What are the reasonable limits on loyalty to one’s employer?

Chantale Leroux works as a clerk for Avco Environmental Services, a small toxic-waste disposal company.
The company has a contract to dispose of medical waste from a local hospital. During the course of her work, Chantale comes across documents that suggest that Avco has actually been disposing of some of this waste in a local municipal landfill. Chantale is shocked. She knows this practice is illegal. And even though only a small portion of the medical waste that Avco handles is being disposed of this way, any amount at all seems a worrisome threat to public health.
Chantale gathers together the appropriate documents and takes them to her immediate superior, Dave Lamb. Dave says, “Look, I don’t think that sort of thing is your concern or mine. We’re in charge of record-keeping, not making decisions about where this stuff gets dumped. I suggest you drop it.”