NJ Whistleblower Law May Apply to a Company’s Out-of-State Employees

New Jersey’s Conscientious Employee Protection Act (CEPA) was described as the nation’s “most far reaching whistleblower statute” when it was enacted in 1986. The purpose of CEPA is to protect whistleblowing activities that benefit the health, safety and welfare of the public by giving employees protection when they report their employers’ unlawful conduct. It protects employees in both the public and private sectors, as well as independent contractors.

Now, nearly 40 years later, CEPA’s far reaching nature continues to be affirmed by courts. The most recent example is an Appellate Division ruling that CEPA could apply to a person who works for a New Jersey-based company but performs her work at the company’s Texas office.

In the case, Halliday v. Bioreference Laboratories, Inc., the employee Stephanie Halliday emailed her company’s New Jersey-based quality control department to report deficiencies in the way her Houston-based team was handling patients’ lab results. The company sent employees from New Jersey to Houston to provide training. While in Houston, those trainers allegedly “castigated” Halliday for reporting the issue. Later, when the chief compliance officer visited the Houston location, Halliday raised the issue again. Eventually, she was placed on a performance improvement plan for allegedly poor job performance, then was fired shortly thereafter. The firing was approved by company leaders in New Jersey.

Halliday sued her company, alleging she was fired for whistleblowing in violation of CEPA. However, her case was dismissed at trial, with the court ruling that CEPA did not protect her because she lived and worked exclusively in Texas. On appeal, the New Jersey Appellate Division reversed the decision. The appeals panel said CEPA may not necessarily be limited to people who live and work in New Jersey. CEPA may cover an out-of-state employee who works for a company headquartered here.

The appeals court said the situation must be analyzed using the “most significant relationship test.” The presumption is that the law of the employee’s home state — Texas in this case — would apply. However, New Jersey law can apply if New Jersey has the most significant relationship with the case when considering these factors:

• Where the injury occurred
• Where the conduct causing the injury occurred
• Where the parties are located and incorporated
• Where the relationship between the parties is centered

The Appellate Division sent the case back to the trial court to conduct that analysis to determine whether or not the Texas-based employee should be protected by CEPA.

Deutsch Atkins & Kleinfeldt, P.C. has decades of experience representing whistleblowers and making sure employees receive CEPA protections. If you need advice on reporting an issue at work or have been retaliated against for doing so, call our Hackensack attorneys at 551-245-8894 or contact us online to discuss options.