Pennsylvania Whistleblower Law

by Matthew Dolfi

Employers who receive even one dollar of state funding should be aware of developments in the Pennsylvania Whistleblower Law because the statute carves out an important exception to the "at-will" employment doctrine. An employer who could once have terminated an employee for any reason, or for no reason at all, may find that the Whistleblower Law subjects them to liability for wrongful discharge.

In 1986, the Pennsylvania Legislature enacted the Whistleblower Law, 43 Pa.C.S. §§ 1421-1428, to protect government employees from wrongful discharge and retaliation where the employee, in good faith, blows the whistle on the employer for acts of wrongdoing. The Whistleblower Law applies only to employers who are a “public body” but has been interpreted broadly to include employers who are funded in any amount by or through the Commonwealth or a political subdivision. Some apparent examples include counties, cities, townships, and school districts. But a private medical institution that receives annual appropriations from the state is also a “public body.” Riggio v. Burns, 711 A.2d 497 (Pa. Super. 1998). Likewise, a private trucking company that received economic development grants, job creation tax credits, and job training assistance from a political subdivision could be deemed a “public body.” Arner v. PGT Trucking, Inc., 2010 U.S. Dist. LEXIS 26814 (W.D. Pa. 2010). Conversely, a publicly traded, for-profit corporation that merely accepts Medicaid reimbursements is not a “public body.” Cohen v. Salick Health Care, Inc., 772 F. Supp. 1521, 1527 (E.D. Pa. 1991). The critical distinction is whether “a specifically appropriated amount of State funds is provided for the purpose of aiding the agency in achieving public goals.” Davis v. Point Park Univ., 2010 U.S. Dist. LEXIS 125867, *29-30 (W.D. Pa. 2010). A review of the Whistleblower cases reveals that the determination of whether an employer is a “public body” most often involves a factual question.

The exception to the “at-will” employment doctrine created by the Whistleblower Law means that an employer who violates the Law may, in addition to the statutorily available remedies, also be liable for wrongful discharge. Traditionally, an at-will employee could only maintain a wrongful discharge action where a clear mandate of public policy had been violated by the employee’s termination. But courts have held that a violation of the Whistleblower Law is itself against public policy such that an employee terminated for blowing the whistle may, in addition to her whistleblower claim, assert a cause of action for wrongful discharge. In Wilhem v. Borough of Braddock, 28 Pa. D. & C. 4th 211 (Allegheny Cty. 1996), Judge Friedman held that the Whistleblower Law was “a clear direction to the courts and to certain employers that firing an employee whose only failure is reporting the wrongdoing of his employer is against the public policy of Pennsylvania and will not be allowed by the legislature.”

The combination of a whistleblower claim with a wrongful discharge action is significant because, although punitive damages are not recoverable under the Whistleblower Law, they may be awarded for wrongful discharge. Moreover, remedies available under the Whistleblower Law may include, in addition reinstatement, back wages, fringe benefits, seniority rights, and actual damages, an award of attorney’s fees and costs. Because attorney’s fees can become excessive as a case nears trial, an early and comprehensive evaluation of a whistleblower claim is essential.

For good reason, the burden of proof in a Whistleblower case is substantial. An employee must prove by a preponderance of the evidence that, prior to the alleged reprisal, the employee had reported or was about to report, in good faith, an instance of wrongdoing or waste. 43 Pa.C.S. § 1424(b). Waste and wrongdoing include only substantial abuses of government funds or significant violations of a law, code, or regulation. 43 Pa.C.S. § 1422. The employee must further establish, by “concrete facts and circumstances,” that the report led to some retaliatory action against him/her. McClain v. Munn, 2008 U.S. Dist. LEXIS 28985 (W.D. Pa. 2008).

An employer may defend a Whistleblower claim by proving that the action taken against the employee occurred for legitimate reasons. The burden then shifts back to the employee to prove that the employer’s reasons were pretextual.

Forum selection in a whistleblower case is important because federal district courts have acknowledged the right to a jury trial under the 7th Amendment to the U.S. Constitution, while state courts have not. Given the divergence between the state and federal courts’ application of the right to a jury trial, a sympathetic plaintiff could have very different results in a Whistleblower case depending on the choice of venue.

Because the broadly defined Whistleblower Law may subject seemingly private employers to a new arena of wrongful discharge, its application should be considered before an employee is let go. A seemingly innocent report of misconduct to a supervisor could lead to a whirlwind of litigation.