Wrongful Discharge Claims: Retaliation in Violation of Public Policy
North Carolina is an at-will state, which generally means employers can fire most employees at any time and for any reason or no reason at all. However, there are exceptions. This includes common law exceptions under the Wrongful Discharge in Violation of Public Policy doctrine, which allows wrongfully terminated employees to file retaliation claims when they have been discharged due to:
- The employee’s refusal to violate the law at the employer’s request;
- An employee exercising a protected right; or
- An employer’s action that is against law or public policy.
The protections apply to whistleblowers because wrongful discharge claims in North Carolina cannot be based on federal public policy (including federal law or the U.S. Constitution), and because employees are protected from retaliatory discharge for reasons that violate North Carolina public policy.
As an example: North Carolina law provides employees the right to collect workers’ compensation benefits, and an employer who retaliates against an employee for exercising that right violates North Carolina public policy. An employee in this situation can file a wrongful discharge claim over their employer’s violation of state policy.
North Carolina Courts have held that employers cannot terminate employees for reasons that contravene public policy, including retaliatory termination for:
- Refusing to engage in unlawful conduct;
- Refusing to engage in conduct harmful to public safety;
- Complying with jury duty or providing truthful testimony in court;
- Assisting law enforcement in a criminal investigation;
- Refusing to work for less than the state minimum wage;
North Carolina Courts require employees who bring wrongful discharge claims to allege specific conduct that violated a specific expression of North Carolina’s public policy and to prove their case accordingly.
Plaintiffs who prevail in wrongful discharge claims are entitled to damages for their emotional distress, pain and suffering, and lost future wages.
The statute of limitations for wrongful discharge claims in North Carolina is 3 years from the date of the alleged retaliation.
Statutory Protections: Retaliatory Employment Discrimination Act (REDA):
In addition to common law protections, there are also statutory protections for whistleblowers under laws passed by the North Carolina General Assembly. This includes protections under the Retaliatory Employment Discrimination Act (95-240, et. seq.) that protect both private and public employees.
Under REDA, employers are prohibited from terminating employees (or discriminating against them) because they engaged in, or threatened to engage in, protected activities.
This includes: filing a claim / complaint, initiating an inspection / investigation or other proceeding, exercising a right, or providing information to any person in regard to the following N.C. laws:
- Workers’ Compensation Act (i.e. filing a workers’ comp claim or helping another employee file a claim)
- Wage and Hour Act (i.e. reporting overtime violations, refusing to work without a mandated break, etc.)
- Occupational Safety and Health Act (i.e. reporting workplace safety violations)
- Domestic Violence Laws (i.e. taking time off work to file for a protection order)
- Juvenile Code (i.e. conduct required of parents to attend hearings, provide transportation, or pay for medical treatment)
- Paraphernalia Control Act
- Mine Safety and Health Act
- National Guard Employment Rights Act
Other statutory laws also protect whistleblowers against discharge and discrimination, including discharge or discrimination based on:
- Sickle cell trait or hemoglobin C trait
- Genetic testing and genetic information
- Public workers reporting violations, fraud, or gross mismanagement
- Teachers and school faculty reporting sexual harassment
- Testifying in proceedings under the Employment Security Act, including unemployment
- Assisting in investigations involving the Retirement Systems Board
- Assisting in investigations or proceedings over toxic or hazardous substances.
Employees who believe they have been retaliated against in violation of REDA can file complaints with the North Carolina Department of Labor (NCDOL) within 180 days of their employer’s alleged retaliatory action for a preliminary determination. The NCDOL’s Employment Discrimination Bureau (EDB) will either:
- Issue a right-to-sue letter permitting the employee to file a lawsuit, or
- Correct the violation through conference or other informal methods. If these informal measures do not work, the EDB may file a lawsuit on the employee’s behalf, or issue a right-to-sue letter.
Employees may only file lawsuits over alleged retaliatory actions if they have been granted a right-to-sue letter from the NCDOL, and must file their lawsuit within 90 days of the date the letter was issued.
Under REDA, retaliated employees who prevail in their claims may be entitled to:
- Injunctive relief (to stop any ongoing unlawful actions)
- Lost wages / lost benefits
- Attorneys’ fees
- Treble damages (if conduct is found to be willful).
North Carolina False Claims Act § 1-607
The North Carolina False Claims Act allows whistleblowers to file qui tam lawsuits if they know of fraud against the state government, including fraud committed by their employer. Under the N.C. False Claims Act, any person or entity can be held liable for, among other violations:
- Presenting false or fraudulence claims for payment to the state;
- Misappropriating state property;
- Deceptively avoiding binding obligations to pay the state;
The statute of limitations for filing a lawsuit under the North Carolina False Claims Act is 3 years from the date facts were known, or reasonably should have been known, with a maximum of 10 years from the date of the alleged violation. Unlike the Federal False Claims Act, North Carolina does not permit state employees to be Plaintiff-Relators if they gain their information through their employment.
Retaliation Protections Under the N.C. FCA
The North Carolina False Claims Act also provides whistleblower protections against employers who retaliate against employees for filing a qui tam claim, or initiating or assisting in any investigation. Retaliatory conduct may include:
- Demotion or suspension
- Pay or hour reduction
- Hindered prospects of promotions
- Harassment or intimidation
Damages & Whistleblower Awards
Under the N.C. FCA, employees who have faced retaliation are entitled to the following damages:
- Two times the wages due in back pay
- Interest on back pay
- Compensation for any damages sustained due to retaliation / discrimination, including costs of litigation and reasonable attorneys’ fees.
In addition to compensatory damages, whistleblowers are also entitled to a monetary award if they prevail in their claim. This includes:
- 15-25% of any recovery secured with the intervention of the North Carolina Attorney General; or
- 25-30% of any recovery if the whistleblower successfully prosecutes their case without the N.C. AG.
Whistleblower awards may be subject to reductions by the Court if whistleblowers were involved in planning or initiating fraud, or if their claim is based largely on publicly disclosed information.
Federal False Claims Act & Other Federal Whistleblower Statutes
The Federal False Claims Act (31 U.S.C. § 3729 - 3733) allows whistleblowers with information about fraud committed against the federal government, including federal programs or contracts, to file qui tam lawsuits.
Additionally, there are other federal whistleblower statutes that combat fraud and provide remedy to whistleblowers who report fraud. Claims of fraud can be made under one statute, or multiple states simultaneously. Examples include:
- Dodd–Frank Wall Street Reform and Consumer Protection Act, § 922(a), 15 U.S.C. § 78u–6,
- Motor Vehicle Safety Whistleblower Act, 49 U.S.C § 30172
- Financial Institutions Reform, Recovery and Enforcement Act, 12 U.S.C. § 1833a
- Internal Revenue Service Whistleblower Act, 26 U.S.C. § 7623
- Other federal and state specific fraud statutes.
In qui tam actions, a Relator, the person who files suit on the government’s behalf, plays an important role in exposing and correcting various forms of fraud involving a range of federal programs and funds, such as:
- Paycheck Protection Program (PPP) fraud (CARES Act) and fraud involving other COVID-19 stimulus funds;
- Disaster relief fraud, including fraud involving TARP, EESA, or ARRA;
- Health care fraud, including Medicare and Medicaid fraud;
- Corporate fraud in publicly traded companies, and Sarbanes-Oxley / Dodd-Frank violations.
- Fraud in the provision of goods or services in military / defense contracts;
- Procurement fraud, such as providing inferior goods or inflating rates in government contracts;
- Fraud involving education and other public works funding;
- Pharmaceutical fraud involving illegal kickbacks and violations of FDA regulations.
Depending on the alleged fraud, various government agencies may be involved in investigating and prosecuting claims, including the HHS, OIG, OSHA, FBI, IRS, and SEC, among others.
Our attorneys at Edwards Kirby can assist whistleblowers in working with state or federal government agencies when bringing qui tam actions.
What Are the Rewards for Federal Whistleblowers?
Under the False Claims Act, the federal government may recover up to three times the amount of money lost due to fraud (treble damages). Whistleblowers who report fraud are entitled to a percentage of the recovery. Depending on various factors, whistleblowers may be awarded between 10% and 30% of the total recovery.
Though every case is different, many qui tam actions settle for millions of dollars, and some for tens of millions of dollars. According to the publicly available data, whistleblowers receive an average of $320,000 in a $2 million case, if there is a single whistleblower.
Though whistleblowers who planned or initiated a fraudulent scheme cannot receive awards under the federal False Claims Act, whistleblowers who participated may be eligible to receive rewards if they did not have knowledge of the fraud, or were threatened or forced to participate.
Federal Whistleblower Protections
Though whistleblowers are rewarded when a recovery is made, they take great risks when reporting violations and fraud to the government – often in the form of adverse employment actions.
As with the N.C. False Claims Act, the federal FCA protects whistleblowers against retaliatory actions such as termination, demotion, suspension, reduced pay or hours, and harassment.
Who Can Become a Federal Whistleblower?
Any individual with evidence of fraud or unlawful activity against the federal government can be a whistleblower. Though documentation is crucial in qui tam cases, it is not necessarily required to become a whistleblower. Whistleblowers also do not have to be employees or direct associates of wrongdoers; they simply need to have some evidence of fraud or unlawful activity.
Edwards Kirby can evaluate your potential case and evidence you’ve obtained to determine whether you may be able to pursue a qui tam action.