Article by Ralph R. Smith, III, Esq.

By Ralph R. Smith, 3rd, Esq.

In a recent decision, the New Jersey Appellate Division was asked to decide whether a wrongful discharge public policy claim could be brought against a public entity employer who discharged an employee as part of a layoff and the employee claimed that the discharge occurred because of his close association with a co-worker who had been convicted of committing a crime.  The employee plaintiff in Kozak v. Township of Cherry Hill, Docket No. A-2454-13T2 (App. Div. 2015), was formerly employed as the Cherry Hill Township building inspector.  His direct supervisor in that position was the Township’s construction official.  After the construction official announced his retirement plans in 2008, the plaintiff claimed that both the Township’s mayor and business administrator told him in early 2009 that he was going to become the next construction official.

In March 2009, the construction official was charged with accepting bribes from a third party construction inspection service used by the township.  Due to that on-going criminal investigation, the plaintiff was advised by the mayor that he was being suspended with pay, and that his employment as building inspector would be re-evaluated during the pendency of the criminal investigation being conducted by the United States Attorney’s Office.  The Mayor testified in the case that the plaintiff’s suspension happened because the Township did not know how far the criminal investigation would go in plaintiff’s department. While plaintiff met with various investigators over the course of the investigation, he was advised that he was not “a target” and ultimately was not charged with any criminal wrongdoing.

In June 2009, plaintiff’s attorney sought his reinstatement in light of the negative outcome of the criminal investigation.  Rather than being reinstated, plaintiff was terminated as part of a township wide reduction in force due to economic issues facing the Township. The Township asserted that plaintiff was chosen for selection because other persons had more licenses in the construction department than plaintiff and thus could absorb some of the extra work arising from the lack of the laid off workforce.  Plaintiff was ultimately one of thirteen other township employees who lost their job as a result of the layoff.

In challenging his layoff, plaintiff claimed that, amongst other things, the layoff violated a clear mandate of public policy under the case of Pierce v. Ortho Pharmaceutical Corp., 84 N.J. 58 (1980), because he was laid off due to an erroneous belief that he had committed an offense since he worked with a co-worker who committed a crime.  The Appellate Division, like the Trial Court did earlier, rejected this claim as being grounds for asserting a wrongful discharge public policy claim.  In dismissing this claim, the Appellate Division noted that plaintiff could not identify any clearly defined mandate of public policy that prohibited an employer from discharging an employee based upon a perception that the employee’s trustworthiness was compromised due to an association with a former supervisor convicted of accepting wrongful bribes. In addition, the court found that the undisputed evidentiary record presented by the Township to the Trial Court indisputably established that the asserted reason for plaintiff’s selection was not a pretext for wrongful action because the layoff decision was supported by overwhelming proof that economic issues existed at the Township, and that plaintiff, along with a second laid off department employee had the least number of licenses in that group.  As a result, the appeals court concluded that the wrongful discharge claim premised upon a violation of public policy was rightly dismissed by the Trial Court.

This is a positive decision for employers, due to how the appellate court adopted a restrictive view of the kinds of public policy matters that could support a Pierce wrongful discharge claim. The case also illustrates the importance of being able to articulate the reason (s) for a reduction in force and why certain employees are chosen for selection in that reduction in force.  Any time layoffs are being contemplated, employers should devise at the outset an appropriate plan for implementation that is free of illegal considerations and one grounded in a rationale selection process for choosing the employees to be affected by the layoff.  In this case, the employer decided that, in plaintiff’s department, those employees who had the least licenses would be selected for reduction because of the anticipated increased need for certain skill sets after certain job positions were to be eliminated.  Such objective standards are always the most preferred in constructing a selection process for expected layoffs.  Equally important is that the employer do exactly what the Township did here in following that criteria and documenting how that selection criteria was applied to the plaintiff in this case.

Layoffs can often be the cause for costly litigation, so employers are wise to seek advice during the pre-layoff process, especially when a layoff includes a large segment of the employer’s workforce. Effective selection practices and guidance in implementing such practices goes a long way towards eliminating such possible legal action.