protected activity and the alleged adverse employment action, can be compelling enough to overcome the jurors’ potential bias against an employer. Claims of causation are also generally rebutted by proof that the decisionmaker was not aware of the employee’s complaint or other protected activity. Some plaintiffs have successfully argued that they do not need to show actual knowledge by the decisionmaker, but in these cases the plaintiff has been required to demonstrate general corporate knowledge of the complaint and that the decisionmaker was acting on orders of someone who did have knowledge of the protected activity. Other factors are also relevant to establishing a causal nexus. Employment decisions that predate the protected activity obviously do not support a causal link. See, e.g., id. at 272. Further, selection for termination in a reduction-in-force program, based on an application of objective selection criteria, undercuts a claim of causal nexus. Indeed, an employer may reassign, demote or even discharge a poor performing employee without violating the LAD, provided that there is a legitimate business reason for doing so. See Casseus v. Elizabeth General Medical Center, 287 N.J. Super. 396, 405 (App. Div. 1996). On the other hand, a post-complaint termination of an employee for performance problems, where documentation of the performance problems is lacking, may be problematic for the employer. Of course, to minimize exposure to whistleblowing clams, employers can act proactively in a number of ways. Employers, for example, should have employment counsel or experienced human resources personnel review termination and demotion decisions carefully to ensure that there is a legitimate reason for the recommended action. Implementing effective policies and procedures for receiving and responding to internal complaints is imperative. For publicly traded companies, Section 301 of Sarbanes-Oxley requires establishment of procedures for receipt, retention and treatment of complaints. Employers must also establish a zero tolerance approach to retaliation — articulating the policy in communications to employees and publicizing it through managerial training. Employees should also be encouraged to report any complaints about retaliation — and those reports must be promptly addressed. Handling complaints on a confidential need-to-know basis will not only foster a corporate culture where employees are comfortable in raising workplace concerns, but also may effectively screen decision makers from knowledge of the complaint, precluding a later argument that it impacted the decision-making process which brought about the adverse employment action. Employers must also keep abreast of changing whistleblower laws. For example, CEPA was amended effective Sept. 14, 2004, to modify the existing posting requirement and add distribution requirements. The posting and distribution are also required to be in English and Spanish. In sum, while many challenges exist for employers, the correct steps can effectively address the concerns of the whistleblowing employee, and minimize exposure to retaliation claims. David W. Garland is co-chair of the employment and labor practice group of Sills Cummis Epstein & Gross of Newark. Lynne Anne Anderson is a member of the group. The authors thank Karina Fuentes, an associate with the firm, for her research assistance.

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