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Ohio Supreme Court virtually guts wrongful-termination-in-violation-of-public-policy claims

Thursday, February 13, 2020

In a case with far-reaching implications, the Republican majority in House v. Iacovelli made it much harder to establish a claim even when public policy is clearly against the reason for the firing.

Columbus, OH – In a decision yesterday splitting along partisan lines, the Supreme Court of Ohio made it far more difficult to establish a claim for wrongful termination in violation of public policy. In House v. Iacovelli, 2020-Ohio-436, 2020 WL 696639 (Feb. 12, 2020), the Court declined to recognize the claim of an employee who was discharged after confronting her employer for failing to accurately report her earnings to the Bureau of Unemployment Compensation.

A wrongful-termination-in-violation-of-public-policy claim was first recognized as an exception to Ohio’s stringent employment-at-will doctrine in Greeley v. Miami Valley Maintenance Contrs., 49 Ohio St.3d 228 (1990). The claim was often available if

(1) there is a clear public policy manifested in a state or federal constitution, statute, administrative regulation, or common law; and

(2) under the circumstances a plaintiff alleges, her discharge would jeopardize that public policy.

After being terminated, the House plaintiff identified various provisions of Ohio Revised Code Chapter 4141 as the source of her wrongful-termination-in-violation-of-public-policy claim. The Chapter imposes fines and penalties for an employer's failure to accurately report employee earnings, but "do[es] not include a personal remedy for a dismissed employee ..."

The Supreme Court majority, in a decision penned by Justice Pat Fischer, a Republican, held that "[t]he lack of a personal remedy in the statutory scheme does not jeopardize the policy because the remedies contained in the statute sufficiently protect society's interest and discourage employers from engaging in the prohibited behavior." Even if a wrongful-termination-in-violation-of-public-policy claim were to be recognized on House's facts, according to the Supreme Court, it would not promote Chapter 4141's policy, since employers could still engage in inaccurate wage-reporting while avoiding liability by refraining from retaliating against employees who report it.

Now that the Supreme Court has shown its indifference to the plight of House and others, under what circumstances, will a court recognize a wrongful-termination-in-violation-of-public-policy claim? “[T]his court has focused only on the existence of a personal remedy for the employee in circumstances that involved public policies that protect substantial rights of the employee.” And when do public policies protect an employee's substantial rights? When the statutory scheme “specifically protect[s] employees.”

The circularity of the Court's analysis was not lost on the dissent. Said Justice Melody Stewart, joined by her Democratic colleague Justice Michael Donnelly: “When the source of the public policy is a statute that contains a remedy for a wrongfully terminated employee, recognizing a claim for wrongful termination in violation of public policy may not be necessary.” But it shouldn't matter, for the dissent, whether the public policy at issue is intended to protect individual employees or some governmental interest. “Regardless of the type of public policy involved, one of the central questions underlying the jeopardy component is whether a privately enforceable remedy for the aggrieved employee is needed to adequately protect the public policy.”

The dissent proceeded to discuss a litany of cases in which the Court appeared to grasp this point. “In the past,” the dissent observed, “when examining whether statutory remedies adequately protected the public policy at issue, this court focused on the adequacy of the remedies available to the individual employee.”

The majority opinion represents a puzzling, and in many ways unprincipled, departure from this to-be-preferred approach.

The dissent also observed that turning away employees who are fired for reporting violations of the law, or for refusing to violate the law themselves, “could jeopardize important public policies at the heart of a number of Ohio's laws even if those public policies do not necessarily protect the right of an individual employee.” Employees fired for refusing an employer's directive to illegally dump toxic waste into a river, for example, “have a difficult choice to make—break the law or be fired for not breaking the law.” “The central idea of the public policy tort,” for the dissent, “is to create privately enforceable disincentives for private employers to use their power in the workplace to undermine important public policies.”

Even if the majority’s distinction (between public policies intended to protect employees and those intended to promote a governmental interest) were a viable one, according to the dissent, the majority misapplied it in the case. “[T[he public policy behind accurately reporting employee wages is meant to protect a substantial right of the employee—the right to receive his fair share of unemployment compensation—in the event of an employee's termination through no fault of his own.” (Emphasis in original.) “Employees, moreover, are often the only ones who know of and can report their employers' violations. But [i]f employees know they can be terminated with no recourse for reporting a potential violation or for cooperating with the Bureau of Unemployment Compensation to uncover a potential violation, it is highly unlikely that they will ever report or cooperate. In turn, employers are unlikely ever to be identified and subjected to the administrative remedies for their wrongdoing.” In this way "the majority opinion does more to encourage employer underreporting than the statutory remedy provisions could ever do to discourage it."

In light of House, lawyers contemplating bringing a claim for wrongful termination in violation of public policy are well-advised to scrutinize every possible source of public policy (whether the state or federal constitution, a statute, a regulation, or the common law) for signs that an individual employee remedy was intended or implied. Just as the House dissent was able to tease out of Chapter 4141 an intent—not apparent on the surface—to ensure that discharged workers receive their fair share of unemployment compensation, so practitioners may be able to discern, in other statutory schemes (or perhaps more likely in the common law), some “hidden” purpose to benefit employees.

(As the dissent shows, that benefit may or may not take the form of a remedy for wrongful discharge.) Failing that, lawyers could try to amplify some of the public-policy themes the dissent articulates, perhaps exposing consequences even more troublesome than those resulting from denial of a wrongful-termination-in-violation-of-public-policy claim in the unemployment-wage-reporting context.

The bottom line, though, is that the Supreme Court of Ohio majority just gutted what little protections for workers existed in Ohio against being fired even under the most outrageous of circumstances that most people would find fundamentally wrong and against the interests of all Ohioans.

Related Practice Areas
Employment DiscriminationEmployment RetaliationWrongful Termination

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