NY County Court Explains Why Whistleblower Protection Clause In Employee Manual May Be Worthless December 29, 2009

In Candela v. Banco Industrial de Venezuela C.A., the New York County trial court’s decision to dismiss a breach of contract and wrongful termination claim by a bank employee serves a clear warning to at-will employees everywhere: know your rights and what you must do to protect them before you are fired. Conversely, the decision also serves as a strong reminder to small business owners: make sure that your employee manual is properly drafted – or else.

In this case, the plaintiff, a former assistant treasurer of the defendant bank, claimed that she was fired as a direct result of her attempts to expose suspicious irregularities with respect to several trade confirmations that had come to her attention. Although she acknowledged that she was an at-will (as opposed to a contract) employee (for more information on the limited rights of at-will employees under New York law, see “Why Most Breach of Contract/Wrongful Termination Claims By At-Will Employees Are Doomed To Fail“), she alleged that the defendant’s own “Personnel Policies and Practices Manual promised to protect her from adverse action in connection with reporting suspicious activities,” and that this promise gave rise to a contractual obligation to protect her from retaliatory termination.

According to the Court, there are two problems that prove fatal to her claim, however. First, the Manual only protected against retaliatory action those who file a Suspicious Activities Report (SAR) – which the plaintiff never did. Second, the Manual also contained an explicit disclaimer that allowed them to terminate any at-will employee.

Thus, the implication of this decision is two-fold:

1. If you are an employee, make sure you read carefully your employment manual before you undertake any actions that might affect your job; and,
2. If you are the employer, make sure that your employment manual is appropriately drafted to protect your right to terminate at-will employees.

Jonathan Cooper is a New York Business Litigation and New York Commercial Litigation Lawyer with a focus on New York breach of contract and New York business fraud claims before the Nassau, Queens, Brooklyn, Bronx, Westchester and Suffolk County courts of New York State. For more information, feel free to contact his Long Island office at 516-791-5700.

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