• Key point. Churches that dismiss an employee for reporting financial improprieties may be liable for wrongful dismissal.
A Missouri court ruled that a charity could be sued by a bookkeeper who was dismissed as a result of her reporting financial improprieties by her supervisor. A bookkeeper became aware that her supervisor was engaged in a number of financial improprieties, including (1) stealing money from his employer; (2) charging personal expenses to his employer and not paying these charges back; (3) keeping some of the cash sent to his employer in the mail; and (4) obtaining reimbursements for travel expenses that were never incurred. She reported her findings to a member of the charity's personnel committee who told her to "get more evidence." She continued to gather evidence, and spoke with two other members of the personnel committee. She was later dismissed. The reason for her dismissal was hotly contested. The charity insisted that her dismissal had nothing to do with her accusations against her supervisor. Rather, it insisted that she had been fired for missing several days of work, failing to perform assigned duties, and arriving late to work. The bookkeeper claimed that she had been dismissed because of her "whistleblowing." She sued her former employer, and a jury awarded her $100,000 in damages.
A state appeals court upheld the trial court's ruling. It conceded that employees (such as the bookkeeper in this case) "who have no contract for a certain term of employment are employees-at-will. An employee-at-will normally has no right to sue for wrongful discharge even if the employee was terminated without cause." However, the court pointed out that there are limited exceptions to this rule. The so-called "whistleblower" exception protects employees who report "wrongdoing or violations of law or public policy by the employer or fellow employees to superiors or third parties." Such persons cannot be dismissed without cause, even though they are "at will" employees hired for an unspecified term.