A Challenge to the Public Policy Exception to the At-Will Employment Doctrine

A case my firm handled recently involved paralegals who were terminated by a law firm with offices in Ohio.  Each paralegal had observed illegal conduct committed by a number of employees of the firm, on multiple occasions. Separately, each of the clients brought their concerns to their respective supervisors and each paralegal was subsequently terminated.  The firm denied that illegal conduct had occurred and claimed the employees were fired for performance reasons.  The firm also argued that as “at will” employees, the paralegals had no right to bring a claim for wrongful termination even if they had in fact observed and reported illegal conduct.  Can an at-will employee who is fired for reporting illegal conduct file a meritorious suit for wrongful discharge of employment?

What is the At-Will Employment Doctrine?

 Under Ohio law, absent a federal or state law specifically prohibiting discrimination against an employee (e.g., The Civil Rights Act, The Whistleblower Protection Act, The Americans With Disabilities Act, etc.) or an express agreement between the employer and employee, generally either the employee or the employer may terminate an employee’s employment at any time, for any reason not contrary to existing state of federal law. This leaves the employer with the ability to freely terminate employees as they please and employees to freely leave their position at any time, for any reason.

 What is the Public Policy Exception to the At-Will Employment Doctrine?

 In 1990 the Supreme Court of Ohio, in the landmark case of Greely v. Miami Valley Maint. Contractors (1990), 49 Ohio St.3d 228, 551 N.E.2d 377, 639 N.E.2d 51, established the tort of wrongful discharge in violation of public policy as an exception to the at-will employment doctrine. Greely’s employer terminated him after it received a child support wage assignment order from the local domestic relations court. The Court Held that R.C. 3113.213(D), which prohibited an employer from discharging an employee because of a child support withholding order, was a “sufficiently clear” statement of public policy by the Ohio General Assembly and warranted an exception to the at-will doctrine.

 The Expanding  Evolution of the Public Policy Exception to the At-Will Employment Doctrine

Four years after the Court decided Greely, the Ohio Supreme Court decided Painter v. Graley (1994), 70 Ohio St.3d 377, 639 N.E.2d 51, which expanded upon Greely. The Supreme Court held that a statute expressly forbidding termination of employment was not a prerequisite to a wrongful discharge claim.  Instead, public policy exceptions to the at-will doctrine could be discerned from “the Constitutions of Ohio and the United States, legislation, administrative rules and regulations, and the common law.”[1] The court left the determination of whether the alleged grounds for a particular discharge violate a clear public policy to the discretion of the lower courts.

One year later, the Ohio Supreme Court decided Collins v. Rizkana (1995), 73 Ohio St.3d 65, 652 N.E.2d 653.  There the Court further expanded on Greely and Painter by establishing the now well-known four part test for a public policy discharge claim:

(1)  Clarity: “[a] clear public policy existed and was manifested in a state or federal constitution, statute or administrative regulation, or in the common law.”

(2)  Jeopardy: “dismissing employees under circumstances like those involved in the plaintiff’s dismissal would jeopardize the public policy.”

(3)  Causation: “[t]he plaintiff’s dismissal was motivated by conduct related to the public policy.”

(4)  Overriding Justification: “[t]he employer lacked overriding legitimate business justification for the dismissal.”[2]

In Collins, supra, the Supreme Court of Ohio examined whether Ohio should recognize a public policy exception to at-will employment based upon sexual harassment in the workplace. The court held that it located at least two sources of statutorily expressed public policy in this regard.[3]

First, the Court noted that the Ohio General Assembly, through various criminal statutes, including R.C. 2907.06 and R.C. 2907.21 through 2907.25, prohibited crimes of a sexual nature. The court held that even where no crime was committed through the sexually harassing behavior, “it is nevertheless a violation of public policy to compel an employee *** to do an act ordinarily proscribed by law.”[4] None of the criminal statutes cited by the Court either: (1) imposed a reporting requirement on an employee or (2) prohibited an employer from discharging an employee for reporting the crime.

Second, the Court held that R.C. 4112.02, which prohibits employers from discharging or refusing to hire a person because of sex, reflected Ohio public policy against sexual harassment in the workplace. [5] Significantly, the Court held that either of the two sources above would have been independently sufficient to allow for the recognition of a public policy as an exception to the at-will employment doctrine.[6]

An Employee Who Files a Claim Under the Ohio Whistleblower Protection Act Must Strictly Comply With That Act

Two years after Collins was published, the Ohio Supreme Court decided  Kulch v. Structural Fibers, Inc. (1997), 78 Ohio St.3d 134, 677 N.E.2d 308.  Kulch involved an employee who verbally complained to his employer about toxic chemicals in the air that were causing serious health problems to he and his coworkers. After the employer ignored his concerns, Mr. Kulch filed an OSHA complaint, which resulted in significant sanctions to the company. Mr. Kulch then alleged that the employer began to retaliate against him and ultimately fired him. Mr. Kulch sued the company asserting claims under both the Whistleblower Protection Act and for wrongful discharge in violation of public policy.[7]

The trial court granted summary judgment to the employer on the public policy discharge claim, which was affirmed by the appellate court. On appeal, the Supreme Court of Ohio reviewed whether Ohio law demonstrated a public policy against retaliation towards and employee who reports an OSHA violation.  Similar to Collins, supra, the Court explained that there were two main sources of public policy regarding an OSHA violation report and that each was “independently sufficient to justify an exception to the employment at-will doctrine.”[8]

First, the court cited Section 660(c), Title 29 of the U.S. Code, which prohibits employers from retaliating against employees for reporting OSHA violations. Thus, the Court expanded Greely by expressly holding that courts could consider federal law in determining state public policy. In this regard, the Court commented that various other provisions in Ohio law also reflected statutory and constitutional provisions favoring safety in the workplace, including R.C. 4101.11 (duty of employer to protect employees and frequenters) and R.C. 4101.12 (duty of employer to furnish safe place of employment).[9] Notably, none of these Ohio statutory provisions mandated employee reporting or prohibited employer retaliation.

Second, the Court pointed to R.C. 4113.52, the whistleblower statute, which it held embodied a “clear public policy favoring whistleblowing.[10] However, the Court held that the public policy exception based on the whistleblower statute was limited to a narrow set of circumstances and strict compliance with the detailed reporting requirements set forth in the statute.

The First District Court of Appeals Seeks to Further Limit the Public Policy Exception

A majority of lower courts applying Greely and its progeny have never required that a source of public policy must contain a requirement that an employee report a concern and/or an express prohibition against an employer from retaliating. However, in 2004 the First District Court of Appeals held that the clarity element can only be established if a clear public policy existed and was manifested in a state or federal constitution, statute or administrative regulation, or in the common law, which source also mandates reporting of such conduct and/or prevents an employer from retaliating against an employee for such conduct. Hale v. Volunteers of Am., 1st Dist. No. C-020839, 158 Ohio App.3d 415, 2004-Ohio-4208, 816 N.E.2d 259,

Mr. Hale and a co-employee worked at a rehabilitation center for felony offenders. Throughout their employment, both employees complained to their employer on numerous occasions about the center’s treatment of offenders.[11] Later, the two employees received questionnaires from the Ohio Department of Rehabilitation and Corrections requesting information about the center.[12] The employees returned the questionnaires with comments critical of the center.  Thus, both employees were “whistleblowers.” Both were later terminated and brought an action for wrongful discharge in violation of public policy.[13] The trial court granted summary judgment in favor of the employer.

On appeal, the employees cited various technical portions of the Ohio Administrative Code as evidence of a “clear public policy” to provide suitable housing and treatment to its inmate population.[14] But the employer argued that the employee’s sole source of public policy was the whistleblower statute.[15]

The First District discussed Kulch and its holding that if a Greely claim is premised solely on the public policy favoring whistleblowing set forth in the whistleblower statute, an action cannot be maintained unless there is strict compliance with the statute. Then the First District went beyond Kulch to hold that in order to pursue any claim under Greely, a plaintiff must cite to an independent source of public policy that “must parallel the public policy set forth in the whistleblower statute.”[16]

Specifically, the First District observed that the section of the Ohio Administrative Code section cited by the employees did not: (1) specifically protect adult offenders; (2) require employees to report abuse; or (3) prohibit the employer from terminating them for such reports.[17]

Although the First District announced that it arrived at their decision in Hale after “analyzing the Ohio Supreme Court’s discussion of public policy independent from the whistleblower statute, as well as the case law from our sister appellate districts,” a controversy arises from this interpretation.  Without citation, the First District implied that the Ohio Supreme Court had only permitted a Greely claim separate from the whistleblower statute “when those employees have claimed that they were fired for raising issues relating to workplace safety.”[18] However, a review of the Supreme Court of Ohio cases involving public policy exceptions to at-will employment suggests this may not be a correct statement of the law of Ohio.  The Supreme Court of Ohio has specifically upheld public policy exception claims in the context of discharge as result of a child support order and for sexual harassment, neither of which involved physical workplace safety concerns. See Greely and Collins, supra.

In fact, the only case cited by the First District in Hale which imposed this new legal element for a Greely claim is an unreported case out of the 11th District Court of Appeals, Evans v. Phtg., Inc., 11th Dist. No. 2001-T-0054, 2002-Ohio-3381.  There, the Eleventh District held that a plaintiff cannot establish a Greely claim unless the statute in question “specifically prohibit[ed] an employer from terminating an employee who reports” the conduct.[19]

Unsurprisingly, the Hale decision was not unanimous. The dissenting judge pointed out that his colleagues were adding a requirement to the Supreme Court of Ohio precedent: “I believe that the majority expresses an unduly restrictive view of what constitutes an independent policy under Kulch. To be cognizable in a wrongful-discharge claim under Kulch, a policy need only be independent from the protections of the whistleblower statute; there is no requirement that the source of the independent policy itself mandate disclosure of violations by an employee, or that it explicitly prevent the discharge of an employee for such a disclosure.”[20]

Although a few courts have followed the holding of Hale, the majority of courts in Ohio, before and after Kulch, and before and after Hale and Evans, have never held that a plaintiff can only establish a public policy exception unless a statute cited for public policy mimics the requirements of the whistleblower statute.[21]

Conclusion

It is clear that numerous courts have declined to follow the questionable reasoning set forth in Hale.  It will be up to the Ohio Supreme Court to determine whether the highly restrictive language employed by Hale in determining the breadth of the public policy exception is the law of Ohio.