Enforcing Public Policy Within the Context of Employment

By Jeffrey Needle


I. Introduction.

Employees who are terminated in violation of a clear mandate of public policy have a cause of action in tort against there employer for wrongful discharge. This is an exception to the employment at will doctrine. The public policy tort is one of the primary vehicles for the enforcement of public policy, both federal and state.

Generally, when an employment contract is indefinite in duration, either the employer or employee may terminate the contract at will. Roberts v. ARCO, 88 Wn.2d 887, 894 (1977). In Thompson v. St. Regis Paper Co., 102 Wn.2d 219 (1984), however, the Court recognized the public policy exception to the common law terminable at-will doctrine. The court recognized that the exception applies where application of the common law doctrine would lead "to a result clearly inconsistent with a stated public policy and the community interest it advances." Id. at 231, 685 P.2d 1081. The court also said that "[t]he policy underlying the exception is that the common law doctrine cannot be used to shield an employer's action which otherwise frustrates a clear manifestation of public policy." Id. This public policy mandate may be found, without jurisdictional limitation, where the "employer's conduct contravenes the letter or purpose of a constitutional, statutory, or regulatory provision or scheme" and where prior judicial decisions established relevant public policy. Id. (emphasis added). The Courts have described this exception as "narrow." Wilmot v. Kaiser Aluminum & Chem. Corp., 118 Wash.2d 46, 53, 821 P.2d 18 (1991) (citing Thompson). The court must be careful to "find" public policy not "create" it. Sedlacek v. Hillis, 104 Wn.App. 1, 3 P.3d 767 (2000), review granted 142 Wn.2d 1024.

Applying these principals, the Court in Thompson relied upon a federal statute as a clear mandate of public policy in the state of Washington: the Foreign Corrupt Practices Act of 1977, 91 Stat. 1494.

The Foreign Corrupt Practices Act is a clear expression of public policy that bribery of foreign officials is contrary to the     public interest and that specific companies, St. Regis for one, must institute accounting practices to ensure that this public policy is advanced. If appellant's discharge was premised upon his compliance with the accounting requirements of the Foreign Corrupt Practices Act and intended as a warning to other St. Regis controllers, as appellant alleges, then his discharge was contrary to a clear mandate of public policy and, thus, tortious.
Id. at 234.

In order to prevail, Plaintiff must prove four elements: (1) the existence of a clear public policy (the clarity element); (2) that discouraging the conduct in which they engaged would jeopardize the public policy (the jeopardy element); (3) the public-policy-linked conduct caused the dismissal (the causation element); (4) the defendant must not be able to offer an overriding justification for the dismissal (the absence of justification element). Gardner v. Loomis Armored Inc., 128 Wn.2d 931, 941, 913 P.2d 377 (1996). Incredibly, the public policy tort is limited to wrongful discharge. Disciplinary actions short of discharge do not state a claim.

We have not yet considered whether an employee should be able to recover for disciplinary actions that do not result in discharge where the employer's actions violate a clear mandate of public policy. Other jurisdictions which have considered the issue are divided with respect to whether an employee has a cause of action, based on public policy, for disciplinary actions.

Generally, other jurisdictions share the same concern as the Court of Appeals in this case, that recognizing a cause of action for wrongful disciplinary action less than discharge has the potential to expand and to generate frivolous claims. Ludwig, 960 F.2d at 43; Mintz, 905 P.2d at 562; White, 78 Wash.App. at 839, 898 P.2d 331. In White, the Court of Appeals reasoned that by recognizing a cause of action for employer actions short of an actual discharge, the court would be opening a floodgate to frivolous litigation and substantially interfering with an employer's discretion to make personnel decisions. White, 78 Wash.App. at 839-40, 898 P.2d 331. The Court of Appeals noted that "the courts are ill- to act as super personnel agencies." White, 78 Wash.App. at 840, 898 P.2d 331 (citing Washington Fed 'n of State Employees v. State Personnel Bd., 29 Wash.App. 818, 820, 630 P.2d 951 (1981)). We agree with the reasoning and the decision of the Court of Appeals.

White v. State, 131 Wn.2d 1, 18-20, 929 P.2d 396 (1997). Neither harassment nor a demotion is sufficient, even where it is undisputed that a substantial factor in the decision to demote or harass was the Plaintiff's protected activity. In other words, even if an employer stated explicitly that it was retaliating because of an employee's complaints about the employer's refusal to follow safety ordinances or statutes, the employee has no claim unless the retaliation rises to the level of discharge from employment. At some point, a demotion or harassment may rise to the level of a constructive discharge. (1)  Washington courts have not yet decided whether a constructive discharge is sufficient to state a claim under the public policy tort.

II. The Clarity Element - The Existence of Public Policy.

In Dicomes v. State, 113 Wn.2d 612, 617 (1989), the court held that "the question of what constitutes a clear mandate of public policy is one of law." See also Gardner v. Loomis Armored, Inc., supra at 937 . In Dicomes, the court stated that:

Courts have found contravention of a clear mandate of public policy in four general areas: (1) where the discharge was a result of refusing to commit an illegal act, see, e.g., Tameny v. ARCO, 27 Cal.3d 167, 164 Cal.Rptr. 839, 610 P.2d 1330 (1980) (termination for refusal to engage in price fixing); (2) where the discharge resulted due to the employee performing a public duty or obligation, see, e.g., Nees v. Hocks, 272 Or. 210, 536 P.2d 512 (1975) (discharge because employee absent from work to serve on jury duty); (3) where the termination resulted because the employee exercised a legal right or privilege, see, e.g., Kelsay v. Motorola, Inc., 74 Ill.2d 172, 23 Ill. Dec. 559, 384 N.E.2d 353 (1978) (pursuit of workers' compensation claim); and (4) where the discharge was premised on employee "whistleblowing" activity, see, e.g., Wagner v. Globe, 150 Ariz. 82, 722 P.2d 250 (1986).
Dicomes, supra, at 618. The court expressly declined to limit the scope of what constitutes a contravention of public policy to clear statutory violations. Id. at 619; Furnam v. Crista Ministries, 116 Wn.2d 659, 669 (1991). In Dicomes, the court affirmed summary judgment for the employer holding that, "[i]n the area of discretionary political decision making, plaintiff's arguably good faith belief in the righteousness of her conduct is too tenuous a ground upon which to base a claim for wrongful discharge." Id. at 624.But the court clearly stated that it was not restricting such claims "solely to incidents of whistle blowing that involve employer statutory violations . . ." In Washington, the relevant inquiry is whether some "important public policy interest embodied in the law has been furthered by the whistle blowing activity." Id. at 621.

In Roberts v. Dudley, 140 Wn.2d 58, 993 P.2d 901 (2000), the Court ruled that even though the defendant employed less than eight employees, the public policy reflected in RCW 49.60 et seq was sufficient to state a claim under the public policy tort. In order to satisfy the clarity element, a statutory policy may be broader than a statutory remedy. Id. at 88 fn 5 ("Unfortunately Justice Talmadge's concurrence confuses the absence of a statutory remedy with the absence of a statutory policy. However, the policy may be broader in declaration than the remedy provided by the statute").

III. The Jeopardy Element - Discouraging the Plaintiff's Conduct Would Jeopardize the Public Policy.

In explaining the "jeopardy" element, the Gardner court wrote that the inquiry is "whether, on the facts of each particular case, the employee's discharge contravenes or jeopardizes that public policy. The jeopardy element guarantees an employer's personnel management decisions will not be challenged unless a public policy is genuinely threatened." Id. at 941-942 (emphasis added). To establish this element, the plaintiff must show that he or she engaged in particular conduct, and the conduct directly relates to the public policy, or was necessary for the effective enforcement of the public policy. "This burden requires a plaintiff to argue that other means for promoting the policy . . . are inadequate. Additionally, the plaintiff must show how the threat of dismissal will discourage others from engaging in the desirable conduct." Id. at 945 (internal citations omitted). The purpose of the jeopardy element is to guarantee "an employer's personnel management decisions will not be challenged unless a public policy is genuinely threatened." Gardner, supra, at 941-42.

In Gardner, supra, the court held that the employee had a claim for wrongful termination in violation of public policy, even though the employer violated no underlying law or policy. The conduct at issue was the employer's conduct in discharging the employee and the alleged reasons therefore. The Good Samaritan public policy and the policy of saving lives would be jeopardized if the employer was allowed to fire an employee for trying to save a life, even if he or she disregarded a company rule in the process. Indeed, the court required only that the employee "reasonably believe" his actions were necessary to enforce the policy and suggested that this was "an issue of fact for the jury." Id. at 946.

In Ellis v. City of Seattle, 142 Wn.2d 450, 13 P.3d 1065 (2000), the Court held that in the context of concerns regarding public safety where imminent harm is present, "jeopardy" element of claim for wrongful discharge in violation of public policy test may be established if an employee has an objectively reasonable belief the law may be violated in the absence of his or her action.

In the context of concerns regarding public safety where imminent harm is present, we hold the jeopardy prong of the Gardner test may be established if an employee has an objectively reasonable belief the law may be violated in the absence of his or her action. This comports with our holding in Gardner emphasizing the need for swift action to protect human life. We do not, however, at this time disturb the holdings in Bott and Wlasiuk as to situations not involving immediate harm to life and limb.
Id. at 461. It would appear in the absence of violations of law relating to public safety, the employee must prove that the law was actually violated.

IV. The Causation Element.

In order to satisfy the causation element, Plaintiff need not prove that the illegal motivation was the only reason for discharge or even the but for reason for discharge. Plaintiff need only prove that the illegal reason was a substantial factor for discharge.
The Court in Wilmot v. Kaiser Aluminum & Chem. Corp., 118 Wn.2d 46, 821 P.2d 18 (1991) explains that "[u]nder the substantial factor test, if the pursuit of a claim for benefits was a significant or substantial factor in the firing decision, the employer could be liable, even if the employee's conduct otherwise did not entirely meet the employer's standards." Wilmot, at 71. In any case of retaliation under the public policy tort, the employer may offer evidence of legitimate reasons for discharge. But that evidence is insufficient, as a matter of law, if an illegal reason was a substantial factor in the decision to terminate employment. Wilmot, supra. Unlike federal law, no affirmative defense applies. Mackay v. Acorn Custom Cabinetry, Inc., 127 Wash.2d 302, 311, 898 P.2d 284 (1995)(applying substantial factor to RCW 49.60 et seq); Cf WPI 330.05. A special verdict form must incorporate the "substantial factor" language. Capers v. Bon Marche, 98 Wn.App. 131, 144 (1998)(use of "because of " instead of "substantial factor" was error).

V. Absence of Overriding Justification.

In Gardner v. Loomis, supra, the Court included for the first time the element of overriding justification. "This fourth element of a public policy tort acknowledges that some public policies, even if clearly mandated, are not strong enough to warrant interfering with employers' personnel management." Id. at 947.

In Gardner, the employer argued extensively that its workplace rule which required a driver to remain in the armored car was necessary as an overriding justification to protect the lives of its employees. Loomis defended its work rule as part of a fundamental policy designed to guarantee the safety of its employees. Id. at 947-948. Yet this argument was rejected by the Court. Id. 949. No Washington case has ever relied upon an overriding justification as a legitimate basis for termination from employment. Certainly, ordinary workplace deficiencies can not suffice as a matter of law.

VI. Pending Cases

A. Hubbard v. County of Spokane, 103 Wn.App. 671, 14 P.3d 806 (2000) review granted ___Wn.2d ____(2001).

In Hubbard, the Plaintiff was the Spokane County Planning Director for 15 of the total 17 years he worked with the Department of Public Works. Part of Hubbard's responsibility was to administer and interpret land-use statutes and ordinances. Id. at 672. The Director of Public works and a County Commissioner consistently overruled Plaintiff's judgment on zoning issues. The Commission eventually wrote a stern letter to Hubbard "advising [him] that he was no longer needed at the public works staff meetings." Id. at 675. "According to Mr. Hubbard, [the Commissioner] directed the staff to bend the rules whenever possible and indicated that it was okay to go a little faster than the speed limit." Id.

On June 4, 1995, Mr. Manson, the Director, Mr. Hubbard, and other staff met with the Airport Director, to consider an application to construct a new motel at the airport. The interpretation of the zoning code for this purpose had been in dispute for several years. Mr. Hubbard and staff interpreted the county zoning code to prohibit the described motel. Mr. Manson disagreed and indicated that he would issue the building permit. Mr. Hubbard became somewhat "confrontational" with Mr. Manson. After the meeting, Mr. Hubbard consulted with the senior civil deputy prosecuting attorney about Mr. Manson's intention. The Prosecutor agreed with Mr. Hubbard's interpretation and communicated his concern to Mr. Manson by telephone. The Prosecutor followed up this conversation with a June 9, 1995 letter (copied to Mr. Manson) to the motel's attorney advising his belief that Mr. Manson's interpretation of the zoning code would not sustain a legal challenge. That same day, Mr. Manson fired Mr. Hubbard. Id.  Hubbard filed suit alleging wrongful discharge in violation of a clear mandate of public policy. The suit was dismissed on summary judgment.

In Hubbard, the plaintiff contended that he was terminated for refusing to violate the zoning laws or in the alternative for protesting the violation of the zoning laws. He argued that by violating these zoning laws, the defendants were affording special privileges to developers and thus breaching the Municipal Officer's Code of Ethics under RCW 42.23.

The relevant portion of the Municipal Officer's Code of Ethics prohibits a municipal officer from using "his or her position to secure special privileges or exemptions for himself, herself, or others." RCW 42.23.070(1). Assuming for the sake of argument only that the ethics code can be source of public policy, the Court ruled that the statute does not apply to facts of this case. Id. at 678. Thus, the clarity element was not satisfied.

The Code proscribes beneficial contractual interests on the part of municipal officers made by, through or under the officer's supervision. RCW 42.23.030. None are alleged or part of this record. The purpose of the Code is to increase the pool of citizens eligible for public office by allowing certain remote interests. RCW 42.23.010. The kind of beneficial interest appears limited to financial interests. See Barry v. Johns, 82 Wash.App. 865, 868, 920 P.2d 222 (1996). Mr. Hubbard completely fails to establish any inference that the individual respondents received beneficial financial interests from County contracts. Accordingly, he fails to establish the clarity element. At best, Mr. Hubbard infers Commissioner Hasson and Mr. Manson were seeking to accommodate political constituents, an outcome not proscribed by Chapter 42.23 RCW. Mr. Hubbard argues no other public policy violations.
Id. Although the Court also found that jeopardy element was not satisfied, Id. at 678-679, this is dicta. The Washington State Supreme Court granted review.

B. Sedlacek v. Hillis, 104 Wn.App. 1, 3 P.3d 767 (2000), review granted 142 Wn.2d 1024, 21 P.3d 1150 (2001).

In Sedlacek, the Plaintiffs were hired as apartment managers. They were hired as a team. Each of them were paid a monthly salary of $1,600 and were also provided with a rent-free apartment at the complex, and with health insurance coverage. Id. at 6 - 7.

On December 22, 1995, Mr. Sedlacek was diagnosed with acute myelogenous leukemia and immediately hospitalized until January 31, 1996. Ms. Sedlacek promptly notified the Defendants of her husband's illness. Ms. Sedlacek testified that her husband was able to perform his management duties following his release from the hospital, only slower and with the help of the family, and that she herself continued with her regular duties following her husband's release from the hospital. She also testified that after the Defendants learned of her husband's condition, she noticed an abrupt change in their attitude. Whereas the two couples had previously been friends, the Defendants now shunned the Sedlaceks, acting, according to Ms. Sedlacek, as if they thought Mr. Sedlacek's cancer was transmittable. Id. at 7.

On March 14, 1996, the Defendants discharged both Sedlaceks from their employment, giving them only three days to vacate their apartment. The Defendants assert that the Plaintiffs were terminated from employment because the vacancies were up substantially; that the condition of the premises had deteriorated significantly; and that an independent consultant determined that the Sedlaceks were not adequately performing their job. Id. at 7 - 12. The Plaintiffs presented evidence to contradict these assertions. Id.

Initially, the Court of Appeals acknowledged that the Washington Law Against Discrimination (WLAD) does not apply to employers with less than eight employees. Id. at 13. Adopting the payroll method, the Court concluded that the defendant employed less than eight, and that therefore the WLAD did not apply. Id. at 16.

In reference to the public policy tort, the Court relied upon Roberts v. Dudley, 140 Wash.2d 58, 993 P.2d 901 (2000), which recognized a cause of action for the common-law tort of wrongful discharge in violation of public policy against an employer with fewer than eight employees who allegedly had discharged the plaintiff because she was pregnant. Id. at 17. The Court in Sedlacek applied that same reasoning to disability discrimination, and recognized a public policy tort based upon the policy in the WLAD against disability discrimination, even in those cases where the defendant employed less than eight.

[W]e conclude that, like sex discrimination, disability discrimination in employment contravenes a clear mandate of public policy, notwithstanding RCW 49.60's eight-employee threshold. Accordingly, we hold that Washington common law recognizes a cause of action for unlawful discharge in violation of public policy based on disability discrimination just it does for unlawful discharge in violation of public policy based on sex discrimination.
Sedlacek v. Hillis, 104 Wn.App. 1, 19-20, 3 P.3d 767 (2000).

In reference to the jeopardy element, the Court ruled that "[t]o establish jeopardy, plaintiffs must show they engaged in particular conduct, and the conduct directly relates to the public policy, or was necessary for the effective enforcement of the public policy. Additionally, the plaintiff must show how the threat of dismissal will discourage others from engaging in the desirable conduct." Id. at 20 (citations omitted). Acknowledging that the husband was disabled, the Court of Appeals found that his "status directly relates to the public policy of eliminating and preventing disability discrimination in employment." Id. at 23.

In reference to the causation element, the Court stated that "[i]f [the defendant] discharged the Sedlaceks because [Plaintiffs'] illness adversely affected his job performance, without making such reasonable accommodations as would enable [Plaintiff] to perform satisfactorily, then public policy was violated." Id. On this issue, the Court found that there existed a question of fact. Id. at 24.

The Supreme Court granted review. On review, the principal question involved whether the husband's disability could be attributed to the wife. The lack of any associational interest in the wife under the state law appears to be clear. Therefore, the reliance by the Court of Appeals on the policy of RCW 49.60 appears doubtful.

On appeal to the Supreme Court, the Plaintiff relied upon the American with Disabilities Act to provide the necessary source of public policy. The ADA explicitly adopts the associational interest rejected under Washington State law. (2) In response to reliance upon the ADA, the Defendants have argued to the Supreme Court that federal law may not be used as a source of public policy for the purpose of a claim of wrongful discharge. This argument appears to have little merit. As stated above, Thompson considered a violation of the Federal Foreign Corrupt Practices Act. The issue was directly addressed in Cummins v. Mold- In Graphic Systems, No. 1 CA-CV 99-0559 (Ariz.App.Div.1 06/05/2001), where the Court considered: "Can tort liability be imposed on an employer for wrongful termination of an at-will employee who refuses to engage in conduct proscribed by federal law?"

We see no difference between the employee who is terminated for refusing to break the laws of our state and the employee who is terminated for refusing to violate our federal laws. . . . With this consideration in mind, it is only logical that the source of the law proscribing the requested conduct is immaterial, so long as that law applies to those within the territorial boundaries of Arizona and manifests "a 'clear mandate' of public policy." . . . . Laws that affect Arizona as a whole may provide the basis for a wrongful termination suit for refusing to engage in illegal conduct, regardless of whether the proscribed conduct is made unlawful by the state or the federal government.
***
We hold that the tort of wrongful termination for refusing to engage in illegal conduct is actionable if the source evidences some clearly mandated public policy and that policy applies in Arizona, regardless of the policy's source.
Id. Other jurisdictions which not explicitly addressing the issue have relied upon federal law. (3)

VII. Conclusion.

The public policy tort is one of the strongest weapons in the employment law arsenal. It protects employees who refuse violate the law or ignore violations of the law in the name of loyalty to an employer.

1. "A constructive discharge occurs when, looking at the totality of circumstances, 'a reasonable person in [the employee's] position would have felt that he was forced to quit because of intolerable and discriminatory working conditions.'" Watson v. Nationwide Ins. Co., 823 F.2d 360, 361 (9th Cir. 1987). "This test establishes an objective standard; the plaintiff need not show that the employer subjectively intended to force the employee to resign." Id.; Satterwhite v. Smith, 744 F.2d 1380, 1381 (9th Cir.1984); Sanchez v. City of Santa Ana, 915 F.2d 424, 431 (9th Cir.1990) (constructive discharge occurred where unfounded negative evaluations led to denial of merit pay on two separate occasions, and where employee's attempts to challenge loss of pay were rebuffed).

2. The ADA explicitly provides: "As used in subsection (a) of this section, the term ''discriminate'' includes - (4) excluding or otherwise denying equal jobs or benefits to a qualified individual because of the known disability of an individual with whom the qualified individual is known to have a relationship or association." 42 U.S.C. Section 12112(b)(4). In order to establish a prima facie case under an "association discrimination" theory, Plaintiff must establish the following elements: (1) she was subjected to an adverse employment action, (2) she was qualified for the job at that time, (3) she was known by the employer at the time to have a relative with a disability, and (4) the adverse employment action occurred under circumstances which raised a reasonable inference that the disability of the relative was a determining factor [substantial factor] in employer's decision. Den Hartog v. Wasatch Academy, 129 F.3d 1076, 1085 (10th Cir.1997). "It is unlawful for a covered entity to exclude or deny equal jobs or benefits to, or otherwise discriminate against, a qualified individual because of the known disability of an individual with whom the qualified individual is known to have a family, business, social or other relationship or association." 29 C.F.R. §1630.8 (1996).

3. E.g., Kilpatrick v. Delaware County Society, 632 F.Supp. 542, 545-46 (E.D.Pa. 1986)(Occupational Safety and Health Act, 29 U.S.C. Section 651); Adler v. American Standard Corp., 538 F.Supp. 572, 577-79 (D. Md. 1982)(various fraud federal statutes); Tameny v. Atlantic Richfield Co., 27 Cal.3d 167, 170, 179, 610 P.2d 1330 (1980)Sherman Antitrust Act); Martin Marietta Corp., v. Lorenz, 823 P.2d 100, 110-11 (Colo. 1992)(fraud against the government in violation of 18 U.S.C. 1001 et seq); Wheeler v. Caterpillar Tractor Co., 108 Ill.2d 502, 506, 510-22, 485 NE2d 372 (1985) cert denied, 475 U.S. 122 (1986)(Atomic Energy Act of 1954, 42 U.S.C. 2011 et seq); Howard v. Zack Co., 264 Ill. App.3d 1012, 1023-24, 637 N.E.2d 1354 (1994)(violations of record keeping requirements of federal regulations); Russ v. Pension Consultants Co., 182 Ill.App.3d 769, 772, 776-77, 538 N.E.2d 693 (1989)(refusing to violate provisions of the Internal Revenue Code); Petersimes v. Crane Co., 835 S.W. 2d 514, 517 (Mo. App. 1992)(refusing to commit fraud against the government in violation of 18 U.S.C. Section 1001 et seq); Boyle v. Vista Eyewear, Inc. 700 S.W. 2d 859, 876-77 (Mo.App. 1985)(refusing to violate FDA regulations).