How not to fire an employee

Today, I’m going to tell you a little story. It’s about a stay-at-home mom who works part-time from home. She’s worked for the same company for over a year, and performed well. Every three months, the employer would renew her tenure for another three-month period. Recently, the mom asked for and received time some time off to deal with a medical issue of one of her children. While she was out on leave, she received an email from her manager telling her that her position was being eliminated and that her services would no longer be needed.

The legal issues in this vignette are relatively easy to spot: ADA (based on associational disability), FMLA (if she worked enough hours for the company), and GINA (depending on the nature of her child’s medical condition and whether her employer is in possession of genetic information).

This story, though, raises a larger issue. All legal issues aside, is this employee more likely or less to sue following her termination? According to the Settle It Now Negotiation Blog, there are four main reasons why an employee might file a lawsuit:

1. Feelings of unfair, insensitive treatment at the time of termination.
2. Lack of notice of the termination.
3. Certain groups – women and minorities - are especially likely to sue.
4. Perception of poor on-the-job treatment.

Our story violates at least the first three of these rules.

This employer, however, made one key mistake that helps fan the flames of bad feelings and could lead to a lawsuit – communicating the termination by email. Email is cold and informal, and should never be used to fire an employee.

The moral of this story – in preventing lawsuits by terminated employees, how the employee is fired is as important, if not more important, that why the employee was fired.

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Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus.

For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or jth@kjk.com.

Cat fight on aisle 6: court leaves open the possibility that a handbook can create a contract

In White v. Fabiniak, Wal-Mart fired Carla White for threatening to "slap the piss" out of a co-worker, Stephanie Jeppe. Prior to the termination, White had used Wal-Mart's Open Door Policy to complain to her supervisor that Jeppe had been threatening her.

White was an at-will employee of Wal-Mart. At the start of her employment, Wal-Mart provided her an employee handbook that contained, among other provisions, an Open Door Policy. That policy provided:

If you have an idea or a problem, you can talk to your supervisor about it without fear of retaliation. Problems may be resolved faster if you go to your immediate supervisor first. However, if you feel your supervisor is the source of the problem, or if the problem has not been addressed satisfactorily, you can go to any level of management in the Company. But remember, while the Open Door promises that you will be heard, it cannot promise that your request will be granted or that your opinion will prevail.

White claimed that the open door policy created an implied contract between her and Wal-Mart, and terminating for using the policy violated that contract. The court of appeals disagreed:

The policy provides an avenue an employee may use in the event he or she has a work related concern, idea, or grievance. Within the context of the policy, therefore, Wal-Mart admits it will not terminate or otherwise punish an employee for choosing to share his or her ideas or problems with management. Read plainly, this is neither an implied or express promise of continued employment. Rather, it is merely an assurance that an employee can utilize the policy without concern of unfair reprisals on behalf of management or the company at large. ...

[W]e hold the plain meaning of the open door policy assured an employee he or she would not be retaliated against for utilizing it as a means to air his or her grievances. This does not imply the policy guaranteed an employee continuous employment if, for example, he or she breached a separate policy set forth in the manual in the course of utilizing the open door policy. ...

Nothing in the open door policy states that an aggrieved employee who decides to use the policy may utilize or threaten to utilize vigilante tactics if a particular supervisor does not handle the grievance in a manner the employee demands. Quite the contrary, the policy provides that, while an employee will assuredly be heard, an employee's view or opinion regarding the resolution of a problem will not always prevail.

Appellant does not specifically allege Chuba refused to hear her complaint, nor did she provide any evidence that her termination was retaliatory in nature. Appellant acknowledges, and the record demonstrates, she was fired for threatening Jeppe in violation of the workplace violence policy. Nothing in the record indicates Wal-Mart acted inappropriately in terminating appellant on this basis.

This opinion, however, may not be as pro-employer as it seems. It does not say that the employee handbook cannot create a contract, but merely that it does not in this case because Wal-Mart terminated White because she violated its workplace violence policy. The court did not find that White had no legal claim, but that Wal-Mart had a good reason to fire her. Thus, this opinion leaves the door open to the possibility that an employee can make a breach of contract claim if the employer does not have good cause for the termination.

Although unclear from the opinion, it is safe to assume that the handbook contained an at-will disclosure, such as: "This handbook is not a contract, express or implied, and does not guarantee employment for any specific period of time. Although we hope that your employment relationship with us will be long term, you are at all times an at-will employee, which means that either you or the company may terminate this relationship at any time, for any reason, with or without cause or notice." If that is the case, I fail to see how any employee could complain that the handbook creates an implied contract that the employer can breach, even if the employer admitted it fired an employee for using a handbook provision such as the open door policy.

Unless handbook disclaimers are to be rendered meaningless, employees cannot be permitted to bring breach of contract claims based on an employer's failure to follow a policy in the handbook. The claim must be based on some other recognized legal right, such as statutory retaliation or some public policy separate and apart from the handbook language itself.

Butt painter settles wrongful discharge lawsuit

In the update that I know everyone's been waiting for, Stephen Murmer, the Virginia high school art teacher terminated after school officials learned he moonlighted by creating paintings using his bare buttocks as a brush, has settled his wrongful discharge lawsuit on the eve of trial. [See Butt painter's lawsuit to go to trial].

You may be asking yourself, what was his claim worth? $65,000. Unreal. We can all sleep easier knowing justice has been served.

[Hat tip: Lowering the Bar]

Ohio court finds no public policy for opposing corporate accounting irregularities

One would think that in our post-Enron corporate environment, employees, even in non-public companies, would be free to oppose corporate accounting irregularities without fear of termination. Yet, in Schwenke v. Wayne-Dalton Corp., the Lorain County (Ohio) Court of Appeals ruled that an employee claiming he was terminated for that very reason had no claim.

Ronald Schwenke was the controller for Wayne-Dalton Corp., a privately held manufacturer of garage doors headquartered in Mt. Hope, Ohio. During Schwenke's employment he complained about certain inappropriate accounting procedures engaged in by Wayne-Dalton's President and its CFO, in addition to what he perceived as the misappropriation of corporate assets. His complaints fells on deaf ears, and he was simply told to "make it work," perform his duties as controller, and not question how the business was operated. When he refused to "make it work" he was fired. Schwenke claimed that his termination was in retaliation for his complaints, and that it violated Ohio's public policy against firing employees in retaliation for reporting inappropriate accounting procedures or misappropriation of corporate assets.

Schwenke did not claim protection under Ohio's whistleblower statute because he failed to follow the statute's very specific reporting requirements that one must follow to qualify as a protected whistleblower. Instead, he claimed there is "a public policy in support of not firing an employee, such as appellee, in retaliation for reporting inappropriate accounting procedures or misappropriation of corporate assets." The court of appeals disagreed:

[W]e find that appellee has failed to identify any source of public policy as the basis for his claims. Appellee ... did not identify any constitution, statute or regulation that might provide a basis for his claims. Nor did appellee cite or present the trial court with any legal authority in support of his argument that his termination violated public policy.

In other words, Schwenke lost not because a public policy does not exist, but because he failed to articulate one. I wonder if the result would have been different if Schwenke simply articulated the Sarbanes-Oxley Act, which establishes accountability standards for publicly traded companies, as the public policy supporting his claim.

The concurring opinion, however, goes further, and suggests that there is no public policy sufficient for protection:

Appellee has failed to identify any source of public policy as the basis for his claims. I believe Appellee's best argument is the fiduciary duty which exists between a corporation and its directors and its shareholders warrants recognition as a public policy exception to the at-will employment doctrine. I know of no case law, nor has Appellee identified any, which has recognized the breach of that fiduciary duty rises to the level of a matter of public policy. The fact no such case law exists does not preclude this Court from recognizing, and thereby creating, new common law. While the facts of this case suggest doing so may be equitable, I join my colleagues in refusing to do so....

While I agree the corporate management practices found to exist by the jury in this case demonstrate a breach of the fiduciary duty to the corporation's shareholders ... I do not feel such rises to the level of a great societal wrong. This case brought to mind the Enron scandal. Unlike Enron, no corporate officer or board of directors' member of Wayne-Dalton has been alleged, much less shown, to have committed a criminal offense. Unlike Enron, Wayne-Dalton is not involved in the supply of public utilities. Unlike Enron, Wayne-Dalton's corporate management practices cannot be said to have any impact on the general public health and safety. Wayne-Dalton "wrongs" as found by the jury are not "societal" in nature.

The Enron analogy is fallacious. Enron was a publicly traded company. If Wayne-Dalton was a public company, Schwenke could have had a statutory whistleblower claim under Sarbanes-Oxley. The existence of that statutory remedy, however, would most likely nullify his public policy wrongful discharge claim, under the holding of Leininger v. Pioneer National Latex.

Nevertheless, the Schwenke case sends the wrong message to Ohio's privately held companies -- that they can terminate corporate watchdogs without fear of retaliation liability. Employees have to be free to oppose corporate accounting irregularities, even in non-public companies. Sarbanes-Oxley should provide a sufficient public policy to support these claims against non-public companies. I hope it does in the next case of this ilk.

Butt painter's lawsuit to go to trial

Does anyone remember Stephen Murmer? He was the Virginia high school art teacher suing his former employer over his termination after school officials learned he moonlighted by creating paintings using his bare buttocks as a brush. (See Butt I was doing it on my free time). School officials terminated Murmer after they saw a YouTube video in which he wore a swim thong and a Groucho Marx mask to demonstrate how he applies paint to his rear and presses it onto a canvas. The ACLE filed the lawsuit, claiming that Murmer's termination violates his First Amendment right to free expression. According to the lawsuit, available via the ACLU, Murmer was terminated for art he created on his free time and under a pen name, all of which he kept private from his students:

18. Plaintiff has thus created paintings by using his posterior and other body parts as a stamp with which to imprint paint onto a canvas.

19. With this technique, which includes sitting in paint and then pressing his buttocks onto a canvas, Plaintiff has created paintings which range from depicting stylized flowers to portraiture and patterns.

20. These seemingly simple paintings thus have a surprise in store for the viewer: only gradually, if at all, comes the realization that the image has been created with monotypes of the human body, a realization intended to reverberate in the viewer, setting in motion a process of self-discovery of one’s own personality traits, oscillation between watching a flower (or portrait or pattern) and one's preconceived bias of the human body. The artist's hope is that the viewer thus discovers his individual personality characteristics through visual response – as well as his personal views on the concept and the purpose of art.…

22. On or about October 25, 2003, Stan Murmur appeared in a short-lived cable TV show entitled "Unscrewed with Martin Sargent," where he explained how he promoted his artwork using the Internet, demonstrated how he creates his art, and completed a composition for TechTV.

23. As character invention Stan Murmur, Plaintiff was wearing a costume consisting of a towel wrapped around his head in a turban, a Groucho Marx mask, a white bathrobe, and a black swim thong.…

26. Stan Murmur’s performance eventually found its way onto YouTube, an Internet website on which users post videos. Plaintiff had no role in posting the video on YouTube.…

28. Plaintiff has scrupulously kept his private artwork separate from his role as a teacher.

29. At no time did Murmer discuss his art in his classroom. Nor did he ever inform students about his art or the YouTube.com video.

Murmer and the ACLU claim that what Murmer did on his own time was his own personal business and that the termination violates his constitutional right to free speech. Last week, the trial court denied the school district's motion to dismiss, permitting the case to proceed to trial on March 11.

This case continues to illustrate the dangers that employees face when posting controversial material on websites. What do you think: should employers be allowed to fire employees over personal activities outside of work?

[Hat tip: Lowering the Bar]

Ohio Supreme Court holds that no wrongful discharge claim exists for employee terminated while on workers' comp leave

Four months ago, I reported on Klopfenstein v. NK Parts Industries, Inc., an Ohio appellate decision which held that Coolidge v. Riverdale Local School Dist. created an independent public policy exception to the employment at-will doctrine. Klopfenstein stood in direct contrast to other Ohio appellate districts, such as Cuyahoga County in Brooks v. Qualchoice, which held that Coolidge does not create a new public policy exception to the employment at-will doctrine, but instead illustrates conduct that is retaliatory under R.C. 4123.90 (the workers' comp anti-retaliation provision). At that time, I predicted that given the conflict, the Ohio Supreme Court would soon be asked to revisit this issue, and that it should reject the Klopfenstein line of cases:

Klopfenstein will not be the last word on this issue. Whether in an appeal from that case, or some future case, the Ohio Supreme Court will be called upon to clarify its Coolidge holding and definitively state the proper statute of limitations. In anticipation of that future battle, let me suggest that Klopfenstein was wrongly decided. R.C. 4123.90 states: "No employer shall discharge ... any employee because the employee filed a claim ... under the workers’ compensation act for an injury ... which occurred in the course of and arising out of his employment with that employer." If an employee is terminated because of workers' comp-related absences, that employee is being terminated because of the claim. Thus, the termination falls squarely within the coverage of R.C. 4123.90. It is the job of the legislature, and not the courts, to expand the statute of limitations for Coolidge claims if it sees fit to do so.

Today, the Ohio Supreme Court has proved me to be both prescient and correct. In Bickers v. W. & S. Life Ins. Co., the Court has held: "An employee who is terminated from employment while receiving workers' compensation has no common-law cause of action for wrongful discharge in violation of the public policy underlying R.C. 4123.90, which provides the exclusive remedy for employees claiming termination in violation of rights conferred by the Workers' Compensation Act." In so ruling, it greatly limited the reach of its 2003 Coolidge decision, limiting Coolidge to considerations of "good and just cause" for termination under R.C. 3319.16 (which involves terminations of contracts by boards of education). The Court explained its rationale for limiting employees to a statutory claim under the workers' comp retaliation provision:

The policy choice between permitting and prohibiting the discharge from employment of an employee who has been injured at work is a difficult one, as it inevitably creates a burden of some degree upon either the employer or the employee.

Should the policy choice be to deny employers the exercise of their employment-at-will prerogative and require them to hold open the jobs of injured employees for indefinite periods of time, then employers will be burdened with employees unable to perform the work for which they were hired and an inability to obtain permanent replacements. This would be particularly onerous on small employers with few employees, who lack the ability to shift the duties of an injured employee to other employees.

Should the policy choice be to permit an employer to terminate a worker who is injured on the job and cannot work as a result, then the worker suffers not only the burden of being injured but also the burden of unemployment at a time when seeking a new position is made more difficult by the injury.

In addressing this difficult policy issue, which lacks wholly satisfactory solutions, the General Assembly chose to proscribe retaliatory discharges only. Employers may not retaliate against employees for pursuing a workers’ compensation claim. R.C. 4123.90. It is within the prerogative and authority of the General Assembly to make this choice when determining policy in the workers' compensation arena and in balancing, in that forum, employers' and employees' competing interests. We may not override this choice and superimpose a common-law, public-policy tort remedy on this wholly statutory system.

In holding the employee to the statutory remedy, the Court continued its string of recent opinions limiting the scope of Ohio's wrongful discharge tort (see Ohio Supreme Court rejects common law wrongful discharge age discrimination claim). What is becoming more and more clear under Ohio law is that if a statute provides a remedy that an aggrieved employee can take advantage of, that employee will not have a valid common law wrongful discharge claim.

The Bickers opinion is also interesting for the debate between the majority and the minority on the actual holding of Coolidge and whether the Court is merely clarifying its prior holding, or outright reversing binding precedent. That debate, while interesting from a jurisprudential standpoint, is ultimately immaterial to the practical impact of Bickers for companies: employers no longer have to hold jobs open in perpetuity for employees who are off work because of a workers' comp injury. The FMLA and the ADA, where applicable, will still have something to say about the duration of a medical leave of absence (see ADA may require leaves of absence beyond FMLA mandates), but at least as to the workers' comp law employees are limited to their statutory remedy and the 180-day statute of limitations that goes along with it.

How narrow is the scope of the public policy tort in Ohio?

Just as it seemed that Ohio courts were narrowing the scope of the wrongful discharge public policy tort, they toss a curve ball. Hycomp, Inc., a manufacturer of airplane engine parts, terminated David Zajc, one of its quality control managers, after he refused to ship a part he deemed either noncompliant with contract specifications or had quality issues. Zajc claimed that his termination jeopardized the clearly defined public policy found in the Uniform Commercial Code, the Ohio Products Liability Act, and federal aviation regulations. The trial court disagreed and dismissed Zajc's claim on Hycomp's motion for summary judgment. The Cuyahoga County Court of Appeals, however, reversed that dismissal. It agreed with Zajc that the UCC (which permits a buyer to reject nonconforming products), the Products Liability Act (which imposes strict liability where the risks exceed the benefits of a product design), and federal aviation laws and regulations (which authorize the FAA to regulate the production of aircrafts and provide for a inspection system for subcontracted parts). According to the Court, it is irrelevant that those laws do not expressly prohibit Zajc's termination, but that it is enough that the termination places those public policies in jeopardy, notwithstanding that Zajc never complained, but merely refused to carry out his bosses directive to ship the at-issue parts.

The dissent argues that Zajc's claim is nothing more than a back door whistleblower claim, that there is no evidence that Zajc complained about any safety concerns, and that even if he did, he failed to comply with the mandatory prerequisites of the Whistleblower Act. In the words of the dissenting Judge Gallagher:

Absent facts demonstrating a clear safety concern, I do not find any clear public policy expressed in the above statutes that would be jeopardized by the termination of an employee who disagrees with his employer about whether a part is nonconforming or defective and then disobeys instructions to ship the goods.... In this case, Zajc is asking us to find a clear public policy that an employer cannot discharge an employee who disagrees about the quality of parts and refuses to ship the parts without any showing that public safety is being endangered. I do not believe that Zajc has shown that the narrow public policy exception to the employment at-will doctrine should be extended to the limited facts of this case.

Those who are regular readers of this blog will not be surprised that I think the dissent has the better of the argument. The tougher question is how to interpret the implications of this decision. For the past several years, we've seen a tightening of the public policies that will support a wrongful discharge claim. The Zajc case, though, seems to open up a can of worms by permitting employees to shoehorn a termination into a tangentially implicated statute. For employers, the bottom line is to make employment decisions based on legitimate, non-discriminatory, non-retaliatory business reasons. Companies should never fail to take a legitimate employment action out of a fear of being sued. Cases like Zajc, however, certainly inject a little more uncertainty into the process for companies and for the lawyers advise them.

A copy of Zajc v. Hycomp, Inc. is available for download here.

Ohio Supreme Court may be asked to clarify Coolidge

In addition to providing a good summary of the history of the public policy wrongful discharge tort in Ohio, Klopfenstein v. NK Parts Industries, Inc. also sets the stage for a potential battle in the Ohio Supreme Court over the proper statute of limitations for a claim under Coolidge v. Riverdale Local School Dist. Coolidge held that an employer cannot discharge an employee who is receiving temporary total disability workers' compensation benefits solely on the basis of absenteeism or inability to work, when the absence or inability to work is directly related to an allowed condition. The Cuyahoga County Court of Appeals, in Brooks v. Qualchoice, held that Coolidge does not create a new public policy exception to the employment at-will doctrine, but instead illustrates conduct that is retaliatory under R.C. 4123.90 (the workers' comp anti-retaliation provision). In Klopfenstein, the Third District Court of Appeals disagreed, holding, "Coolidge creates an independent public policy exception to the employment at-will doctrine." These divergent holding have significant implications, because the two claims have vastly different statutes of limitations. An aggrieved employee has 4 years to file a public policy wrongful discharge claim, as compared to 180 days for a retaliation claim pursuant to R.C. 4123.90. The workers' comp retaliation statute also has strict notice requirements that a claimant must meet as a prerequisite to bringing suit, in addition to more restrictive damages.

Klopfenstein will not be the last word on this issue. Whether in an appeal from that case, or some future case, the Ohio Supreme Court will be called upon to clarify its Coolidge holding and definitively state the proper statute of limitations. In anticipation of that future battle, let me suggest that Klopfenstein was wrongly decided. R.C. 4123.90 states: "No employer shall discharge ... any employee because the employee filed a claim ... under the workers’ compensation act for an injury ... which occurred in the course of and arising out of his employment with that employer." If an employee is terminated because of workers' comp-related absences, that employee is being terminated because of the claim. Thus, the termination falls squarely within the coverage of R.C. 4123.90. It is the job of the legislature, and not the courts, to expand the statute of limitations for Coolidge claims if it sees fit to do so.