This document summarizes a presentation on whistleblowing and ethics in human resources management. It discusses when managers can blow the whistle on their employer's unlawful or unethical practices and still be protected. It examines two New Jersey court cases on this issue. The first case found that copying confidential documents could be protected activity if done to advance a discrimination lawsuit. The second case found employees may have a reasonable expectation of privacy in some personal emails, depending on the clarity of the company's email policy. The presentation advises employers to have clear policies on technology and whistleblowing, and to seek expert legal advice when retaliation claims arise.

1. 2011 Garden State Council SHRM Conference – Atlantic City Convention Center, Atlantic City, NJ
Ethics in Human
Resources Management
What happens when MANAGERS BLOW THE
WHISTLE?
John J. Sarno, Esq.
Date, Time, and Location

2. Ethical Dilemmas
Managers owe a duty of loyalty to the
employer to
1) carry out its policies faithfully and
2) to advance the employer’s interest.
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3. The “Whistleblower” Case
• Whistleblowing activity, i.e.: disclosure or
objection, or refusal
• Reasonable belief that employer violated
a law, rule, regulation, was fraudulent or
criminal, or violated a “clear mandate of
public policy”,
• Adverse employment action
• Causation
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4. Not every employee complaint is
whistleblowing
Not every employee refusal, rejection or
objection is whistleblowing
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5. Employee’s “Reasonable Belief”
Employee should have some objective
rationale for her belief that employer’s
conduct violates law, is fraudulent or is
incompatible with a clear mandate of
public policy. Generally, an employee
should be able to articulate a law,
regulation or code.
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6. Probing Employee’s Reasonable
Belief
Does employee say anything like:
‒
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‒
‒
‒
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Wrong or not right
Not honest
Unsafe
Illegal or against the law
Violating my rights
Unethical
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7. Generally speaking, whistleblowing must
protect the public or further some important
public interest.
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8. What is a “clear mandate of public policy
concerning public health, safety or welfare?”
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9. Pierce v. Ortho Pharmaceutical Corp.
(NJ Supreme Court, 1980)
Important public policies concerning public
health, safety or welfare can be found in the
constitution, statutes, professional rules of
conduct, government agency rulings, court
decisions…
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10. “Retaliatory Action” means the discharge,
suspension or demotion of an employee, or
other adverse employment action taken against
an employee in terms and conditions of
employment.
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11. Klein v. UMDNJ
(NJ App. Div. 2005)
Generally speaking, the employers “adverse
employment action” must either impact
“compensation or rank” or be “virtually equivalent
of discharge.”
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12. A lateral transfer does not constitute an adverse
action if the transfer has no impact on tangible
benefits or opportunities.
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13. Maimone v. Atlantic City
(NJ Supreme Court 2006)
A transfer from detective to patrolman resulting
in a 3% reduction in salary and lost overtime
constitutes adverse action.
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14. Whistleblower Policy
•
•
•
•
Summarize the law
Establish a complaint procedure
Identify the person who receives complaint
Person who receives the complaint should not
be the decision-maker
Note: In-house counsel, HR Managers and
Supervisors can also be whistleblowers.
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15. Parker v. M&T Chemicals
(NJ App. Div. 1989)
Employee, in-house counsel, refuses to take
custody over the trade secrets of a competitor
which were inadvertently unsealed. He writes a
memo to his boss indicating that the company
may be in violation of a court order. He is later
reprimanded and demoted. Court permits suit to
proceed but leaves unresolved ethical issues
when in-house lawyers sue employer/client.
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16. The Cases:
Quinlan v. Curtiss-Wright Corp
Stengart v. Loving Care Agency
Supreme Court of New Jersey (2010)
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17. Quinlan v. Curtiss-Wright Corp
• The Facts
• Employed since 1980 as benefits analyst,
promoted to executive director of HR in 1999.
• Signs confidentiality agreement
• In 2000 Ken Lewis is hired in HR and promoted
to corporate director of HR in 2003
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18. • Quinlan complains and is given bonus and raise
• Lawsuit is filed in 2003 alleging unequal pay
• While employed, confidential documents,
including salary information and performance
evaluations are copied and given to lawyer
• Fired for “breach of duty” and “theft of company
documents.”
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19. • Lawsuit is amended to include “retaliation.”
• Jury awards $10.7 million dollars‒
‒
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Back pay
Front pay
Emotional distress
Punitive damages
Interest
Counsel fees
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20. Did Quinlan Engage In “Protected
Activity?”
N.J. Law Against Discrimination
Objections
Refusals
Disclosures
Resisting
Providing Information
Pursuing a Claim
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21. Court Adopts “Flexible Totality of The
Circumstances” Test.
Factors:
‒ Relevance to case
‒ Company policy
‒ Purpose of copying and disclosure
‒ To whom?
‒ Would documents be destroyed?
‒ Could documents be obtained in another way?
‒ Whether documents were available in ordinary
course of business
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22. Court finds that violating confidentiality policy
could be “protected activity”
Employee could be fired
Could be retaliation
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23. Stengart v. Loving Care Agency
The Facts:
‒ Employed in 1994 and was Director of Nursing
‒ Was given a laptop computer with e-mail program
and internet access
‒ Employer’s Electronic Communications policy is
published in Employee Handbook
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24. The Employer’s Policy
E-mail and voice mail messages, internet use
and communication and computer files are
considered part of the company's business and
client records. Such communications are not to
be considered private or personal to any
individual employee.
…The principal purpose of electronic mail (email) is for company business communications.
Occasional personal use is
permitted…(Emphasis added).
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25. • Stengart resigns employment on January
2, 2008, alleging discrimination and
harassment.
• She refuses to be interviewed as part of
employer’s investigation.
• Quits on January 14th and returns laptop.
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26. • In anticipation of her resignation, Stengart
exchanges e-mails with her attorney during
several days in December, 2007 and in
January, 2008.
• She used the laptop during working time,
accessing her Yahoo account over the internet.
• Lawsuit is filed on February 7, 2008 alleging
discrimination and harassment, and
constructive discharge.
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27. • Browser software on the laptop automatically
made a copy of each web page viewed and
shared them on the hard drive in a “cache”
folder.
• Among the items saved were files containing
emails Stengart had exchanged with her lawyer.
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28. Are The Emails “Private?” Is There A
“Reasonable Expectation of Privacy?”
Factors to consider –
‒ Adequacy of the policy
‒ Does the company routinely monitor emails?
‒ Are emails sent from company’s account or
Yahoo/AOL/Gmail account?
‒ Are the emails “privileged?”
‒ Location of computer
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29. Court suggests that by allowing for “occasional
personal use”, employees may have a right to
privacy in some “personal” e-mails.
Policy is unclear whether it covers emails
transacted from personal accounts.
Policy does not warn employees that such
emails are stored on hard drive and that they
can be retrieved.
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30. What Does This Mean:
• Employees can be fired for disloyalty
• Some acts at disloyalty are protected activity
Factors:
Motivation
How disruptive
Does employee have a belief that
the law is being violated?
But: Extremely high-risk if protected activity
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31. • Seek advice on any complex case
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32. Next Steps
•
•
•
•
•
Review policies and agreements
Inform all employees of policies
Consider a security audit
Manage by “walking around”
Have expert advice available
-EANJ
-Law Firm
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33. Thank You
www.eanj.org
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