RULE 27
Don’t Forget State Laws
Introduction
Introducing Peter Petermann, a whistleblower who made history by challenging the at-will employment doctrine. After being fired for refusing to provide false testimony for his employer, Petermann won a landmark case in California that established the principle that the “right to discharge an employee” could be constrained by public policy. This was a significant departure from the century-old legal tradition, which allowed employers to terminate workers for any reason or no reason (known as at-will employment).
Although the at-will doctrine still stands, employers cannot terminate employees for reasons that violate public policy. However, the interpretation of this rule may vary from state to state, or it may not exist at all. Therefore, it is essential to familiarize yourself with Rule 27 and understand how your state interprets this rule before pursuing a wrongful termination lawsuit.
Practice Tips
- Checklist 1, found in Rules for Whistleblowers, provides a summary list of states that have enacted False Claims Acts.
- Always consider filing a state retaliation lawsuit, even if your claims are also covered under a federal law.
- Walder v. Bio-Rad Laboratories, Inc., 916 F.3d 1176 (9th Cir. Feb. 26, 2019) (dismissing federal claims, but upholding state common law cause of action).
Resources
Lawrence Blades, “Employment at Will v. Individual Freedom: On Limiting the Abusive Exercise of Employer Power,” 67 Columbia Law Review 1404 (Dec. 1967). In the early days of the development of the “public policy exception,” this groundbreaking law journal article was relied on in numerous court decisions as providing a legal justification for changing the “at-will” doctrine.
First case upholding state cause of action for a whistleblower:
- Petermann v. International Brotherhood of Teamsters, 344 P.2d 25 (Cal. App. 1959).
For detailed state-by-state analysis, see:
- Stephen Kohn, “Concepts and Procedures in Whistleblower Law,” Quorum Press 2000 (Chapter 2) (setting forth state-by-state analysis).
- Robert G. Vaughn, “State Whistleblower Statutes and the Future of Whistleblower Protection,” 51 Administrative Law Review 581 (1999).
- Wendeln v. Beatrice Manor, 712 N.W.2d 226 (Neb. 2006) (discussing difference in damages available to whistleblower under tort versus contract theories of recovery under state law).
Federal preemption cases:
- English v. General Electric, 496 U.S. 72 (1990) (state common law not preempted despite existence of federal safety-related whistleblower law)
- Gervasio v. Continental Airlines, 2008 U.S. Dist. LEXIS 58767 (N.J. 2008) (no federal preemption under Airline Deregulation Act)
- Hawaiian Airlines v. Norris, 512 U.S. 246 (1994) (no preemption under federal Railroad Safety Act)
- Lingle v. Norge Division, 486 U.S. 399 (1988) (state retaliatory discharge law not preempted by collective bargaining agreement)
In addition, many whistleblower statutes, including those in the Dodd-Frank Act and the Sarbanes-Oxley Act, contain an explicit “savings clause” that preserves an employee’s right to file state lawsuits based on the same underlying facts as those set forth in the federal lawsuit.
See, for example, 18 U.S.C. § 1514A(d) (SOX).
Whistleblower State Laws: Resources for Rules in Your State
Protections for whistleblowers under state law vary widely from state to state. Although many states have recognized common law protections for whistleblowers, under what’s known as the “public policy exception” to the “at-will” doctrine, not all states do and in some states this common law protection may be abridged.
Many states have also instituted their own version of the Federal False Claims Act, allowing whistleblowers to file qui tam cases on behalf of the State government and receive awards when they can demonstrate fraud.
The Office of Inspector General of Health and Human Services also evaluated the False Claims Acts of individual States to determine whether the State law meets the requirements of section 1909(b) of the Social Security Act, See 71 FR 48552, Aug. 21, 2006. The HHS OIG’s guidelines can be read here. The review of these laws, however, pertains only to Medicaid fraud, and the approval of the HHS OIG does not necessarily mean that the law is sufficient for reporting other types of fraud.
Frequently Asked Questions
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