The Public Policy Exception to Employment At-will: Time to Retire a Noble Warrior? - Kenneth R. Swift

• Jurisdiction: United States,Federal
• Publication year: 2010
• Citation: Vol. 61 No. 2

The Public Policy Exception to Employment At-Will: Time to Retire a Noble Warrior?by Kenneth R. Swift^*

I. Introduction

An armored car driver leaves his truck in violation of company rules to help save a woman from a knife-wielding attacker and is terminated.

A campus security guard is called to a scene where a man is lifting a woman; he mistakenly believes it is an attack, arrests the man, and is terminated.

A nurse is invited on a camping weekend by her supervisor, refuses to take part in a bawdy dance, and is terminated.

A woman, asked by her employer to sign a statement indicating she acted inappropriately at work, requests to meet with a lawyer first and is terminated.¹

Each of the above employees brought suit claiming they were improperly terminated. Two prevailed; two did not. All claims were based upon what is commonly known as the public policy exception to the employment at-will rule.

Among the social changes brought about by the various civil rights movements of the 1960s, 1970s, and beyond, were numerous statutory exceptions preventing employers from terminating or failing to hire employees based upon sex, race, age, religion, or physical disability, among other traits.² Alongside the development of these protections for employees were other protections based upon the notion that an employer should not be able to circumvent public policy by using his otherwise unfettered right to terminate. This exception, the public policy exception, is still commonly pleaded and litigated.³

Section II of this Article will briefly review the history of employment at-will in the United States and the emergence of the statutory exceptions to the doctrine. Section III will provide a history of the development of the public policy exception and explore both how the exception was the basis for many of the statutory protections available today for employees and how the exception significantly impacted the employer-employee relationship. Section IV will summarize and analyze the role that the public policy exception has played in the development of the employer-employee relationship and will also provide the framework for discussing whether the exception, in its present form, is still necessary. Section V will provide an in-depth factual and legal analysis of a sampling of public policy exception case law to explore the malleability of the exception. Section VI, the final section of the Article, will argue that the public policy exception in its current form has outlived its usefulness because many of its historical uses have been codified, leaving the exception as an unnecessary catchall provision.

II. Employment At-Will and the Development of Statutory

Exceptions

Employment at-will has been the starting point in American employer-employee relationships since at least the latter part of the nineteenth century.⁴ Under this doctrine, an employer may terminate employees for good cause, bad cause, or no cause at all.⁵ The doctrine goes both ways; an at-will employee is free to leave a job at any time for any reason.⁶

The origin of the American at-will rule is generally attributed to an 1877 treatise by Horace Wood.⁷ However, there has always been great academic debate as to whether Wood misinterpreted or misread the prevailing English common law rule (which set employment for a fixed term for both the employer and employee)⁸ or whether he was reporting on existing employment law practices prevailing in the country at the time.⁹

The efficacy of the doctrine has also been debated by courts and commentators, with many arguing that the flexibility afforded by the doctrine benefits both employers and employees¹⁰ and opining that "adoption of the [at-will] rule by the courts greatly facilitated the development of the American economy at the end of the nineteenth century."¹¹ Others have noted that it has "been applied to obtain harsh and inequitable results."¹² Today the debate is purely academic, as employment at-will is a strongly rooted concept in American law and the starting point for employer-employee relations in forty-nine¹³ out of fifty states.¹⁴

The employer-employee relationship was likely of lesser consequence in the late 1700s and early 1800s when America had a primarily agrarian economy. It was not until the Industrial Revolution ofthe mid-1800s that an employee's rights to his job, or lack thereof, began to be an issue. With the rise of large factories, employees became little more than chattel, a fungible asset like machinery and raw goods.¹⁵ Unless a member of a union, an employee in the first half of the twentieth century had no protection against termination.¹⁶ What the law of employer-employee relationships did provide at that time was a central precept of the American legal system—certainty in the law.¹⁷ The law was clear that an employer could terminate any employee at any time, for any reason, even for reasons that today are widely viewed as morally repugnant, such as race, sex, and religion.

That all changed with the passing of Title VII of the Civil Rights Act of 1964,¹⁸ which prohibits employment decisions based upon an individual's race, color, religion, sex, or national origin.¹⁹ Over the following decades, state legislative bodies followed suit, enacting provisions to protect employees against similar discriminatory conduct.²⁰

Further protections were developed in the years following the Civil Rights Act, providing protection against adverse employment decisions based upon age²¹ and disability,²² among many others. Recent legislation even protects against the use of genetic testing in employment deci-sions.²³ This tapestry of legislation has, while by no means eliminated discrimination of this type, provided potential recourse against discrimination based upon immutable human traits and sexual and reproductive rights.²⁴ However, even alongside the development of these protections, courts recognized that certain terminations were counterproductive to the broader social welfare, and with that came the rise of the public policy exception to the doctrine of at-will employ-ment.²⁵

III. The Rise and Development of the Public Policy Exception

The public policy exception holds that an at-will employee cannot be terminated if such termination would be counter to public policy. As discussed below, courts struggle with defining the term public policy and determining when a termination implicates and is contrary to public policy.²⁶

Historically, the public policy exception has played a significant role in ensuring that employees be allowed full participation and exercise of their rights under state and federal constitutions and statutes by prohibiting employers from terminating employees seeking to exercise their rights. Additionally, the exception was the origin of modern whistleblower statutes and similar protections.

A. Protecting the Duties and Rights of the Citizenry

One of the earliest judicial decisions limiting the power of an employer to terminate for any reason, and perhaps the first public policy exception case, was the case of Petermann v. International Brotherhood of Teamsters.²⁷ In Petermann (which predates the Civil Rights Act of 1964²⁸ ), an employee was terminated after he refused his employer's order to give false testimony before the California state legislature.²⁹ The California Supreme Court, for the first time, noted that employment at-will was subject to an exception for terminations in violation of public policy.³⁰ The court began its analysis by noting that "[t]he term 'public policy' is inherently not subject to precise definition."³¹ The court settled on what has become a common definition of public policy: "that principle of law which holds that no citizen can lawfully do that which has a tendency to be injurious to the public or against the public good."³² The public policy was found in state statutes making it illegal to both give and solicit perjury.³³ In holding that the termination was unlawful, the court reasoned that the employer's generally unlimited right to discharge employees was secondary to the importance oftruthful testimony for the public welfare.³⁴

Since Petermann a myriad ofstatutory protections, initially fueled by the public policy exception, have been passed to prevent dismissals of employees when termination would do injury to the general public welfare. Three decades later, the California Supreme Court extended Petermann to cooperation in civil cases as well. In Gantt v. Sentry Insurance,³⁵ the employee was the supervisor of a woman who was being sexually harassed. The employee supported the woman's harassment claim, both internally and in testimony to a state investigator, and was constructively terminated because of his support.³⁶ In holding that the public policy exception supported his claim, the court addressed the issue of the difficulty in defining the term public policy.³⁷ The court ultimately determined that "[a] public policy exception carefully tethered to fundamental policies that are delineated in constitutional or statutory provisions strikes the proper balance among the interests of employers, employees and the public."³⁸

In Nees v. Hocks,³⁹ an employee was terminated for refusing her employer's request that she ask to be excused from jury duty.⁴⁰ In holding for the employee, the court reasoned that if an employer could terminate with impunity an employee for serving on a jury, the moral of the community, as demonstrated through the jury system, would be thwarted.⁴¹ The right created by this decision was later codified by the state legislature.⁴² Many other jurisdictions followed suit.⁴³

In Novosel v. Nationwide Insurance Co.,⁴⁴ an employee was terminated because he refused to lobby and otherwise support a bill the employer felt would be beneficial to its business. The employee brought a claim for wrongful discharge based upon the public policy exception grounded in his constitutional right to free political association and beliefs.⁴⁵...