Greenbaum, Rowe, Smith & Davis LLP
In This Issue:
- Dispute Resolution Symposium Focuses on Improving Business Performance By Managing Disputes »
- Implementing Work Life Policies While Avoiding Legal Pitfalls »
- The Legislature Expands Employer Liability Under CEPA »
- Supreme Court Expands Warranty Protection to Lessees »
- Raymond M. Brown Joins GRS&D as Chair, White Collar Defense & Corporate Compliance Practice Group »
- David A. Roth Joins GRS&D as Chair, Environmental Practice Group »
- Court of Appeals for the Third Circuit Holds that Computer Fraud and Abuse Act Provides for Civil Remedies »
- BUSINESS FOR BREAKFAST SEMINAR - A Continuing Seminar Series »
- Digging Deeper: What You Need to Know About the Recently Expanded Grantee Fee (Mansion Tax) and the New Transferee Tax »
- The Employee’s Common Law Duty of Loyalty — Combatting the Faithless Employee »
- 30 GRS&D Attorneys Honored by Legal Directories »
- Highlights »
The Legislature Expands Employer Liability Under CEPA
By Galit Kierkut, Esq.
In January 2006, the New Jersey State legislature significantly expanded employer liability under the Conscientious Employee Protection Act (“CEPA”). By enacting amendments to both CEPA and the Punitive Damages Act, the legislature has paved the way for New Jersey whistleblowers to obtain large recoveries in their retaliation lawsuits against their employers.
Prior to the amendments, CEPA protected from retaliation an employee who (a) discloses or threatens to disclose a practice of the employer or another employer that has a business relationship with the employer, that the employee reasonably believes is in violation of a law or public policy, is fraudulent, or is criminal; (b) provides information to a public body conducting an investigation into any violation of law by the employer or by another employer which has a business relationship with the employer; or (3) refuses to participate in any activity that the employee reasonably believes is a violation of a law, fraudulent, criminal or incompatible with public policy.
The CEPA amendments expand the scope of protected activity to include an employee’s reporting to a supervisor or a public body “any violation involving deception of, or misrepresentation to, any shareholder, investor, client, patient, customer, employee, former employee, retiree or pensioner of the employer or any government entity.”
CEPA also now requires Courts to provide certain relief to victorious CEPA plaintiffs that had previously been discretionary. This relief includes injunctions, reinstatement, lost wages and legal fees. The civil fines that may be awarded have increased in amount as well.
While punitive damages are still discretionary under CEPA, the impact of the amendments will perhaps be greatest in this area. In decid3 ing whether to award punitive damages, jurors will be instructed to consider not only the amount of compensatory damages awarded to the employee, but the effect of the employer conduct on investors, shareholders, clients, patients, customers or other employees as well. In addition, the amendments to the Punitive Damages Act removed the cap on the amount of punitive damages an employee is permitted to obtain in a CEPA retaliation lawsuit. That cap had previously been set at the greater of $350,000 or five times compensatory damages.
Employers are well advised to consult their attorneys regarding implementing comprehensive and effective reporting procedures and anti-retaliation policies, similar to those in the sexual harassment area. Training in the implementation of these policies and procedures should be provided to all employees as well. All employers with ten or more employees must be aware that CEPA requires both the conspicuous posting of a notice detailing its provisions in both English and Spanish and the distributing of such notice to all employees on an annual basis. Finally, employers should always consult with counsel prior to making an employment decision that affects, in any way, the terms and conditions of employment of an employee who has been a whistleblower.
It is likely that the number of CEPA lawsuits will increase as a result of these provisions. Smart employers will protect themselves by implementing these preventative measures. Although such steps will not eliminate the risk of being sued, they will greatly increase the likelihood of a successful defense.