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Minn.: Supreme Court Refuses to Expand Exception to Employment-at-Will Doctrine

By Kelly Moffitt © Ogletree Deakins   1/15/2014
The Minnesota Supreme Court rang in 2014 with an employer-friendly decision on the at-will employment rule. On Jan 2, in Dukowitz v. Hannon Security Services (No. A11-1481), the state’s highest court held that the public-policy exception to the employment-at-will rule does not apply to an employment termination resulting from an employee’s application for unemployment benefits. This is a key holding for employers, as it signifies the court’s reluctance to further chip away at the common law employment-at-will doctrine.

Background

Jane Kay Dukowitz worked for Hannon Security Services as a security officer.  She worked evening shifts.  In September of 2008, Dukowitz took a temporary daytime position.  In connection with this switch, she signed a document acknowledging that the position might not be available after the holiday season. In December, her supervisor told her that the daytime position would not be available after the end of the month and that Hannon did not have any other hours available for her. Dukowitz claims that when she told her supervisor that she would have to apply for unemployment compensation benefits “to make ends meet,” her supervisor turned to another supervisor and asked, “should we term her?” Dukowitz claims that she begged her supervisor not to terminate her employment and asked to be put on a “floating shift” to pick up available hours.

Dukowitz filed for unemployment benefits on Dec. 21, 2008. Her daytime position became unavailable two days later. Hannon terminated her employment on March 13, 2009. Dukowitz claims Hannon fired her for seeking unemployment benefits. Hannon claims it terminated Dukowitz’s employment for other, legitimate reasons.

Dukowitz filed suit for wrongful discharge, claiming that Hannon violated Minnesota public policy by terminating her employment in retaliation for her application for unemployment benefits. The district court sided with Hannon; the Minnesota Court of Appeals affirmed and Dukowitz appealed.

The Minnesota Supreme Court’s Decision

The Minnesota Supreme Court set out to decide “whether the public-policy exception to the employment-at-will rule applies to a termination resulting from an employee’s application for unemployment benefits.” Dukowitz argued that the court’s decisions in the well-known cases of Phipps v. Clark Oil & Refining Corp. (1987) and Nelson v. Productive Alternatives, Inc. (2006), “establish a cause of action for wrongful discharge if an employee can identify a clear mandate of public policy that the employer violated when it discharged the employee.” Alternatively, she argued that the court should recognize a wrongful discharge cause of action under the facts presented by her case. The court found both of Dukowitz’s arguments unpersuasive.

First, the court disavowed Dukowitz’s notion that she had a cause of action under the Phipps and Nelson cases. In Minnesota, employment is generally “at will” such that an employer may discharge an employee for any reason or no reason so long as it is not for an unlawful reason. The Phipps decision recognized a narrow public-policy exception to this rule, namely, that “an employee may bring an action for wrongful discharge if that employee is discharged for refusing to participate in an activity that the employee, in good faith, believes violates any state or federal law or rule or regulation adopted pursuant to law.” In Nelson, the court held that the common-law cause of action recognized in Phipps survived the enactment of Minnesota’s Whistleblower Act (Minn. Stat. § 181.931-.935).  Dukowitz urged the court to interpret Phipps more broadly, to include “an exception to the employment-at-will rule for any violation of a clear mandate of the state’s public policy.” The court rejected that argument as “inconsistent with the reasoning of Phipps” and reiterated that Phipps and Nelson “recognize a common-law cause of action for wrongful discharge only in those circumstances in which a termination is the result of an employee’s refusal to do an act that the employee, in good faith, believes to be illegal.”

Second, the court declined to recognize a new cause of action for wrongful discharge for terminations resulting from an employee’s application for unemployment benefits. The court reached this conclusion for two reasons: (1) due to the court’s reluctance to take on the role of determining public policy, as this task is “usually better performed by the legislature”; and (2) because the Minnesota legislature “has already delineated the consequences for an employer that interferes with an employee’s application for unemployment benefits” through Minn. Stat. §268.192 (which states that an employer who “directly or indirectly. . . obstruct[s] or impede[s] an application or continued request for unemployment benefits” is guilty of a misdemeanor), and Minn. Stat. § 268.184 (which provides administrative and criminal penalties for employer misconduct relating to administration of the unemployment insurance program). In discussing the latter point, the court emphasized that “the Legislature has not created a civil action for retaliation in Minnesota’s unemployment-insurance statutes” like it did in the workers’ compensation statutes and the Whistleblower Act.

Of note, Justice Wright filed a detailed dissent, which Justice Page joined. The dissent argued that Dukowitz’s contention that Phipps implicitly recognized a broader cause of action for wrongful discharge is “equally plausible.” The dissent also emphasized that “[a]s a common-law court, we have the power to recognize and abolish common law doctrines” and that “as society changes over time, the common law must also evolve.” Moreover, the dissent argued, “the mere existence of another remedy is not sufficient to crowd out this common-law wrongful-discharge claim.” Finally, the dissenting justices pointed out that “[o]nly a small minority of states that have recognized the public-policy exception to the employment-at-will rule limit it to an employee’s refusal to violate the law or report a violation of law.” Under this reasoning, the dissent urged that Dukowitz should have a cause of action for wrongful discharge.

Implications of the Decision

The Dukowitz ruling is undoubtedly a positive one for employers, as it demonstrates the Minnesota Supreme Court’s reluctance to expand the scope of the public-policy exception to the employment-at-will rule. However, employers are well-advised to continue to monitor this issue, as Dukowitz is likely not the last case that we will see in this area. Indeed, some plaintiffs’ attorneys may be bolstered by the dissent’s reasoning and may make similar arguments to continue to push for further expansion of the exceptions and new causes of action. Furthermore, it is possible that the legislature could address these issues by enacting new or revised statutes. As always, employers are well-advised to remain aware of the existing laws that may come into play when making employment decisions, such as the unemployment, workers’ compensation, and whistleblower statutes discussed by the court in Dukowitz.

Kelly A. Moffitt is an attorney in the Minneapolis office of Ogletree Deakins. Republished with permission. © 2014 Ogletree Deakins. All rights reserved.