Do I Have A Claim Against My Employer In New York For Firing Me For Reporting Or Opposing Violations Of The Company’s Code Of Conduct?

This article discusses:

• Employers’ codes of conduct, and those codes’ anti-retaliation provisions.

• Breach of contract claims against employers in New York for retaliating against executives or professionals in violation of the employers’ own codes of conduct.

• The impact of disclaimers contained in employers’ codes of ethics.

• How breach of contract claims against employers in New York, for striking back against executives or professionals in contravention of the employers’ own codes of business conduct, differ from lawsuits against employers under statutes protecting whistleblowers.

• Criado v. ITT Corp.: a successful lawsuit against a company in New York for retaliating against its worker in breach of the company’s own code of conduct.

Depending on the circumstances, you, the executive or professional, may have a claim against your employer in New York for firing you for reporting, opposing, or refusing to take part in violations of the company’s code of conduct. 

Under New York law, as an executive or a professional, you are considered an employee. Consequently, as an executive or a professional in New York, you are safeguarded by the same anti-retaliation provisions of your employer’s code of conduct that protect other employees.

The vast majority of publicly-traded companies publish a code of ethics or a code of business conduct that promises protection, against retaliation, to any employee who reports any unlawful activity in good faith. This article refers to these codes of ethics or codes of business conduct as “codes of conduct.”

Why Do Publicly-Traded Companies Maintain Codes Of Conduct Protecting Employee Whistleblowers From Retaliation?

Publicly-listed companies maintain codes of conduct because, since 2003, the two largest U.S. stock exchanges, the New York Stock Exchange (the “NYSE”) and the National Association of Securities Dealers Automated Quotation System (“NASDAQ”), have mandated that every listed company publish a code of conduct protecting employee whistleblowers from retaliation. These codes of conduct must provide:

• enforcement mechanisms to encourage prompt, internal reporting of violations of the codes;
• assurances that the companies will not retaliate against employees for reporting violations of the codes; and
• that the companies will protect employees who make reports in good faith, or who report questionable behavior.

Further, the NYSE and NASDAQ mandate that companies publicize their codes of conduct. Indeed, the NYSE goes further and specifically requires that corporations place their codes of ethics on their corporate websites.

In New York, An Employer, By Retaliating Against An Executive Or A Professional In Violation Of The Employer’s Own Code Of Conduct, May Be Breaching A Contract

An executive’s or a professional’s claim, against his or her employer, for retaliating against the executive in violation of the employer’s own code of conduct is essentially a breach of contract claim.

The executive or professional alleges that the employer, by publishing a code of conduct containing provisions prohibiting retaliation, formed a binding contract between the employer and the executive. The professional or executive further alleges that he or she came forward to raise his or her concerns about what the executive believed in good faith to be a violation of law or a violation of the employer’s code of conduct. The executive or professional charges that the employer retaliated against the executive for reporting his or her concerns. The employer’s retaliatory actions, the executive or professional maintains, are a violation of the binding contract between the employer and the executive.

Employers’ Codes Of Conduct Often Protect A Wider Range Of Conduct By Employees Than Do The New York Whistleblower Law Or Other Federal Or State Whistleblower Statutes

Many employers’ codes of conduct shield, from retaliation, a broader range of activities by employees than do federal or New York whistleblower statutes.

For example, the New York Whistleblower Law (the “Whistleblower Law”), N.Y. Labor Law § 740, renders it unlawful for an employer or an employer’s agent, among other ” ʹ[r]etaliatory action[s],ʹ ” to discharge, suspend, demote, penalize, threaten, or discriminate in any other manner against any employee or former employee because the employee, among other actions, discloses or threatens to disclose to a supervisor or to a public body, objects to, or refuses to participate in, an activity, policy or practice of the employer that the employee reasonably believes is in violation of a federal, state, or local law, rule, or regulation or that the employee reasonably believes poses a substantial and specific danger to the public health or safety.

In contrast, many companies’ codes of conduct shield, from retaliatory actions by employers, not only employees who disclose, object to, or refuse to take part activities of the employer that the employees reasonably believe are in violation of a law, rule, or regulation, but also workers who disclose, object to, or refuse to take part in violations of the companies’ codes of conduct. 

Disclaimers May Prevent Executives And Professionals In New York From Enforcing Anti-Retaliation Provisions Of Employers’ Codes Of Conduct

However, the presence of a disclaimer in an employer’s code of conduct has prevented numerous employees from enforcing anti-retaliation promises contained in the corporate code of conduct.

Regardless of the specificity of the promise or the employee’s reliance on it, New York state courts and federal district courts sitting within New York State routinely decline to enforce an employer’s code of conduct’s anti-retaliation guarantee where the employer’s code includes a disclaimer that clearly declares the at-will status of the employee.

Money Damages In An Action Against An Employer for Retaliating In Violation Of The Employer’s Code Of Conduct May Be Significantly Lower Than In A Statutory Whistleblower Action

Further, the money damages awarded in lawsuits against employers for retaliating against executives or professionals in breach of the employers’ own codes of conduct may be substantially lower than the monies recovered in executives’ or professionals’ actions against employers under federal or New York retaliatory discharge statutes.

For example, remedies available to an employee in a lawsuit brought under the New York Whistleblower Law include, among other things, reinstatement; front pay; compensation for lost wages and benefits; payment by the employer of reasonable attorney’s fees, costs, and disbursements; a civil penalty of up to $10,000; and punitive damages.

By contrast, in an employee’s lawsuit against an employer for violating the anti-retaliation promises set forth in the employer’s code of conduct, the employee typically may recover compensatory damages, but not punitive damages or attorney’s fees.

Criado v. ITT Corp.: A Successful Lawsuit Against A Company in New York For Retaliating Against Its Professional Employee In Breach Of The Company’s Own Code Of Conduct

In Criado v. ITT Corp. (S.D.N.Y.), the plaintiff individual, Richard Criado, successfully sued his employer in New York for violating the employer’s code of corporate conduct by firing Mr. Criado for reporting, to a senior vice president of the employer, suspected unethical or unsafe conduct by the company.

Mr. Craido had been employed by the defendant, ITT, for 23 years as a pilot, flying executives around the world in the company’s private fleet of planes. ITT’s Code of Corporate Conduct stated: “If you know or have good grounds for suspecting that any illegal or unethical conduct has occurred or is planned by anyone, you are expected to report it. . . . Your report, which may be anonymous, will be treated confidentially, and you will in no way be penalized for making such a report” (emphasis added).

Mr. Criado reported in confidence, to ITT’s Senior Vice President for Administration Ralph Pausig, a rumor, which had long circulated at ITT’s hangar, that ITT intended to hire a vendor’s son as a co-pilot, even though the vendor’s son had little flight experience. Despite Pausig’s pledge of confidentiality, Pausig disclosed Mr. Criado’s identity to ITT in the course of investigating Mr. Criado’s suspicions. ITT shortly fired Mr. Criado for disloyalty. Following a jury trial, the jury found that ITT’s written and oral assurances of confidentiality and non-retaliation were contractually binding and awarded Mr. Criado $250,000 for wrongful discharge.

To sum up, and depending on the particular facts, you, the executive or professional, may have a cause of action against your employer in New York for firing you for reporting, opposing, or refusing to participate in violations of the company’s code of conduct. You may have such a cause of action even if your employer terminated you for conduct that is not protected under the New York Whistleblower Law.

However, the inclusion, in your employer’s code of conduct, of a disclaimer may prevent you enforcing anti-retaliation promises in your employer’s code of conduct. Further, the money damages that you recover in a lawsuit against your employer for breaching the company’s own code of conduct may be substantially lower than the money damages recoverable in an action brought under the New York Whistleblower Law or under another state or federal retaliatory discharge statute.

If you are an executive or a professional in the New York City metro area and you believe that you have been wrongfully terminated, that you’ve been denied salary, bonuses, commissions, or other wages that are owed to you, or that your employer has failed or refused to reasonably accommodate your disability, call New York City Wrongful Termination Lawyer David S. Rich at (347) 835-5688 today.