The Houston Astros, winners of the 2017 World Series, were found to have used a video camera in center field to spot the opposing catcher signaling the next pitch the pitcher should throw (one finger for a fastball, two for a curve, etc.). The video feed was monitored by a team employee near the dugout who would then loudly bang a bat on a trash can to signal that an off-speed pitch was coming (no bang meant that the batter should anticipate a fastball).  Armed with this knowledge, the batter could better anticipate the pace of the pitch and adjust his swing to enhance his ability to hit the ball squarely.

Team Gets Caught

This ploy went public two years later when a former Astros pitcher detailed the scheme in an interview with a sports journal.  MLB investigated and confirmed that the sign stealing had in fact taken place.  They therefore issued the following sanctions:

The team’s Field Manager, A.J. Hinch, was suspended for one year. Hinch did not participate in the scheme and actually took some steps to disable the technology but MLB concluded that he never actually directed the players to stop (the team subsequently fired Hinch);

The team’s General Manager Jeff Luhnow was also suspended for a year (and also fired by the team) because it was determined that he likely knew about the scheme as well.

The team was fined $5 million and deprived of their first and second round draft picks in each of the next two years.

No players were punished despite the fact that MLB’s report concluded that “[v]irtually all of the Astros’ players had some involvement or knowledge of the scheme.” Baseball Commissioner Rob Manfred explained it was impossible to determine the degree of accountability that each player might have had, and that punishing them was “impractical” due to the large number of players involved and the fact that many of them now play for other teams.  While not said, it is likely that the players’ contracts and the collective bargaining agreement with the players union might also have contributed to the decision not to pursue individual punishment.

Cheating Sends Wrong Signals

The scandal has impacted other teams as well.  The Astros’ 2017 bench manager, Alex Cora, was found to have been intimately involved with the scheme and was therefore fired by the Boston Red Sox, who had hired him to manage the team in 2018.  Former Astros player Carlos Beltran, supposedly one of the ringleaders of the video ploy, subsequently stepped down from his job as the just-hired manager of the New York Mets.

The Astros have paid a heavy price for their anti-competitive behavior.  Their championship is forever tainted in the eyes of many as having been won unfairly.  Two previously respected managers have been jettisoned and their careers jeopardized, and the forfeited draft choices will impede their ability to secure new on-field talent in the near future.

Lessons Learned

The lessons that can be learned from this cheating scandal should not be ignored just because it happened in the sports arena and not the real world.  What if employees seek a competitive edge by improperly using secrets learned from hiring a competitor’s former employee? What if a manager disregards safety issues or a hostile work environment in the interest of maintaining production? What if employees are hesitant to report wrongdoing out of fear of retaliation?

Here are some critical points to consider:

Culture Matters. How a company does things, how employees carry out their duties and how everyone represents the organization to the public are critical drivers of the operation.  Employers should make sure that the organization’s culture influences everyone’s behavior and decisions, and that it is not merely a phrase to be cited at orientation and ignored thereafter.  The situation involving the Houston Astros demonstrates that wrongs attributable to a deficient culture are likely to garner harsher scrutiny and greater punishment than those involving merely a few bad actors.

Role Modeling is Critical. Managers must demonstrate through both words and actions that doing the right thing is demanded. This includes supervising their employees effectively and holding them accountable when they lapse.  The Astros’ manager did not approve of the sign stealing but he failed to stop it and did not appear to try very hard to do so.  This creates the impression that such lapses are tolerated or condoned in the interest of advancing the bottom line.  When that attitude is aired in court or in public, responses are usually more severe and consequences more long-lasting.

Stop the Behavior. If an employee does act contrary to organizational culture, the manager must act to correct the behavior.  Failure to do so just embeds the practice further into the employer’s culture and breeds an atmosphere where employees focus more on not getting caught than on advancing the employer’s mission. Consequences are required and must be severe enough to truly garner everyone’s attention.

See Something. Say Something. Hear Something. An employer must make it clear that employees can feel safe raising concerns and that those concerns will be listened to. Merely having a policy or telling the employee that they did the right thing in coming forward is not enough – an effective response is needed.

Bottom Line

It seems reasonable to assume that when an organization decides to cheat, they waste a great deal of time, effort and resources into trying not to get caught.  Despite those efforts, they often do get caught and pay a heavy price.  A judge or jury is likely to be more sympathetic to an employer that tries hard to do things correctly than to one who tries to get away with something or just does not seem to care.

An employer that devotes all of its energies to doing business the right way is likely to come out ahead, and their managers will sleep better at night too.

The post Baseball’s Cheating Scandal Has Lessons For All Employers appeared first on Felhaber Larson.

Because the Decision was Written…

A Xiong worked for Minneapolis Public Schools (“MPS”) as a probationary special-education teacher at Hmong International Academy (“HIA”) from August 2015 to June 2017. Based on low ratings on his teaching abilities and classroom management, School Principal Debora Brooks-Golden and her administrative team decided not to rehire Xiong for the following school year. They entered this decision into the MPS Probationary Teachers Rehire Decision Dashboard.

Several days later, Brooks-Golden asked Xiong to create a document summarizing data that would permit HIA to seek an assessment of a student for special-education eligibility. Xiong refused because he felt that the school had not followed proper procedures for the request. Four days later, Xiong was asked to sign a seperation form acknowledging that his employment would end at the close of the school year.

Xiong sued under the Minnesota Whistleblower Act (MWA), claiming that he was fired for refusing to prepare what he contended was an illegal document seeking a special-education assessment.  The trial court dismissed the case on summary judgement so Xiong appealed to the Minnesota Court of Appeals.

…The Employee’s Claim was Done

The Court of Appeals affirmed the dismissal, explaining that Xiong failed to show a causal connection between the protected conduct (refusing to prepare the requested document) and his termination.  Xiong relied heavily on the fact that he was asked to sign termination paperwork just four days after his protected conduct, which was sufficient to raise an inference that the two were connected.

The Appeals Court noted, however, that while temporal proximity can sometimes raise an inference of a causal connection, it could not do so here since there was solid evidence that MPS had already made the decision not to rehire Xiong before he engaged in any protected conduct.  As such, Xiong’s temporal proximity argument had no merit, and in the absence of any other evidence of motivation, his claim had to fail.

Bottom Line

It can look bad to the outside observer to inform an employee of termination just four days after that employee engaged in protected activity.  The key to overcoming this negative inference is irrefutable, documented proof that the termination decision was made before the protected activity took place, or at least before it was known by the employer.

Therefore, when you decide to let your people go, immediately write a memo to your file, send an email to your manager or create a file on your computer – do something to document the decision.  Otherwise, you may feel plagued when that not-yet-terminated employee walks in tomorrow to report a workplace injury, file a harassment claim or engage in some other protected action that might now seem like a questionable motive for the termination.

The post The First Commandment For Avoiding Whistleblower Claims appeared first on Felhaber Larson.

It is not the intention here to dissect these recent events or comment upon them.  Rather, we seek only to suggest to Minnesota employers that notwithstanding the current political debate, our state law appears to grant protected whistleblower status to any person who makes a whistleblower complaint regardless of whether or not that person experienced the complained-of events on a first-hand basis.

On the One Hand

The Minnesota Whistleblower Act provides that employers may not take any adverse action against employees for a variety of different actions, most notably where:

the employee, or a person acting on behalf of an employee, in good faith, reports a violation, suspected violation, or planned violation of any federal or state law or common law or rule adopted pursuant to law to an employer or to any governmental body or law enforcement official.

There are similar protections for health care employees reporting violations of standards of care, as well as for certain public employees reporting misdeeds to a legislator, the legislative auditor or a constitutional officer.

The first point to note is the obvious one – there is nothing in the provision referenced above that explicitly requires the individual to have first-hand knowledge (e.g. that they personally learned, witnessed or experienced the behavior) of the subject matter of the report.

And On the Other

In addition, the statute affords protection to “the employee, or a person acting on behalf an employee…” It is possible that this provision was intended only to protect “Joe” when Joe’s family member, attorney or other advocate makes a report on Joe’s behalf.  In that event, however, wouldn’t the statute have said “the employee, or a person acting on behalf of the employee…”?  Instead, the statute protects “a person acting on behalf of an employee” which easily can be read to protect “Jane” who hears Joe tell her about an impropriety and then reports Joe’s concerns to management on his behalf because Joe is reluctant to do so.

Of course, that interpretation might lead to the odd result that Jane is protected but Joe is not since Joe did not actually make the report.  A court would have to conclude (and perhaps reasonably so) that under these circumstances Joe should be viewed as having implicitly made the report as well since he asked or permitted Jane to do so (but what if he asked Jane not to say anything but she made the report anyway?).

The stronger argument that “second-hand whistleblowers” are protected is the statutory requirement for good faith reports.  As we wrote in It Just Got MUCH Easier to Sue as a Whistleblower in Minnesota, the Minnesota Supreme Court has interpreted the 2013 amendments to Minnesota’s Whistleblower Act to lower the bar on the good-faith requirement to simply mandating that the report not be knowingly false or made in reckless disregard for the truth.

In essence then, employees are protected if they just show that they are not making the whole thing up.  It would therefore seem that if Jane talks with co-workers, hears about things they claim to be witnessing, and draws conclusions of possible wrongdoing, she would meet the good faith requirement since she would not be fabricating the stories herself. Indeed, she might actually be protected in this regard even if the other employees were fabricating their stories if Jane truly believed what they told her.

Bottom Line

With no explicit statutory directive that whistleblower reports must be based on first-hand experiences, and with an exceptionally minimal threshold for proving good faith, a good argument exists for concluding that second-hand reports are sufficient to earn protected whistleblower status under our state statute.  Until the courts or the legislature offer greater clarity, Minnesota employers should act accordingly.

The post Does Minnesota’s Whistleblower Law Protect Second-Hand Complaints? appeared first on Felhaber Larson.

Steven Moore was a long-time patrol sergeant for the New Brighton Police Department. His duties included supervising other patrol officers.

In March 2015, Moore filed a union grievance over the fact that he and other officers were not paid overtime for attending a mandatory training session outside of working hours.  The City initially denied the grievance but ultimately agreed to pay overtime to all of the employees who attended the training.

Don’t Call Us, We’ll Call You…Maybe

A few weeks later, the department initiated two investigations of Moore’s behavior on the job. The first involved allegations that Moore improperly approved an officer’s unscheduled work hours; the second looked into whether Moore had fraudulently called in sick because he attended a concert on the evening of a work day he missed for medical reasons.  Moore was placed on paid administrative leave requiring him to remain in his house every day from 8:00 a.m. to 4:00 p.m.

After two months, the City ruled against Moore on the unscheduled time approval and ordered him to serve a five-day unpaid suspension. As for the sick leave issue, the City determined that the injury that kept Moore off work would not have prevented him from attending the concert so they found no wrongdoing.   However (and this is a really big however), they never told Moore that they had completed their investigation or that they had exonerated him.  Instead, he remained on house arrest administrative leave for another seven months.

When Moore was finally reinstated, he was assigned to an administrative desk job instead of his regular role supervising the other patrol officers. He also received a performance evaluation for the year indicating that he performed unsatisfactorily in all facets of his job and needed to follow a performance improvement plan.  He remained on the job for more than a year thereafter without incident until he received an oral disciplinary warning for insubordination. At that point, Moore sued under Minnesota’s Whistleblower Statute which provides that an employer may not “discharge, discipline, threaten, otherwise discriminate against, or penalize an employee” for reporting violations of law.

Is Nine Months Off With Pay a Bad Thing?

The trial court granted the City’s motion to dismiss.  Moore then appealed to the Minnesota Court of Appeals who reversed the dismissal, reinstated Moore’s lawsuit and remanded the case back to the lower court for a jury trial.

In ruling for Moore, the Court explained that employees seeking relief under the Whistleblower Statute must first demonstrate that they have suffered some sort of adverse action (or penalty, the term actually used in the statute) sufficient to justify a claim.  If so, the employer has the chance to articulate a legitimate, lawful reason for that action.  Doing so tosses the ball back to the employee who must demonstrate that the articulated reason for the adverse action is just a pretext to cover up the employer’s retaliatory motive.

In evaluating these respective burdens of proof, the Court focused almost entirely on the seven-month extension of the administrative leave after the underlying charges against Moore had been resolved.  The City argued that as a matter of law, a paid vacation administrative leave is not a penalty. The Court disagreed, noting that the statute defines the term “penalize” to include conduct “that might dissuade a reasonable employee from making or supporting a report.” They then surmised (without ever touching on whether the leave was paid or unpaid) that there are circumstances when keeping an employee out of the workplace for an extended period might dissuade that person from speaking up.  As such, they concluded that “administrative investigatory leaves are not categorically excluded from constituting adverse employment actions under the Minnesota Whistleblower Act.”

The Court of Appeals then turned from the abstract to the specific in evaluating whether in this case, a reasonable jury could conclude that the City’s actions were penalizing in nature.  Again, they answered “yes.” They found that a jury would be justified in deciding that a reasonable employee “might” be intimidated about reporting a violation knowing that the employer’s response could be to “commence an investigation and place him on leave for nine months—far longer than it takes to investigate any plausible misconduct claim…”  Therefore, they concluded that being forced to remain on administrative leave for seven months after the conclusion of the investigation (and exoneration) met Moore’s initial burden of showing adverse action under the Whistleblower Statute.

Is That All You Have to Say?

Once Moore carried his initial burden, it was incumbent upon the City to articulate a legitimate reason for their actions.  The City justified the extended administrative leave by offering evidence that they were in discussions with the union regarding a way to get rid of Moore possible early retirement and severance package for Moore.

The analytical burden then shifted back to Moore to establish that that City’s proffered reasons were a pretext for retaliation. The Court concluded that Moore met this burden in two ways.  First, Moore never told the City that he wanted to retire so their reliance on this premise for delaying Moore’s reinstatement could be viewed dubiously by a jury.

In addition, the Court observed that the City never adequately explained why the retirement discussions necessitated Moore’s continuing absence, or why it took seven months to conclude those discussions.  The absence of a better rationale than this for Moore’s extended leave would allow a jury to conclude that the City’s reasons were in fact a pretext for retaliation.  That is all that was needed for the Court to rule in Moore’s favor and give him the chance to present his case to a jury.

Bottom Line

While the Court indicated that administrative leaves pending legitimate investigations are still quite legitimate, it appears that under the right wrong circumstances, an extended involuntary paid leave can still be a hardship on an employee that will allow a lawsuit to go forward.

The post Overly Long Paid Administrative Leave Can Be Evidence of Unlawful Motive appeared first on Felhaber Larson.

The decision in Digital Realty Trust, Inc. v. Somers will have a significant impact in that arena because it limits the scope of anti-retaliation measures meant to protect whistleblowers under the Dodd-Frank Act.  The impact on other types of whistle blower cases, however, is likely to be minimal.

Too Late under Sarbanes-Oxley

Digital Realty Trust hired Paul Somers in 2010 but fired him in 2014, allegedly in retaliation for reporting to his supervisor and senior management that the company had eliminated internal controls in violation of the Sarbanes-Oxley Act of 2002.  Seven months after the alleged issue, he reported the corporate misconduct internally within the company.

Justice Ginsburg, writing for the Court, observed that the Sarbanes-Oxley Act was passed in 2002 to protect employees from retaliation for having reported corporate misconduct.  Such protection extends not only to those employees who report misconduct to a government authority but also to those who inform anyone within the company who has supervisory authority over them.  However, Sarbanes-Oxley’s remedial scheme for retaliation against whistleblowers requires that claim be brought within a 180-day statute of limitations.  Somers failed to meet this requirement.

Too Informal Under Dodd-Frank

The Dodd-Frank Act of 2010 was passed in response to the financial crisis of 2008 and was intended to “promote the financial stability of the United States by improving accountability and transparency in the financial system.”  That law contains its own remedial scheme and defines “whistleblowers” to include only those persons who have reported misconduct to the Securities and Exchange Commission (SEC).  As noted above, Somers never made such a report.

Since Somers did not qualify as a whistleblower under Sarbanes-Oxley for having missed the 180-day statute of limitations, his claims were limited to review under Dodd-Frank.  The Supreme Court then concluded that Dodd-Frank’s definition the statute’s definition of “whistleblower” was “clear and conclusive” and that they needed to enforce the intent of Congress in writing the law as they did.  Since Somers never reported anything to the SEC, he was not considered a protected whistleblower under that law and his claim therefore was invalid.

Bottom Line

For those employers outside of the securities industry, this case is not likely to have much impact.  Far more employers must still operate under the more expansive reach of Sarbanes-Oxley which as Justice Ginsburg wrote “sought to disturb the corporate code of silence that discouraged employees from reporting fraudulent behavior not only to the proper authorities, such as the FBI and the SEC, but even internally.”

The post Some Whistleblower Claims Have Been Narrowed appeared first on Felhaber Larson.

James Friedlander was fired from his job at Edwards Lifesciences, LLC. Friedlander sued the company under the Minnesota Whistleblower Act (MWA) claiming that he was let go for objecting to and reporting the company’s plan to breach a contract with an outside party.  The company denied this, explaining instead that he was let go for violating the company’s expense report policies for which he had been warned previously.

The Law

The MWA bars employers from terminating an employee who “in good faith” reports a violation or suspected violation of law to their employer or to a government agency or official.

For many years, Minnesota courts had interpreted the “good faith” standard to entail a two-part test:

(1) The report was not knowingly false or made in reckless disregard for the truth; and

(2) The reporter acted with the “purpose of blowing the whistle, i.e., to expose an illegality.”

The employee had to satisfy both parts of the test for the report of illegal behavior to meet the “good faith” standard.

What Changed?

The company filed a motion to dismiss, noting that Friedlander only raised his concerns with company officials whom he knew were already aware of his concerns. One cannot expose an illegality that has already been brought to light so his “report” simply could not have made for that purpose.  He therefore failed the second prong of the “good faith” test under the statute.

Friedlander countered, however, that the legislature amended the statute in 2013 to define “good faith” merely as “conduct that does not violate section 181.932, subd. 3.”  In turn, that provision prohibits disclosures that are false or made in reckless disregard of the truth.  Accordingly, by codifying only the first prong of the traditional interpretation of good faith, the legislature obviously intended to eliminate the second prong and render the employee’s motivations for the report irrelevant.

The conflict made its way to the Minnesota Supreme Court, who ruled in Friedlander’s favor. They explained that it is always assumed that the legislature intends to change the meaning of the law when they amend it.  Since the legislature is presumed to be aware of how a statute has been interpreted, their decision to amend it by including just one of the two prongs of the good faith test obviously meant that the other prong was to be eliminated.  Otherwise, there would have been no reason for them to amend the statute as they did.

Accordingly, employees complaining about illegalities no longer have to show that they intended to complain on that basis – basically, they just have to show that they are not just fabricating the whole thing.

Bottom Line

This is bad news for Minnesota employers who can now expect an increase in whistleblower claims.  Any employee who has complained about violations of their rights or illegal behavior by their employer can now claim whistleblower status for any subsequent discipline or other adverse action.  All they have to show is that their complaint was not knowingly false or in reckless disregard of the truth – a pretty low bar.

Interestingly, in reaching their decision the Supreme Court chose to ignore recorded statements from the author of the 2013 amendments who professed that the bill was not intended to change the law

The silver lining here is that the complaint still has to meet the requirement of being about a violation or suspected violation of law.  Many of the matters about which employees might complain do not relate at all to legal issues so not every complaining employee automatically becomes a legally protected whistleblower.

If you need to issue corrective action to an employee who has made such complaints, be absolutely sure that you have a good deal of proof of that employee’s wrongdoing.  In addition, avoid doing so right after the employee has made a complaint (this may not be possible with the chronic complainers).  Finally, be patient – perhaps the legislature will see what havoc the court has created and will amend the statute to say what they apparently meant it to say in the first place.

The post It Just Got MUCH Easier to Sue as a Whistleblower in Minnesota appeared first on Felhaber Larson.

The MWA protects employees from retaliation for engaging in a variety of whistleblowing activities such as participating in a government investigation or refusing to engage in illegal behavior.  In the case of Ford v. Minneapolis Public Schools , the employee claimed she was fired for reporting suspected legal violations committed by her employer.  However, she waited more than two years before filing her lawsuit.

The Supreme Court explained that a two-year statute of limitations (the time permitted to bring a lawsuit) exists for claims that have been “historically recognized”, otherwise known as “common law claims.” Minnesota recognized a common law claim for wrongful discharge in 1987 in Phipps v. Clark Oil, which involved a service station attendant who was fired after refusing his employer’s directive to illegally pump leaded gasoline into a  customer’s car that required unleaded gas.   Since the MWA also encompasses this common law claim within its statutory protections for whistleblowers,  it could be argued that the two-year statute of limitations for common law claims also should apply to claims brought under that statute.

However, the court observed that the MWA protects other forms of employee behavior as well, including reporting an employer’s illegal behavior.  Since Minnesota has never recognized a common law action for wrongful discharge on that basis, and since it exists only because the MWA created it, this sort of claim is not “historically recognized.”  As such, Minnesota’s  six-year statute of limitations for liabilities “created by statute” must apply rather than the two-year period for common law claims.

Bottom Line

This is an odd decision because it potentially creates two different filing periods for claims under the same statute.  Lawsuits involving employee refusals to engage in illegal behavior would have to be brought within two years while all other claims under the MWA would be subject to a six-year filing period.  It also is a troublesome decision since it extends the period of time in which lawsuits can be brought and therefore also the time in which records should be kept, memories have to be retained and uncertainty must be endured.

For more information, please contact Grant Collins at gcollins@felhaber.com.

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