A unanimous New Jersey Supreme Court has eased the standard for employees bringing retaliation claims in a ruling that has positive and negative consequences for employers.
Battaglia v. UPS arose from an employee's claims that he was retaliated against for complaining to a supervisor about co-worker and supervisor misconduct and for making an anonymous complaint to the corporate HR Manager. Specifically, the employer faced the following claims: (i) a retaliation claim under the state's Law Against Discrimination (LAD); (ii) a retaliation claim under the state's Conscientious Employee Protection Act (CEPA); and (iii) a claim based on an implied contract of employment.
With respect to the discrimination-based retaliation claim, the court ruled that the legal standard under the LAD requires that an employee show that he or she made a complaint in good faith. The court emphasized that an employee does not have to show "actual discrimination against an identifiable victim," which eases the standard for employees filing retaliation claims. However, because the court did not establish a particular test for determining "good faith," this issue may continue to be the subject of employee lawsuits.
In addition, the court ruled that an employee seeking payment for future emotional distress under the LAD must prove that the distress will be permanent by offering an expert opinion in support of his or her claim. Past emotional distress claims under LAD (i.e., humiliation, embarrassment after having been discriminated against) do not require an expert opinion.
With respect to the CEPA retaliation claim, the court determined that the employee's complaints regarded trivial matters (i.e., co-workers' taking extended lunch breaks and charging small amounts of personal items to the company credit card). Therefore, the employee's complaints did not concern the types of fraud-based complaints for which CEPA's protections were intended. Vague complaints, complaints referring to minor workplace misconduct or complaints regarding generalized employee disengagement or low morale are not the types of activity that would trigger CEPA's protections.
However, the court clarified that a supervisor's failure to act upon an employee's good-faith complaint regarding a legal violation, or an employer conducting a limited or cursory investigation, could expose the employer to greater risks of liability under CEPA's whistleblower provisions.
Finally, the court affirmed a lower court's dismissal of the employee's contract claim which asserted that his demotion was a violation of an implied employment contract based on the employer's discipline policies contained in its employee manuals. The employee argued that the employer had breached a contract created by the discipline policy, which contained a statement that employees would not be disciplined for making complaints. The lower court had dismissed the claim in part because of the employer's prominent disclaimers that the manual did not create an employment contract.
Based on the decision, New Jersey employers should ensure the effectiveness of internal whistleblowing and retaliation (whether fraud-based or discrimination-based) policies and procedures to ensure that any employee complaints are properly identified and vigorously investigated. In addition, employers should emphasize employee and supervisor training with respect to equal employment opportunity and whistleblowing.