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.