Bad Faith Investigation of Whistleblowing Employee Can Be Retaliatory Action under CEPA

Have you ever discovered wrongdoing within your company? Maybe your company was doing something illegal or lying to investors. If you took a stand and decided to complain about or report the wrongdoing, New Jersey law may protect you. The New Jersey Conscientious Employee Protection Act (“CEPA”) prohibits employers from retaliating against employees who “blow the whistle” if they reasonably believe their employers violated the law, acted fraudulently, or acted contrary to public policy. If an employer takes “retaliatory action” against an employee for blowing the whistle, that employee may have a claim under CEPA.

CEPA defines “retaliatory action” as the “discharge, suspension or demotion of an employee, or other adverse employment action taken against an employee in the terms and conditions of employment.” N.J.S.A. 34:19-2(e).  Employment actions other than discharge, suspension or demotion may fall under broader category of adverse employment action “in the terms and conditions of employment.” Beasley v. Passaic City., 377 N.J. Super. 585, 608 (App. Div. 2004). The terms and conditions of employment “refer to those matters which are the essence of the employment relationship, and include … length of workday … increase or decrease of salaries, hours, and fringe benefits … physical arrangements … and promotional procedures.” Id.

If an employer investigates an employee in bad faith because of the employee’s whistleblowing activity, is that a “retaliatory action” under CEPA? That was the issue recently considered by the Appellate Division in Anderson v. City of E. Orange, No. A-4206-19, 2022 N.J. Super. Unpub. LEXIS 419, at *3 (App. Div. Mar. 15, 2022). The Anderson Court concluded that a bad faith internal investigation by Employer East Orange Police Department (“EOPD”) of its police lieutenant Calvin Anderson (“Anderson”) could constitute retaliation under CEPA. Id.

In 2018, Anderson’s supervisor ordered EOPD officers to implement a “productivity improvement system.” Id. at *3. Anderson refused to do so, and complained that the system essentially functioned as an arrest quota system in violation of N.J.S.A. 40A:14-181.2. Id. After Anderson complained, his supervisor subjected him to a neglect-of-duty investigation. Id. That same supervisor also instructed another police captain to investigate Anderson for failing to report to a lineup for a July Fourth celebration. Id. at *4. Anderson filed a one-count complaint against his supervisor, the City of East Orange, and the EOPD, alleging a violation of CEPA. Id. at *3. Five months after Anderson filed suit, and just a day after he complained to an East Orange councilperson, he was promoted to police captain. Id.

Defendants moved for summary judgment, arguing that Anderson had failed to establish a CEPA claim because he had been promoted and thus did not suffer an adverse employment action. Id. at *5. Defendants also argued that the “productivity improvement system” was not an illegal quota system. Id. Anderson argued that after he complained about the alleged quota system, he suffered “baseless investigations, was issued written warnings, was constantly threatened with discipline, and was deliberately made to look like an incompetent police officer.” Id. The trial court judge granted EOPD’s motion for summary judgement, finding that the alleged retaliatory acts were not “sufficiently severe or pervasive and had not alter[ed] [plaintiff's] employment position . . . in an important and material manner,” observing that Anderson had been promoted to captain. Id.

Anderson appealed, asserting that the motion judge erred in granting summary judgment because there was a genuine issue of material fact as to whether the alleged adverse employment actions taken against him combined to make up a pattern of retaliatory conduct in violation of CEPA, citing Green v. Jersey City Bd. of Educ., 177 N.J 434, 448 (2003). Id. at *7. The Appellate Division noted that Anderson’s promotion five months after he filed his complaint did “not make him whole from or constitute a rescission of the other alleged acts of retaliation.”  The Anderson Court further opined that “the constant threats and blatant retaliation by [d]efendant[s]” had caused him emotional distress and concrete economic harm.” Id. at *12-13. The Court reasoned that the “combined impact of the alleged previous acts of retaliation” outweighed the increase of salary Anderson received through his promotion. Id. at *13. Therefore, the Appellate Division reversed the trial court decision. Id. at *15.

The Anderson Court’s opinion exemplifies the fact intensive case-by-case analysis courts conduct when considering whether actions outside of “discharge, suspension or demotion” can constitute an adverse employment action sufficient for a CEPA claim. Although the decision is unpublished, it is persuasive authority that bad faith investigations, when combined with economic harm or emotional distress, undertaken in retaliation for an employee’s whistleblowing activity, may be sufficient to constitute retaliation under CEPA.

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