Performance ReviewsIn a rare decision favorable to Michigan whistlblower plaintiffs, the Court of Appeals reversed a trial court’s decision to dismiss a whistleblower case against an employer. But the real lesson that employers and their HR professionals should take from the decision is that timely decision making in the termination process is critical, as well as accurately documenting deficiencies during the employment relationship.

In short, if a decision to terminate an employee is made, make sure that decision is supported by facts and then follow through as soon as possible. And if your company’s HR policy is an impediment to swift action, it needs to be revised to avoid situations like that discussed below.

The Factual Time Line Leading up to the Whistleblower Claim 

The case, Furhr v Trinity Health Corp., (2013), involved a plaintiff who was hired by the hospital, a subsidiary of Trinity Health, in 2007. He was promoted to a newly-created position that was to address problems with inconsistent accounting of the hospital’s inventory. His job duties included responsibility for controlling the hospital’s surgical inventory and for supervising a staff of subordinates.

Plaintiff’s tenure with the Hospital was not without issues: On numerous occasions between the time he was hired and April, 2010, plaintiff’s subordinates complained about plaintiff to his supervisor. The hospital responded by hiring a “coach” to work with plaintiff in December, 2009 on the interpersonal issues these subordinates had complained about. During the same time period, the hospital’s inventory continued to fluctuate.

In contrast, Plaintiff’s two annual performance reviews were positive and there was no mention of the fluctuating inventory issues in the reviews.

Fast forward to the beginning of April, 2010 where the process and decision to terminate plaintiff was underway: (i) The employer’s CFO approached another employee in the hospital’s finance department, and asked if she would be interested in assuming plaintiff’s job “if there was a change in staffing.;” (ii) That same employee also testified that the Hospital’s Director of Finance and Budget, told her that a decision had been made to fire plaintiff; (iii) On April 8, 2010, the Hospital’s CEO sent an email to the hospital’s vice president that stated in relevant part: “that [plaintiff] . . . is on the way out and that Amy Moored from finance will be assigned to get the OR inventory corrected.;” and (iv) Consistent with the preceding, the Vice President testified that the decision to terminate plaintiff was made in the first week of April, 2010.

But as of May guess who is still employed? And in between April and May, coincidentally or otherwise, plaintiff testified that he “became aware” of potential significant wrongdoing by one of the hospital’s vendors relative to the inventory and billing for restocking. And prior to plaintiff being terminated on May 10, 2010, he had reported the overbilling issue to the U.S. Attorney’s office.

The Whistleblower Lawsuit

Although the employer had, by all accounts, made the decision to terminate the plaintiff in April, the preceding time line gave plaintiff the factual and legal framework to build a lawsuit alleging that his termination violated Michigan’s Whistleblower Protection Act.

Under the WPA, an employer may not discharge or otherwise discriminate against an employee “because the employee . . . reports or is about to report . . . a violation or a suspected violation of a law or regulation or rule . . . to a public body.” MCL 15.362.

In response to the lawsuit, the employer and its affiliates filed a motion for summary disposition arguing that substantial evidence existed showing that the decision to terminate plaintiff preceded his call to the U.S. Attorney, and therefore plaintiff could not establish that he was terminated because of his whistle blowing activities.

The Court agreed. But the Court of Appeals, almost begrudgingly, took a different view and reversed the dismissal of the plaintiff’s whistleblower protection claim because certain fact issues existed that should be resolved by a jury:

[I]t is possible, perhaps even probable, that  a jury would not find plaintiff’s testimony credible in light of the conflicting evidence … Nonetheless … [i]t is the jury’s role to determine issues of credibility … not the trial court on a motion for summary disposition … credibility issues are for the jury.

The Take-Away

It is important to note that the employer, by its own admission, made the decision to terminate the employee sometime in the beginning of April. Yet, that termination did not take place until approximately a month later and after the plaintiff contacted the U.S. Attorney’s office.

It is easy to criticize the employer’s apparent glacial-like process for terminating employees. But in my experience as an employment law attorney, such a process is very common. Unfortunately, equally common is the danger that what had been clear, unlawful reasons for terminating an employee are called into question by intervening events – legitimate or otherwise.

Accordingly, here are two important considerations every employer should include in the HR strategies:  

  1. Termination decisions rarely happen in a vacuum, i.e., given enough lead time, the individual to be terminated will often have some knowledge that the ax is about to fall. And employers should be very concerned about limiting that lead time in order to limit the risks that the individual can set the stage for events prior to the termination actually taking place. Examples include stealing contact, pricing, or trade secret information, sabotage, or suddenly discovering a good conscious or reason to make a report to law enforcement. 
  2. Additionally, before making the decision to terminate an employee, make sure the basis for the termination is not unlawful and your company should have two or three reasons to support this decision. Yes under Michigan law, like most states, employment is presumed to be at-will, which means an employer does not actually need a reason to terminate an individual. But from a “best practices” and practical stand-point, not having a reason and not being able to document a reason is a recipe for operational and legal disaster.

For more more information about employment law compliance or Michigan’s Whistleblower Protection Act, contact Jason M. Shinn whose legal practice focuses on Michigan employment law compliance and litigation including unlawful discrimination, sexual harassment, and investigating employee misconduct. Also, feel free to connect with Jason on Twitter.