What you need to know:
Last Monday, the Connecticut Supreme Court ruled in Trusz v. UBS Realty Investors that private sector employees who make whistleblower statements pursuant to their official job duties are protected from employer discipline. The Trusz decision is particularly significant as it comes in the wake of a recent Second Circuit decision in Berman v. Neo@Ogilvy, which extended whistleblower protections under the Dodd-Frank Act to those employees who complain internally, rather than to the SEC.
What you need to do:
Employers, especially those with employees in Connecticut, should review and update their whistleblower compliance and related training programs to ensure that employees at all levels understand best practices for responding to and investigating employee complaints.
The plaintiff, Richard Trusz, is the former head of UBS’s Realty valuation unit and a managing director of UBS Realty. In early 2008, he reported to management that he believed there were errors in the valuations of certain UBS Realty properties, which should be corrected and disclosed. UBS’s investigation of Trusz’s report confirmed that there were valuation errors, but determined that they were not material. Trusz disagreed and continued to express concern.
Following his termination from UBS, in 2009, Trusz sued UBS in Connecticut federal court, alleging, among other things, that he was terminated in violation of Connecticut General Statutes Section 31-51q for reporting securities laws violations by UBS. The Connecticut statute at issue provides that any employer shall be liable for disciplining or discharging an employee as a result of the employee’s exercise of free speech rights under either the US or Connecticut Constitutions.
The case came before the Connecticut Supreme Court upon a request from the Connecticut federal court to opine on whether the 2006 US Supreme Court decision in Garcetti v. Ceballos applies to Trusz’s Connecticut state law claim. In Garcetti, the US Supreme Court held that when “employees make statements pursuant to their official duties, the employees are not speaking as citizens for First Amendment purposes, and the Constitution does not insulate their communications from employer discipline.”
In a 7-0 decision, the Connecticut Supreme Court unequivocally concluded that Garcetti’s holding does not apply to an employee’s claim that his employer violated Connecticut General Statutes Section 31- 51q. Instead, the court reasoned that Connecticut’s state constitution protects public employees from discipline by their employers with respect to speech made pursuant to their official job duties on matters of significant public interest. The court went on to hold that Connecticut law provides the same protection in the private sector to employee speech made pursuant to official job duties. The court also set out a balancing test, whereby if an employee’s job-related speech relates to a matter of public concern, that speech is protected and “trumps” the employer’s right to control employee speech by disciplining or discharging the employee.
The Trusz decision is particularly significant in that it expressly expands the rights of private sector whistleblowers (and limits employers’ rights) in a state which is home to a number of large employers in the financial and insurance industries. In light of the decision, employers are advised to review and update their whistleblower compliance and training programs and to proceed with caution when disciplining or terminating an employee that has raised either internal or external complaints. Employers should consult with employment counsel and stay apprised of new developments in this area, especially in light of other recent decisions, such as the Second Circuit’s ruling in Berman v. Neo@Ogilvy, which have similarly expanded protections for whistleblowers.