New Jersey Law Protects Employees Who Expose Fraud

The state of New Jersey has a well-deserved reputation for protecting its citizens from inequities, and this is especially true in the workplace. The state’s Conscientious Employee Protection Act, or CEPA, is a good example of this: It is a whistleblower law that protects employees who’ve engaged in a protected activity from retaliation. Though the law is broadly thought of in terms of objecting to involvement in illegal activity, a recently-decided case makes clear that CEPA also protects employees who expose fraud, even if it does not rise to the level of a criminal act.

The recent case involved a licensed nurse named Debra Herbe, who began working for Rutgers University as a Health Care Case Manager in 2009 and was promoted in 2011 to the position of Clinical Nurse Coordinator in the Child Health Program. In 2012 Ms. Herbe entered her supervisor’s office after becoming aware that the woman had enlisted a direct report to compose an essay during working hours for her to submit for the supervisor’s admission to the Rutgers nursing school’s graduate program. Upon Herbe’s entry to the office, the supervisor asked her to participate as well, but she did not comply. The following day the activity continued, with both the supervisor and Ms. Herbe’s colleague working on the application rather than participating in work activities. Within two weeks she reported what she’d seen to an anonymous employee hotline.

Following her report, the business manager for the program that the women worked for investigated the complaint and confirmed that her accusation was “completely founded.” The supervisor’s application for graduate school was not considered and the supervisor was disciplined. Almost immediately after, Herbe became the subject of workplace harassment. She was disparaged and disciplined in front of her colleagues and employees and for the first time she received poor performance evaluations. Her work duties were also changed.

As a result of the treatment she was receiving at work, Ms. Herbe began to suffer emotional distress and was diagnosed with Post Traumatic Stress Disorder and Major Depression. Her psychologist believed her condition was a result of her work environment and indicated that she could no longer work. Ms. Herbe took three extended leaves of absence over a 15-month period, and when no firm date was provided for her return to work, Rutgers terminated her employment. In response she filed a complaint against the company, accusing them of violating CEPA by having terminated her for having engaged in the protected activity of reporting her supervisor’s fraudulent activity.

Her initial response from the court was disappointing. The case was dismissed, with the trial court deciding Ms. Herbe had been unable to show that she’d reasonably believed a law had been violated or that she’d suffered retaliation as a result of her actions. However, she appealed her case to the Superior Court of New Jersey’s Appellate Division, which reversed the lower court’s decision and remanded it for further proceedings. In its ruling the appellate judges noted the protected activities encompassed by CEPA include objecting to participation in activities that the employee believes are fraudulent. The court pointed to several previous decisions to support their decision, including two cases represented by our firm. In one of these the plaintiff had refused to hide or destroy a document, while in the other the plaintiff had refused to file a fraudulent disciplinary action against a subordinate. In both instances, the court had held that whistleblowers are not expected to be attorneys or to cite specific law, but rather need only believe the activity they were asked to participate in was fraudulent. In Ms. Herbe’s situation, she not only believed that her supervisor was doing wrong by having somebody else write her application essay, but also considered her having used work time to do it a theft from her employer. Her case will proceed to trial for a jury to consider.

All too often, employees who act ethically face retaliation for doing the right thing. If you have suffered an adverse employment action and need information on your rights, the employment attorneys at Schorr & Associates can help.

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