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Covid Whistleblower Lawsuits Heating Up: What Industries Need To Know


Covid-19-related lawsuits are being filed nationwide, according to Kent Schmidt, a partner in the international law firm Dorsey & Whitney in its Southern California office, who specializes in business litigation. In an effort to detect trends in litigation and advise clients on how to prepare accordingly, Schmidt has been following these cases as they are filed.

The three primary plaintiff groups are consumers, employees and shareholders. Schmidt said he’s seeing more and more employee lawsuits being filed as the weeks move on, and he said no industry is safe from these lawsuits, with the latest lawsuit filed against Trader Joe’s. 

Among the types of lawsuits brought by employees are retaliation claims for raising concerns with management on a variety of compliance issues, whether or not relating to Covid-19. Schmidt said companies need to start doing some things to protect themselves from this kind of litigation. 

“The fact that the Covid-19 crisis immediately follows a period in which the public was focused on news relating to a whistleblower’s role in the Trump impeachment trial makes this risk even greater,” he said. “Lawyers’ and laypersons’ consciousness of the leverage a whistleblower has and the legal protections that the law affords to such employees is certainly greater than it was a year ago. It’s not just public companies and those that do business with the federal government that need to be concerned about whistleblower retaliation claims. Even smaller private companies are vulnerable.

“Many states, such as California, have detailed whistleblower protection statutes that prohibit an employer from engaging in any retaliation against an employee for raising a compliance concern. Other states accomplish the same objective by prohibiting the termination of even an at-will employee who is a whistleblower because it is a violation of public policy.

“In the Trader Joe’s case filed in Kentucky last week, the allegation is that the company expressly terminated the plaintiff because of his complaints about health and safety. In many cases, there is a disputed question of whether a termination or constructive discharge occurred because of some other reason or as a result of the concerns raised by the employees. These issues also arise in the context of a constructive discharge in which an employee claims that blowback from his or her complaint created an intolerable working condition that led to a resignation. 

“The fact that there are so many layoffs and furloughs right now increases the risk that a termination for some legitimate reason will be challenged on the theory that the employee was terminated in retaliation for raising a concern about the company’s compliance with law, whether health and safety or some other regulation,” Schmidt said. 

He added that companies should take steps now to be sure they have procedures in place to address employee complaints and there is no retaliation for raising the concern.

Schmidt is keeping an updated list of the Covid-19 lawsuits being filed on his blog (including the Trader Joe’s suit mentioned above). You can find that information here.

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