Understanding the Limitations of North Carolina’s Whistleblower Protection Act

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Robert Joyce

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Fred is an accounts payable clerk for a North Carolina city.  He learns that some of his fellow employees, including his supervisor, are cheating the city and the taxpayers.  Fred brings this matter to the attention of the city manager.  The manager, rather than congratulating Fred, fires him.  Better to get rid of this one troublesome at-will employee than upset the entire city workforce.  Fred has a good lawsuit against the city, doesn’t he?  Does he?

You might think that Fred has a good First Amendment free speech claim.  He spoke out truthfully about a matter of public concern and he got fired because of it.  Surely, you might think, that kind of retaliation is unconstitutional.

In 2006, the United States Supreme Court issued a decision that cut back dramatically on the potential for governmental employees to prevail in claims that their governmental employers had violated their free speech rights.  In Garcetti v. Ceballos, 547 U.S. 410, the Court said that public employees who are discharged from employment because of what they say have no claim—no chance of victory in court—if, when they speak out, they are speaking as part of their jobs.  In such cases, “the employees are not speaking as citizens for First Amendment purposes,” the Court said, but are instead speaking as employees doing the jobs they are paid to do, so that “the Constitution does not insulate their communications from employer discipline.”

It doesn’t matter how important the subject is.  It doesn’t matter that the employee is the one person in the best position to speak out.  It doesn’t matter that the employee is acting in good faith motivated by public concern.  If the employee is speaking as part of his or her job, the speech is not protected.

It seems very likely that a court would say that it was part of Fred’s job as an accounts payable clerk to bring financial irregularities to his superiors’ attention.  If that’s right, Fred has no First Amendment claim since he was speaking as an employee and not as a citizen.  A great number of federal courts have reached this very outcome since the Garcetti decision in 2006.  See Battle v. Board of Regents for the State of Georgia, 468 F.3d 755 (2006), for example.

Even as it reached its decision in Garcetti, the Supreme Court recognized that “[e]xposing governmental inefficiency and misconduct is a matter of considerable significance” and that “public employers should, as a matter of good judgment, be receptive to constructive criticism offered by their employees.”  (punctuation omitted)

OK, that’s what government officials should do.  But if Fred and others in his position have no First Amendment protection when they expose wrongdoing, what protection in law do they have?

The Supreme Court looked to state whistleblower laws as a large part of the answer, saying:

The dictates of sound judgment are reinforced by the powerful network of legislative enactments-such as whistle-blower protection laws and labor codes-available to those who seek to expose wrongdoing.  547 U.S. at 425.

So, can Fred look to North Carolina’s whistleblower protection act for help?  No.  Fred is out of luck.  He is simply not protected by our statute.

North Carolina’s statute is found in Article 14 of GS Chapter 126.  It is formally entitled “Protection for Reporting Improper Government Activities.”  Here is its policy statement, found at GS 126-84(a):

It is the policy of this State that State employees shall be encouraged to report verbally or in writing to their supervisor, department head, or other appropriate authority, evidence of activity by a State agency or State employee constituting:

(1) A violation of State or federal law, rule or regulation;

(2) Fraud;

(3) Misappropriation of State resources;

(4) Substantial and specific danger to the public health and safety; or

(5) Gross mismanagement, a gross waste of monies, or gross abuse of authority.

It goes on, in GS 126-85, to prohibit discharge and other retaliation against state employees who report violations of law, fraud, misappropriation, danger, or gross mismanagement, waste, or abuse of authority.

State employees.  The statute protects only employees of the state government and, by virtue of GS 126-5(c5), employees of public school systems and community colleges.  If you work for government in North Carolina but, like Fred, you do not work for the state, a public school system, or a community college, you are not protected by the statute.  There is no statute that extends whistleblower protection to employees of cities, counties, hospital authorities, airport authorities, water and sewer authorities, or other units of government.  And there is no statute that protects employees of private companies.

Fred cannot look to the First Amendment for protection, and he cannot look to North Carolina’s whistleblower statute.  Is there no other way that he can get a court to review a discharge that he considers so wrongful?

Well, North Carolina does recognize a claim available, in the right circumstance, to wrongfully fired at-will employees.  It is called the public policy wrongful discharge tort.  An employee whose discharge violates well-established public policy can sue the employer.  The first case to recognize such a claim in North Carolina was Sides v. Duke Hospital, 74 N.C. App. 331 (1985), where the court let a claim go forward by an at-will nurse who said that she was fired because she testified truthfully at court in a way that cost her employer money.  There is such a strong public policy in this state, the court said, that people should testify fully and truthfully in court that we are not going to let employers get away with firing employees because of their testimony.  Such a discharge is wrongful because it is in violation of the public policy of the state.

Fred thinks:  Me too!  My discharge was wrongful because it certainly is in violation of the public policy of the state to fire employees because they report wrongdoing.  Even if I am not literally protected by the whistleblower act, it sets the public policy of the state.  Heck, GS 126-84 even begins, “It is the policy of this State . . .”

Fred may once again be out of luck.  A discharged employee of a textile mill—who, like Fred, was not covered by the North Carolina statute—tried exactly that argument in a case heard in federal district court in Charlotte in 2006.  The whistleblower statute sets the public policy of the state, that fellow argued, and my discharge is wrongful because it is in violation of that public policy.

No.  The court in that decision, Hardin v. Belmont Textile Machinery Company, 2006 WL 2229002 (W.D.N.C.), ruled that the state statute sets the policy of the state for state government employment and “was not intended to serve as state public policy” for other employment.

Would Fred have better luck in another court before another judge on another day on his wrongful discharge claim?  Perhaps.  But the Hardin decision indicates that it will be an uphill fight.

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2 Responses to Understanding the Limitations of North Carolina’s Whistleblower Protection Act

  1. I would argue that Fred’s common law wrongful discharge claim should be based on statutes other than the state whistleblower law, as the source of public policy. The example doesn’t say how the other city employees are going about “cheating the city and the taxpayers.” If the “cheating” is accomplished by committing fraud, or if there is bribery or other improper influence involved, those are crimes under Chapter 14 of the General Statutes, firing Fred for reporting those crimes undermines the enforcement of those criminal statutes meant to protect the public, and therefore firing Fred is a wrongful discharge in violation of public policy. The Hardin case would have no relevance to a claim presented in that way, but there are many other NC appellate cases that would support the reasoning suggested.

    • Robert Joyce says:

      Thanks, David, for an excellent comment. You are no doubt right that there will arise circumstances in which the whistleblower protection law does not provide an employee with protection (because, for instance, the employee works for a county, not a state agency) but the employee may nonetheless be able successfully to pursue a tort action for wrongful discharge. My chief intention was to point out the limited scope of the whistleblower protection law and to observe that there may be circumstances in which it provides no protection and in which no other relief (in the nature of a first Amendment action or a tort wrongful discharge action) may be available. I appreciate your comment.

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