Ohio Supreme Court Rejects Public Policy Wrongful Discharge Claim for Protesting Payroll Fraud

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.

Ohio Court of Appeals Finds Public Policy Jeopardized by Discharge of Waitress for Objecting to Employer’s Payroll Tax Evasion

Earlier this month, the Ohio Court of Appeals recognized a public policy wrongful discharge claim when a waitress was fired for objecting to her employer’s failure to properly pay all unemployment taxes on her account.  House v. Iacovelli, 2018-Ohio-443. “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.

According to the Court’s opinion, 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 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 on the grounds that the statutes “fail to adequately protect society’s public policy interest in establishing and maintaining an unemployment compensation program.”

The Supreme Court of Ohio has explained that analyzing the jeopardy element of  a public policy wrongful termination action requires assessing whether prohibiting the action from going forward would compromise the objectives of the public policy in question.   . . .  Thus,“[a]n analysis of the jeopardy element necessarily involves inquiring into the existence of any alternative means of promoting the particular public policy to be vindicated by the common-law wrongful discharge claim.”   . . .  The public policy expressed in a statute is not jeopardized by the absence of a wrongful termination action when the aggrieved employee “has an alternate means of vindicating his or her statutory rights[,] [] thereby discouraging an employer from engaging in the unlawful conduct.”  Id.  “Wiles made clear that the method to determine whether a plaintiff can file statutory and public policy causes of action involves reviewing the adequacy of the remedy, not ensuring the aggrieved party receives the greatest recovery.”   . . .  “[A] remedy is not inadequate merely because it does not allow for all avenues of recovery.”  Coon at ¶ 22.

While society’s interests may be protected by the Attorney General’s intervention and the employee may have the right to file an administrative appeal to challenge unemployment benefits that are awarded, the statute fails to address any remedies for an employee when an employer refused to comply with the statute. “[W]e emphasized in Coon that “the purpose of a remedy in a  wrongful termination case is * * * to deter the employer from violating the law and to place the  employee in the position they would have been had the employer not violated the law.”  However,   the statute “does not contain any provision that would provide [the plaintiff] with a “meaningful opportunity” to return to the position she occupied prior to the adverse employment action.”    Therefore, the statutory remedies are inadequate and the plaintiff has satisfied the jeopardy element of a public policy wrongful discharge claim.

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 be changed or 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.

Hamilton County Court of Appeals Rejects Public Policy Wrongful Discharge Claim Based on Alleged HIPAA and Insurance Fraud Violations

Last week, a divided Hamilton County Court of Appeals reversed a jury verdict entered in favor of a terminated physician on a public policy wrongful discharge claim on the grounds that her accusations of HIPAA and insurance fraud violations were not supported by sufficiently clear sources of public policy because neither statute imposed an affirmative obligation on the plaintiff to report her concerns or prohibited the employer from retaliating against an employee who reports violations of the statute.  McGowan v. Medpace, Inc., 2015-Ohio-3743. Unlike Cuyahoga and Franklin County Courts of Appeal, the Hamilton County Court of Appeals requires a statutory source of public policy to parallel the general whistleblower statute by requiring an employee to report concerns and to prohibit the employer from retaliation for reporting those concerns.  Also, this case rejects a prior Montgomery County Court of Appeals decision finding HIPAA to be a valid source of public policy to support a wrongful discharge claim.

According to the Court’s opinion, the plaintiff had been hired into three positions to replace a retiring physician: to be the Executive Director of two research centers and to take over the retiring physician’s private practice.  In addition, the retiring physician appointed her to replace him as the Principle Investigator on the research studies being conducted by the two research centers.   While the research centers was not affiliated with the private medical practice, they shared office space, employees and patients. Shortly after she started, the plaintiff became concerned with how the staff treated patient files (in that the research studies and medical practice operated using the same file instead of having different charts).  Staff also left the charts open on carts outside patient rooms.  She felt that this violated HIPAA.  She was also concerned that the retiring physician routinely ordered larger doses of medication than medically necessary and directed the patients to split them.   She felt that this was insurance fraud.   She also conferred with an attorney who confirmed her suspicions.  Accordingly, at the next staff meeting, she directed the staff to cease the offending practices and expressed her opinion that they violated HIPAA and insurance fraud laws.  The retiring physician learned of her accusations and removed her as the PI and from his private practice.  The defendant employer did not fire her or remove her from her ED positions, but explained that she should not have made the allegations and it could not control the retiring physician from removing her from his practice and research studies.  After she refused to apologize to the retiring physician and accused the employer of retaliation, it fired her a few weeks later.  She was awarded $800,000 in compensatory and punitive damages by a jury.  The employer appealed.

Unlike Franklin and Cuyahoga Counties, the Hamilton County Court of Appeals only recognizes narrow exceptions to the employment at will doctrine and  public policies as actionable wrongful discharge claim if the underlying statute – like the general whistleblower statute – requires the plaintiff to report concerns and prohibits the employer from retaliating against the employee for reporting those concerns:

In a claim for wrongful discharge in violation of public policy, an employee satisfies the clarity element by establishing that a clear public policy existed, and that the public policy was one that imposed an affirmative duty on an employee to report a violation, that prohibited an employer from retaliating against an employee who had reported a violation, or that protected the public’s health and safety.

With respect to the plaintiff in this case, the Court concluded that the insurance fraud statute did not impose an affirmative duty on her to report her concerns about the retiring physician’s insurance fraud or prohibit her employer from terminating her for reporting those concerns.  Accordingly, that statute could not constitute a clear source of public policy as required for a public policy wrongful discharge claim under Ohio law.

The Court reached the same conclusion with respect to the HIPAA issues even though the Montgomery County Court of Appeals had previously recognized it as providing a sufficiently clear source of public policy protecting patient’s privacy rights.  The dissent would have recognized the HIPAA public policy claim as protecting public safety.

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 be changed or 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.

Ohio Court of Appeals Reinstates Wrongful Discharge Claim Based on Employee Objections to Sharing Computer Passwords Even Though the Employer Was Not Subject to Liability Under the Applicable Statute.

On Thursday, a unanimous Cuyahoga County Court of Appeals reversed a directed verdict entered at trial in favor of an employer on a claim for wrongful discharge in violation of public policy based on the plaintiff’s objection to password sharing by employees.  Rebello v. Lender Processing Servs., Inc., 2015-Ohio-1380 (4-9-15).  The employer was a service provider for Chase Bank and was required by contract to restrict access to non-public information about Chase customers to employees who had cleared Chase’s security procedures (including a background check, and drug testing, etc.).  However, because Chase was not approving new employee passwords fast enough, it had allegedly become common practice for the employees to share passwords in order to keep up with their work.  The Plaintiff claimed to have objected to this process repeatedly, particularly after an email from Human Resources threatened that employees who shared passwords could be fired and subjected to civil and criminal liability.  Shortly after directing her subordinates to stop sharing emails and threatening to report the practice to upper management and Chase, she was fired for reasons that she claimed were pretextual.  At trial, the judge ruled that she had not identified a clear public policy against sharing passwords.  On appeal, the Court of Appeals found that the public policy reflected in the Gramm-Leach-Bliley Act, 15 U.S.C. §6801, et seq. was sufficiently clear to support her claim that she was fired for opposing unauthorized disclosure and use of non-public financial customer information.  Moreover, she could also show that this public policy was jeopardized by her termination since that statute did not contain any provisions protecting employees from retaliation for refusing to violate the Act or for threatening to report its breach.

According to the Court’s opinion, the plaintiff worked for a company which helped preserve property owned by customers of Chase Bank who were in financial distress or foreclosure.  In order to perform their duties, employees were provided with access by Chase to non-public information about the clients subject to a contract which required that access be limited to employees who had cleared Chase’s security protocols and were provided with a password by Chase. Moreover, they were required by the Chase contract to report to Chase any unauthorized disclosures of the information.   However, apparently, Chase was not providing passwords fast enough and it had become common practice for employees to share passwords in order to keep up with the work.  There was evidence that the plaintiff had objected to this process for over 18 months and was repeatedly told to stay the course and management would take care of the problem.    There was also evidence that upper management became aware – at least several occasions – that passwords were being shared and that they told employees to stop sharing passwords and requested Chase to speed up its process.  

After a Denver employee reported the password sharing practice in her exit interview, the issue came to the forefront again in February 2012.  A conference call was held and supervisors, including the Plaintiff, were told that password sharing must stop.   The Plaintiff’s manager told her to stay the course and calm down and that it was not their job to inform Chase about the password sharing.   When password sharing continued, Human Resources sent an email to all employees at the end of February reminding them that they were not permitted to share passwords, that they could be immediately fired for sharing passwords and that they could also be civilly and/or criminally prosecuted.   Plaintiff informed her supervisor that she would prohibit her employees from sharing passwords even if it meant that the work production suffered and that that she would inform upper management or Chase about the password sharing.  She was told that the company’s Information Service Officer would handle it.  

The following week, the Plaintiff’s manager claimed she reported concerns with the Plaintiff’s attendance and tardiness.  On April 2, a co-worker allegedly complained about disruptive profanity the Plaintiff used in a personal telephone call.  A subsequent investigation by Human Resources discovered that other employees had been similarly disturbed by other personal telephone calls by the Plaintiff.  Therefore, the Plaintiff was summarily fired for “for disrupting the work environment, unsatisfactory performance, violation of policies and procedures, challenges with supervisory execution and challenges with attendance, punctuality and time off.”  There was apparently no documentation of prior disciplinary or performance issues.  

The plaintiff filed a wrongful discharge in violation of public policy claim based on several statutes: the Fair Credit Reporting Act, Ohio’s identify theft protection statute and the Gramm-Leach-Bliley Act, 15 U.S.C. §6801 (“GLBA”).  The employer’s motion to dismiss was denied, as was its summary judgment motion.  However, at trial, the visiting judge granted the employer’s motion for directed verdict (thus, removing the case from the jury) on the ground that none of these statutes clearly addressed the plaintiff’s objections to employees sharing computer passwords.  This appeal followed.  

On appeal, the Court agreed that the employer was not subject to the Fair Credit Reporting Act because it was not a consumer reporting agency and the Plaintiff failed to show “that her concerns regarding password sharing in any way implicated any of the specific policies or purposes FCRA was enacted to address.”  It also found that Ohio’s identity theft statute, R.C.§1349.19,  did not apply because  

there was no evidence that, as a result of password sharing, LPS’s or Chase’s security systems were “breached” as defined in the statute or that any unauthorized “access and acquisition” of personal information occurred (or was likely to occur) that “cause[d] or reasonably is believed will cause a material risk of identity theft or other fraud.” [She] presented no evidence that any of the Chase customers whose information was accessed by LPS employees through password sharing was at any material risk of identity theft, fraud or any other financial harm as a result of that practice.

However, the GLBA was different. “The GLBA requires financial institutions to take steps to ensure the security and confidentiality of the nonpublic information of its customers.”  Moreover, the Interagency Guidelines Establishing Information Security Standards (“guidelines”), 12 C.F.R. part 30, Appx. B, “apply to ‘customer information maintained by or on behalf of entities over which the office of the Comptroller of the Currency has authority’ and “address standards for developing and implementing administrative, technical, and physical safeguards to protect the security, confidentiality, and integrity of customer information.” 

The guidelines also require banks to consider whether other security measures, such as controls to authenticate and permit access only to authorized individuals, controls to prevent employees from providing customer information to unauthorized individuals, and encryption of electronic customer information to which unauthorized individuals may have access, are appropriate and, if so, adopt those measures. . . . The guidelines also require banks to “[r]equire its service providers by contract to implement appropriate measures designed to meet the objectives” . . . “Service providers” include “any person or entity that maintains, processes, or otherwise is permitted access to customer information or consumer information through its provision of services directly to the [bank].”

The Court concluded that the GLBA and its guidelines established a clear public policy. The employer did “not dispute that the GLBA and its regulations apply to Chase and the nonpublic customer information accessed by” the employer’s employees, but argued that the GLBA technically only applied to Chase and not to service providers like it. The Court rejected this argument: 

[The employer] cites no authority in support of its contention that an employer must be found to have violated and subject to liability under the specific statute that serves as the source of the public policy before we may conclude that a clear public policy exists that has been compromised by the employer’s conduct.

Importantly, the employer’s own documents, policies and contracts acknowledged that its activities were subject to the GLBA and that it had a statutory obligation to comply with that statute to protect and maintain the confidentiality of Chase customer information.

The Court also rejected the employer’s attempts to limit characterization of the Plaintiff’s objections to “password sharing,” which is not a specific activity discussed in the GLBA.   While there would be no statutory violation if passwords were shared among employees who were already authorized by Chase to access the non-public information, there arguably would be a statutory violation if the passwords were shared with individuals who were not authorized to access the information.

Rebello does not contend that there is a public policy against “password sharing” under the GLBA or any other state or federal law. Instead, she argues that her objections to password sharing and threats to report LPS’s practice of password sharing to Chase implicated public policy because they related to concerns over the unauthorized access and disclosure of nonpublic personal information of Chase’s customers. Rebello contends that “by objecting to sharing passwords, she [was] objecting to a practice that threatened the confidentiality and allowed unauthorized access of individuals to confidential nonpublic customer information.” She argues that even though there is no public policy against password sharing per se, there is a public policy manifested in the GLBA to protect against the unauthorized access and disclosure of nonpublic personal information and that because LPS’s and Chase’s anti-password sharing policies were implemented (at least in part) to prevent the unauthorized access and disclosure of this information, dismissing employees under circumstances like those allegedly involved in her dismissal, i.e., for refusing to continue sharing passwords and threatening to report password sharing among LPS employees to Chase, would jeopardize that public policy.

 . . . Where, however, a password that permits access to nonpublic customer information is shared with a person who does not have authority to access that information and the password is, in fact, used by the person with whom it is shared to access nonpublic consumer information, password sharing results in the unauthorized disclosure of that information, thereby implicating the public policy against unauthorized access and disclosure of nonpublic personal information of consumers. Thus, the issue in this case is whether Rebello’s objections to password sharing were akin to a complaint regarding the unauthorized access and disclosure of nonpublic consumer information.

That being said, there was still a factual dispute about the scope of the password sharing.  The employer produced evidence that the individuals gaining access had been authorized to do so by Chase, but simply had not yet received the means of access (i.e., a password token).   However, the Plaintiff and one other witness testified that access was also being provided to employees who had not yet been authorized by Chase.  To complicate the matter further, the Plaintiff did not think it really mattered whether the employees had been authorized by Chase to access the information or not since the contract and policy prohibited sharing passwords.  She viewed the issue of password sharing to be virtually identical to the issue of unauthorized disclosure of the protected information.  The Court concluded that a reasonable jury could agree with the Plaintiff:

In this case, based on the evidence presented by Rebello that LPS was regularly and systemically disregarding the password system established by Chase and allowing LPS employees who had not yet been authorized by Chase to access its nonpublic customer information, a reasonable jury could have found that there was, in fact, no difference between Rebello objecting to password sharing and Rebello objecting specifically to the results of that password sharing, i.e., the unauthorized access and disclosure of nonpublic information to LPS employees. The trial court erred in taking that determination away from the jury and concluding as a matter of law that “[t]he mere assertion relative to sharing passwords is insufficient to satisfy the clarity element of a wrongful termination action.”

Moreover, it was irrelevant that no identity theft had actually occurred as a result of the password sharing practice or that the violation of the password protocols had not actually harmed any of Chase’s customers.  The alleged unauthorized access by the employees was by itself enough harm to the privacy interests of Chase’s customers as protected by the GLBA:

Rebello was not required to show that any consumer identity theft had occurred or that any consumer’s confidential information had otherwise been misappropriated to establish the clarity and jeopardy elements of her claim. A plaintiff asserting a claim of wrongful termination in violation of public policy is not required to show that the conduct to which the employee objected actually resulted in the type of harm that the public policy seeks to prevent. Furthermore, even if such a showing were required, the unauthorized access of Chase’s  customers’ nonpublic information by LPS employees in and of itself caused a harm to the privacy interests of those customers — one of the interests the GLBA seeks to protect. (bolding added for emphasis).

Finally, the Court found that public policy could be jeopardized by the employer’s conduct in terminating the Plaintiff for refusing to participate and threatening to report its alleged violation of the statute.   Public policy claims at common law can only exist where the applicable statute does not provide exclusive remedies for its breach.

The GLBA contains no statutory remedies protecting employees who complain about, refuse to participate in and threaten to disclose an employer’s unauthorized access and disclosure of nonpublic consumer information. Thus, there is no existing statutory remedy that “adequately protect[s] society’s interest [in] discouraging this wrongful conduct.” Id. If employers were allowed to terminate employees for objecting to, refusing to participate in and threatening to disclose the unauthorized access and disclosure of nonpublic consumer information, such retaliatory practices could deter employees from reporting or taking other steps to protect nonpublic consumer information from unauthorized access and disclosure. We find that without a common-law tort for wrongful discharge under these circumstances, the clear public policy against unauthorized access and disclosure of nonpublic consumer information would be compromised.

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 be changed or 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.

Franklin County Court of Appeals: Ohio Public Policy Exists to Support Wrongful Discharge Claims for Reporting Unsafe Workplace, Substance Abuse and Patient Mistreatment

Last week, a panel of the Franklin County Court of Appeals unanimously reversed an employer’s summary judgment in a wrongful discharge case and found a specific statutory duty for employers to provide a safe workplace that was void of patient malpractice and drug abuse.  Blackburn v. Am. Dental Ctrs., 2014-Ohio-5329.  In that case, a dental office hired a dentist for less than six months in 2002.  In that time, he became the subject of a number of complaints by the plaintiffs (and presumably others).  One of the plaintiffs was terminated shortly after the dentist left and another ceased coming to work approximately five months later, after objecting to unsafe practices (most from the former dentist) involving employees and patients. They both filed a number of claims, including a whistleblower claim which was dismissed on summary judgment, and public policy discharge claims based on an unsafe workplace, mistreatment of patients and workplace substance abuse. The Court reiterated that a plaintiff may pursue a public policy wrongful discharge claim even if her whistleblower claim fails as long as she can identify an independent public policy apart from the failed statutory whistleblower claim.  Further, the plaintiff is not required to specifically identify the statute evincing the public policy in her complaint and can survive summary judgment by identifying the statute at that time.  Rejecting the holding of a different Ohio Court of Appeals, the  Court found Ohio Revised Code §§ 4101.11 and 4101.12 to evince a public policy prohibiting retaliation by employers against employees who report workplace conditions that jeopardize staff and dental patient safety.  Moreover, the Court found these statutes broad enough to also constitute a public policy against alleged workplace drug abuse which poses “threat to employee and patient safety.”

According to the Court’s opinion, the plaintiffs filed a number of claims in April 2008, including whistleblowing, wrongful discharge in violation of public policy and slander.  The employer filed counter-claims against them as well.

[Plaintiffs] alleged . . . that, after [the employer] hired Dr. Allen, they began investigating Dr. Allen's background and discovered he had lost his dentistry license in Michigan, had been convicted of criminal offenses in Michigan, and under the terms of his sentence, was not supposed to leave Michigan. [Plaintiffs] also claimed to have witnessed Dr. Allen engage in substandard and dangerous patient treatment that resulted in permanent damage or loss of teeth. Much of this involved unnecessary dental procedures or deliberately botched work to generate further treatment and thus higher billings for [the employer] and Dr. Allen. [Plaintiffs] further claimed to have witnessed Dr. Allen at work intoxicated, hung over, smelling of alcohol, and falling asleep while examining patients. [Plaintiffs] claimed that they informed their supervisors . . . of these issues regarding Dr. Allen, but rather than act to protect patients from this conduct, ADC management and staff retaliated against appellants by, among other things, harassing appellants, warning them not to lodge further complaints, threatening them with legal action for defamation, reducing their wages, assigning them unfavorable work duties, and denying promotions.

  . . . .

With respect to workplace safety, both [plaintiffs] claim to have reported issues arising from Dr. Allen's conduct, generally alleging that he physically accosted or harassed  [them], threatened them, and had other violent confrontations in the workplace, including an instance in which another dentist in the same office brought a machete to work to confront Dr. Allen. Both [plaintiffs] asserted that, when they brought these problems to the attention of their superiors, they were told to ignore the situation or face termination.

 . . .

 . . . In this case, the record is replete with evidence of the professional shortcomings of Dr. Allen. The evidence indicates he routinely worked when hung over or intoxicated to the point of dysfunction, and the results for some patients were disfiguring, painful, and permanent. He intentionally botched simple procedures in order to generate lucrative repair work after the fact. Most relevant to the jeopardy element, the materials submitted by appellants, if believed, make it clear that their terminations were in direct response to appellants' attempts to warn their employer about the grossly substandard care provided by Dr. Allen to ADC patients.

The trial court granted summary judgment to the employer on most of the plaintiff’s claims in September 2010 (at which time the remaining claims and counter-claims were voluntarily dismissed).   The Court of Appeals initially affirmed the dismissal of most of the claims (including the whistleblower claims), but reversed on the public policy wrongful discharge claim:

we concluded that the trial court erred when it held that as a matter of law appellants had insufficiently pleaded in their complaint the claims for public policy wrongful discharge based on drug and substance abuse in the workplace, patient safety, and workplace safety.

 . . . .

The failure of appellants' whistleblower claims does not preclude a common law claim for wrongful discharge in violation of public policy, because the whistleblower statute supplements rather than replaces the common law cause of action.  . . . However, if an employee fails to strictly comply with the whistleblower requirements of R.C. 4113.52, as we found in Blackburn, the employee cannot base a Greeley claim solely upon the public policy embodied in that statute. Id. at 153. Rather, the employee must identify an independent source of public policy to support her claim.

On remand, the trial again dismissed the wrongful discharge claim on the basis that the sources of public policy were not sufficiently identified in the complaint.  The Court of Appeals reversed since the public policy sources were sufficiently identified at the summary judgment stage:

They cite to two specific sections of the Ohio Revised Code, R.C. 4101.11 and 4101.12, as specific statutory support for their proposed public policy promoting workplace safety for employees and patients. . . .

These sections provide as follows:

R.C. 4101.11. Duty of employer to protect employees and frequenters Every employer shall furnish employment which is safe for the employees engaged therein, shall furnish a place of employment which shall be safe for the employees therein and for frequenters thereof, shall furnish and use safety devices and safeguards, shall adopt and use methods and processes, follow and obey orders, and prescribe hours of labor reasonably adequate to render such employment and places of employment safe, and shall do every other thing reasonably necessary to protect the life, health, safety, and welfare of such employees and frequenters.

R.C. 4101.12.  Duty of employer to furnish safe place of employment No employer shall require, permit, or suffer any employee to go or be in any employment or place of employment which is not safe, and no such employer shall fail to furnish, provide, and use safety devices and safeguards, or fail to obey and follow orders or to adopt and use methods and processes reasonably adequate to render such employment and place of employment safe. No employer shall fail to do every other thing reasonably necessary to protect the life, health, safety, and welfare of such employees or frequenters. No such employer or other person shall construct, occupy, or maintain any place of employment that is not safe.

 . . .

We accordingly find that these statutes together establish that there exists a clear public policy that is manifested in a state or federal constitution, statute, or administrative regulation in Ohio favoring workplace safety for employees and frequenters.  . . . There is a statewide policy prohibiting termination of employees who report conduct and practices in a dental practice that present a risk of severe harm to patients or staff.

 . . . .

We accordingly find the trial court erred in concluding that there is no Ohio public policy against retaliation by employers against employees who report workplace conditions that jeopardize staff and dental patient safety.  . . .. In so holding, based on R.C. 4101.11 and 4101.12, we specifically disagree with the Sixth District's holding in Whitaker v. FirstEnergy Operating Co., 6th Dist. No. OT-12-021, 2013-Ohio-3856, ¶ 25, which found those statutes too "general and broad" to support such a claim, and agree with the dissent in that case. (Yarbrough, J., dissenting.)

With respect to the allegation that there is a clear statewide public policy against drug abuse in the workplace, other than the general criminalization of some types of drug use, we find that this public policy is essentially subsumed into the two others cited. To the extent the alleged drug abuse is a component of the threat to employee and patient safety, it falls under the workplace safety rubric generally rather than as an independent public policy grounds.

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.

Ohio Court of Appeals Rejects Retaliation Claim Based on FLSA and Ohio’s Prompt Wage Payment Act

Last week, the Ohio Court of Appeals in Cuyahoga County rejected the claim of a home health worker that she was fired for complaining about not receiving overtime pay or paid vacation. Hurd v. Blossom 24 Hour We Care Ctr., Inc., 2012-Ohio-3465. The Court found that the plaintiff was exempt under the companionship exemption from overtime pay under the FLSA and, thus, was not protected by the FLSA for complaining about a failure to pay overtime pay. Interestingly, the Court found the plaintiff’s good faith belief in making the complaint was irrelevant because the “good faith belief standard” only applied in Title VII claims. It also found that she was similarly unprotected for complaining about the failure to provide her with a paid vacation because she had a pending breach of contract action covering that very issue. Ohio law does not require employers to provide a paid vacation and without showing the existence of a prior agreement for paid vacation, she could not prevail on a wage payment claim. Therefore, a public policy claim was unnecessary in this case, according to the Court. What seemed to be a more significant motivating factor was that the employer apparently had a legitimate reason to terminate her employment based on a prior criminal record and her failure to timely submit to a background check.

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.

Tough Day for Plaintiff Claims

Today, I learned about three different lawsuits, each of which were rejected by the courts on appeal. Tough day for plaintiffs; good day for employers. These courts rejected a claim by an employee who soiled herself after being denied a restroom break supported by medical documentation, by a police chief who was allegedly reported neglect of a mentally ill patient to his supervisor and by a medical resident who brought an ADA claim after a local hospital refused to reinstate him after he had been terminated for diverting controlled substances for his personal use even though he had completed a drug rehabilitation program.

This morning, the Sixth Circuit released two employment decisions. In the first, the plaintiff brought suit under Title VII for discrimination and for the intention infliction of emotional distress when her supervisor would not permit her to take a restroom break despite her medical condition. Worthy v. Materials Processing, Inc. No. 10-1138 (6th Cir. 7/27/11). The plaintiff had previously reported her medical condition to the HR Department, but it neglected to inform her supervisor that she would require restroom breaks. When the plaintiff told her supervisor that she needed the break because of a medical condition, he refused to relieve her on the production line. Accordingly, she ultimately soiled herself. A union grievance was filed, the HR Manager apologized for not passing on the information and the plaintiff was given two days of paid leave. Dissatisfied, she filed a Charge of Discrimination and, ultimately, a lawsuit. Oddly, there is no mention of the ADA in the Court’s decision. The Court concluded that Title VII only applied to material adverse employment actions, like promotions, hiring, demotions and firing, and not to employment decisions which “do not change [an employee’s] salary, benefits, title, or work hours,” even if they make the employee’s job “significantly more difficult.” It rejected the emotional distress claim on the grounds that the supervisor’s undisputedly petty and cruel behavior was not objectively outrageous and “utterly intolerable in a civilized community.”

In the second opinion released this morning, the Sixth Circuit rejected the ADA claim of a medical resident because his evidence of pretext was based on personal conjecture and speculation. Hall v. Ohio Health Corp., No. 10-3327 (6th Cir. 7/27/2011). The plaintiff had been terminated from two prior residency programs before beginning at Doctor’s Hospital. While there, he had been placed on academic probation and warned about inappropriate behavior (such as engaging in personal conversations when he was supposed to monitoring patients, inattention to detail, self-prescribing pain medication for a foot condition, disappearing during rounds, being unprepared, etc.). Finally, he was caught diverting pain medication to himself (by prescribing the medication to a patient and then taking it for himself). When confronted, he never admitted to having an addiction. Fed up, the Hospital terminated him, but advised him to reapply if he fixed his problems. After completing an addition program, the plaintiff reapplied to OhioHealth, but was rejected. The lawsuit followed. The Court found that the plaintiff could not show that the Hospital’s explanation was pretextual: his long history of unprofessional and unethical behavior, lack of requisite medical knowledge and his prior supervisor’s unwillingness to work with him again. Any evidence that he was rejected solely because of a former addiction was based only on his personal belief instead of evidence.

Finally, the Franklin County Court of Appeals rejected the wrongful discharge claim of a police chief who claimed that he was terminated for reporting an investigation into the neglect of a mental patient to the institution’s executive officer. Boyd v. Ohio Dept. of Mental Health, 2011-Ohio-3596. In particular, the plaintiff was investigating how a mental patient had been sent to a medical appointment without a mandatory police escort, which enabled the patient to escape. The incident had been reviewed by two institutional committees, but he continued to investigate – allegedly without the knowledge or approval of his boss. He claims that he was fired for reporting the investigation to her – allegedly in violation of O.R.C. § 5101.61(E), which “prohibits an employer from "discharg[ing], demot[ing], transfer[ring], prepar[ing] a negative work performance evaluation, or reduc[ing] benefits, pay, or work privileges, or tak[ing] any other action detrimental to an employee or in any way retaliat[ing] against an employee as a result of the employee's having filed a report [to the Ohio Department of Job and Family Services] under this section." Problem was, he never reported anything to ODJFS; he only reported the investigation to his boss. He asserted that his boss had authority to resolve any systematic problems with patient neglect and reports to her should be as protected as reports to ODJFS. However, the Court refused to expand public policy as reflected by the General Assembly in the statute.

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.

Ohio Court of Appeals: Factual Issue Exists When Employee Fired After Good Performance Review

[Editor's Note: The Supreme Court vacated this decision on November 23, 2011 in light of Dohme. However, the Court of Appeals again reversed the employer's summary judgment on April 19, 2012, meaning this case is likely to return to the Supreme Court].

Earlier this month, the Cuyahoga County Court of Appeals reversed summary judgment in favor of an employer on a claim of wrongful discharge in violation of public policy. Alexander v. Cleveland Clinic Foundation, 2011-Ohio-2924. In that case, a private police officer working for the Foundation says he was attempting to help a pedestrian cross at a crosswalk when a driver ignored his motions to stop and continued through the crosswalk. He smacked the side-view mirror as the car passed – he says to get its attention. However, the driver later complained about the incident and a formal investigation was conducted. The employee had sometime earlier lost his temper with a bus driver who knocked him down in the street and he had been counseled to watch his temper. He had recently received a performance commendation and made a training officer and had received only satisfactory and mostly satisfactory performance evaluation. He was fired – purportedly just for slapping the driver’s mirror as it passed – and not for his overall work record. He claimed that his termination violated Ohio’s public policy requiring an officer to enforce traffic laws. The employer said he was fired for poor customer service skills. The Court’s majority decided that the factual dispute should be left to a jury, although the dissent felt that there was no clear public policy favoring the employee’s claim.

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.

Ohio Supreme Court Recognizes Retaliatory Discharge Claim Before Employee Files Worker’s Compensation Claim

This morning, a majority of the Ohio Supreme Court agreed that an employee who reports a workplace accident to management is protected from retaliatory discharge by Ohio Revised Code § 4123.90 as soon as the report is made even though he has not yet formally initiated a worker's compensation claim or testified in a worker's compensation proceeding. Sutton v. Tomco Machining, Inc., Slip Opinion No. 2011-Ohio-2723. "Ohio recognizes a common-law tort claim for wrongful discharge in violation of public policy when an injured employee suffers retaliatory employment action after injury on the job but before the employee files a workers' compensation claim or institutes or pursues a workers' compensation proceeding." In Sutton, the employee was injured while disassembling a chop saw as part of his job and immediately reported the accident and injury to the employer's president. Within an hour, he was discharged without any explanation (although he was assured that it was not because of his performance, compliance with rules or work ethic).

A few months after being terminated, the employee filed suit alleging both a statutory violation of O.R.C. §4123.90 and a tort for wrongful discharge in violation of public policy. He alleged that he was terminated immediately after the accident in order to prevent him from claiming employment status when he initiated a formal worker's compensation claim. The employer moved dismiss/judgment on the pleadings, which was granted by the trial court. The Court of Appeals affirmed in part and reversed in part. It concluded that there was no valid statutory claim because the employee had been fired before he initiated a worker's compensation claim. However, it also concluded that his termination was in violation of the public policy reflected in the same statute. In confronting this issue, the Supreme Court noted:

R.C. 4123.90 provides: "No employer shall discharge, demote, reassign, or take any punitive action against any employee because the employee filed a claim or instituted, pursued or testified in any proceedings under the workers' compensation act for an injury or occupational disease which occurred in the course of and arising out of his employment with that employer."

{¶ 14} R.C. 4123.90 does not expressly prohibit retaliation against injured employees who have not yet filed, instituted, or pursued a workers' compensation claim. But it does expressly prohibit retaliation against injured workers who have filed, instituted, or pursued a workers' compensation claim. Essentially, a gap exists in the language of the statute for conduct that occurs between the time immediately following injury and the time in which a claim is filed, instituted, or pursued. Sutton's firing occurred in that gap. The parties disagree as to whether the public policy underlying R.C. 4123.90 justifies the creation of an exception to the
employment-at-will doctrine to protect such employees.

Interestingly, the Court had previously rejected a similar claim before it recognized the wrongful discharge in violation of public policy exception to the employment at will doctrine:

Although we have never before directly addressed whether the public policy underlying R.C. 4123.90 protects such employees, we have addressed whether the statute itself protected a similarly situated employee. In Bryant v. Dayton Casket Co. (1982), 69 Ohio St.2d 367, 23 O.O.3d 341, 433 N.E.2d 142, we addressed whether an employee's expression of an intent to pursue a workers' compensation claim was sufficient to satisfy R.C. 4123.90's requirement that an employee "institute" or "pursue" a proceeding and whether the employee was therefore protected by the statute against retaliation. Id. at 370. The relevant facts are that the employee, Bryant, cut his finger with a saw during his second day of employment with Dayton Casket Company, informed someone within the company of the injury, and was thereafter fired. Id. at 368. At the time of his dismissal, no workers' compensation proceedings had actually been pursued or instituted. Id. at 369. The employee sued and alleged that his firing was in retaliation for his pursuit of a workers' compensation claim. Id. at 368. He argued that his informing someone within the company of the injury was sufficient to satisfy the R.C. 4123.90 requirement that he pursue a claim. Id. at 370. We held that a mere expression of an intention to pursue a claim is not "pursuit" of a claim and, therefore, Bryant was not protected from retaliatory firing under the statute. (emphasis added).

However, since the 1982 decision, the Court now recognizes exceptions to the employment at will doctrine, and also found room to fix gaps in legislation when it determined that the gap was not intended to create an absurd result:

We find that the General Assembly did not intend to leave a gap in protection during which time employers are permitted to retaliate against employees who might pursue workers' compensation benefits. The alternative interpretation—that the legislature intentionally left the gap—is at odds with the basic purpose of the antiretaliation provision, which is "to enable employees to freely exercise their rights without fear of retribution from their employers." Coolidge v. Riverdale Local School Dist., 100 Ohio St.3d 141, 2003-Ohio-5357, 797 N.E.2d 61, ¶ 43. The General Assembly certainly did not intend to create the foot race cautioned against in Roseborough, 10 Ohio St.3d at 143, 462 N.E.2d 384, which would effectively authorize retaliatory employment action and render any purported protection under the antiretaliation provision wholly illusory. Therefore, it is not the public policy of Ohio to permit retaliatory employment action against injured employees in the time between injury and filing, instituting, or pursuing workers' compensation claims. Rather, R.C. 4123.90 expresses a clear public policy prohibiting retaliatory employment action against injured employees, including injured employees who have not filed, instituted, or pursued a workers' compensation claim. (emphasis added).

That being said, the Court declined to permit employees who are unlawfully discharged in violation of the public policy reflected in O.R.C. §4123.90 to recover the same unlimited damages available to other wrongful discharge plaintiffs. Instead, the Court decided that because the General Assembly intended to limit the monetary recovery of successful plaintiffs under O.R.C. §4123.90, that public policy tort plaintiffs should similarly be restricted: "Accordingly, we hold that Ohio's public policy as established by the legislature is to limit remedies for retaliatory employment actions against injured employees to those listed in R.C. 4123.90." Otherwise, plaintiffs who were fired before they brought worker's compensation claims would recover more than plaintiffs who were fired after they initiated worker's compensation claims even though, ultimately, both plaintiffs were relying on O.R.C. §4123.90 as the basis for their recoveries.

It would be nonsensical to acknowledge a tort in violation of public policy but fail to tailor the remedies in conformance with that public policy. We therefore hold that the remedies available for wrongful discharge in violation of the public policy against retaliatory employment actions as expressed in R.C. 4123.90 are limited to those listed in R.C. 4123.90.

For these reasons, we recognize a common-law tort claim for wrongful discharge in violation of public policy when an injured employee suffers retaliatory employment action after an injury but before he or she files, institutes, or pursues a workers' compensation claim. To establish causation, a plaintiff who alleges wrongful discharge in violation of public policy as expressed in R.C. 4123.90 must prove that the adverse employment action was retaliatory, which requires proof of a nexus between the adverse employment action and the potential workers' compensation claim. We further hold that the remedies available for the tort are limited to those provided by R.C. 4123.90.

Three justices dissented.

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.

It’s Baaaackkk! Dohme Again Makes it to Oral Arguments Before Ohio Supreme Court

Yesterday was déjà vu all over again at the Ohio Supreme Court as the Dohme case had its second appearance before the Court in oral argument. As previously reported here in February 2008, “the Ohio Supreme Court heard oral argument about whether public policy wrongful discharge claims should be recognized when the employee did not “blow the whistle” to either a government agency or management about safety concerns, but rather, complained to a private sector insurance auditor about his paranoia of being set up to be fired in a document of fire alarm inspections.”

A law school classmate, Todd Penny, again argued the case for the employer. According to the 2007 opinion of the Montgomery County Court of Appeals, the employer’s insurance company was conducting a risk assessment in connection with developing a price quote. As had been done in the past, the employer informed staff about the inspection and directed that only certain designated employees were to communicate with the insurance company employee. (It later explained that this was to ensure that the insurance company only received information from staff who were up to date with accurate information). There was some confusion about one of the employer’s staff not coming to work that day, however, and the plaintiff ultimately greeted the insurance representative and spoke to him about a missing report which he believed would be blamed on him. The employer pointed out that the plaintiff never mentioned any safety concerns to the insurance company employee. During oral argument, it was explained that the plaintiff then told another employee at the employer that he had told the insurance employee about the missing report so that he could not be blamed for its disappearance. The plaintiff was then terminated for violating a work directive.

The Court of Appeals concluded that even though the plaintiff did not specifically mention a concern with workplace place safety to the insurance representative, the issue raised related to workplace safety. It also found inherently suspicious the employer’s direction to limit communication with the insurance representative. However, Justice O’Connor was troubled by this “leap” and suggested that it might be suspicious if only the plaintiff had been directed to not communicate with the insurance representative.

The plaintiff’s attorney attempted to argue that evidence of causation cannot be limited to simply this single conversation with the insurance representative, but argued that the Court should look back at the plaintiff’s history – going back to 2001 -- of being perceived as a safety troublemaker. Justice Lanzinger then asked how long an employee should be protected after engaging in protected whistleblowing. In response, his attorney admitted that it would typically be no more than 6 months, but that it would be longer in this case in light of the protracted disputes over fire safety at the plant.

In short, the employer argued that this case should be dismissed on summary judgment because (1) the plaintiff never mentioned a concern with workplace safety to the insurance representative (but only a concern with workplace paranoia) and (2) never complained to a government agency or internal management about any safety concerns. Otherwise, the possibility exists that an employee would be able to claim whistleblower protection just by mentioning an issue to a spouse, neighbor, drinking buddy, etc. This time around, the Court did not seem to entertain the same acceptance of the plaintiff’s case.

As mentioned, the case was previously argued before the Supreme Court, which remanded it for lack of a final and appealable order (in that the plaintiff had attempted to create an appealable order by voluntarily dismissing without prejudice a overtime wage claim). On remand, the plaintiff dismissed that claim with prejudice and the trial court reinstated his prior summary judgment in favor of the employer. Without writing a new opinion, the Court of Appeals, again, reversed and the employer, again, appealed to the Supreme Court.

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.

Ohio Appeals Court: Employee’s Speculation Does Not Convert a Lateral Transfer Into a Constructive Discharge.

Late last month, Montgomery County Court of Appeals affirmed the dismissal of wrongful, constructive discharge claim against an employer which arose out of the plaintiff’s transfer to a similar job at a location 15 miles from his former job. Lookabaugh v. Spears, 2008-Ohio-1610. The court also dismissed defamation claims against the employer’s customer whose complaints about the plaintiff motivated his transfer because the customer had a qualified privilege to complain. Although the plaintiff speculated that the new job would not be reliable and prevented him from regularly checking on his ill wife during lunch, the court noted that a "[p]art of an employee's obligation to be reasonable is an obligation not to assume the worst, and not to jump to conclusions." Farris v. Port Clinton Sch. Dist., 2006-Ohio-1864, ¶64. Moreover, a lateral ‘transfer without a change in benefits, salary, title, or work hours is usually not an adverse employment action. Policastro v. Northwest Airlines, Inc.,” 297 F.3d 535, 539 (6th Cir 2002).

The plaintiff accepted the job in part in order to obtain health insurance because his wife had been ill. Although the job regularly required him to travel, he could often check on his wife during his lunch break. After a customer (who had long-standing conflicts with the plaintiff) complained and threatened to move his business if the plaintiff continued to work there, the employer transferred the plaintiff to the same job 15 miles away. The plaintiff rejected the transfer. After filing suit, the plaintiff claimed that the transfer was an adverse job action which forced him to resign because (1) there had not been a job previously available at the new location (i.e., it was a “ghost job” which had been created for him as a pretext), (2) the offered job was not comparable, and (3) his was no longer the decision-maker regarding his employment.

As noted by the court, an adverse employment action generally “occurs when it results in a material change in wage or salary, a less distinguished title, a material loss in benefits, significantly diminished material responsibilities, or other indices that might be unique to the particular situation. Hollins v. Atlantic Co., 188 F.3d 652, 662 (6th Cir. 1999). A significant increase in the employee's commute may be a factor in whether a transfer is an adverse employment action. Keeton, 429 F.3d at 264-65 . . . . In determining whether the transfer is an adverse employment action, courts generally employ an objective test. See Mauzy, 75 Ohio St.3d at 588-89; Policastro, 297 F.3d at 539, citing Kocsis v. Multi-Care Mgmt., Inc., 97 F.3d 876, 886 (6th Cir. 1996). An employee's subjective belief that one position is more desirable is irrelevant to whether the transfer is an adverse employment action. E.g., Policastro, 297 F.3d at 539; Tessmer v. Nationwide Life Ins. Co.,” Franklin App. No. 98AP-1278 (9/30/99).
The court rejected the plaintiff’s argument that the transferred job was not comparable. Although the plaintiff complained about the employee turnover rate at the new location, the seasonal downturns in working hours, and the new manager’s temper, the plaintiff “assumed that he would be fired from” the new location. The plaintiff “cannot base a constructive discharge claim based on an unsubstantiated assumption that his worst fears would come true. ‘Part of an employee's obligation to be reasonable is an obligation not to assume the worst, and not to jump to conclusions.’" Farris v. Port Clinton Sch. Dist., 2006-Ohio-1864, ¶64.

The fact that the plaintiff” would no longer be able to visit his wife during lunchtime does not render the position at [the new location] incomparable to the [former] position. Although [the plaintiff] benefitted from living close to the [former] facility by being able to check on his wife at lunchtime, that benefit was a subjective reason for [the plaintiff] preferring the [former] position. However, being able to go home at lunchtime was not a benefit of employment offered by Landmark to its employees. [The plaintiff] was not promised that he could go home at lunchtime, and he indicated that he did not go home every day because he was not always in the area during lunchtime. His position with Landmark . . . . . required him to travel to customers' properties throughout the day. Although [the plaintiff] would have preferred to work at the facility within a mile of his home, the addition of a ten to fifteen mile commute did not constitute a material change in the terms of his employment.”

Because there was no evidence that the plaintiff had been constructively discharged, he also could not prevail on his claim that his "discharge" had violated public policy.

Insomniacs can read the full decision at http://www.sconet.state.oh.us/rod/docs/pdf/2/2008/2008-ohio-1610.pdf.

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.

Ohio Appeals Court: Controller’s Objection to Corporate Misfeasance and Breach of Fiduciary Duty Cannot Support Wrongful Discharge Claim.

Late last month, the Holmes County Court of Appeals reversed a jury verdict in favor of a discharged controller on the grounds that the trial court should have entered summary judgment in favor of the defendant employer on the claim of wrongful discharge in violation of public policy. Schwenke v. Wayne-Dalton Corp., 2008-Ohio-1412 (3/27/08). In that case, the plaintiff controller alleged that he had been terminated for complaining about corporate officer misfeasance and misappropriation. However, the court determined that the plaintiff had failed to identify a specific source of public policy which was violated by the alleged corporate misfeasance and misappropriation. The defendants had claimed that the plaintiff had been fired because of “his inability to work with his direct supervisor and with senior management, his negative and arrogant attitude and "the on-going degenerative nature of [his] work performance.” Accordingly, the judgment of $72,000 and $148,000 in attorneys fee was reversed.

The plaintiff had alleged that the CFO and president of the privately-held corporation had engaged in misappropriation and malfeasance in engaging in the following actions for over three years:
* The “corporate office would `issue' credits for expenses incurred in Europe (France was facility location). The driver of the amount of the credit would be based on the financial deficit reflected on Europe's financials that the executives were looking to conceal. Credits would be issued against the Mt. Hope manufacturing facility and possibly other facilities;”
* The American “facilities would as a matter of business sell products to [the company]. As such the US had an ongoing receivable for which Europe would have to issue payments to the US. These `credits' would be used to offset legitimate receivables. The credit would reduce [corporate] expenses, and the offset to A/R would allow for no exchange of cash for this specific issue, [r]esulting in overstated [corporate] Europe profits; [r]esulting in fictitious [corporate] cash flow; [r]esulting a stronger appearing [corporate] Europe balance sheet; [f]avorable credit terms from vendors for the [corporate] entity; and [r]esulting in overstated costs in the USA and if the Credit was treated as a return, an understatement of revenues (same P & L effect but in different areas of the income state).”
* “[C]orporate accounting personnel, under the direction of the executives, would write-up manual journal entries to decrease costs in Europe and increase costs in the US. On occasion there would be no credits issued, just a transfer of costs on paper that would inflate US costs while masking costs and losses in Europe.”
* The defendant corporate officers “misused company assets for personal gain. Specifically, [one] defendant . . . received massive personal loans (to fund personal assets such as homes) from [the corporation] at interest rates significantly below the Fair Market Value (i.e. 2.5%) while earning large interest rates on their deferred compensation (i.e. 13%-17%). This occurred over a 3 1/2 year period between January 2001 and July 2004. The inappropriate moving of costs across [corporate] facilities allowed for inaccurate bonus accruals, rewards, and deferred compensation accruals for [the individual corporate officer defendants]. Numerous employee (management, supervisory and non-supervisory) bonus awards (and sometimes departments) were subjectively lowered, with no basis, to decrease lower ranking employees' annual bonus payouts allowing for inflated executive . . . . bonus and deferred compensation awards;”
* The corporate individual defendants “were engaged in inappropriate accounting procedures and misappropriation of corporate assets. Specifically, defendants implemented the `3-B Plan', which allowed major shareholder . . . . to receive undisclosed commissions in the amount of millions of dollars by selling products in Europe below costs (i.e. `dumping').”

The plaintiff controller denied that his claims were governed by Ohio’s Whistleblower statute, and thus, he had not been required to prove that he had put his concerns in writing to his supervisors or complained to a government agency. Rather, he claimed that his protests were protected as a matter of public policy and that his retaliatory discharge violated public policy.

In order to prevail on such a claim, a plaintiff must demonstrate: "1. That clear public policy existed and was manifested in a state or federal constitution, statute or administrative regulation, or in the common law (the clarity element); 2. That dismissing employees under circumstances like those involved in the plaintiff's dismissal would jeopardize the public policy (the jeopardy element); 3. The plaintiff's dismissal was motivated by conduct related to the public policy (the causation element); and 4. The employer lacked overriding legitimate business justification for the dismissal (the overriding justification element)."

The court determined that, notwithstanding the detailed allegations, the plaintiff controller could not prevail because he had failed to satisfy the clarity element by identifying a public policy existed. “Nor did [the controller] cite or present the trial court with any legal authority in support of his argument that his termination violated public policy. [The controller] merely alleged that he questioned [the individual corporate officer defendants] about alleged inappropriate accounting practices and misappropriations of corporate assets and was fired and that his firing violated public policy. [The controller], . . . merely alleged that his firing violated public policy. In short, . . . [the controller] never offered any legal authority suggesting that [appellant's] conduct and alleged reaction from or by his employer forms a basis for a "public policy' exception to Ohio's at will relationship."

While the concurring judge was willing to consider that fiduciary duties may have been violated, the judge was unwilling to believe that breach of fiduciary duty constitutes a source of public policy sufficient to override the employment at will doctrine.

Insomniacs can read the full decision at http://www.sconet.state.oh.us/rod/docs/pdf/5/2008/2008-ohio-1412.pdf.

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.