Arizona's "Whistleblower" Laws: Tread Carefully
A "whistleblower" is someone who reports to management (or in some cases state and federal agencies) that they believe someone in their company is engaged in illegal conduct. There are numerous federal statutes that provide remedies to employees who are terminated or retaliated against for "blowing the whistle." For example, the Sarbanes Oaxley Act prohibits publicly traded companies from discriminating against an employee who reports a violation of any SEC rule or regulation. And, there are state laws, too. This article will provide an overview of Arizona's whistleblower laws.
Arizona has two whistleblower laws; each is very different. The first provides that it is illegal to terminate an employee because he or she reported to management that they believe someone in the company is violating (or is about to violate) an Arizona statute or the Arizona Constitution. This same law also makes it illegal to terminate an employee because he or she refused to engage in conduct that they believe is a violation of an Arizona statute or the Arizona Constitution. This is sometimes referred to as a "refusal" claim.
There are some important nuances that you need to be aware of in order to make a state whistleblowing claim:
- The employee cannot rely on a violation of a federal statute or regulation as the basis for their whistleblower or refusal claim – they may only rely on a violation of an Arizona statute or the Arizona Constitution.
- The individual must be an employee – not an independent contractor.
- The employee must raise their concerns with an appropriate member of management.
- The employee must show that their belief that someone in the company is violating (or is about to violate) an Arizona statute or the Arizona Constitution was "objectively reasonable." An employee's whistleblower claim may be dismissed if no reasonable person could conclude that the individual was engaged in illegal conduct.
- The employee must have actually been terminated. Mere retaliation against the employee is insufficient, although an employee may be able to claim that they were "constructively discharged" due to the intolerable working conditions.
- The "whistleblowing" must have been the "substantial motivating factor" in the termination. This means that if the employer can show that the whistleblowing played only a minor role in the decision to termination, the employer may prevail.
- Finally, the whistleblower provision of this law applies only to private employers. There is a different whistleblower law, discussed below, that provides remedies to state employees who are terminated for blowing the whistle.
- The "refusal" provision in this law, however, applies to both private and state employers. In other words, a state employee who is retaliated against for refusing to engage in conduct that they believe is a violation of an Arizona statute or the Arizona Constitution may bring a claim under this law.
State Employee Whistleblower Law
Arizona's other whistleblower law applies only to state employers. It provides that a state employer may not take any "adverse employment action" against a state employee who reports (1) a violation of "any law"; (2) mismanagement of state funds, or (3) abuse of authority. An adverse employment action is any action that is reasonably likely to deter employees from exercising their rights. This includes a demotion, a reduction in pay, and a transfer to a less desirable job. It may also include placing an employee on paid leave, reducing an employee's responsibilities, or even a written warning if the warning can later be used as basis for progressive discipline. This law is much broader in the sense that it does not require the employee to show they were terminated – retaliation that results in an adverse employment action is sufficient. It also allows the employee to pursue a claim based on a violation of "any law," whereas employees in the private sector must show a violation of an Arizona statute of the Arizona Constitution. It also allows a whistleblower claim to be based on mismanagement of state funds or an abuse of authority.
There are, however, some tricky procedural requirements that state employees need to be aware of. For example, an employee must disclose their concerns in writing and to a "public body." The writing must contain the employee's name, a summary of the alleged violation, and the date range in which the violations occurred. The employee may not disclose confidential materials to unauthorized individuals when lodging their complaint. In other words, be careful what information is disclosed.
If a state employee believes that they have been retaliated against, they must lodge a complaint with the appropriate independent personnel board within ten days after they have been retaliated against. This is one of the shortest statute of limitations in the law, so a state employee must act carefully and quickly. If the employee fails to lodge a timely complaint, they cannot assert a whistleblower claim.
We can help to navigate these issues and other employment issues that often arise.
About the authors: Kraig J. Marton heads the employment law department at the Phoenix law firm of Jaburg Wilk. He assists employers and employees in complying with the many laws affecting employers. Jeffrey A. Silence is an attorney at Jaburg Wilk. He also focuses his practice in employment law. Got a question for Kraig or Jeffery? Contact them here.
This article is not intended to provide legal advice and only relates to Arizona law. It does not consider the scope of laws in states other than Arizona. Always consult an attorney for legal advice for your particular situation.