NJ May Ban Secrecy Deals in Whistleblower Suits Involving Public Officials

The New Jersey state senate is considering a bill that would forbid secrecy in the settlement of certain whistleblower lawsuits that involve government agencies or public officials.

The state’s assembly already passed the legislation unanimously. It moved to the senate on Monday.

The proposed law would prevent public entities and government employees from agreeing to confidentiality when they settle an action brought under the state’s Conscientious Employee Protection Act (CEPA). The bill also calls for a public listing of all such settlements — including the amount of taxpayer money paid to outside attorneys.

The new bill stems from an uproar over the Garden State’s handling of its CEPA settlement with a former prosecutor, Bennett Barlyn, who claimed he was fired for complaining that an indictment was dropped for political reasons.

CEPA is one of the strongest whistleblower laws in the United States. It protects both public and private employees from retaliation for opposing or disclosing any unlawful activity.

Mr. Barlyn’s lawsuit reportedly settled last year for $1.3 million, with a further state outlay of about $4 million in attorneys’ fees. Legislators who wanted full details from Mr. Barlyn were frustrated by the deal’s confidentiality provisions.

Settlements of such a “serious nature should not be locked away in the dark,” the bill’s chief sponsor, Assemblyman John McKeon, said in a statement. “The public deserves to know whether their government is operating with their best interests in mind or making costly, self-serving decisions. It’s disturbing that someone who uses the whistleblower law to truthfully speak out against wrongdoing can then be stifled when the matter is resolved.”

The proposed legislation, which passed New Jersey’s lower house on March 23 in a 73-0 vote, provides an exception for agreements involving national security. It covers CEPA settlements entered by the state itself, as well as by any county, municipality, district, public authority, public agency, and any other political subdivision or public body — plus all employees of those bodies, if they are acting in an official capacity.

Other states have grappled with the issue of confidential settlements involving public money. In 2010, for instance, former Nebraska Gov. Dave Heineman signed a law that made it harder for taxpayer-supported bodies to keep their settlements secret. The statute was proposed after a “secret settlement” in a sexual harassment case, according to The News Media & The Law.

New Jersey is more protective of its whistleblowers than many other states, although California, Oregon, Massachusetts, and New York also rank highly. Overall, about 15 states bolster federal laws with measures that ban retaliation against both public- and private-sector employees who oppose wrongdoing.