On May 8, 2012, the New York Court of Appeals again reaffirmed the strength of New York’s at-will employment doctrine in rejecting a wrongful discharge claim in Sullivan v. Harnisch, 19 N.Y.3d 259, 969 N.E.2d 758 (2012). The court declined to extend the limited exception to the at-will employment doctrine recognized in prior cases to a hedge fund compliance officer who confronted the president of his employer regarding allegedly improper trades. The court emphasized that any modification to the employment at-will doctrine should be left to the legislature.
Plaintiff Joseph Sullivan, the former COO and compliance officer of Peconic Partners and Peconic Asset Managers, alleged that he was terminated after raising concerns regarding certain stock sales made by defendant William Harnisch for his personal accounts. Within days of the confrontation, Sullivan’s employment was terminated. He argued that his discharge fell within an exception to the at-will doctrine recognized in Wieder v. Skala, 80 N.Y.2d 628, 609 N.E.2d 105 (1992), in which a lawyer claimed to have been dismissed by his law firm because he insisted that the firm report professional misconduct in accordance with the disciplinary rules. The court in Wieder declined to dismiss the plaintiff’s claim for wrongful discharge, ruling that the relationship between a lawyer and law firm created an implied-in-law obligation to uphold the standards of the legal profession that trumped the employment at-will doctrine.
The Sullivan court held in a 5-2 decision that the Wieder exception did not apply to the role of a compliance officer, because Sullivan’s “regulatory and ethical obligations and his duties as an employee” were not “‘so closely linked as to be incapable of separation,’” as had been the case in Wieder. Chief Judge Jonathan Lippman dissented.
The decision represents a positive development for employers, who can rest assured that New York courts continue to be reluctant to expand the narrow Wieder exception to the robust employment at-will doctrine.