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Hellmuth & Johnson

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Minnesota whistleblower statute refresher at its 2nd anniversary

Two years have passed since the Minnesota Whistleblower statute was significantly expanded.  On May 24, 2013, the amended law went into effect, which significantly enlarged the rights of whistleblowers that imposed greater restraints on employers in taking retaliatory action against employees who engaged in whistleblowing activities. 

The two year anniversary provides an opportune time for a refresher on the current Minnesota whistleblower statute. The law dates back to the late 1980’s, when the Minnesota Court of Appeals first recognized whistleblower rights, followed by the enactment of a limited statute to protect whistleblowers, which then preceded an affirmance by the Supreme Court of the initial appellate court whistleblowing decision.

The treatment of the whistleblower law vacillated over the years by the Minnesota courts. In early years, they were generally supportive but, in later years, a number of restrictions developed, which made whistleblowing claims more difficult for employees to pursue. 

Under the old law, whistleblowers were basically confined to four categories: employees who report violations of criminal laws or regulations to management; workers who participate in government investigations in the workplace; employees who refuse to follow, in good faith, illegal directions by employers; along with a special provision for whistleblowers in the health care industry to report substandard practices. 

Under the new law, employers who would take retaliatory action against whistleblowers, including termination, are subject to civil litigation, including punitive damages and attorney fees for successful claimants.

Under the new law, protection for whistleblowers are expanded to cover the following matters:  violations of civil laws or rules; “planned violation” of laws that have not yet occurred; and communications by state government employees to legislators and other state officials.

Meanwhile, new developments are occurring at both state and federal levels concerning whistleblowers. The Minnesota Supreme Court will be deciding soon the statute of limitations for whistleblowers. Although the statute does not mention any particular limitations, the court decisions over the years have construed it as two years, consistent with other Minnesota laws for employment-related claims. But the Minnesota Court of Appeals late last year Ford v. Minneapolis Public Schools, 857 N.W.2d 725 (Minn. App., 2014) rev. granted (Feb. 25, 2015).  expanded the statute of limitations to six years, reasoning that the Minnesota statute of limitations for rights created by statute, Minn. Stat. § 541.07(3) applies to whistleblowing claims. The Supreme Court agreed late in the winter to review that determination and a decision is expected later this year whether whisteblowers will be subject to a 2-year or longer 6-year limitations period.

At the Federal level, the Securities and Exchange Commission (SEC) the agency that regulates publicly traded stocks, has taken a hard line against the companies that impose restrictive confidentiality agreements upon prospective whistleblowers. It recently imposed a $130,000 fine upon a Texas technology and engineering company that required employees to sign agreement stating that they will notify the company, in advance, before reporting whistleblower concerns to the SEC.  That action was part of what the FEC claims to be its plan for “vigorous enforcement” of whistleblower laws, which are contained in the Dodd-Frank Financial Overhaul Act, dating back to the early 2000’s. The $130,000 fine, although modest, follows the imposition of a much larger penalty on a hedge fund, which retaliated against whistleblowing employees. 

Whistleblowers have been a vital force in the workplace for more than 25 years, dating back to the late 1980’s. The new Minnesota law, now marking its second anniversary, gives them more rights and remedies, which necessities that employers act warily in dealing with whistleblowing employees.