Avoiding Retaliation Claims: Know What You're Aiming At Before Pulling the Trigger on a Termination

Shooting Self in Foot.jpgA recent Michigan Court of Appeals decision extended an employer's liability for a retaliation claim by employees exercising a right afforded under Michigan's Worker's Disability Compensation Act (WDCA) even though the employee had yet to file a petition under the act.

This case is also a reminder that employers and their HR professionals need to fully evaluate the facts and circumstances giving rise to an adverse employment decision before making a decision that could have the unintended consequence of giving rise to a retaliation claim. 

Overview of Retaliation under Michigan's Workers Disability Compensation Act.

Before getting into the specifics of this case, and for the history buffs out there, going back to 1976, Michigan courts have held that terminating an employee in retaliation for having filed a worker’s compensation petition is against Michigan's public policy. Sventko v Kroger Co, (1976). 

In 1982, the Michigan legislature essentially added this court ruling and policy by amendment to the WDCA, which specifically prohibits an employer from discriminating and retaliating against an employee for pursuing remedies under the WDCA.

Unlawful Retaliation and Michigan's Workers Disability Compensation Act.

Fast forward to this past October where a Michigan Court of Appeals panel in the case of Cuddington v United Health Servs, (Oct 25, 2012), held that the filing of a petition for worker’s compensation benefits is not a prerequisite to all retaliatory discharge claims against employers under the applicable statutory provision (MCL 418.301(13)).

Instead, the Cuddington Court reasoned that an employee who exercises a right afforded under the WDCA and is later terminated or discriminated against in retaliation for exercising that right, may maintain a retaliation action under the WDCA.

In the Cuddington case, Raymond Cuddington had been employed by the employer for 12 years. He was injured in an automobile accident while making a delivery for his employer. While EMS were called to the scene, Mr. Cuddington elected not to go to the hospital that night. However, the next morning soreness and pain set in and Mr. Cuddington sought medical treatment and called-off work.  

In response to this call-off, the President of the company and his wife (also an officer of the company) called Mr. Cuddington to ask why he was not at work. The President's wife then advised Mr. Cuddington over the phone that:

You ain’t hurt, if you were hurt you would have went in the ambulance to the hospital last night. If you don’t come into work, you are blanking -- blanking fired.

In spite of the employer's eloquent and apparent termination notice, Mr. Cuddington reported back to work two days after this doctor's visit, but he was told that he had been terminated. Following this termination, Mr. Cuddington filed a claim for worker’s compensation benefits and subsequently commenced this action for retaliatory discharge pursuant to MCL 418.301(13).

Unlawful Retaliation for Exercising Rights Under Michigan's Workers Disability Compensation Act.

While the employee had not filed a Worker's compensation claim at the time of his termination, Mr. William Webster, an attorney who specializes in representing individuals in bringing Worker's Compensation claims, explains that a finding of retaliation by the employer is perfectly consistent with Michigan's Worker's Compensation Act. Specifically, he notes:

Employees and employers engage in a trade-off under the Workers' Compensation Act. Employers enjoy immunity from suit by injured workers in exchange for providing workers' compensation. Employers in essence 'earn' this immunity from suit by providing timely benefits to injured workers without regard to fault. Those benefits include medical treatment, wage loss benefits, and possible vocational rehabilitation. If an employee is terminated or otherwise suffers adverse employment action for trying to obtain one of those limited, statutorily defined benefits, then a retaliation claim is available to the aggrieved employee.

In sum, because the employee had sought a right provided under the WDCA - medical treatment - and was allegedly terminated for pursuing that right, the employee had a claim for retaliation even though the employee had yet to file a Worker's compensation claim.  

The Take-Away for Employers

Retaliation and wrongful discharge claims may arise under any number of theories that may not be immediately apparent at the time an employer makes an adverse employment decision. And while many employers understandably would completely agree with Yogi Berra's observation that "Prediction is very hard, especially about the future," it is important that employers and their HR professionals fully consider all the facts and circumstances before taking action in order to eliminate potential retaliation claims. 

According to Mr. Webster, this is especially important in the area of worker's compensation claim because of recent amendments to the Workers' Compensation Act that took effect in December of 2011, which altered the manner in which wage loss benefits are calculated. 

Avoiding Whistleblower Claims - It's All in the Employer's Response

Knife Behind Back.jpgThe alleged (mis)handling of an employee's complaints of wrong-doing by her former employer offers insight on how to avoid a subsequent whistleblower claim or, at least, be in a better position to defend against such claims. 

Specifically, a Metro Detroit Employment Law firm was recently sued for violating (ironically) various employment laws. The law firm and named defendants were also alleged to have violated Michigan's computer crimes statute, MCL 752.791-97, which forms the basis for a whistleblower claim.

The Complaint filed in Wayne County Circuit (PDF) alleges that the defendant law firm's named partner and defendant stole computer records consisting of client information from his former law firm prior to departing to start a competing venture.

The computer statute generally targets computer intrusion crimes and traditional crimes committed through the use of computers, such as theft. Plaintiff, however, did not assert an actual claim under Michigan's computer statute and, instead, used the alleged violation as the cornerstone for her whistleblower claim, i.e., she was "about to report" the Defendants' violation of the Michigan computer statute to unspecified public bodies, which was one of the reasons she was fired.  

Under Michigan's Whistleblower’s Protection Act (WPA), MCL 15.362 et seq., employers are restricted from discharging, threatening, or otherwise discriminating against an employee because that employee reports or is "about to report" a violation or suspected violation of a federal or state statute or regulation to a public body. Where a claim is based on an "about to report" theory, the plaintiff must show by clear and convincing evidence that he or she was about to report, verbally or in writing, the violation or suspected violation of a state or federal law to a public body.  

The Take Away

While it remains to be seen how this litigation actually resolves, the Complaint offers a number of "rookie" employment law mistakes that employers should avoid. Consider for example, the employer is alleged to have no employee handbook and no Discrimination or Harassment policies in place. 

But an important "take-away" for employers is how to limit or otherwise avoid a subsequent Whitsleblower claim. In that regard, companies should consider the following points:

  • Have policies in place that encourage the reporting of complaints;
  • Take all complaints seriously and investigate all concerns;  
  • Employers should encourage a reporting employee to document as many details of the alleged violation as possible so that the investigation is focused on the actual complaint. Such documentation has the added benefit that if the employee later claims retaliation, there will be a record of the reported conduct, which will be difficult to later modify or expand by the employee's lawyer; 
  • Policies should expressly state that employees who report suspected violations will not be subject to retaliation in any manner and that any retaliation will not be tolerated; 
  • Document all steps taken in the investigation process;
  • Document a conclusion: Either the existence of a compliance issue or the absence of one; and
  • If a violation occurred, document and follow through with corrective action.

While there certainly is no "silver bullet" for avoiding whistleblower claims, by being proactive and taking these steps, employers will better able to avoid such claims or, at least, put the employer in a better position to defend a subsequent whistleblower claim in the future.

Does An Employer Violate the FLSA's Anti-retaliation Provision for Firing Employee For Facebook Posting About Payment Practices?

Facebook.jpgOn June 24, 2011, a Florida federal district court dismissed a claim that an employer violated the Fair Labor Standards Act's (FLSA) anti-retaliation provision by allegedly firing an employee who expressed her disagreement over the employer's payment practices on Facebook.

The Plaintiff, Lilli Morse, filed suit against her former employer, J.P. Morgan Chase & Co., under the FLSA alleging it failed to pay her overtime wages. She further alleged that when she complained on her Facebook page, J.P. Morgan retaliated by terminating her employment.

The FLSA Anti-retaliation Provision

Under the FLSA anti-retaliation provision an employer cannot

... discharge or in any other manner discriminate against any employee because such employee has filed any complaint or instituted or caused to be instituted any proceeding under or related to [the Act], or has testified or is about to testify in such proceeding, or has served or is about to serve on an industry committee. 29 U.S.C. 215(a)(3).

Earlier this year, the Supreme Court held that this anti-retaliation provision extended to both written and verbal complaints. See Kasten v. Saint-Gobain Performance Plastics Corp., 131 S. Ct. 1325 (U.S. 2011). Specifically, the Court noted that to fall under the anti-retaliation provision, a complaint must be "sufficiently clear and detailed for a reasonable employer to understand it, in light of both content and context, as an assertion of rights protected by the statute and a call for their protection." And this standard may be met by oral or written complaints.

Expressing Disagreement Over Payment Practices on Facebook is not a "complaint" under the FLSA  

Turning to Ms. Morse's case, the Court acknowledged that the statutory requirement may be satisfied by an "informal workplace grievance procedure." But the Court refused to extend the FLSA's anti-retaliation provision to a posting on an employee's Facebook page because it did not equate a Facebook post with the filing of a "complaint" within the meaning of the FLSA. Specifically, the Court reasoned: 

Morse does not allege that she made anything close to a serious complaint to her employer ... in fact, she never complained to her employer at all. She simply voiced her disagreement with her employer's payment practices on her Facebook page.

Employers Still Must Exercise Caution in Addressing Employment Issues and Social Media

Increasingly Facebook is becoming an acceptable means to fulfill legal related obligations. For example, a Businessweek article (by Heather Smith) discusses foreign courts' acceptance of using Facebook in legal proceedings and foreclosure notices.

It is easy to understand, however, why the Court refused to extend the FLSA's anti-retaliation provision's requirement of making "any complaint" to a Facebook posting. After all, how many times do people express frustration or disappointment through an informal Facebook posting but take no further action, such as actually complaining to their employer? 

But employers still need to exercise caution when it comes to taking adverse employment actions against employees in connection with Facebook and other social media. This is because Section 7 of the National Labor Relations Act (NLRA) protects the right of employees (union and non-union) to engage in "concerted activities" for their "mutual aid and protection." And in protecting such rights, the NLRB has aggressively pursued employers taking action or implementing social media policies that may discourage employees from exercising their Section 7 rights, i.e., talking with each other about protected subjects — wages, hours, and other terms and conditions of employment. In this regard, the NLRB has taken various actions against employers for simply having a policy that may have a "chilling" effect, even absent evidence the employer enforced the policy.

It is, therefore, important for employers to carefully review their employment policies relating to social media, Internet usage, email, and related technologies to assess the potential risks for violating their employees' rights under Section 7 of the NLRA. 

Michigan's Whistleblowers' Protection Act: Protecting Employees Who Are "About to Report" A Violation

Whistle.jpgA recent opinion from the Michigan Court of Appeals illustrates the significant challenges employees have in successfully bringing a certain claim under the Michigan Whistleblowers' Protection Act (WPA) and opportunities employers have for dismissing such claims. 

Challenges for Employees making an "About to Report" Whistleblowers' Protection Act Claim

Under Michigan's Whistleblowers' Protection Act (WPA), MCL 15.361, an employer is prohibited from, among other things, discharging an employee because the employee "reports or is about to report" a violation or suspected violation of the law. 

One reason a Whistleblowers' Protection Act claim based on an "about to report" theory is challenging for plaintiffs to successfully assert is because it requires a plaintiff to prove by clear and convincing evidence that he or she was about to report a statutory covered violation. MCL 15.363(4). A clear and convincing evidence is the most demanding standard applied in civil cases.  

Assessing "About to Report" Claims under Whistleblowers' Protection Act

In assessing whether there is "clear and convincing evidence" that a plaintiff was "about to report" a violation covered by the WPA, Michigan courts will often look to the spectrum of activity leading up to the adverse employment action. 

This point was recently illustrated in the recent case of Pope v. Brinks Home Sec. Co. (2011) where the entirety of plaintiff's evidence that she was "about to report" a violation of commission stealing and other alleged unethical behavior was her testimony that she told her supervisor that she was going to make a report to the EEOC and attorney general. Her supervisor denied this statement was ever made. Thus, plaintiff's testimony raised a factual question that a jury would normally decide, it was not enough to meet the required "clear and convincing standard" called for under the WPA. 

In contrast, Michigan courts have found the preceding was established where an employee threatened to report violations covered by the WPA if the employer did not take corrective action, she actually discussed the violations with her supervisor and coworkers, and documented dates that she had discussions with others regarding the need to report.  

Take-Aways

Employees who believe they were fired or received other adverse treatment because they were "about to report" a violation covered by the Michigan Whistleblowers' Protection Act need to understand that it is rarely going to be enough to claim "I was fired but only because I was about to report a violation." Instead, courts are essentially looking for credible evidence that the employee actually intended to report violations independent of the employee's own intent or testimony. Following through with reporting the violation after the adverse employment decision may provide some evidence of a pre-termination decision to make a report covered by the WPA. Also, documenting dates of discussions and who was involved with discussions about suspected violations also provides additional evidence supporting an "about to report" WPA Claim. 

For employers, the WPA does not prevent discharging an employee for legitimate, non-retaliatory reasons. But even with the high evidentiary burden employees may have to overcome in bringing a WPA claim, it is important to gather as much information to make an informed decision as to whether the discharge may violate the WPA. And it is important to make this assessment from the perspective of a judge or jury or may be "second-guessing" the employer's decision.    

This post on the Michigan Whistleblowers' Protection Act is only an overview of a very narrow aspect of the Act. And like many areas of employment law, the WPA has specific, complicated, and nuanced statutory requirements, which should be addressed with experienced legal counsel. Reading even a beautifully written post like this is not a substitute for an attorney’s independent judgment, experience, and research.