New Jersey Supreme Court Rules that CEPA is a Watchdog’s Best Friend

On July 15, 2015 in a 5-0 decision, the Supreme Court of New Jersey issued its long awaited decision in Lippman v. Ethicon, Inc., which affirmed and modified the Appellate Division’s ruling that employees, whose core job duties include monitoring whether their employers comply with standards and regulations, are protected under the New Jersey Conscientious Employee Protection Act (“CEPA”).  While advocates hailed the decision as a major victory for workers' rights, employers fear it will expose companies across New Jersey to more lawsuits.

In Lippman, the plaintiff brought an action under CEPA against his former employer, Ethicon, Inc., a subsidiary of Johnson & Johnson, alleging that he was terminated due to his whistleblowing activities with regard to safety concerns he had with some of the pharmaceutical products developed by the defendants.  Lippman’s high-level position however required him to assess health risks posed by products and to provide medical input in determining whether corrective measures were required.  After he complained, Lippman was terminated.  Ethicon maintained that Lippman was fired for engaging in a romantic relationship with a subordinate employee.  The Superior Court granted the defendants’ motion for summary judgment and dismissed Lippman’s case finding that, since Lippman’s job duties included raising issues regarding product safety, he was not entitled to protection under CEPA.  On appeal, the Appellate Division reversed finding that "watchdog employees" are the most vulnerable to retaliation because they frequently speak out and that CEPA does not limit protection based on an employee’s job title or function.

The New Jersey Supreme Court agreed and ruled that CEPA is remedial legislation and that the statutory cause of action created by CEPA applies equally to all employees regardless of their specific job duties.  The Court found that there is no evidence of legislative intent to have CEPA operate any other way due to its liberal construction.  The Court also found that CEPA protects employees who “refuse to participate” in any activities they believe are unlawful, implying it protects activities related to an employee’s normal job duties, since “it would be likely that the employee would be asked to participate in employer activity within the course of, or closely related to, his or her core job functions.”  Thus, there can be no additional requirements imposed on watchdog employees unless and until the legislature specifically expresses such intent to distinguish employees who are entitled to CEPA protection.  The Court also rejected the Appellate Division’s requirement that employees must demonstrate they pursued and exhausted all internal means of securing compliance in order to bring a claim under CEPA.  The Supreme Court found that this requirement was “incompatible with prior precedent and imposes an obligation nowhere found in the statutory language."

Employers’ Takeaways:

• CEPA’s protections extend to all employees regardless of their job duties; even those who are employed for the explicit purpose of bringing concerns or potential issues to the attention of the company

• There is no longer a requirement that employees must demonstrate an exhaustion of all internal means of securing compliance in order to secure whistleblowing protections under CEPA.

• Employees, however, still need to demonstrate that they have suffered an adverse employment action (such as demotion, termination and the like), and that the adverse action occurred because they engaged in protected activity.

• Companies that hire professionals to specifically engage in risk analysis such as the pharmaceutical industry should take extra precaution when making employment decisions regarding these types of employees. Management and Human Resources professionals must be trained and sensitized to protected conduct in all its forms.

For more information regarding this decision and to learn how you can protect your company from whistleblowing claims, please contact John C. Petrella, Esq., Director of the firm's Employment Litigation Practice Group at jpetrella@genovaburns.com, or Dina M. Mastellone, Esq., Director of the firm’s Human Resources Practice Group, at dmastellone@genovaburns.com or 973-533-0777.