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Conscientious Employee Protection Act (CEPA): New Jersey Law Protecting Whistleblowers

above-the-bar-logo-no12.jpgThe New Jersey Conscientious Employee Protection Act (CEPA) is one of the most pro-employee whistleblower protection statutes in the country. Our New Jersey Whistleblower Attorneys have been following a recent lawsuit involving allegations of wrongdoing under CEPA. In Madera v. Horizon Blue Cross Blue Shield of N.J., an employee made an internal complaint of wrongdoing and shortly thereafter was fired. The employee alleged that her termination was wrongful because it violated CEPA.

What Activities Does CEPA Protect?

Under CEPA, in general, an employer is prohibited from retaliating against an employee for objecting to or refusing to participate in any “activity, policy or practice of deception or misrepresentation which an employee reasonably believes may defraud any shareholder, investor, client, patient, customer, employee, former employee, [or] retiree” or activity that “is incompatible with a clear mandate of public policy concerning the public health, safety or welfare or protection of the environment”

Factual Background of Madera Lawsuit

In Madera, the employee worked as the Director of Compliance and complained after her employer’s demanded that she modify her internal reports about company practices that resulted in prompt pay penalties pursuant to the Prompt Pay Act. Under the Act, insurance companies are required to pay certain claims within a proscribed time period and, if they fail to do, they could be issued prompt pay penalties. The employee stated that the penalties were due to the Service Division’s errors and the employer demanded she change her internal report. After the employee refused, the employee was terminated the following month. The employer based the termination on the employee’s failure to supervise a subordinate employee for running an outside business. However, the plaintiff-employee alleged that the timing was curious especially since the employer approved of the subordinate employee’s outside business activities previously and that the basis for termination was a pretext for her whistleblower complaints.

What an Employee Needs to Prove under a CEPA Claim

The employee filed a lawsuit under CEPA and alleged that employer’s action violated CEPA. In order to be successful under a CEPA claim, a plaintiff-employee must show the following factors:

1. “the [employee] reasonably believes that her employer’s conduct was fraudulent or
2. the employee “engaged in protected whistleblower activity”;
3. the employee suffered an adverse action by the employer; and 4. there is a casual connection between the adverse action and the whistleblowing

Why the Employee’s CEPA Claim Failed

The plaintiff-employee alleged that the Company’s demand that she modify her internal reports was “fraudulent or criminal.” However, the Appellate Division ruled that this was a simple employee-employer dispute where the subject matter did not violate any law, rule or regulation. The Appellate Division found that the employee failed to meet her burden on CEPA because she could not show that the employer conduct was fraudulent, criminal or violated a law, rule or regulation.

This case is important because it provides guidance to whistleblowers on what is protected activity and to employers on how to deal with certain complaints. If you believe that you have observed any fraudulent, criminal or otherwise inappropriate actions in the workplace or employee complains of such conduct, our New Jersey Whistleblower Attorneys can assist you. Call now at (800) 893-9645 to learn your rights and obligations under the law.


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