How "Hannan" Continues Its Role as a Gift That Keeps On Giving

The Hannan case from 2008 changed the way our state courts in Tennessee approach summary judgment. In essence, Hannan made it much more difficult, for example, for employers to get summary judgment in employment discrimination cases based upon state law.

A recent Tennessee Supreme Court decision all but eliminated the ability to have a case summarily dismissed (that is, without a trial) when the claim is based upon common law retaliatory discharge. In Gossett v. Tractor Supply Company, Inc., the Court held that an employer must offer evidence that disproves the employee's claim that the discharge was motivated by retaliation. This is a swing in methodology from the Court's previous use of the U.S. Supreme Court burden-shifting posture: if an employee demonstrates a reasonable jury could conclude retaliation occurred, the employer has an opportunity to refute that presumption by demonstrating a legitimate business reason existed for the discharge. Notable is that in the U.S. Supreme Court body of law, employers can have "mixed motives" in discharging employees without being liable for a violation of the law. Cases brought under state law in Tennessee are now no longer eligible for the mixed motive consideration.

In the end, it doesn't change the cautions we extend to employers concerning retaliation cases. We warned about the difficulty in getting rid of them once they appeared in court. Now we have the court language to back it up.

Ask Not For Whom The Whistle Blows . . .

That whistle you hear may not mean the end of the work day has arrived.

In the past two decades numerous states and the federal government have passed laws prohibiting employers from discharging employees for “blowing the whistle” on certain matters at work. Although these laws have been on the books for several years, it can still be difficult to differentiate between simple employee complaints and true “whistleblowing” that can land an employer in hot water. A recent $1 million dollar judgment issued against a Tennessee employer by the Occupational Health and Safety Administration (“OSHA”) re-emphasizes the importance of understanding this difference and the numerous state and federal whistleblower laws in general.

Last month, OSHA ordered Tennessee Commerce Bank in Nashville to reinstate a former corporate officer and pay more than $1 million in back pay, compensatory damages, interest, attorney fees, and other relief. The employee filed a complaint with OSHA after he was placed on administrative leave and then fired. The employee’s complaint alleged that the Bank placed him on leave and then fired him because he raised concerns about internal controls, employee accounts, insider trading, and other issues at the Bank. The employee first raised these issues to the Bank’s audit committee and later to the FDIC and the Tennessee Department of Financial institutions. OSHA investigated the employee’s complaint and found that the Bank had discharged the employee in violation of the whistleblower provisions of the Sarbanes-Oxley Act of 2002 (“SOX”). The Bank indicated that it would appeal OSHA’s decision.

Despite the outcome of the appeal, this case serves as an important reminder that retaliating against a “whistle blower” can expose an employer to as much liability as discharging an employee based on his or her race, gender, or age. And often times, this liability is much more difficult to identify than determining whether an employee is covered by other non-discrimination statutes.

Given the scope and ambiguity still present in the whistleblower laws, it is vitally important for employers to be aware of the parameters of state and federal laws prohibiting retaliation against whistleblowers. If you have any questions about a particular situation, feel free to contact us.