Quirky Question # 227, New Bells and Whistles in Minnesota Statute

by Dorsey & Whitney LLP
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Question

We have an employee who we have been planning to terminate because of performance issues.  This employee may have realized this was coming because he recently sent an email to a number of people claiming that our company policies violate the law.  We have been aware of these possible problems before his emails were sent and already have been working on correcting them.  We suspect this employee may have sent these emails simply to shield himself from termination.  We are concerned that we may be subject to a “whistleblower” claim if we terminate this employee.  Can we still fire him despite his emails?

Answer

This is a good question and a situation employers should be aware of in light of recent amendments to the Minnesota Whistleblower Act (“MWA”).

The MWA provides generally that an employer may not “penalize” an employee because “the employee, or a person acting on behalf of an employee, in good faith, reports a violation, suspected violation, or planned violation” of any law.  The 2013 amendments added protection for good faith reports concerning “planned violation[s]” and also added definitions for the terms “good faith,” “penalize,” and “report.”

To determine your risk in terminating your employee, we should parse the statute’s various definitions.  First, for an employee to have a claim he must have made a “report.”  Under the prior version of the MWA, what constituted a “report” was not defined.  Courts applied the common meaning of the term and generally required some sort of formal act for the employee to have made a report.  In addition, courts held that, in general, reports about violations about which the employer was already aware did not constitute a “report.”  Departing from courts’ relying on the common meaning of “report,” the MWA’s recent amendments define a report as “a verbal, written, or electronic communication by an employee about an actual, suspected, or planned violation of a statute, regulation, or common law, whether committed by an employer or a third party.”  The definition is certainly more detailed, though it’s unclear how (if at all) it might change what constitutes a report, or whether it would make your employee’s email about the known problem with your policies a report on which he could base a claim.

Second, the report must be made in “good faith.”  It’s this element that has typically drawn the most attention from courts.  Under the old MWA, the term “good faith” – like “report” – was left undefined.   Minnesota courts interpreting the term explained that a report made in good faith requires that it be made for the purpose of blowing the whistle.  In other words, the report had to be made with the intention of exposing something illegal.  Minnesota courts also explained that the MWA’s purpose was to protect the conduct of neutral parties, and, accordingly, required that the person blowing the whistle be doing so for the protection of the general public, or, at minimum, the protection of some third person(s) in addition to the whistleblower.  Courts found these requirements necessary so alleged whistleblowers could not, after the fact, bootstrap some law to a previously-made report, or make a report solely to avoid being terminated.

The MWA’s amendments may put a wrinkle in this analysis.  The amended statute now defines a “good faith” report as one that is not “knowing[ly] . . . false” or “in reckless disregard of the truth.”  What this new definition means exactly is not entirely clear.  Under this definition, one might argue that any report about a violation, suspected violation, or planned violation of law would be in “good faith” so long as the employee did not know the report was false or in reckless disregard of the truth, even if reporting such a violation was within the individual’s required job duties or helped no one but the whistleblower himself.  But this reading would undercut years of precedent requiring that a whistleblower have a genuine purpose in making a report (i.e., that the whistleblower’s intent was to expose an illegality – beyond merely fulfilling her job duties – in order to benefit some third party).  It would also potentially turn your employee into a legitimate whistleblower.

There are strong arguments, however, that the requirement that a whistleblower have a proper purpose when making a report still remains.  After all, nothing in the amendments changes the MWA’s general purpose, which courts have explained is to protect neutral parties who blow the whistle for the protection of the general public.  Moreover, before the amendments, employees were already prohibited from making reports they knew were false or in reckless disregard of the truth.  In addition, Minnesota courts consistently have held that reports of violations about which the employer already knows are not protected by the MWA.  Cases from as recent as last year (although applying the prior version of the statute) have reiterated this rule.  Since the MWA’s purpose is to protect employees who “blow the whistle” to expose illegality in order to protect others, it would make little sense for the new amendments to shield employees who don’t actually blow any whistle that anyone cares about or hasn’t already heard.

What also remains unclear is whether an employee may be a protected whistleblower if blowing a whistle is included in his or her job duties.  Previously under the Minnesota Supreme Court’s interpretation of “good faith,” an employee’s job duties were relevant to whether a report was made “for the purpose of exposing an illegality.”  Under the amended statutory definition of “good faith,” an employee whose job duties include blowing the whistle may argue he or she is now protected as long as the report is not knowingly false or in reckless disregard of the truth.  This argument seems thin.  The MWA’s purpose is to protect neutral parties who take some risk in exposing wrongdoing, not to shield an employee who is simply performing his job.  Moreover, such an interpretation would seemingly hamstring employers from taking any action against poor performing employees whose job may include compliance duties.  The MWA was not meant to create an exception to the at-will employment rule for certain types of professions.

So what should employers do differently given the lack of clarity in the new amendments?  At a minimum, employers can diminish risks by considering the following before taking any action against a possible whistleblower:

  • Ask yourself why the employee is being terminated.  The MWA protects employees only if the employer takes an adverse action because the  employee engaged in whistleblowing activity.  If employers have legitimate,  non-retaliatory business reasons that are unrelated to any whistleblowing  activity, then courts are more likely to find there was no MWA violation.
  • Avoid creating anything that would suggest a causal relationship      between an employee’s alleged whistleblowing activity and any adverse  action.
  • Consider whether you can wait before taking any action.  The timing between an employer’s action  and the employee’s complaint often is used to create an inference that the adverse action was in retaliation for the report.
  • Be aware that an employer can still violate the MWA even if it does  not terminate the complaining employee.   Any action that serves to “penalize” an employee for making a  report could trigger the MWA.  This  definition could encompass a large range of employer actions.

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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