Minnesota's Whistleblower Law, The Hot New Lawsuit
By: RICHARD A. ROSS
May 1999
In the past year, Minnesota's Supreme Court and Court of Appeals have issued more than a dozen decisions involving the State Whistleblower Law. (Minn. Stat. § 181.932.) This activity reflects an enormous increase in whistleblower lawsuits. The statute prohibits termination, discrimination or other negative action toward an employee that has reported, in good faith, a real or suspected violation of a law to the employer or to a governmental agency. The law also protects employees who refuse to comply with an employer's orders if the employee has an objective, factual basis for believing the orders would violate a law; the employee must tell the employer that this is the basis for refusing to comply with the orders. Finally, the statute was recently amended to add a special provision for employees of health care providers and facilities. These employees now are protected for reporting situations where the public health is at risk because of a quality of care level that is below the standards set by law or by "a professionally recognized national clinical or ethical standard."
Much of the recent whistleblower litigation revolves around the question of whether the statute protects only those employees who report violations of laws that involve a "public policy." This term applies to statutes that protect the public's morals, health, safety and welfare or the public as a whole, as opposed to laws that protect individual rights or property. Although there is some confusion on this topic, it appears that Minnesota courts will apply the whistleblower statute only where a public policy interest is at stake. The confusion has resulted from the year's only Minnesota Supreme Court whistleblower decision, Hedglin v. City of Wilmar, 582 N.W.2d 897 (1998), as interpreted by two Minnesota Court of Appeals decisions. The Supreme Court discussed but did not decide Hedglin based on the public policy issue. In Donahue v. Schwegman, Lundberg, Woessner & Kluth, P.A., 586 N.W.2d 811 (Mn. Ct. App. 1998), and Bertagnoli v. Carlson Marketing Group, Inc., (unreported), the Minnesota Court of Appeals addressed the public policy issue and reached contradictory conclusions.
In Hedglin, three former Wilmar firefighters complained that they were the victims of retaliation after reporting that other firefighters had submitted false claims for pay for firecalls they did not make, and that other firefighters were drunk when they drove the firetruck or reported to firecalls. The Minnesota Supreme Court held the whistleblower law only required an employee to make a good faith report of a state or federal law violation, and refused to adopt an explicit requirement that the alleged violation involve a public policy question. This caused most commentators to suggest that the Court had rejected the public policy requirement. However, the Court specifically stated:
Finally, we conclude that we need not decide whether the public policy requirement applies to the whistleblower statute because here the misconduct reported did implicate clearly mandated public policy.
Id. at 903. Thus, the decision does not do away with the public policy requirement, even though such a requirement is nowhere actually stated in the statute.
One month later, the Minnesota Court of Appeals decided Bertagnoli, in which an employee complained to her supervisor that the company's billing practices defrauded its customer. The Court of Appeals stated:
The supreme court in Hedglin declined to read an additional requirement into the whistleblower act, and we decline to do so as well. Because the plain language of the whistleblower act does not require that a clearly mandated public policy be implicated in an employee's report of wrongdoing, the district court erred ...
Three months later, however, the Court of Appeals seems to have changed its reading of Hedglin. Making no mention of Bertagnoli, the Minnesota Court of Appeals reaffirmed the need for an employee to establish the public policy requirement. In Donahue v. Schwegman, Lundberg, Woessner & Kluth, P.A., 586 N.W.2d 811 (Ct. App. 1998), the Court of Appeals, held that:
... Although the legislature intended the whistleblower statute to bring sweeping protection to employees who report wrongdoing by employers, we do not believe the intent was to obliterate employment at-will. Instead, both the common-law public policy exception and the whistleblower statute only protect employees who expose violations of law designed to promote the public's morals, health, safety and welfare.
Id. at 814. In this case, the Court found that the employee had not invoked public policy issue when she complained about the employer's practice of making an automatic payroll deduction for the cost of employee phone calls, increased by a ten percent administrative fee.
In other cases, the Court of Appeals held that a whistleblower must actually identify a law and have a good faith, objective reason for the belief that the law has been violated. An employee who refused to sign his job description because he believed that he would not be able to fulfill the job duties failed to prove a whistleblower claim. Johnson v. Opportunity Workshop, Inc., (unreported). Another employee, who reported the need for building permits, failed to identify a specific law or any evidence of a violation of a law. Techam v. People Serving People, Inc., (unreported). And an employee who claimed that he refused to document the misconduct of six employees because he believed that the ordered action constituted age discrimination failed to state a claim, since he had no evidence that age discrimination was the underlying purpose. Harris v. Ostbye & Anderson, Inc., (unreported). In Obst v. Microtron, Inc., 588 N.W.2d 550 (Mn. Ct. App. 1999), the Court held that reporting a suspected violation of a contractual agreement did not constitute a report of a violation of a law.
While the application and interpretation of the whistleblower statute is still evolving, it is clear that former employees are suing under this statute on a more frequent basis. Thus, employers who become aware that employees are claiming a type of conduct that is illegal or unlawful should take care in responding to their claims and in disciplining these employees. Consult with your employment attorney before taking any action.