Florida Supreme Court raises bar for whistleblower claims

But employers should not lower their standards.

The Florida Supreme Court recently resolved a long-standing conflict concerning the Florida Private Sector Whistleblower Act.

In Gessner v. Southern Company, the Court adopted a standard that is likely to make it more difficult for employees to prevail on certain whistleblower retaliation claims. Plaintiffs will be required to prove that the activity, policy, or practice they opposed was actually in violation of a law, rule, or regulation, rejecting a "reasonable belief" standard that had divided the state’s appellate courts.

The decision appears to be a victory for employers. And from a litigation perspective, it is.

But employers should resist the temptation to draw the wrong lesson from the decision. The Gessner decision does not diminish the importance of encouraging employees to report concerns, investigating complaints promptly, or maintaining strong anti-retaliation protections.

The decision

The Florida Private Sector Whistleblower Act prohibits employers from retaliating against employees in several circumstances. One of those provisions, section 448.102(3), protects employees who object to or refuse to participate in an activity, policy, or practice of the employer that is "in violation of a law, rule, or regulation."

Florida courts disagreed about what that language meant.

Some courts held that an employee was protected if he or she had a good-faith, objectively reasonable belief that the employer's conduct violated the law. Other courts held that the employee had to prove that the conduct actually violated a law, rule, or regulation.

The Florida Supreme Court has now adopted the latter view.

The Supreme Court held that an employee pursuing a claim under section 448.102(3) must establish that the activity, policy, or practice to which the employee objected was, in fact, in violation of a law, rule, or regulation. A belief -- even a reasonable and good-faith belief -- is not enough.

Applying that standard, the Court affirmed summary judgment in favor of the employer because the employee failed to present sufficient evidence that the practices he opposed actually violated applicable law.

What the decision means for employers

The immediate impact of Gessner will be felt in litigation. Employers defending Florida whistleblower claims now have a stronger basis to challenge claims at the pleading, summary judgment, and trial stages when a plaintiff cannot identify and prove an underlying legal violation.

Litigants are likely to devote greater attention at the outset of a case to the specific statutes, regulations, or legal requirements allegedly violated. Plaintiffs may no longer rely solely on evidence that they believed misconduct was occurring. Instead, they must be prepared to prove that the challenged conduct actually violated the law.

The decision also brings greater predictability to Florida whistleblower litigation by resolving disagreement among the state’s appellate courts.

The decision may also increase the importance of investigation and documentation practices. In cases where an employer contends that no underlying legal violation occurred, contemporaneous investigation records, witness interviews, factual findings, and corrective-action documentation may become critical evidence. Employers who thoroughly document the manner in which concerns were evaluated and addressed will generally be better positioned to defend whistleblower claims that proceed to summary judgment.

For employers, however, the most important point may be what Gessner does not change.

Don’t confuse litigation strategy with compliance strategy

A common mistake would be for an employer to assume that because the legal standard has become more favorable, workplace reporting systems can be relaxed.

That would be shortsighted.

Most employers do not maintain whistleblower policies primarily because they fear whistleblower lawsuits. They maintain them because internal reporting helps identify problems before they become lawsuits, regulatory investigations, government audits, or public-relations crises.

Consider a few examples.

An employee reports what appears to be an overtime-calculation problem. An investigation later determines that the employer’s payroll practices were lawful.

Another employee reports conduct that appears discriminatory. The investigation concludes that no violation of law occurred but identifies management practices that require additional training.

A third employee raises concerns about workplace safety. The concerns ultimately prove to be unfounded, but the review uncovers maintenance issues that should nevertheless be addressed.

In each scenario, the employee may have been mistaken about the existence of a legal violation. Yet the report still provided value to the organization.

The goal of an effective compliance program is not to encourage employees to report only confirmed violations of law. It is to encourage employees to raise concerns before potential problems become actual violations.

For that reason, prudent employers should continue encouraging employees to report any concerns in good faith, even if those concerns ultimately prove unfounded.

Is it time to review your whistleblower policy?

Although Gessner does not require employers to rewrite their whistleblower policies, the decision presents a good opportunity to review them.

Many policies appropriately define “reportable” conduct more broadly than violations of law. Employers often encourage reporting of unethical conduct, policy violations, workplace safety concerns, conflicts of interest, accounting irregularities, and other forms of misconduct.

In many cases, maintaining that broader reporting standard remains advisable.

Employers may also wish to consider whether their policies

• Clearly encourage good-faith reporting.
• Explicitly cover reports of suspected misconduct or suspected legal violations, even if an investigation later determines that no violation occurred.
• Prohibit retaliation against employees who raise concerns.
• Provide multiple reporting channels.
• Avoid unrealistic promises of absolute confidentiality.
• Distinguish between intentional false reports and reports that are made in good faith but later prove to be unsubstantiated or incorrect.

A policy that encourages employees to speak up before problems escalate remains one of the most effective risk-management tools available to employers.

Training may be even more important than policy language

For many employers, the most valuable response to Gessner may not be revising a policy at all. It may be reinforcing manager training.

Managers who receive complaints should focus less on whether the employee has correctly identified a legal violation and more on whether the concern warrants review. Refresher training can help prevent the common mistake of dismissing complaints simply because they do not initially appear to involve a legal violation.

Once a concern is raised, Human Resources professionals and investigators should ensure that the organization's review process is thorough, consistent, and well documented. As Gessner demonstrates, the existence or nonexistence of an underlying legal violation may ultimately become a central issue in litigation.

An employee can be wrong about the law and still raise an issue worth investigating.

Conclusion

Employers should be careful not to overread the Gessner decision.

The ruling changes the standard for certain whistleblower claims. But it does not change the value of robust reporting mechanisms, prompt investigations, strong anti-retaliation practices, or a workplace culture that encourages employees to raise concerns.

Employers should not respond to Gessner by lowering their compliance standards, or their commitment to encouraging employees to speak up when concerns arise.