Employer's distribution of a memo tying reduction in hours to employee's wage complaint supports a New Jersey CEPA claim

by Saul Ewing Arnstein & Lehr LLP

[author: Ruth A. Rauls]


Earlier this month, the New Jersey Appellate Division issued a decision, which found that sending employees a memo that hours would be cut because one of the staff brought a wage-and-hour claim, could constitute an "adverse employment action" by the employer supporting a whistleblower suit. The Appellate Division reversed the trial court's grant of judgment dismissing plaintiff's claim under the Conscientious Employees Protection Act ("CEPA"), and also remanded the issue of whether New Jersey's Wage and Hour Law is preempted by federal law, in Flecker v. Statue Cruises, A-4390-10 (decided November 14, 2012).


According to the court’s opinion, Howard E. Flecker was employed by Statue Cruises as a deckhand and was covered by a collective bargaining agreement ("CBA") under which employees were to be paid for overtime at a rate of time and one-half of the employee's straight time for hours worked in excess of forty-eight hours per week. Flecker filed a complaint in state court, alleging that the CBA's overtime provision was contrary to the New Jersey Wage and Hour Law. After the complaint was filed, a company executive issued a memorandum informing employees about the lawsuit. The memo identified Flecker as the named party in the lawsuit and advised that in an effort to mitigate damages, the company would not schedule union employees to work more than forty hours per week until the issues raised in the complaint were resolved. The memo further identified Flecker as the brother of a union officer, indicated that the union might support the wage suit and questioned whether the union's involvement in the litigation was in the best interest of the employees, in light of the fact that now the employees would "lose a day's pay (or more) every week."

Reaction from Flecker's coworkers was immediate and significant, with some individuals personally confronting him. Some urged Flecker to drop the suit, while others started ignoring him. One worker allegedly told Flecker that he was "ruining everybody's career," affecting everyone financially and that he wanted to burn the complaint "on the boat with everybody." Flecker alleged that the stress of his daily encounters with co-workers after the memo was distributed forced him to resign from his position. Additionally, Flecker alleged that his hours were reduced after the memo was issued. Based on these allegations, Flecker filed an amended complaint adding a CEPA claim.

In granting defendant’s cross-motion for summary judgment, the trial court found that the employer's issuance of the inflammatory memo was not an adverse employment action because it was not a completed personnel action that impacted plaintiff's employment. The court also found that the reduction of plaintiff's hours of work was not retaliatory and the purported confrontations with co-workers, while creating a hostile work environment, were not sufficiently egregious to support a CEPA claim. The Appellate Division reversed. In so doing, it held that the universe of possible retaliatory actions under CEPA is broader than discharge, suspension and promotion and that it may include "creating a hostile working environment through a memorandum that defendant knew or should have known would incite plaintiff's co-workers, who then commenced harassing plaintiff about his lawsuit to such an extent that the work environment became so intolerable to plaintiff that he was forced to resign." With regard to the reduction of hours, the Appellate Division noted that the trial court's wholesale adoption of defendant's position was improper on summary judgment because the record showed that the employer provided shifting explanations for reducing plaintiff's hours and, thus, there was a question of fact as to whether it acted with retaliatory intent. The Appellate Division found that there existed disputed factual issues material to plaintiff’s CEPA claim and thus, summary judgment was inappropriate.

What It Means For Employers:

The Appellate Division's decision in Flecker, demonstrates that there is no "bright line" test or standard for determining what may constitute a retaliatory action under CEPA, and the analysis regarding the spectrum of possible retaliatory actions is fact sensitive and may encompass a wide variety of actions. Specifically, retaliatory actions under CEPA encompass more than just discharge, suspension and promotion. Accordingly, employers should use caution in responding to lawsuits initiated by employees and avoid any company-wide communications that may subject the litigant to harassment by co-workers, as such actions by the employer could be used to support a CEPA claim.

Please contact the author or any member of Saul Ewing's Labor, Employment and Employee Benefits practice with any questions regarding this development.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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