U.S. Supreme Court Finds Sworn Testimony Outside Scope of Regular Job Duties Entitled to First Amendment Protection

This post was contributed by Gina E. McAndrew, an Associate in McNees Wallace & Nurick LLC's Labor & Employment Practice Group in Scranton, Pennsylvania.

While the labor and employment law world is abuzz after the decisions in Burwell v. Hobby Lobby and Harris v. Quinn (cases this Blog will cover in the coming days), the United States Supreme Court also issued a decision further clarifying protected speech under the First Amendment. In Lane v. Franks, et al., the Court analyzed whether a public employee, testifying under subpoena, was entitled to First Amendment protection when his testimony was outside of the scope of his job duties.

The employee, Edward Lane, was hired by Central Alabama Community College as Director of Community Intensive Training for Youth ("CITY"), a statewide program in Alabama for underprivileged youth. Shortly after his employment began he conducted an audit of CITY's expenses. The audit led to the termination of an Alabama State Representative, who was on CITY's payroll. Following the termination decision, Lane provided testimony against the Representative in support of an FBI investigation of the Representative. Shortly after his testimony, twenty-nine CITY employees were laid off, including Mr. Lane. While twenty-seven of these terminations were rescinded, Mr. Lane's was not.

Lane filed suit, claiming he was terminated in retaliation for providing testimony against the Representative. The District Court found that his testimony was not protected by the First Amendment. The District Court stated that public employees speaking pursuant to official job duties were "not speaking as citizens for First Amendment purposes." The District Court opined that Lane learned of the information included in his testimony while an employee of CITY, so his "speech [could] still be considered as part of his official job duties." Lane appealed, first to the 11th Circuit Court of Appeals and then to the United States Supreme Court.

In overturning the lower courts' decisions, the Supreme Court restated the special test applied to public employees for First Amendment protection purposes. The first part of this analysis examines whether the speech in question was made pursuant to official duties or as a citizen and whether the employee was speaking on a matter of public concern. If the employee is speaking as a citizen and on a matter of public concern, the second part of the test is whether the public employer has "adequate justification for treating the employee differently from any other member of the general public."

The Court noted that "[t]ruthful testimony under oath by a public employee outside the scope of his ordinary job duties is speech as a citizen for First Amendment purposes," even when that speech "relates to his public employment or concerns information learned during that employment." The Court noted that such testimony is a "quintessential example of speech as a citizen," as it comes with the obligation to tell the truth. This obligation is separate and distinct from any obligations a public employee may have to his employer.

The Court opined that the essential question is whether the relevant speech is "ordinarily within the scope of an employee's duties" and "not whether it merely concerns those duties." In its analysis, the Court found that such public employee speech holds special value because of how public employees gain knowledge, and is "necessary to prosecute corruption by public officials." The Court ultimately found Lane's sworn testimony, pursuant to a subpoena, to be speech as a citizen and on a matter of public concern. In applying the second step of the analysis, the Court found that the employer had no legitimate interest in treating Lane differently from any other member of the public, finding that his testimony did not involve any false statements or disclose any privileged or confidential information.

The Court's decision provides useful guidance to public employers in the area of First Amendment protection for public employees. However, future decisions will likely shed light onto when speech is "ordinarily within the scope of an employee's duties" sufficient to warrant First Amendment protection. Many employees, especially public employees, provide testimony on a regular basis pursuant to official job duties. Accordingly, while Lane is helpful, First Amendment issues must still be evaluated on a case-by-case basis.

Three in a Row? That's a Trend

It seems like we have been spending a lot of time discussing successful appeals of arbitration decisions lately, which is been a good thing for Pennsylvania employers. Recently, we reported on two cases in which an employer successfully appealed a negative arbitration decision. Historically, such successful appeals have been difficult. However, the current trend continued when a decision from the Commonwealth Court of Pennsylvania, sitting en banc (as full court rather than simply a three judge panel), rounded out the trifecta.

In Pa. Dept. of Corr. v Pa. State Corr. Officers' Assoc. (pdf), the court was asked to analyze whether a grievance arbitrator's decision reinstating corrections officers accused of inmate abuse was rationally derived from the collective bargaining agreement, and of so, whether the award violated a well-defined public policy. You may recall from our prior posts that these questions call for the application of the "essence test" and the limited public policy exception to that test.

Let's take a step back.  The grievants had been suspended pending investigation of corroborated allegations of inmate abuse, and the union filed grievances challenging the suspensions. The first issue before the arbitrator was whether the grievances were timely filed. The parties' agreement required that grievances be filed within 15 days of the alleged "occurrence" giving rise to the dispute. The arbitrator found that the grievances were in fact timely filed, even though they were filed well beyond 15 days after the implementation of the suspensions. The arbitrator reached this conclusion by finding that the suspensions constituted continuing violations of the agreement. The arbitrator held that, as a result, the grievances were timely filed even if back pay would be limited to the date the grievances were filed. Basically, the arbitrator held that each day of suspension gives rise to a new occurrence, triggering a new 15 day period.

What did the court have to say?  The court disagreed and succinctly concluded that the arbitrator's decision, which did not cite to any provision of the agreement, lacked foundation in and failed to logically flow from the agreement. Put simply, the arbitration decision failed the essence test. The court did not reach the issue of whether the decision would violate a public policy.

So what?  For those of us with responsibilities for responding to grievances, this decision is significant. The court seems to have thrown out the continuing violation theory, a theory that unions often rely on when grievances are untimely filed, but there is some ongoing impact on the grievant.  Because most agreements prohibit an arbitrator from adding language to the agreement, as the agreement did here, without a specific provision providing for its use, employers should strongly consider taking the position that the continuing violation theory is dead.

Pennsylvania Whistleblower Law Restricts Ability of Public Employers and Non-Profits to Terminate Employees

In Pennsylvania, as in the majority of states, most employees are presumed to be employed “at will.” Under the at-will employment doctrine, an employer does not need “cause” to terminate an employment relationship. Rather, the employer may terminate an employee at any time, for any reason or no reason at all. (At the same time, the employee reserves the right to terminate his or her employment for any reason.) The only caveat is that the employer’s reason for termination cannot be an illegal one.

Federal and state statutes, as well as the courts, have created a number of exceptions to the doctrine of at-will employment. To be sure, an employee cannot be fired (or demoted, transferred, denied a promotion, or subject to any otherwise “adverse employment action”) on the basis of race, religion, gender, national origin, age, or disability, among other things. In addition, under Pennsylvania law, certain employers may not terminate an employee who has reported that his or her employer is engaging in misconduct.

Such retaliation is prohibited by Pennsylvania’s Whistleblower Law, 43 P.S. § 1421 et seq. Specifically, the Whistleblower Law makes it unlawful for an employer to “discharge, threaten or otherwise discriminate or retaliate against” an employee for making a good faith report to a superior or to an “appropriate authority” about an instance of “wrongdoing or waste.” The Whistleblower Law also prohibits retaliation against an employee who has participated in an investigation, hearing, or inquiry into the employer’s alleged misconduct.

While the Whistleblower Law does create a significant carve-out to the at-will employment doctrine, the whistleblower protections afforded do not protect every gripe, objection, or criticism of a dissatisfied employee. Specifically, the Law extends whistleblower protections to only those employees who report “waste” or “wrongdoing.” These terms are narrowly defined to require more than a report of inefficient business practices or violation of internal policies. Rather, the Whistleblower Law requires a report of conduct that is (1) specifically prohibited by a particular federal, state, or local law or regulation; (2) a substantial abuse of public funds or resources; or (3) a breach of professional ethics. Moreover, the employee must report the misconduct internally to a supervisor or externally to a government body or agency with appropriate enforcement or regulatory authority over the subject of the report; a report to a co-worker, the general public, or a member of the media is not protected.

The most significant limitation on an individual’s ability to challenge his termination under the Whistleblower Law is that the statute extends whistleblower protections to only those who are considered “employees” within the meaning of the statute. Unlike many states who extend whistleblower protection to both public and private employees, the Pennsylvania Whistleblower Law narrowly defines “employee” to be an individual performing work for wages for a “public body.” In simple terms, a “public body” is a state or local government agency or department, or any entity “funded in any amount by or through Commonwealth or political subdivision authority.”

What then qualifies as a “public body”? Clearly, state agencies, departments, and commissions; county, city, and township bodies; municipal corporations; and school districts are public bodies. But beyond that, the answer depends on whom you ask. 

Decisions by Pennsylvania’s state and federal courts have diverged on what constitutes a “public body” for purposes of the Whistleblower Law. Both state and federal courts have faced the issue of whether private corporations constitute a public body merely because they receive some sort of public money. Federal courts in the Commonwealth have held that indirect and attenuated receipt of public funds for services rendered to private individuals does not bring the recipient within the Whistleblower Law. For example, these courts have held that a for-profit corporation operating out-patient cancer treatment centers is not a “public body” simply because it receives Medicare reimbursements from the Commonwealth. The Pennsylvania state courts, however, repeatedly have found “public body” status based solely on the indirect receipt of such funds.

Despite the differing precedent, one thing is clear. The protections of the Whistleblower Law have been significantly expanded by court decision. No longer must an individual be a state or government worker to be protected. Courts have held that an individual working for a private corporation may fall within the protection of the Whistleblower Law if the corporation provides public services or performs governmental functions under a contract with the state.

Furthermore, in Johnson v. Resources for Human Development, Inc., a 2011 case before the United States District Court for the Eastern District of Pennsylvania, it was presumed that a non-profit is covered by the Whistleblower Law. In that case, the plaintiff was employed by a non-profit corporation that sponsored human services programs in multiple states. One such program, which provided job training for at-risk youth, received funding from the City of Philadelphia’s Department of Human Services. After being terminated, the plaintiff brought a claim under the Whistleblower Law. Specifically, she alleged that her termination was retaliation for informing her supervisor that a co-worker was having inappropriate relations with one of the youth participants. While the plaintiff’s whistleblower claim was ultimately rejected because her protestations did not constitute a “report” (and occurred five years before her termination), neither party contested that the non-profit was a “public body” subject to the prohibitions of the Whistleblower Law.

Ultimately, public employers, non-profit organizations receiving public funds, and other entities contracting with the Commonwealth must be aware of the protections afforded by the Whistleblower Law. The easiest way for such employers to avoid lawsuits is to establish a culture where employees are encouraged to raise legal and ethical concerns with management. Employers should develop internal reporting procedures for employees to voice such concerns. Managers and supervisors must be informed of the rights of employees to report concerns and informed that retaliation—whether in the form of termination, harassment, or blacklisting—is prohibited and subject to discipline. To be sure, a problem employee who underperforms or violates internal policy cannot shield himself or herself from discipline simply by making some complaint or allegation of employer misconduct. However, in light of Pennsylvania’s Whistleblower Law, employers must be particularly cautious when taking adverse action against these individuals.