Secretary sues district, claims it violated Texas Whistleblower Act

A school secretary sued her employer school district, alleging that it violated the Texas Whistleblower Act after it terminated her employment. The district requested that the lawsuit be dismissed and the court denied that motion. The school district appealed.

The court of appeals examined the facts. The secretary was responsible for maintaining the school's accounting records, completing monthly bank statements and activity reports, issuing checks, receiving money and making receipts, making deposits into the school's bank account, and storing funds in a safe, locked vault.

A teacher on the campus sent an email to the police department, alleging that she tendered $2,700 in cash to the school secretary from a prekindergarten fundraiser. The teacher signed a "deposit reconciliation form" evidencing the transfer. The next day, the teacher requested a check from from the secretary to purchase items related to the fundraiser. At that time, the secretary informed her that "I'm off $1,000." In other words, the secretary had only $1,700 of the $2,700 that the teacher had given to her.

According to the teacher, the secretary stated that the principal had something to do with the missing money. The secretary then called the teacher into her office and asked her to change the deposit form from $2,700 to $1,700. During that same meeting, the principal allegedly told the teacher the missing money would be replaced with concession stand money.

The police department followed up on the teacher's allegations by asking the secretary to come in for questioning. The secretary told police she received $2,700 in cash from the teacher and then proceeded to lock the money in her filing cabinet. She stated that the principal then went through her filing cabinets. She also admitted that she asked the teacher to change the deposit reconciliation form with the principal's knowledge and consent and that she had done the same thing on other occasions. She stated that she had previously reported the principal to the district's internal audit department.

While the police investigation was ongoing, the district conducted an internal audit. The audit concluded that both the principal and the secretary failed to comply with district policies and procedures to properly administer the fundraising activities at the campus. The report further found that the mismanagement resulted in $34,176.13 in missing funds.

The audit department expanded the scope of its audit to prior years. It issued an "Addendum to Mismanagement of Student Activity and Motivational Funds" report. This report concluded that the campus had understated gross receipts and records regarding campus uniform inventory, resulting in a loss of $15,885.03 instead of an expected profit of $5,738 on the sale of school uniforms.

The report further indicated that "a five-year cash trend revealed that cash balances had decreased in the last four fiscal years." The report concluded that both the secretary and principal failed to comply with district policy regarding student fundraisers consecutively during the years at issue. As a result, the district terminated the secretary's employment.

The secretary sued the school district under the Texas Whistleblower Act, which states that a governmental entity (including a school district) may not take adverse personnel action against an employee who in good faith reports a violation of law by the employing entity or another employee to an appropriate law enforcement authority. To establish a claim under the act, an employee must show that:

1. they reported;
2. the report asserts a violation of law by the employer or another employee;
3. the report was made to an appropriate law enforcement authority;
4. the report was made in good faith; and
5. the adverse action would not have occurred if the employee had not reported the illegal conduct.

In this case, the school district claimed that the secretary's report to the police was not a protected report and that it was not made in good faith, because she made the report to deflect from her own culpability and because the actual report to the police was made by a teacher, not by the secretary.

The court of appeals disagreed, noting that the secretary's voluntary statement, while admitting to misconduct, identified separate alleged violations of the law by the principal, her supervisor.

Under applicable law, in order to properly "report" under the Whistleblower Act, a public employee must convey information that exposes or corroborates a violation of law or otherwise provide relevant, additional information that will help identify or investigate illegal conduct. The secretary's statement to the police met this requirement. Additionally, the fact that the secretary did not initiate the investigation does not disqualify her from making a protected report under the act.

The court of appeals agreed that the case should not be dismissed and that the secretary should be permitted to sue the school district for potential violations of the Texas Whistleblower Act.