B. Wrongful Discharge in Violation of Public Policy

• Library: South Carolina Damages (SCBar) (2009 Ed.)

B. Wrongful Discharge in Violation of Public Policy

This section discusses the damages recoverable for the wrongful discharge of an employee in violation of a clearly established public policy, including compensatory and punitive tort damages and equitable remedies.

1. Types of Damages Available When Discharge Violates Public Policy

South Carolina continues to adhere to the doctrine that the employment relationship, in the absence of a contrary agreement, is terminable at the will of the employee or the employer. Under at-will employment relationships, whether viewed as contractual or not, an employer generally may discharge an employee without liability. As previously stated, appellate courts have created two exceptions that limit an employer's ability to terminate at-will—the handbook exception, and the public policy exception. This section will discuss the public policy exception to the employment at-will doctrine, whereby an employee may have a cause of action in tort against his employer when the employee alleges that he was wrongfully discharged in violation of a clearly established mandate of public policy.

When first recognized in South Carolina, an employer violated the public policy exception when he required an employee to break a law as a condition of retaining employment.¹⁹⁸ In an attempt to avoid frivolous litigation, South Carolina appellate courts placed several limits on the public policy exception.¹⁹⁹ First, an employee who would be subject only to administrative or civil sanctions as a condition of continued employment does not have a cause of action for wrongful discharge.²⁰⁰ Second, South Carolina courts did not intend for the public policy exception to overlap an employee's statutory or contractual rights. This exception originally was limited to situations where no statutory remedy for the employee's wrongful discharge existed.²⁰¹

Practice Tip: South Carolina courts do not recognize a public employee's retaliatory discharge for filing a report of governmental wrongdoing, under the South Carolina Whistleblower Act,²⁰² as a violation of the public policy exception to the employment-at-will doctrine.²⁰³

The Whistleblower Act itself provides an employee who is wrongfully discharged a civil cause of action and remedies, including reinstatement, lost wages, damages, and attorney fees.²⁰⁴ A significant body of case law under the South Carolina Whistleblower Act has developed. While not exhaustive, the following cases are a representative sample.²⁰⁵

Case law continues to define the circumstances under which South Carolina courts will recognize a cause of action for wrongful discharge in violation of public policy. Post-Ludwick decisions have extended the public policy exception to the employment-at-will doctrine to include the following situations:

1 Where the legislature has defined offenses against public policy in Title 16, Chapter 17, of the South Carolina Code of Laws.²⁰⁶
2. Where an employee's termination would violate civil statutory law.²⁰⁷
3. Where an at-will employment contract contains a clause requiring notice before termination.²⁰⁸

Since a clear mandate of public policy is not a specifically defined concept, courts have asked juries to decide if an employee's termination violates this exception to the at-will doctrine. To do this, juries must first determine the actual reason for the employee's discharge. In other words, was the employee terminated for just cause or in retaliation for doing something he had a right to do or not do? If a jury determines that the employee's termination was retaliatory, the jury will find that the employer violated the public policy of South Carolina.²⁰⁹ other situations where a jury was asked to determine whether an employee was wrongfully terminated in retaliation, thereby violating public policy, include:

1. Where an employee reported and testified about unsafe working conditions.²¹⁰
2. Where an employee accused her employer of violating state and federal labor laws and threatened to file a formal complaint.²¹¹
3. Where an employee refused to facilitate his employer's questionable business practices.²¹²

Even when the employment relationship is terminable at will, an employer who wrongfully discharges an employee may still be liable in tort for compensatory and punitive damages. The award a wrongfully discharged employee receives is dependent upon the cause of action and the relief sought.²¹³

Where an employee seeks only monetary damages, his action is at law, and an appellate court will uphold the findings of fact and damage award where any evidence exists to reasonably support them.²¹⁴ However, only willful, wanton acts will support an award of punitive damages in wrongful discharge actions.²¹⁵

Where an employee seeks reinstatement, his action is equitable,²¹⁶ and an appellate court has jurisdiction to find facts in accordance with its own view of preponderance of evidence.²¹⁷ Additionally, payment of back wages, akin to restitution, is an integral component of an equitable remedy.²¹⁸ However, equity will not permit an award of future earnings or punitive damages.²¹⁹

2. Tort Damages

a. Post-Ludwick Legislatively Created Remedies

In 1986, the South Carolina General Assembly enacted two statutes that provided employees with civil causes of action and remedies against an employer. South Carolina Code section 41-1-80 prohibits an employer from discharging an employee in retaliation for instituting or participating in Workers' Compensation proceedings, and provides an employee with lost wages and reinstatement.²²⁰

South Carolina Code section 41-1-70 holds an employer liable if he dismisses or demotes an employee for complying with a subpoena or for serving on a jury. Under South Carolina Code section 41-1-70, an employee may have a civil action against his employer for damages caused by the dismissal or demotion. In the case of an employee's discharge, the damages are limited to one year's salary. Where an employee is demoted, the damages are limited to the difference, for one year, between the employee's salary before and after demotion. However, South Carolina Code section 41-1-70 does not permit an award of punitive damages.²²¹

In Patterson v. I.H. Services, Inc.,²²² the Court of Appeals upheld the trial judge's actual damage award of 52 weeks' lost wages. Here, the employer janitorial service claimed that it would have discharged the plaintiff employee several months later in any event, since the company lost its contract at the location where the employee was working at the time of her discharge. The court reasoned that (1) the employee was entitled to actual damages for one year, since the possibility existed that she would have been transferred rather than discharged; (2) the employer did not meet its burden by proving facts that would have reduced its liability, or by showing that the employee would have been discharged for other reasons; and (3) the employee testified that she was not able to locate other work for one year.²²³

b. Judicial Expansion of the Public Policy Exception

When first recognized by South Carolina appellate courts, employees only had an action for wrongful discharge in violation of public policy when an employer required an employee to break a criminal law as a condition of retaining employment, and later, where the termination itself was a violation of criminal law. Our appellate courts did not explicitly limit the public policy exception to these situations, and beginning in the mid-1990's, South Carolina appellate courts expanded this exception to the employment-at-will doctrine to include situations where an employer fired an employee for pursuing statutory rights directly related to employment. In Garner v. Morrison Knudsen Corp.,²²⁴ the South Carolina Supreme Court opened the door by holding that novel issues regarding the public policy exception should not be decided on a 12(b)(6) motion to dismiss.²²⁵

Following Garner the Court of Appeals in Keiger v. Citgo, Coastal Petroleum, Inc.,²²⁶ held that whether the discharge of an employee for threatening to exercise her statutory rights under the Payment of Wages Act constituted a violation of a clearly established public policy, was inappropriate for dismissal on a 12(b)(6) motion. The Keiger court contemplated whether the Act itself, the purpose of which is to help working people by assisting them in collecting wrongfully withheld compensation, comprised "a legislative declaration of public policy...."²²⁷

Then in Evans v. Taylor Made Sandwich Co.,²²⁸ the Court of Appeals upheld a jury verdict that expanded the public policy exception to include violations of civil statutory law. Here, the court reasoned that, although the employees had a statutory remedy for the wrongful withholding of their wages under the South Carolina Payment of Wages Act,²²⁹ the statute provided no remedy for the wrongful discharge.²³⁰

The Payment of Wages Act requires an employer to notify an employee of agreed-upon wages when the employee is hired, and the employer must notify the employee in writing if the employer decreases the wages.²³¹ When an employer discharges an employee, the employer must pay all wages due to the employee within forty-eight hours of discharge, or the next regular payday, but no later than thirty days.²³² The Act permits an award of treble damages, and attorney fees and costs.²³³

In Evans v. Taylor Made Sandwich Co.,²³⁴ the employees alleged that their employer violated the Payment of Wages Act by calculating their wages for making sandwiches on a per package rate, rather than a per sandwich rate, arbitrarily deducting wages from their paychecks for alleged laziness, decreasing their wages without notice, and by failing to pay wages due to former employees in a timely manner. At trial, the jury found that Taylor Made terminated the employees in retaliation for filing complaints under the Payment of Wages Act, rather than for excessive absenteeism as the employer...