Employment Update: Protecting employees who do the right thing

Last month, the Washington State Court of Appeals, Division III issued a remarkable published opinion for the rights of employees. Becker v. Cmty. Health Sys. Inc. upheld the right of a CFO to bring a wrongful discharge in violation of public policy claim for refusing to submit false or misleading financial data to shareholders and the U.S. Securities and Exchange Commission (SEC). The case is now likely to be appealed to the Washington State Supreme Court, giving it an opportunity to clarify long standing case law that provides basic protections for employees who act to protect public safety and uphold the law, and to clarify that this protection is still the law in the state of Washington.

This ruling is good news for employees by clarifying the protection of employees who refuse to violate or who expose violations of accepted public policy. WSAJ believes it is important to have an independent statutory protection for all employees, just as public sector employees currently have.

Credit: Reuters/Jonathan Ernst

Credit: Reuters/Jonathan Ernst

Protection for employees also extends to securing access to the courts, rather than arbitration. In an excellent column by Gretchen Morgenson, she details how Sean Martin, a highly regarded trader at Deutsche Bank, was forced into arbitration when he was allegedly retaliated against after reporting serious misconduct and insider trading. In the private binding arbitration proceeding, he was barred by the three-member panel from testifying about crucial topics. These arbitrators are picked by the bank and bound by their rules. Martin said, “I was surprised and disappointed when the arbitrators refused to listen to important parts of what I wanted to say and rejected or redacted my exhibits. I can’t see how a dispute can be fairly resolved if one party is not even allowed to tell their side.”

The huge problem pointed out by this column is that, in addition to the unfair treatment of the whistle-blower in these private arbitration agreements, the facts of the wrongdoing that are being brought forward by the whistle-blower never see the light of day and never make it into the public realm. The corrupt actions can stay buried in the company’s private arbitration files controlled by the  wrongdoers themselves. This is disgraceful and dangerous to our Democratic Republic. There is a reason that we have an open and public court system mandated by our Constitution, and cases like this – where fraudulent actions that corrupt the integrity of our financial markets can stay hidden in the dark – certainly highlight the reason for justice to be conducted in the open.

For the last two years, WSAJ has been working on legislation relating to wrongful termination in violation of public policy in response to the Washington State Supreme Court’s decision in Cudney v. ALSCO that severely impaired this common-law protection. In that case, Mathew Cudney was fired from his job after he reported his supervisor driving in a company vehicle while drunk. Mr. Cudney sued ALSCO for wrongful termination, which was rejected by the State’s highest court. Now Becker has the potential to right this incredible injustice.

It is imperative this this law is changed, whether it be a legislative fix, or by the Courts. If not, the most dangerous employers could threaten vital public policies, putting both their employees and the general public at risk of harm from not only drunk drivers, but environmental polluters, defective products, domestic violence, and any number of other criminal acts. Please be assured that WSAJ will be carefully monitoring this issue in the months to come.


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