Minnesota Whistleblower Act

A whistleblower is an employee who exposes information or activity that he or she honestly believes is illegal.  Because of the importance of exposing illegal activity, Minnesota enacted the Whistleblower Act as protection for employees who report suspected illegal activity to their employer.

Protected Conduct under the Minnesota Whistleblower Act:

Generally, the Minnesota Whistleblower Act makes it illegal to discharge, discipline, threaten, or penalize an employee for:

  • Good faith reporting of known, suspected or planned violations of law;
  • Participating or cooperating in government hearing or investigation;
  • Refusing to commit an illegal act or an act the employee objectively believes is a violation of law;
  • Good faith reporting of an employer’s violation of state or federal healthcare standards; and
  • A public employee’s reporting of a scientific study.

Damages under the Minnesota Whistleblower Act:

Damages for violations of the Minnesota Whistleblower Act include, but are not limited to, reinstatement, back pay, compensatory damages, and the expungement of any adverse records of an employee who was the subject of the alleged acts of misconduct. Minn. Stat. § 181.935(c).  The employee can also recover reasonable attorney’s fees, costs, and interest. Minn. Stat. § 181.935(a).  Further, the employee can seek punitive damages if the court finds clear and convincing evidence that the employer deliberately disregarded the employee’s rights. Minn. Stat. §§ 549.191, 549.20; see Morrow v. Air Methods, Inc., 884 F. Supp. 1353, 1357 (D. Minn. 1995) (holding the Whistleblower Act does not foreclose punitive damages).

Amendments to the Minnesota Whistleblower Act:

In 2013, the legislature expanded whistleblower protections of Minnesota employees.  The legislature made three important changes.

First, it modified the definition of a “good faith” report.  Previously, courts defined “good faith” to require the employee to show the purpose of making the report was made to expose an illegality, i.e., to “blow the whistle,” at the time the report was made. Obst v. Microtron, Inc., 614 N.W.2d 196, 197 (Minn. 2000).  This made claims under the Whistleblower Act very difficult for employees. After the 2013 amendment, however, “good faith” now only requires that the employee not make statements or reports “knowing that they are false or that they are in reckless disregard of the truth.” Minn. Stat. §§ 181.931, subd. 4, 181.932, subd. 3.  In other words, a report is in good faith if the employee makes it without knowing it to be false or reckless ignorance of the truth.  The distinction is subtle but significant.

Second, the amendment now defines “penalize.”  “Penalize” now means conduct by an employer that might dissuade a reasonable employee from making or supporting a report, including post-termination conduct by an employer or conduct by an employer for the benefit of a third party. 4 Minn. Prac., Civil Jury Instr. Guides 55.68 (6th ed.).

Lastly, the amendment also expanded the definition of a “report.”  Previously, a “report” had to be about actual or suspected illegal conduct.  Now, the Whistleblower Act also includes a “planned” illegal act.  As such, an employer can face a whistleblower claim if it penalizes an employee for reporting a planned illegal act – even if that act never takes place.

Few cases have addressed the Whistleblower Act since its amendment.  And none of those cases have discussed the impact of the amendment.  Accordingly, it appears the traditional burden-shifting test (called the McDonnell Douglas test) applies. See Elkharwily v. Mayo Holding Co., No. 15-1492, — F.3d —, (8th Cir. May 20, 2016).

Test for Whistleblower Claims in Minnesota:

In the absence of direct evidence of retaliation, courts apply the McDonnell Douglas burden-shifting framework to the Minnesota Whistleblower Act claims.  Under McDonnell Douglas, the initial burden is on the plaintiff to establish a prima facie case.  To establish a prima facie case, a plaintiff must prove: (1) conduct by the employee that is protected by the Act, (2) an adverse employment action directed at the employee, and (3) a causal connection between the protected conduct and the adverse action.  Showing a causal connection is often difficult because the employer will claim the employee was terminated for poor performance.

If the plaintiff establishes a prima facie case, the burden shifts to the employer to articulate a legitimate reason for the adverse action.  Once a legitimate reason is articulated, the burden then shifts back to the plaintiff to prove that the proffered reason is merely a pretext and that retaliatory animus motivated the adverse action.

The McDonnell Douglas test is favorable to employers because even if a report is protected by the Minnesota Whistleblower Act, the employee must show the employer’s alleged reason for termination is merely a pretext or sham.  In other words, where an employee makes a protected report, but has poor job performance justifying termination, the employee’s whistleblower claim will fail.

Historical perspective and competing public policies help show why it is so difficult to bring a successful claim under the Whistleblower Act.  Minnesota preserves the long-standing presumption of at-will employment – an employer can dismiss an employee hired for an indefinite term at any time. See Cederstrand v. Lutheran Bhd., 263 Minn. 520, 532, 117 N.W.2d 213, 221 (1962); Pine River State Bank v. Mettille, 333 N.W.2d 622, 627 (Minn. 1983).  This policy preserves “the employer’s prerogative to make independent, good faith judgments about employees [that] is important in our free enterprise system.” Id.  While the Minnesota legislature modified this policy by enacting the Minnesota Whistleblower Act, this perspective shows why these cases are often difficult to prove.

Conclusion

The 2013 amendments probably do not drastically alter the landscape of whistleblower claims.  The claims are difficult to prove and employers retain many defenses.  Nonetheless, the limits of the new amendments have not been tested in courts . . . yet.  Depending on the courts’ interpretation, decades of employer-friendly precedent may have overturned.  In light of the amendments, causation will be the key element.

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