Employee Retaliation Protection Expanding

Growing Retaliation Protection

Reports of an Employer’s Customers’ and Clients’ Actions Matter.

Workplace retaliation claims are not limited solely to actions among co-workers or with management.  Rather, retaliation claims are increasingly emanating from actions by an employer’s customers or vendors.  Imagine a situation where an employer does everything by the book, keeps its nose clean and has a track record for never engaging in any illicit or fraudulent activity. Now imagine an employee comes to the employer (or to the authorities) and reports that he/she believes one of the employer’s trusted clients is doing something illegal, like defrauding the government.  What if a year after the employee reported the client’s behavior, the employer wanted to terminate that employee’s employment?  Aside from the fact that an employer should not want to do business with an illicit client, should any other red flags go up about how to handle this situation from a human resources perspective?  Absolutely.

The above scenario is similar to the one the Eighth Circuit Court of Appeals handled in Townsend v. Bayer Corp. In that case the Court found that an employee was protected from retaliation under the federal False Claims Act (FCA) for reporting that one of the employer’s customers, a doctor, was working with an unapproved prescription drug and submitting fraudulent Medicare information to the government.  When the employee was terminated a year later he sued the employer, alleging retaliation for reporting the doctor.  The court ordered the employee be reinstated with backpay and awarded other monetary damages, despite the fact that the behavior reported was not the employer’s.

The lesson here is that an employee’s protection from retaliation extends beyond the employer’s actions and into instances where the employee in good faith reports allegedly fraudulent or unlawful actions of an employer’s customers, vendors, clients, etc.  More importantly, this decision implicates not only the federal FCA but also a variety of ever increasing and overlapping anti-retaliation and wrongful discharge laws such as the Minnesota False Claims Act, the Minnesota Whistleblower Act and the Minnesota Human Rights Act.

It is important to understand that not only the employer’s actions, but the actions of who the employer does business with have the potential to lead to costly litigation.  The key to limiting exposure, however, lies in knowing how to react to reports of illicit behavior from business partners, vendors, customers, clients, etc.  Such reports must be taken seriously and the reporting employee should be treated no differently than any other employee.  Further, any decisions regarding the reporting employee must be clearly documented and predicated on legitimate business concerns having nothing to do with the employee’s decision to bring the matter to the attention of the employer or other authorities.

Employers with questions about possible retaliation or any other employment law related questions are encouraged to contact Attorney Chad A. Staul at cstaul@rinkenoonan.com or (320) 656-3515.

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