Michigan Whistleblower s Protection Act

Guidelines A MINIS AD T R A M VE TI V E E A D I S T Winter 2009 Michigan Whistleblower s Protection Act MM R RISK O R Y M C O M IT Michigan Municipal Risk Management Authority Administrative Advisory Committee

Michigan Whistleblower s Protection Act About this Brochure The MMRMA Administrative Advisory Committee, under the direction of M. Christina Sullivan and MMRMA Claims Director Michael Ellis, has produced this Michigan Whistleblower s Protection Act (WPA) brochure with the intent of providing our members with current information on the provisions of the Act and the ramifications that it has on liability in employment litigation. The committee wishes to acknowledge the contributions of Laura S. Amtsbuechler of the law firm Johnson, Rosati, LaBarge, Aseltyne and Field, P.C., for her assistance in the development of this brochure. The Whistleblower s Protection Act is a remedial statute, and courts have held that it must be liberally construed in favor of the persons it was intended to benefit. Introduction The Michigan Whistleblower s Protection Act (WPA), which can be found at MCLA 15.361, et seq., is one of a number of Michigan statutes which provide a cause of action for employees who have been discriminated against, or retaliated against, in the course of their employment. 1 It is important for all employers to know the rights of their employees so that they may properly inform the employees, and also so that steps can be taken to avoid the appearance of a statutory violation. The Whistleblower s Protection Act is a remedial statute, and courts have held that it must be liberally construed in favor of the persons it was intended to benefit. Henry v City of Detroit, 234 Mich App 405; 594 NW2d 107 (1999). Courts have held that the underlying purpose of the WPA is the protection of the public through protection of the whistle blowing employee and removal of barriers that may interfere with the employee s efforts to report violations or suspected violations of law. It is the exclusive remedy when it duplicates common law remedies. The Statute MCLA 15.362 provides that: An employer shall not discharge, threaten, or otherwise discriminate against an employee regarding the employee s compensation, terms, conditions, location, or privileges of employment because the employee, or a person acting on behalf of the employee, reports or 1 See also, Michigan Elliot Larsen s Civil Rights Act, MCL 37.2101 et. seq. is about to report, verbally or in writing, a violation or a suspected violation of a law or regulation or rule promulgated pursuant to law of this state, a political subdivision of this state, or the United States to a public body, unless the employee knows that the report is false, or because an employee is requested by a public body to participate in an investigation, hearing, or inquiry held by that public body, or a court action. MCL 15.361(a) defines employee as a person who performs a service for wages or other remuneration under a contract for hire, written or oral, expressed or implied. Employee includes employees of political subdivisions. Case law has held that independent contractors are not employees covered by the WPA. MCL 15.361(b) provides that employer means a person who has one or more employees, and it includes an agent of an employer. MCLA 15.361(d) defines public body to mean all of the following: (i) a state officer, employee, agency, department, division, bureau, board, commission, council, authority, or other body in the executive branch of state government. (ii) an agency, board, commission, council, member, or employee of the legislative branch of state government. (iii) a county, city, township, village, inter-county, intercity or regional governing body, a council, school district, special district, or municipal corporation, or a board, department, commission, council, agency, or a member or employee thereof. (iv) any other body which is created by state or local authority which is primarily funded by or through state or local authority, or a member or employee of that body. (v) a law enforcement agency or any member or employee of a law enforcement agency. (vi) the judiciary and any member or employee of the judiciary. MCLA 15.363 provides that an employee who alleges a violation of this Act may bring a lawsuit for either injunctive relief or actual damages, or both. This action must be brought within 90 days after the occurrence of 2 MICHIGAN WHISTLEBLOWER S PROTECTION Act

the alleged violation of the Act. This section also provides that damages which may be recovered include damages for injury or loss caused by each violation of the WPA, including reasonable attorney fees. MCLA 15.364 further explains the remedies which may be ordered by the court as follows: A court, in rendering a judgment in an action brought pursuant to this Act, shall order, as the court considers appropriate, reinstatement of the employee, the payment of back wages, full reinstatement of fringe benefits and seniority rights, actual damages, or any combination of these remedies. A court may also award the complainant all or a portion of the costs of litigation including reasonable attorney fees and witness fees, if the court determines the award is appropriate. 2 The Elements of a Michigan Whistleblower s Protection Act Claim An employee who brings a Whistleblower s Protection Act claim must ultimately be able to plead and prove: 1) involvement in protected activity, 2) discharge or other objectively adverse employment action, 3) a causal connection between the protected activity and the adverse employment action. Chandler v Dowell Schlumberger, 456 Mich 395; 572 NW2d 210 (1998). Protected Activity Activity protected by the Whistleblower s Protection Act includes reporting, or threatening to report, a violation, or a suspected violation of law, regulation or rule promulgated pursuant to law, to a public body, unless the employee knows that the report is false. The statute also recognizes that participation in an investigation, hearing or inquiry held by a public body, or court, is protected by the WPA. Henry, Id. Interpretation of the statutory language defining protected activity raises a number of issues which have been addressed by the courts of this state. A WPA claim based upon an allegation that the employee was about to report, but did not report, a violation or suspected violation, must be proven by the higher standard of clear and convincing evidence. MCL 15.363(4). Henry, Id. A report by an employee to his or her own municipality is protected. For example, a police officer who reports a violation or a suspected violation to the police department of his or her municipality is engaging in protected activity by the WPA. Brown v Mayor of Detroit, 478 Mich 589; 734 NW2d 514 (2007). A report is also protected regardless of whether the report is about illegal activity by a fellow employee or by the employer. Dudewicz v Norris Schmidt, 443 Mich 68; 503 NW2d 645 (1993). Furthermore, the report is protected by the WPA even if it is the employee s job duty to make that report. Brown v Mayor of Detroit, supra. The report of illegal activity does not have to relate to the employer s business. A report of illegal activity by a co-employee unrelated to the job is protected by the WPA. Kimmelman v Heather Downs, 278 Mich App 569 (2008). It does not matter if it is ultimately determined that there was no violation of law. A report of a subjectively reasonable belief that there was a violation is sufficient. Melchi v Burns, 597 F Supp 575 (ED Mich, 1984). In certain cases, a report of a violation of a municipality s rules or ordinances is sufficient if they are promulgated pursuant to law. A report of a violation or suspected violation of law is protected, even if someone else reports first. Shimkus v Hickner, 417 F Supp 884 (ED Mich, 2006). It is not sufficient that the plaintiff prove that the employer believed that the employee reported, or was about to report, if the employee did not report, and cannot prove that he or she was about to report. Chandler v Shlumberger, 214 Mich App 111; 542 NW2d 310 (1995). An employee must actually report to be protected. Discharge or Other Adverse Employment Action An employee does not have to be terminated to have a cause of action under the WPA. A claim can be based on an objectively adverse employment action which is causally related to the protected activity. A report by an employee to his or her own municipality is protected. For example, a police officer who reports a violation or a suspected violation to the police department of his or her municipality is engaging in protected activity by the WPA. 2 The Court may also order a civil fine of not more than $500.00 payable to the State Treasurer for deposit in the general fund. MCLA 15.365. Furthermore, an employer is required to post notices and use other appropriate means to keep his or her employees informed of their protections and obligations under this Act. MCLA 15.368 MICHIGAN WHISTLEBLOWER S PROTECTION Act 3

Employers are increasingly facing situations where employees use the WPA as a shield against legitimate disciplinary employment action. Causal Connection The employee s report does not have to be the only reason for discharge or adverse employment action sufficient to support a WPA claim. It only has to be a cause. An employer must have objective notice of the protected activity. If the employer did not know of the employee s report, or threat to report, no causal connection can be established. Kaufman and Payton v Nikkala, 200 Mich App 250; 503 NW2d 728 (1993). An employee s primary motivation must be to inform the public on a matter of public concern, and a report of illegal activity may not be protected if it is taken by the employee as a preemptive strike to protect against expected discipline. Shallal v Catholic Social Services, 455 Mich 604; 566 NW2d 571 (1997). The timing of events often becomes an important part of a Whistleblower s Protection Act lawsuit. Adverse employment action taken soon after an employee makes a report of illegal activity suggests a casual connection. However, the Michigan Supreme Court has held that timing alone is not enough for an employee to prove causation. West v General Motors, 469 Mich 177; 665 NW2d 468 (2003). Similarly, a report of illegal activity made by an employee soon after the employee learns of potential or expected discipline suggests a motive which is not protected by the WPA. Employers are increasingly facing situations where employees use the WPA as a shield against legitimate disciplinary employment action. The courts have held that such actions are not protected. An employee who participates in, or knows of, the illegal activity and does not report the violations until he learns of potential adverse employment action unrelated to the violations may not be protected by the WPA. In Wolcott v Champion International Corporation, 691 F Supp 1052 (WD Mich, 1987), the Court noted that the report must be made in good faith and held that: The Whistleblower s Act was not intended to serve as a tool for extortion. Those availing themselves of its protection should be motivated, at least in part, by a desire to inform the public about violations of laws and statutes, as a service to the public as a whole. alleged The Michigan Supreme Court also came to a similar conclusion in Shallal v Catholic Social Services of Wayne County, 455 Mich 604; 566 NW2d 571 (1997) when it relied upon the Wolcott holding that the primary motivation of an employee pursuing a Whistleblower claim must be a desire to inform the public of matters of public concern and not personal vindictiveness. The Court held that an employee who used her own situation to extort the employer not to fire her was not protected by the WPA. It is difficult for an employer to directly prove the employee s motivation when asserting such a defense. For this reason, circumstantial evidence, most often timing, becomes important. Important questions related to timing include: 1) how long did the employee know of the alleged illegal activity before making a report? and 2) how long after learning of potential discipline did the employee make a report? It is important to keep in mind that an employer may defeat the causation element of a Whistleblower s Protection Act claim by showing that the adverse employment action was taken for legitimate business reasons and would have been taken even absent the protected activity. Remedies The court may grant injunctive relief. This means that the court can order that the employer act, or refrain from acting, in a manner necessary to remedy a violation of the statute. This includes an order of reinstatement, payment of back wages, reinstatement of fringe benefits and seniority rights or any combination of these. The court may also order damages in the form of lost wages or damages for other injury, including physical or emotional distress. Finally, the court may order a payment of a portion of costs of litigation, including reasonable attorney s fees, witness fees or other costs. The court may also order a civil fine of not more than $500.00 payable to the State Treasurer for deposit in the general fund. MCLA 15.365. Furthermore, an employer is required to post notices and use other appropriate means to keep his or her employees informed of their protections and obligations under this Act. MCLA 15.368. 4 MICHIGAN WHISTLEBLOWER S PROTECTION Act

Further considerations Fear of litigation should not dissuade an employer from implementing legitimate discipline or terminating an employee, if such action is warranted. In circumstances where an employer knows that an employee has reported illegal activity, either out of a truly altruistic concern, or as a shield, the employer must take steps to properly document both the need for discipline or discharge and to properly implement the discipline or discharge. As with any employment situation that could lead to claims of discrimination or retaliation, the employer can reduce the risk of litigation through good employment practices including the use of a planned and well thought out hiring process, the even-handed and consistent application of clear employment policies, documentation of misconduct or poor performance, and following appropriate procedures at the time of termination. If employee behavior or performance necessitates termination, the employer should review the facts for the existence of a legitimate business reason for the termination, and alternatives to termination should be considered. The employer should review other personnel action that has been taken to determine whether it could be argued that the employee to be terminated has been treated differently or singled out. The employee should be treated with consideration at the time of the termination, but neither the decision, nor the reasons for the decision, should be open for discussion or debate at the time of the termination. It may be helpful to give the employee an opportunity to provide input through an exit interview. Legal counsel should be consulted well in advance of the termination involving situations where there is the potential for litigation. When it becomes necessary to terminate an employee, consider these points to help prevent claims, not only under the Whistleblower s Protection Act, but any of the many statutory protections for terminated employees: Evaluate the motivation for the termination. Problems can arise when the employee termination is made at a time, or in such a manner, that it appears that the protected activity was the cause of the termination. An uninformed supervisor, or others, may not realize that they are possibly relying on an unlawful reason for the termination. Beware of insubordination or disloyaltly as the reason given to terminate. An employer may regard whistleblowing as insubordiate behavior, not realizing that the employee is exercising a protected right. Investigate and document all facts in the decisionmaking process prior to termination. There is no substitute for being able to back up the decision to terminate with detailed documentation. Clearly document every employee action, just as you would for any aspect of the employment relationship. This is particularly important when faced with allegations of a retaliatory discharge. Be mindful that favorable outcomes in employment litigation often depend on good employment practices, spanning the entire spectrum from hiring to firing, and everything in between. Develop and maintain good employment records, policies and procedures. Conclusion A topic such as this is difficult to comprehensively discuss in a brochure. Furthermore, judicial interpretation of the statute is always evolving, and it is important that anyone reviewing these materials check for updated court opinions. The WPA protects employees from retaliation by an employer for reporting, or threatening to report, a violation, or suspected violation of law. If an employer is faced with the need to take disciplinary employment action involving an employee who has engaged in protected activity, the appropriate steps need to be taken, and legal counsel should be consulted. This Act cannot be read in isolation. It must be analyzed in conjunction with the Michigan Elliot Larsen s Civil Rights Act, MCL 37.2101 et. seq., among others. Fear of litigation should not dissuade an employer from implementing legitimate discipline or terminating an employee, if such action is warranted. MICHIGAN WHISTLEBLOWER S PROTECTION Act 5

MMRMA ADMINISTRATIVE ADVISORY COMMITTEE Thomas Sesko Chair Redford Township Joseph Merucci Vice-Chair Village of Fowlerville John P. Berry City of Port Huron Joann Coobatis Plymouth Township Thomas J. Laginess Cummings, McClorey, Davis & Acho, P.L.C. Elisabeth Sobota-Perry City of Dearborn Heights Melissa R. Marsh City of Madison Heights RISK Michigan Municipal Risk Management A u t h o r i t y Michael Rhyner, Executive Director, MMRMA Jack Barron, WSO-CSS MMRMA Liaison Patrick Sullivan City of Northville G. LaMont Thomas Southeast Michigan Council of Governments Debra Wilhelm Northville Township EMERITUS MEMBERS Daniel Durack (Canton Township) Chris Sullivan (City of Dearborn Heights) William D. Wagoner, AICP, WSO-CSE (Livingston County) The MMRMA Administrative Advisory Committee was developed to assist and support the Members of the Authority in reducing potential exposure to loss. The Committee meets every month to develop action plans that relate to personnel, zoning, and planning issues, to review pending legislation, and to plan for an ever-changing future. We are presenting this public policy brochure with the hope that it will assist you in making informed and responsible decisions for the benefit of all Members. There are several other public policy brochures available through the Administrative Advisory Committee to assist your community with policy-based decisions. The following are available through the Michigan Municipal Risk Management Authority: Local Planning - The Effects of New State Laws Sexual Harassment Issues of Public Policy in Emergency Management Effective Hiring & Discipline Distracted Driving Volunteers in the Workplace - Managing the Risk Family and Medical Leave Act Best Practices in Risk Reduction Questions and Answers on Employment Applications Violence: A Reality in the Workplace (brochure & video) Ethically Speaking Hazard Mitigation Planning The New Zoning Enabling Act Electronic Communication/Computer Use Policy All-Hazards Risk Management Conducting Internal Investigations Social Security Number Privacy Act Meeting the Challenge of Electronic Discovery Employer Recordkeeping Model Policy and Guidelines Evaluating an Employer s Obligations Under the Fair Credit Reporting Act (FCRA) Integrating Hazard Mitigation and Comprehensive Planning Driver Selection: A Model Policy For A Safe Driver Program Managing Diversity in the Workplace: A Multigenerational Approach A publication for Members of Michigan Municipal Risk Management Authority 14001 Merriman Road - Livonia, Michigan 48154 734.513.0300 or 800.243.1324 FAX 734.513.0318 E-mail: cschwab@mmrma.org or jbarron@mmrma.org Website: www.mmrma.org