Earlier this month, a divided Ohio Supreme Court ruled in favor of an employer on a public policy discharge tort. House v. Iacovelli, Slip Opinion No. 2020-Ohio-435. The Court found that the plaintiff’s discharge for protesting her payroll stubs’ failure to accurately report her income “does not jeopardize any public policy that employers must accurately report employees’ pay and tips to the Bureau of Unemployment Compensation.” The Court found that the existing statutory structure and penalties on employers were sufficient to protect public policy. Therefore, “a personal remedy is not necessary to discourage wrongful conduct by employers . . . “ Further, the unemployment tax statutes cited by the plaintiff do not prohibit retaliation against whistleblowers.
As previously reported two years ago here, the plaintiff waitress alleged in her complaint that she confronted the restaurant’s owner about her payroll stubs underreporting her wages and tips. He allegedly admitted that he had underreported her income and failed to make all of the required contributions in violation of Ohio Revised Code Chapter 4141. She “further alleged that instead of addressing the issue, [he] accused [her] of creating “too much drama” and terminated her employment.” Thereafter, she alleged that he requested that she mislead ODFJS by claiming that she was laid off for lack of work and he agreed to give her $150 every two weeks to make up for the unemployment tax shortfall.
Even though the defendant employer failed to file a timely motion to dismiss or summary judgment motion, the trial court dismissed the claim on the eve of trial on the basis that the plaintiff failed to satisfy the jeopardy element for public policy wrongful discharge claims. That trial court found that the sole remedy under ORC 4141 was for the Attorney General to bring suit; no individual remedies were created. The Court of Appeals reversed. “While the administrative appeal process [to challenge the amount of awarded benefits] provides a viable mechanism to challenge a determination of benefits, it fails to set forth a remedial scheme for a situation such as this where an employee is terminated merely for inquiring about why her pay did not reflect the amount she had earned.” The Court also found that failing to recognize such a claim would chill public policy because employees would not report such payroll failures if they could be fired for bringing them to the employer’s attention.
The Supreme Court reversed.
When the sole source of the public policy is a statutory scheme that provides rights and remedies for its breach, as it is here, we must consider whether those remedies are adequate to protect society’s interest as to the public policy. . . . It is less likely that a wrongful-termination-in violation-of-public-policy claim is necessary when remedies for statutory violations are included in the statutory scheme. . . . This is especially true “when remedy provisions are an essential part of the statutes upon which the plaintiff depends for the public policy claim and when those remedies adequately protect society’s interest by discouraging the wrongful conduct.”
. . . After reviewing R.C. Chapter 4141, it is apparent that the General Assembly has provided remedies that discourage employers from inaccurately reporting employees’ pay and tips to the Bureau of Unemployment Compensation (violating R.C. Chapter 4141) and that punish employers who fail to comply with the requirements in R.C. Chapter 4141.The statutory scheme is structured to protect only the government’s interest and was not designed to protect employees, unlike other statutory schemes for whistleblowing, etc. where employee protections were contemplated. In addition, an anti-retaliation remedy would only prevent retaliation and would not address or discourage the employer’s alleged failure to accurately report payroll information, which is the primary focus of the statute. Finally, the unemployment tax statutes cited by the plaintiff do not contain any prohibition against retaliation towards whistleblowers.
NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.
