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Court Reaffirms that New Jersey’s Whistleblower Protection Law Is Not Bound By the Borders of the State

The Superior Court of New Jersey, Appellate Division, recently authored a significant ruling that reaffirmed and strengthened the resolve of New Jersey’s whistleblower law, the Conscientious Employee Protection Act (“CEPA”). In Halliday v. Bioreference Laboratories, Inc., a Texas based employee, Halliday, of a New Jersey Company, Bioreference Laboratories, Inc. (“BLI”), raised numerous complaints regarding her employer’s Houston, Texas laboratory being out of compliance with the Clinical Laboratory Improvement Amendments (“CLIA”) and thus in violation of federal law. Ms. Halliday was fired within a year of raising her complaints, leading her to file a CEPA claim against her former employer.

BLI moved for summary judgment arguing that Texas law, not New Jersey law, should apply. The trial court agreed with BLI, finding that Texas law governed the issue. Moreover, because Texas law governed the issue, and Texas lacks a whistleblower law in parity with CEPA, Ms. Halliday’s claim failed.  The trial court further noted that even if CEPA applied to the issue, Halliday failed to present evidence that her termination was connected to her complaints. As such, the trial court granted BLI’s motion for summary judgment. Ms. Halliday then appealed. On appeal, the Superior Court sided with Ms. Halliday, vacated the trial court’s ruling and remanded the issue back to the trial court.

The Superior Court’s holding emphasized the core ideas of CEPA as a “remedial legislation” that was created to advance an important social goal, namely “to encourage, not thwart, legitimate employee complaint.” Pursuant to this ideal, the Superior Court looked to the definitional language used in CEPA on the terms “employee” and “employer” and held definitively that, “[CEPA] does not limit the definition of employer to persons or entities located in New Jersey, and the definition of employee is not restricted to individuals performing services in New Jersey.” This landmark holding cements the idea that CEPA is an inclusive legislation that is not fully limited to the borders of New Jersey.

However, the Superior Court was explicit and careful in its ruling to note that while an out-of-state employee of a New Jersey employer may be able to bring a CEPA, it is not automatic or without other considerations. The issue is still beholden to New Jersey’s choice of law jurisprudence, and that New Jersey will continue to ” promote interstate comity and due respect for the laws and interests of sister states[.]” To this end, New Jersey Courts must adhere to the “most significant relationship test.” Wherein, the courts will “presume that the law of the state where the injury occurs applies.” However, this presumption can be overcome by a showing that New Jersey has a “more significant relationship with the parties” based on an assessment of each state’s contacts. This analysis is a balancing of four factors. First, where the injury occurred. Second, where the conduct causing the injury occurred. Third, “the domicile, residence, nationality, place of incorporation and place of business of the parties.” And fourth, where the relationship of the parties is centered.

As the trial court failed to properly investigate, analyze and balance these four factors, the Superior Court remanded the issue back to the trial court with the instruction to apply these factors and come to a definitive factual determination. Importantly, without this determination based on a full and thorough analysis, the Superior Court refused to uphold the trial court’s ruling, and thus vacated BLI’s granted summary judgment. While the issue has not been fully resolved at this time, the ruling is clear that CEPA is not automatically bound to the borders of New Jersey.

This ruling sends an important message to employers in New Jersey who employ workers outside of New Jersey’s borders: even if your employees are not in the state, you are still beholden to CEPA. Having out-of-state workers does not give employers the green light to retaliate against those employees when they raise legitimate complaints regarding the practices of their employer, and that the location of their employees does not shield employers from the consequences that await them for their retaliatory actions headquartered in New Jersey. It also signals the reverse, that New Jersey employees with an out-of-state employer are still protected under CEPA. Through this ruling, the Superior Court has once again reaffirmed that “CEPA is the most ‘far reaching ‘whistleblower statute’ in the nation.’”

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