A major decision from New York’s highest court today on the rights of at-will employees. Put simply, none.
The court ruled that Joseph Sullivan, a compliance officer for a hedge fund, could not sue the fund and majority owner William Harnisch for wrongful discharge. The officer alleged nine causes of action, including that he was fired because he “spoke out” about “manipulative and deceptive trading practices,” and that his dismissal violated “a company policy to prohibit retaliation” for such conduct.
New York is a strict employment-at-will state, except in one instance. In that case, a lawyer claimed to have been dismissed by his law firm “because of his insistence that the firm comply with the governing disciplinary rules by reporting professional misconduct” committed by one of the plaintiff’s colleagues. That claim survived a motion to dismiss.
The appeals court wasn’t buying that argument though in this case.
“Important as regulatory compliance is, it cannot be said of Sullivan, as we said of the plaintiff in Wieder, that his regulatory and ethical obligations and his duties as an employee “were so closely linked as to be incapable of separation.”
That holding stoked the ire of Chief Justice Williams, who issued a passionate dissent. He said that “In the wake of the devastation caused by fraudulent financial schemes—such as the Madoff ponzi operation, infamous for many reasons including the length of time during which it continued undetected—the courts can ill afford to turn a blind eye to the potential for abuses that may be committed by unscrupulous financial services companies in violation of the public trust and the law.”
That sums up the two sides of the argument right there.
Here’s the full text of Sullivan v. Harnisch.