Published:

05/19/2011 11:00pm

Your Employer's Speak Out Policy May Give You a Mini-Employment Contract

ACTUAL CASE HISTORY: Stacey was a retired New York City police detective. At 44, she'd given 20 years to "The Force," as she called it, and was now considering attending law school. There were, though, two young mouths to feed, and a monthly mortgage payment to contend with. With her background in the security field, she put out feelers among friends, placement agencies, and security firms, looking for something in the security field that was "9 to 5."

Through a friend in the Police Commissioner's office she landed an interview with one of the city's largest jewelry manufacturers. The company, owned by private investors, was looking for a second-in-command to the Director of Security, a former FBI agent named Mr. Turnbull. The company had grown considerably in recent years, and the value of their shipments of precious metals, raw gemstones, and expensive, finished product sometimes reached into the millions of dollars. Recently, their primary insurance carrier was pressuring them to hire a larger security staff, and in particular, a Deputy Director for Mr. Turnbull. Turnbull didn't like the idea one bit, and was open about his view. Nonetheless, a month later Stacey was hired as the company's new Deputy Director of Security.

As things turned out, there was a reason Mr. Turnbull didn't want to hire Stacey - or any other Deputy Director for that matter - and it wasn't a good one. Eight months into the job Stacey began to suspect something she eventually confirmed: Turnbull used outside armored-car services to make large shipments of metals, gems and finished goods at almost double the shipping rates other jewelry companies paid. Sometimes he billed the company, sometimes he billed the customer, at times he even billed them both. Turnbull also insisted on using certain armored-car services, despite their poor performance records. Worst of all, Turnbull's favorite armored-car service turned out to be neither bonded nor insured, which made their use a serious violation of the company's insurance policy.

Confidentially, in a closed-door meeting, Stacey presented her findings to the company's Chief Operating Officer. Her presentation was detailed, thorough and methodical, leaving little doubt that overpayments were epidemic, unqualified services abounded, and double-billing had taken place. She expressed, too, her deep suspicions that Mr. Turnbull might be taking kickbacks of some sort. The Chief Operating Officer asked her to keep the matter confidential until he hired outside auditors to "dig deeper," to use his words. For three months, Stacey heard nothing, although Mr. Turnbull seemed, at first, to grow distant, then hostile, and finally abusive, towards her. She requested a second meeting with the Chief Operating Officer through an email to his secretary.

The meeting, held a week later, was brief: after pleasantries, Stacey was told a decision had been made to eliminate the Deputy Director position, and that she would receive two weeks of severance, provided she kept everything - without exception - confidential. She was then asked for her company ID, her security passkey, and was accompanied to the employee exit. Yes, that brief.

When Stacey came to us for help, we had difficulty figuring out how to approach the situation. Like most people, Stacey didn't have an employment contract we could claim was breached. Since she was an "at-will" employee, she could be let go at any time. Though Turnbull had been unpleasant to her, what happened to her didn't constitute illegal discrimination or harassment. The company wasn't a publicly-owned company, so the new Federal "Whistleblower" law, called Sarbanes-Oxley, wasn't applicable. Nor were there any other federal or state "whistleblower" laws that we thought were applicable. The answer we decided upon - and it proved to be the right answer - was based on the company's "speak out" policy.

It was surprisingly simple: after sharing the facts and our knowledge of the law with the company's General Counsel, who claimed "ignorance" with good reason, and with a little b