Avoiding Risks Under Michigan's Whistleblowers' Protection Act - Five Things to Know

Injured by Chance.jpgWhistleblower claims routinely make the headlines. And for employers, whistleblower claims increase the chance of liability even in what should be otherwise routine adverse employment decisions.

By way of example, a number of years ago, I represented an employer in what should have been a garden variety wrongful discharge lawsuit. However, because of some "unfortunate" facts and circumstances this claim also implicated the Whistleblowers' Protection Act. And this this significantly changed the liability calculus as well as the claim's settlement value in what could have been a discrimination lawsuit that settled for nuisance value or been dismissed by way of motion.  

Michigan's Whistleblower Protection Act 

Whistleblower claims may arise under a patchwork of state or federal law. In this regard, Michigan has a Whistleblowers' Protection statute.

Under this act, an employer cannot discharge, threaten, or discriminate against an employee regarding employment, compensation, or a term, condition, location or privilege of employment because of protected activity. While this explanation of Michigan's Whistleblowers' Protection Act makes it appear to be straightforward employment protection statute, the devil is in the details and in its application. 

Five Things to Know under Michigan's Whistleblower Protection Act

Here are four things Michigan employers and employees should understand when it comes to the Whistleblowers' Protection Act: 

  1. "Protected activity" means: (i) An employee or a person acting on behalf of an employee reports or is about to report (either verbally or in writing) a violation or a suspected violation of a law, regulation, or a rule promulgated pursuant to the law of the state, a political subdivision of the state, or the United States, by the employer, a third party, or a co-employee to a public body, unless the employee knows that the report is false; (or) (ii) An employee participates at the request of a public body or has been requested by a public body to participate in an investigation, a hearing, or an inquiry held by that public body or a court action. (iii) A request for the employee to participate in an investigation, or a hearing, an inquiry, or a court action is considered protected activity even though the employee does not actually participate in any such investigation, hearing, inquiry, or court action.
  2. To prove causation for purposes of the Whistleblower Protection Act, the adverse employment “because of” means that protected activity must be one of the motives or reasons the defendant discharged, threatened, or discriminated against the plaintiff. Protected activity does not have to be the only reason, or even the main reason, but it does have to be one of the reasons that made a difference in defendant's decision to take any such adverse employment actions against the plaintiff.
  3. Also, proving causation requires the plaintiff to show that a decision-maker or a person who influenced the decision knew of plaintiff's protected activity. Knowledge may be shown by direct evidence or circumstantial evidence.
  4. A Whistleblower plaintiff must reasonably believe that a violation of law or a regulation has occurred. However, it is not necessary that an actual violation of law or a regulation has occurred, but the employee cannot have a reasonable belief if the employee knows the report is false.
  5. A Whistleblower claim must be brought within 90 days after the occurrence of the alleged violation of the WPA. 

Closing Thoughts on Whistleblower Protection Claims

Again, issues relating to the Michigan's Whistleblowers' Protection Act can be complex and if you or your company is within an area code of a potential Whistleblowers Protection claim you should contact an experienced employment attorney to discuss your situation. This is especially true for employers because liability under the Act may expose your company to damages, as well as paying the reasonable attorney fees and costs of the plaintiff.

For more information about Michigan's Whistleblowers' Protection Act or other federal or Michigan employment law questions, contact Jason Shinn. He is a Michigan employment attorney who has been addressing these employment legal issues since 2001.

Michigan Supreme Court Rejects Heightened Standard in Whistleblower Protection Claims

Rejected.jpgBack on March 21, 2013, this blog critically discussed a Michigan Whistleblower Protection Act (WPA) claim, Furhr v Trinity Health Corp., (2013), where the Court of Appeals reversed a jury verdict in favor of a former employee who had filed a lawsuit against her employer. Procedurally, reversing a jury verdict is not normally expected. But what we questioned was the heightened standard the Court essentially imposed on whistleblowing employees.

The Michigan Supreme Court apparently agreed with our concerns: Last week in a separate Whistleblower Protection claim,Whitman v City of Burton, it essentially rejected the reasoning relied upon in the Furhr decision in reversing (yet another) jury verdict in favor of a plaintiff's Whistleblower Protection Claim. Specifically, the Michigan Supreme Court agreed with a number of points we raised in our prior post, "Employees and Sainthood - Does Michigan's Whistleblower Protection Require Both?," (It is good for the confidence to have the Supreme Court agree with you).

Factual Background of the Whistleblower's Claim

The plaintiff employee was employed by the defendant City as police chief until 2007 when the co-defendant (the Mayor) did not reappoint him. Plaintiff sued under the WPA, claiming that the Mayor's decision not to reappoint him was prompted by plaintiff's repeated complaints to the Mayor and city attorney, which included complaints that the City's refusal to pay his previously accumulated unused sick time and unused personal leave time would violate a City ordinance. In other words the plaintiff employee undisputably based - in part - his whistleblower claim on alleged violations concerning his how financial interests.   

Procedural Background and Dismissal of the Whistleblower Protection Claim

At trial, the jury found plaintiff engaged in protected conduct that made a difference in the Mayor's decision not to reappoint him as police chief, and awarded the plaintiff damages.

The Court of Appeals reversed with the majority holding that plaintiff's claim was not actionable under the WPA because plaintiff was motivated by self-interest in engaging in protected activity under the WPA, rather than promoting the public good:

[P]laintiff clearly intended to advance his own financial interests. He did not pursue the matter to inform the public on a matter of public concern.

The Supreme Court Reverses: No Statutory Requirement as to Whistleblowing Employees' Intent or to be Free of Self-interested Motivations. 

The Michigan Supreme Court curtly rejected the rationale of the Court of Appeals to focus on the perceived self-interested motivation of the plaintiff employee. Specifically, the Michigan Supreme Court noted that nowhere in the WPA (MCL 15.362) is an employee's "primary motivation" addressed and there is nothing in the statute's "plain language [to] suggest or imply that any motivation must be proved as a prerequisite for bringing a claim."

Further, the Act simply did not require that an employee's protected conduct must be motivated by a "desire to inform the public on matters of public concern" as a prerequisite for bringing a claim. Accordingly, the court reversed the Court of Appeals judgment and remanded to the Court of Appeals for consideration of all remaining issues on which that court did not formally rule, including whether the causation element of MCL 15.362 was met.

Closing Thoughts

This is actually the second week in a row in which a favorable decision involving Michigan's Whistleblower Protection Act has been issued.

And while employers are not likely to rejoice over either decision, the Michigan Supreme Court "got it right" in stepping in and reversing in the Whitman case because there simply was not any statutorily basis for courts to impose the heightened standard applied by the lower court. This is because there is no "primary motivation" or '"desire to inform the public" requirement contained in the express language of the WPA. As such there is simply no statutory basis for imposing a motivation requirement in the WPA and the Michigan Supreme Court was not about to create a judicially imposed motivational requirement.

For more information about Michigan's wistleblower protection statute or other Michigan employment law questions, contact employment attorney Jason Shinn who works with businesses to comply with state and federal employment law and individuals protected by those employment law statutes. 

Are Inconsistent Performance Reviews and Inefficient Termination Process Putting Your Company at Risk?

Performance ReviewsIn a rare decision favorable to Michigan whistlblower plaintiffs, the Court of Appeals reversed a trial court's decision to dismiss a whistleblower case against an employer. But the real lesson that employers and their HR professionals should take from the decision is that timely decision making in the termination process is critical, as well as accurately documenting deficiencies during the employment relationship.

In short, if a decision to terminate an employee is made, make sure that decision is supported by facts and then follow through as soon as possible. And if your company's HR policy is an impediment to swift action, it needs to be revised to avoid situations like that discussed below.

The Factual Time Line Leading up to the Whistleblower Claim 

The case, Furhr v Trinity Health Corp., (2013), involved a plaintiff who was hired by the hospital, a subsidiary of Trinity Health, in 2007. He was promoted to a newly-created position that was to address problems with inconsistent accounting of the hospital's inventory. His job duties included responsibility for controlling the hospital's surgical inventory and for supervising a staff of subordinates.

Plaintiff's tenure with the Hospital was not without issues: On numerous occasions between the time he was hired and April, 2010, plaintiff's subordinates complained about plaintiff to his supervisor. The hospital responded by hiring a "coach" to work with plaintiff in December, 2009 on the interpersonal issues these subordinates had complained about. During the same time period, the hospital's inventory continued to fluctuate.

In contrast, Plaintiff's two annual performance reviews were positive and there was no mention of the fluctuating inventory issues in the reviews.

Fast forward to the beginning of April, 2010 where the process and decision to terminate plaintiff was underway: (i) The employer's CFO approached another employee in the hospital's finance department, and asked if she would be interested in assuming plaintiff's job "if there was a change in staffing.;" (ii) That same employee also testified that the Hospital's Director of Finance and Budget, told her that a decision had been made to fire plaintiff; (iii) On April 8, 2010, the Hospital's CEO sent an email to the hospital's vice president that stated in relevant part: "that [plaintiff] . . . is on the way out and that Amy Moored from finance will be assigned to get the OR inventory corrected.;" and (iv) Consistent with the preceding, the Vice President testified that the decision to terminate plaintiff was made in the first week of April, 2010.

But as of May guess who is still employed? And in between April and May, coincidentally or otherwise, plaintiff testified that he "became aware" of potential significant wrongdoing by one of the hospital's vendors relative to the inventory and billing for restocking. And prior to plaintiff being terminated on May 10, 2010, he had reported the overbilling issue to the U.S. Attorney's office.

The Whistleblower Lawsuit

Although the employer had, by all accounts, made the decision to terminate the plaintiff in April, the preceding time line gave plaintiff the factual and legal framework to build a lawsuit alleging that his termination violated Michigan's Whistleblower Protection Act.

Under the WPA, an employer may not discharge or otherwise discriminate against an employee "because the employee . . . reports or is about to report . . . a violation or a suspected violation of a law or regulation or rule . . . to a public body." MCL 15.362.

In response to the lawsuit, the employer and its affiliates filed a motion for summary disposition arguing that substantial evidence existed showing that the decision to terminate plaintiff preceded his call to the U.S. Attorney, and therefore plaintiff could not establish that he was terminated because of his whistle blowing activities.

The Court agreed. But the Court of Appeals, almost begrudgingly, took a different view and reversed the dismissal of the plaintiff's whistleblower protection claim because certain fact issues existed that should be resolved by a jury:

[I]t is possible, perhaps even probable, that  a jury would not find plaintiff's testimony credible in light of the conflicting evidence ... Nonetheless ... [i]t is the jury's role to determine issues of credibility ... not the trial court on a motion for summary disposition ... credibility issues are for the jury.

The Take-Away

It is important to note that the employer, by its own admission, made the decision to terminate the employee sometime in the beginning of April. Yet, that termination did not take place until approximately a month later and after the plaintiff contacted the U.S. Attorney's office.

It is easy to criticize the employer's apparent glacial-like process for terminating employees. But in my experience as an employment law attorney, such a process is very common. Unfortunately, equally common is the danger that what had been clear, unlawful reasons for terminating an employee are called into question by intervening events - legitimate or otherwise.

Accordingly, here are two important considerations every employer should include in the HR strategies:  

  1. Termination decisions rarely happen in a vacuum, i.e., given enough lead time, the individual to be terminated will often have some knowledge that the ax is about to fall. And employers should be very concerned about limiting that lead time in order to limit the risks that the individual can set the stage for events prior to the termination actually taking place. Examples include stealing contact, pricing, or trade secret information, sabotage, or suddenly discovering a good conscious or reason to make a report to law enforcement. 
  2. Additionally, before making the decision to terminate an employee, make sure the basis for the termination is not unlawful and your company should have two or three reasons to support this decision. Yes under Michigan law, like most states, employment is presumed to be at-will, which means an employer does not actually need a reason to terminate an individual. But from a "best practices" and practical stand-point, not having a reason and not being able to document a reason is a recipe for operational and legal disaster.

For more more information about employment law compliance or Michigan's Whistleblower Protection Act, contact Jason M. Shinn whose legal practice focuses on Michigan employment law compliance and litigation including unlawful discrimination, sexual harassment, and investigating employee misconduct. Also, feel free to connect with Jason on Twitter.

Employees and Sainthood - Does Michigan's Whistleblower Protection Require Both?

St. Joseph.jpgIn Hays v Lutheran Social Services of Michigan, the Michigan Court of Appeals recently reversed a jury verdict in favor of a former employee who had filed a lawsuit against her employer based on Michigan's Whistleblower Protection Act (the "WPA").

The basis for the opinion is important for both Michigan employers and employees with respect to the technical requirements under the WPA for making a "report." It also suggest that Michigan employees may have to achieve a certain level of virtue normally required of Saints, i.e., acting only for the good of the public and with no concern for the employee's self-interests.    

Overview of the Michigan Whistleblower Protection Act

Michigan's Whistleblower Protection Act generally provides a remedy for an employee who suffers retaliation for reporting or planning to report a suspected violation of a law, regulation, or rule to a public body.

Often - as was the situation in the case under discussion - Michigan Whitsleblower Protection claims hinge on the issue of whether a plaintiff establishes that a "report" was made or about to be made, yet the WPA does not define the term "report."

The WPA, Home-health Care Workers, Illegal Drugs, and the Police

Plaintiff was employed as a home-health care provider for the defendant employer. As a condition of her employment, Plaintiff had signed a client confidentially agreement, consenting to keep information about her clients confidential. During the course of her employment, she worked with an individual client (Client John Doe), who illegally smoked marijuana in his home and in her presence when she was there in the scope of her employment.

Subsequent to this assignment, Plaintiff contacted the police and specifically the Bay Area Narcotics Enforcement Team ("BAYANET"). She inquired about the potential consequences of knowing about the drug use of another and not reporting it. At the end of the conversation, when asked by the BAYANET official if she would like to take any further action, Plaintiff declined to do so.

After this call was made, Plaintiff was informed by her supervisor that a complaint had been lodged against Plaintiff for making a phone call about John Doe. Plaintiff admitted to her supervisor that she called BAYANET and she was subsequently terminated following this meeting. It is not clear the exact timing, but it appears Plaintiff's call to the police, the complaint, and the termination were in close proximity.

Plaintiff Wins at the Trial level on her Whistleblower Protection Claim

After she was terminated, plaintiff initiated her lawsuit claiming she was terminated in violation of the Michigan Whistleblower Protection Act. A jury came back with a judgment in plaintiff's favor in the amount of $77,897.50 and the trial court also assessed attorney fees and costs to plaintiff in the amount of $69,385.55. 

Technical and Saintly Requirements for Whistleblower Protection?

On appeal, the Court reversed the trial court's decision and concluded that Plaintiff failed to establish a prima facie case for her claims under the WPA. Specifically, the Court noted that according to plaintiff's deposition testimony, she asked the BAYANET officer the following question - "If you're in a situation where there's illegal drugs and you happen - and this person happens to get in trouble, what is your consequence?"

The Court characterized Plaintiff's inquiry as "essentially" her calling the police to inquire about her potential liability if John Doe's illicit drug behavior was discovered and not to report any illegal behavior for the public good.

Plaintiff's only concern was to obtain information about her hypothetical liability, not to provide law enforcement officials with any concrete facts from which they could actually investigate or enforce the law.

Ultimately, this perceived self-interest was a substantial factor in the Court's decision to reverse the jury's verdict in favor of the individual plaintiff.  

Closing Thoughts on Whistleblower Protection Burdens & Barriers

While this decision is obviously favorable for employers, it is understandable why Michigan employees and their attorneys should be concerned. This is because the Court seems to have essentially erected an absolute barrier to protection under Michigan's Whistleblower Protection Act by requiring whistleblowers to be motivated solely for the public good and without reference or concern as to how informing the public may impact that particular employee. And this barrier was erected on a set of troubling facts:

  • First, there does not appear to be any dispute that there was some illegal drug use at issue at the time the plaintiff first contacted the police.  
  • Second, one of the underpinnings of Michigan's Whistleblower Protection Act is that it is to be liberally construed in favor of individuals like the plaintiff and Michigan courts have specifically noted: "Inherent in the WPA is a purpose to protect the public by protecting employees who report violations of laws and regulations. Terzano v. Wayne County, (Mich. Ct. App. 1996). This purpose also reflects the conflict many individuals face with respect to needing to work in order to support themselves and their family versus aspiring to protect the public good. Given this economic reality, what choice would you make? 
  • Third, the court opinion was not clear as to the timeline with respect to plaintiff's phone call to the police and her termination, but it appears to be within close proximity of the other. And presumably the jury addressed this issue in deciding in Plaintiff's favor in the first place.

Accordingly, this court opinion arguably encourages an employee to take a "shoot first, aim later" approach when it comes to making a report under the WPA, even where a number of complex factual and legal issues are involved. In this particular case, such issues included criminal drug laws, employment confidentiality agreements, health care information, and personal privacy issues.

For more more information about Michigan's Whistleblower Protection Act and for complying with this statute as an employer or employee, contact Jason M. Shinn whose legal practice focuses on Michigan employment law compliance and litigation, including unlawful discrimination, sexual harassment, and investigating employee misconduct.

An Employer's Response Guide to Whistleblower Claims

Whistle.jpgRetaliation against company employees who report inappropriate or illegal action create significant legal risks for employers under whistleblower protection statutes.

Employers, however, can significantly increase their chances of disposing of a whistleblower protection claim if proper policies are in place and by appropriately responding to such reports. The following provides an overview of a whistle blower protection claim. 

Who is a Whistleblower?

Under Michigan's Whistleblowers’ Protection Act, a whistleblower is an employee, or a person acting on behalf of an employee, who (i) reports; or is about to report; (ii) verbally or in writing; (iii) a violation or a suspected violation of a law or regulation or rule promulgated pursuant to law of this state, a political subdivision of this state, or the United States to a public body. MCL 15.362.  

A successful whistleblower protection claim may entitle a plaintiff to reinstatement, payment of back wages, full reinstatement of fringe benefits and seniority rights, actual damages, or any combination of these remedies. A court may also award the complainant all or a portion of the costs of litigation, including reasonable attorney fees. MCL 15.364

Establishing a Whistleblower Protection Claim.

To establish a whistleblower protection claim, an individual must show that he or she:

  1. Was engaged in protected activity, which includes reporting to a public body a violation of a law, regulation, or rule, being about to report such a violation to a public body, or being asked by a public body to participate in an investigation;
  2. Was discharged or discriminated against; and
  3. A causal connection exists between the protected activity and the discharge or adverse employment action.

Defending Against a Whistleblower Protection Claim - Timing is Everything. 

The last element of a whistleblower protection claim - a causal connection - often provides employers the opportunity to successfully argue that the complained of adverse employment action had no “causal connection” to the protected activity. 

A temporal relationship, standing alone, is not enough to demonstrate a causal connection between the protected activity and any adverse employment action. Instead, a whistleblower protection plaintiff must show something more than merely a coincidence in time between protected activity and adverse employment action.

Examples of "something more" between the protected activity and the adverse employment action that Courts have accepted include:

  • Showing that the employer was upset about any protected activity.
  • Evidence that after engaging in any protected activity, plaintiff was treated differently than before;
  • Showing that the employee's job duties were altered; or
  • The employee was threatened to stop making complaints.

In other words, the decision to take action against the employee must be connected to the protected activity.

Avoid Turning Employee Complaints into Whistleblower Ammunition

Before taking an adverse employment action, employers must examine employee conduct and a broad range of potential legally protected activities in the workplace. To further minimize or eliminate the risks of a whistleblower protection claim, employers should consider the following: 

  1. Before an employer takes an adverse employment action against an employee, it should first determine if that employee was engaged in protected activities shortly before the termination decision. If so, the employer must next determine if there is a causal link between the termination and the employee’s participation in any such collateral civil rights matter.
  2. It is critical for employers to identify the person responsible for making the adverse employment decision. 
  3. Once this identification take place, the next question is whether the person involved in the decision making had knowledge of the employee’s alleged protected conduct or activities. 

Taken together, this analysis will hopefully show that when the adverse employment decision was made the person making the decision had no knowledge of the protected conduct. Follow this link for additional recommendations for responding to a whistleblower protection claim

Without this link, an employer should be able to show there is no causal connection between the protected activity or conduct and the adverse employment decision. Conversely, such analysis may alert the employer to potential liability and shift the litigation strategy to settlement negotiations in order to minimize further litigation costs.  

Avoiding Whistleblower Claims - It's All in the Employer's Response

Knife Behind Back.jpgThe alleged (mis)handling of an employee's complaints of wrong-doing by her former employer offers insight on how to avoid a subsequent whistleblower claim or, at least, be in a better position to defend against such claims. 

Specifically, a Metro Detroit Employment Law firm was recently sued for violating (ironically) various employment laws. The law firm and named defendants were also alleged to have violated Michigan's computer crimes statute, MCL 752.791-97, which forms the basis for a whistleblower claim.

The Complaint filed in Wayne County Circuit (PDF) alleges that the defendant law firm's named partner and defendant stole computer records consisting of client information from his former law firm prior to departing to start a competing venture.

The computer statute generally targets computer intrusion crimes and traditional crimes committed through the use of computers, such as theft. Plaintiff, however, did not assert an actual claim under Michigan's computer statute and, instead, used the alleged violation as the cornerstone for her whistleblower claim, i.e., she was "about to report" the Defendants' violation of the Michigan computer statute to unspecified public bodies, which was one of the reasons she was fired.  

Under Michigan's Whistleblower’s Protection Act (WPA), MCL 15.362 et seq., employers are restricted from discharging, threatening, or otherwise discriminating against an employee because that employee reports or is "about to report" a violation or suspected violation of a federal or state statute or regulation to a public body. Where a claim is based on an "about to report" theory, the plaintiff must show by clear and convincing evidence that he or she was about to report, verbally or in writing, the violation or suspected violation of a state or federal law to a public body.  

The Take Away

While it remains to be seen how this litigation actually resolves, the Complaint offers a number of "rookie" employment law mistakes that employers should avoid. Consider for example, the employer is alleged to have no employee handbook and no Discrimination or Harassment policies in place. 

But an important "take-away" for employers is how to limit or otherwise avoid a subsequent Whitsleblower claim. In that regard, companies should consider the following points:

  • Have policies in place that encourage the reporting of complaints;
  • Take all complaints seriously and investigate all concerns;  
  • Employers should encourage a reporting employee to document as many details of the alleged violation as possible so that the investigation is focused on the actual complaint. Such documentation has the added benefit that if the employee later claims retaliation, there will be a record of the reported conduct, which will be difficult to later modify or expand by the employee's lawyer; 
  • Policies should expressly state that employees who report suspected violations will not be subject to retaliation in any manner and that any retaliation will not be tolerated; 
  • Document all steps taken in the investigation process;
  • Document a conclusion: Either the existence of a compliance issue or the absence of one; and
  • If a violation occurred, document and follow through with corrective action.

While there certainly is no "silver bullet" for avoiding whistleblower claims, by being proactive and taking these steps, employers will better able to avoid such claims or, at least, put the employer in a better position to defend a subsequent whistleblower claim in the future.