Appeal of Bio Energy Corp.

607 A.2d 606, 135 N.H. 517
CourtSupreme Court of New Hampshire
DecidedMay 5, 1992
DocketNo. 91-148
StatusPublished
Cited by17 cases

This text of 607 A.2d 606 (Appeal of Bio Energy Corp.) is published on Counsel Stack Legal Research, covering Supreme Court of New Hampshire primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Appeal of Bio Energy Corp., 607 A.2d 606, 135 N.H. 517 (N.H. 1992).

Opinions

Johnson, J.

Bio Energy Corp. (Bio Energy) appeals the decision of the department of labor (DOL) that Bio Energy violated the Whistleblowers’ Protection Act (the Act), RSA chapter 275-E, and its award of $7,000 in lost wages to Bio Energy’s former employee, Linda Baron. For the reasons that follow, we affirm.

Linda Baron worked as office coordinator and computer operator for Bio Energy from September 1987, until she was discharged on April 10, 1990. In March 1990, Ms. Baron was a salaried employee. On March 2, 1990, Ms. Baron took a sick day, and Bio Energy deducted a day’s wages from her salary. On March 14, Ms. Baron complained to her supervisor that this deduction violated State law, and gave her supervisor a copy of the DOL’s Administrative Rules for Payment of Wages and Youth Employment (Administrative Rules). Ms. Baron did not report the alleged violation to anyone other than her employer prior to her termination.

Bio Energy paid Ms. Baron the salary it had deducted and then discharged her on April 10,1990. In its memorandum of termination, Bio Energy alleged to Ms. Baron that the causes of her dismissal were excessive absenteeism, unauthorized overtime, failure to follow instructions, and an episode in which she “punched in” early from lunch, thus creating what her employer deemed “unauthorized overtime.”

On April 13,1990, Ms. Baron filed a complaint with the DOL, alleging that Bio Energy had terminated her because she had brought to her supervisor’s attention Bio Energy’s alleged violation of the Administrative Rules. In its decision of January 15, 1991, the DOL found that Ms. Baron was terminated because she reported to her employer what she reasonably believed to be a violation of State law, that she acted in good faith, and that she was wrongfully discharged. These findings are not challenged on appeal.

Ms. Baron was out of work for fourteen weeks after her termination before she obtained another job. The DOL awarded her injunctive relief in the form of a mandatory injunction requiring payment of $7,000 back pay for the time she was unemployed.

Bio Energy argues on appeal that Ms. Baron was not entitled to protection under the Act because she did not report her employer’s allegedly unlawful conduct to a third party or governmental authority. Alternatively, Bio Energy argues that even if she was protected by the Act, the DOL cannot award back pay because back pay consti[519]*519tutes damages, and the Act limits remedies to injunction, reinstatement and recovery of seniority and fringe benefits.

I. Duty to Report to a Third Party

RSA 275-E:2, I (Supp. 1991) provides in relevant part that

“I. No employer shall discharge, threaten, or otherwise discriminate against any employee regarding such employee’s compensation, terms, conditions, location, or privileges of employment because:
(a) The employee, in good faith, reports or causes to be reported, verbally or in writing, what the employee has reasonable cause to believe is a violation of any law or rule adopted under the laws of this State, a political subdivision of this state, or the United States . . . .”

The above paragraph fails to specify to whom a report of an alleged violation must be made. Paragraph II of RSA 275-E:2 (Supp. 1991) contains the requirement, as follows, that in most circumstances the employee must first bring the alleged violation to the attention of the employer:

“II. Paragraph I of this section shall not apply to any employee unless the employee first brought the alleged violation to the attention of a person having supervisory authority with the employer, and then allowed the employer a reasonable opportunity to correct that violation, unless the employee had specific reason to believe that reporting such a violation to his employer would not result in promptly remedying the violation.”

Bio Energy argues that, when read together, paragraphs I and II of RSA 275-E:2 (Supp. 1991) require an employee to report a violation of law to a third party before she is entitled to protection under the Act. We reject that construction as contrary to the manifest purpose of the Act.

Paragraph I of RSA 275-E:2 (Supp. 1991) does not require that an employee report a potential violation of law to a third party. By its very terms, it covers reports made either to employers or to third parties. Paragraph II of RSA 275-E:2 (Supp. 1991) sets forth the mode of compliance with the statute. Specifically, an employee must first notify the employer of any violation before reporting to a higher authority. The requirement that the employee first notify the employer is a significant benefit to employers and furthers the purpose of the Act. Giving the employer the first opportunity to correct a [520]*520violation allows it to avoid harm to its reputation, the burden of undergoing an investigation, preparation for a hearing, etc. Informal resolution of infractions also saves the DOL both time and resources.

We cannot accept Bio Energy’s argument that the legislature intended that paragraph II of the Act require a further report to a third party. Under Bio Energy’s interpretation of the Act, employers would be able to retain the benefit of notification, while avoiding the burdens imposed if the employee were discharged because of his or her notification to the employer. Such an interpretation would thwart the Act’s primary purpose of encouraging employees to report their employers’ violations of law.

Ms. Baron complied with the Act. The DOL found that she was discharged because she reported, in good faith, what she reasonably believed to be a violation of a DOL administrative rule. See RSA 275-E:2,1(a) (Supp. 1991). She informed her supervisor of Bio Energy’s violation of the rule and allowed her employer a reasonable opportunity to correct the violation, which violation her employer corrected. Bio Energy argues that the “report” referred to in paragraph I must be made to someone other than the employer, because paragraph II requires the employee to “first” bring the violation to the employer’s attention. Bio Energy contends that there would be no need for the requirement of a “first” report to the employer if the statute did not contemplate a further report to a third party.

To require a report to a third party or governmental authority where, as here, the initial report results in corrective action is to require the doing of a useless act. Once Bio Energy paid Ms. Baron the disputed wages, she had nothing to report. Had Bio Energy not wrongfully discharged her, the Act would have resulted in the very result that the legislature contemplated, namely a report of a violation by an employee and corrective action by the employer. The interpretation argued by Bio Energy undermines the deterrent effect of the Act; a reading of the statute that required a second report would leave employees such as Ms. Baron unprotected, despite the statute’s clear intent to protect such employees from wrongful discharge.

Moreover, adoption of Bio Energy’s argument would essentially destroy the effectiveness of paragraph II. Employees would have an incentive to invoke the exception found in paragraph II (“unless the employee had specific reason to believe that reporting such a violation to his employer would not result in promptly remedying the violation”) and report directly to a third party without first giving [521]

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Bluebook (online)
607 A.2d 606, 135 N.H. 517, Counsel Stack Legal Research, https://law.counselstack.com/opinion/appeal-of-bio-energy-corp-nh-1992.