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April 16, 2014

Kentucky’s Municipal Employers Achieve Major Victory in 2012

For many, December is a time for reminiscing on the events that shaped the previous year. In our professional lives, this time affords many of us the opportunity to note those developments throughout the year that will shape and impact the year to come, or with a recent major victory for municipalities in the Commonwealth of Kentucky, years to come.  Thanks in part to the vigilant efforts of McBrayer, McGinnis, Leslie & Kirkland, PLLC, municipal employers in Kentucky scored a resounding victory in 2012 concerning interpretation of Kentucky’s Whistleblower Act. For these municipal employers, reduced exposure to liability awaits them in 2013 and beyond.

What is Kentucky’s Whistleblower Act?

Kentucky’s Whistleblower Act is embodied within KRS § 61.101, et. seq. It generally prevents employers from subjecting employees to discipline when those employees disclose information related to actual or suspected violations of any law, statute, rule or ordinance, including allegations of fraud, mismanagement and waste. The purpose of the Act is to encourage employees of the State to report illegal activity without fear of reprisal thus, in theory, reducing waste of taxpayer money and leading to more efficiency and less corruption in government.

While the provisions of the Act were well intended, in many scenarios what the Act really did was restrict public sector employers in their ability to make necessary and justifiable personnel decisions. It also created a valuable political tool for unhappy employees to make false and slanderous accusations against newly elected officials of different party affiliation in an effort to protect their jobs and damage their political opponents. While its purpose was to out wrongdoing, in many instances it encouraged it and left public sector employers with no recourse against trouble brewing employees.

Who is an “Employer” under the Act?

The Act defines an “employer” as the Commonwealth of Kentucky and any of its political subdivisions. Consequently, the protections for whistleblowers afforded by the Act apply only to employees of Kentucky and its political subdivisions. Since being an “employer” is a threshold requirement which must be met in order for the Act to apply, the lack of clarity in the definition created a substantial amount of confusion as to the scope of its applicability. This confusion and uncertainty eventually made its way to the highest court in Kentucky in the matter of Wilson v. City of Central City. See Wilson v. City of Central City, 372 S.W.3d 863 (Ky. 2012).

Wilson v. City of Central City

The “whistleblower” in this case was Wilson, an employee of the City of Central City’s Water Works Department.  In the midst of fairly typical employment related disputes, Wilson began reporting safety concerns he had about the City’s Water Works Department to the state regulatory agency which oversees that department, the Kentucky Division of Water. This led to several written reprimands issued against the City by the Division of Water.

Later, Wilson was terminated from the Water Works Department for excessively using his computer for personal reasons such as accessing online dating sites, neglecting his work duties, mismanagement of the water plant, and abuse of his authority. Several of these allegations, such as the frequent visits to online dating sites while at work, were admitted. Nevertheless, Wilson brought a suit against the City of Central City under Kentucky’s Whistleblower Act alleging he had been wrongfully discharged for reporting safety violations.

Cities are not “Employers” under the Act

The City of Central City, supported by an amicus brief submitted by McBrayer, McGinnis, Leslie & Kirkland, PLLC on behalf its client, argued before the Kentucky Supreme Court that Wilson’s interpretation of the Whistleblower Act was incorrect and that cities were not employers under the Act. The Court wrestled with various terminologies used in Kentucky precedent distinguishing the meaning of the words “municipality,” “city,” and “municipal corporation.” The Court also considered the legislative history of the Act and similar acts, as well as longstanding statutory interpretation principles.

Ultimately, the Kentucky Supreme Court ruled in favor of Central City and McBrayer’s client holding that the Kentucky General Assembly had explicitly excluded cities from the Act’s definition of “employer.” The City of Central City, and by extension all cities in the Commonwealth of Kentucky, can no longer be held liable under Kentucky’s Whistleblower Act.

Aftermath of Wilson v. City of Central City

The clear result of the Wilson decision is that municipal employers no longer will have their personnel decisions second guessed or subjected to liability under the Whistleblower Act. This reduces the overall exposure to risk faced by municipal employers in Kentucky, and restricts the arsenal available to plaintiffs who seek to bring them into court.

However, it is important to remember that the Whistleblower Act is only one of the many statutory frameworks by which aggrieved employees have sought to subject municipal employers to liability for wrongful discharge. For example, no immunity exists for municipal employers in actions arising out of the Kentucky Civil Rights Act. This leaves the door open for claims of wrongful discharge or retaliation due to discrimination in any of its variations such as on the basis of sex, age, nationality or race. Wrongful and constructive discharge claims are also still available under common law. And employees who have been terminated or retaliated against based on political affiliation, association, or simply speaking out on matters of public concern, are still free to assert claims for violation of free speech rights under the Constitution.

If you are a municipal employer, it is important to understand the risks and liabilities involved in making personnel decisions and to enact policies that reduce exposure based on sound legal advice. With an appropriate amount of planning and foresight, backed by attorneys with proven experience in litigating complex municipal liability issues, municipal employers can navigate this complex sea of law, while looking forward to a new year that brings with it less exposure to risk.

© 2014 by McBrayer, McGinnis, Leslie & Kirkland, PLLC. All rights reserved.

About the Author

Chris J. Gadansky, Civil Litigation Attorney, McBrayer Law Firm
Associate

Mr. Gadansky has practiced law throughout Kentucky since 2002. He has extensive experience in commercial and civil litigation in state, federal and appellate courts throughout the state, focusing primarily on municipal liability, public sector defense, civil rights litigation, employment litigation, and general insurance defense. Mr. Gadansky's litigation experience in public sector defense includes specific experience in defending local governments, governmental agencies and officials in connection with claims brought against them under both state and federal law, including Section...

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