Wrongful Termination Claims in Virginia

Wrongful Termination Claims Based on State Law In At-Will Employment States

W. Barry Montgomery

KALBAUGH, PFUND & MESSERSMITH

901 Moorefield Park Drive, Suite 200

Richmond, Virginia 23236

Tel:    (804) 320-6300

Fax:   (804) 320-6312

E-mail:  barry.montgomery@kpmlaw.com

Over the last decade, employers have noticed a dramatic increase in “retaliation” based wrongful termination cases. While many such cases are based on specific language contained in the federal anti-discrimination statutes, there has also been a rise in wrongful retaliation termination actions based on various state laws. Plaintiffs can use these common law causes of action to get around their state’s “employment at will” doctrine and keep their cases out of federal court and in the typically more favorable state courts.  There seems to be a general consensus among the various states that even an at-will employee may not be subjected to adverse employment action in violation of a state’s “public policy.”  The rationale is that an employer may not undermine the state’s expressed public policy by threatening adverse employment action against its employees. In such cases, the employee or former employee will typically allege that he was fired or demoted as a direct result of his decision to exercise a protected right or because he refused to engage in criminal conduct. This article will examine those wrongful termination cases based on state common law theories and some of the practical implications of litigating these cases in state courts.

I.   Wrongful Termination That Violates “Public Policy”

A. Firing An Employee For His Exercise of a Right Protected By Statute

Like many states, Virginia is an “at will” employment state, meaning an employee without a specific contract for employment generally has no recourse under Virginia common law for wrongful termination. However, even in “at will” employment states, there are exceptions to the general rule. For example, In Virginia, an at will employee can sue for wrongful termination if he can prove that he was fired in retaliation for asserting his rights that are protected by a valid state law or policy.  In the case of Bowman v. State Bank of Keysville, 229 Va. 534, 331 S.E.2d 797 (1985), a  corporation had discharged an employee whom was also a shareholder because he refused to vote in accordance with the wishes of the corporation's board of directors. The corporation's coercion violated the Virginia public policy underlying a statute granting every shareholder the right to cast one vote for each share held. The Supreme Court decided that an employer may not lawfully use the threat of discharge of an at-will employee as a device to control the otherwise unfettered discretion of a shareholder to vote freely his or her stock in the corporation—in violation of established public policy. Similar causes of action for wrongful discharge are recognized in states across the country that adhere to the employment at will doctrine. [1]

 The wrongful discharge cause of action based on retaliation was recently reaffirmed by a federal court in Virginia in September 2012.  The federal court upheld an “at will” salaried employee’s state common law claim of wrongful retaliatory discharge. See Lester v. TMG, Inc., U.S District Court, Eastern District of Virginia, No.: 2:12cv421 (September 13, 2012).  Lester argued that he was fired after he sent e-mails to his supervisors protesting the failure of his employer to pay certain wages.  The court noted that Virginia’s “Payment of Wages” law established a public policy that allows and encourages all employees to challenge the employers’ determination of wages. The federal court held that if the employee could prove that he was terminated in direct retaliation for challenging his employers determination of wages, then he could assert a wrongful termination claim despite his “at will” status.    Simply put, the employer could not terminate Lester based on his  decision  to exercise his right conferred by statute to protest his employer’s determination of wages.  See also Katz v. Enterprise Solutions, Inc., 2005 U.S. Dist. LEXIS 37077 (E.D. Va. 2005)

It is worth noting that this exception to this general rule pursuant to the Bowman case is a narrow one. It will only be applied in circumstances where an employee can show that he was fired or otherwise treated adversely in direct retaliation for exercising a right protected by a statute meant to protect public policy. For example, if a statute requires a sheriff’s deputy or teacher to report the illegal conduct of his supervisor the sheriff’s deputy or teacher can not be terminated in retaliation for performing his legal duty pursuant to the applicable statute.  Moreover the employee is not required to prove that the employer’s improper motive was the sole factor upon which the employer basid its decision, only that is was a motivating factor.

B.    Firing an Employee Whom Refuses to Engage in Criminal Conduct

Just as many states will allow a lawsuit based on the termination of an employee for exercising a protected right, they will also allow an action for wrongful termination if the employee can prove she was termination in retaliation for refusing to engage in criminal conduct.[2]  Virginia recognized such a cause of action in the case of Mitchem v. Counts, 259 Va. 179, 190, 523 S.E.2d 246, 252 (2000). In Mitchem, the plaintiff  alleged that her former employer had wrongfully discharged her from her after she refused to engage in a sexual relationship with him. Plaintiff alleged that because she steadfastly refused to enter into a sexual relationship with her employer he retaliated in several ways and ultimately fired her.

The plaintiff in Mitchem claimed that the Virginia’s public policy was violated when a female employee was forced to either consent to the commission of a crime against her person, or engage in a conspiracy to commit a crime, or both, in order to maintain her employment. Plaintiff cited several criminal statutes (Virginia Code §§ 18.2-57, -344, and -345) which criminalized fornication and lewd and lascivious conduct. Mitchem concluded that since refused to engage in the crimes of fornication and lewd conduct she was fired. The Court agreed and found that these criminal statutes were enacted for the protection of the general public, and that Mitchem was a member of that class of persons whom these statutes were designed to protect. Accordingly, she could maintain her lawsuit by alleging that she was fired for refusing to engage in criminal conduct.

II.     Specific State Level Statute’s Prohibiting Retaliatory Discharge

    Many states have statutes that contain express provisions prohibiting adverse employment actions. For example, most states have workers’ compensation laws that prohibit an employer from firing or demoting an employee "solely" because she filed or intended to file or testify in a workers' compensation claim. See Virginia Code § 65.2-308; Okla. Stat. Tit. 40 §403(B); Illinois Work Comp. Act. 820 ILCS 305/1; California Labor Code §132a.  Under most schemes, if an employee can show that he was fired in retaliation for filing a claim or because he intended to file a claim, the employer could be liable for back pay, front pay and even punitive damages and attorney’s fees. Similarly, most states maintain industrial safety laws to promote workplace safety. These laws typically contain provisions providing an employee the right to sue if he is fired in direct retaliation for reporting violations of the workplace safety acts.[3]

III.   Practical Implications of Common Law Wrongful Discharge and Retaliation Claims

These state common law claims can create headaches for employers and their insurance carriers for several reasons. Most states treat the above-referenced common law wrongful discharge claims as tort claims. As such, an employee can seek not only back pay but also damages for pain and suffering and even punitive damages. Such damage claims can lead to exposure of hundreds of thousands of dollars in damages even when the employee earned minimum wage.

Moreover, savvy plaintiff’s attorneys can take steps to add the individual supervisor or manager who made the decision to terminate as a defendant in the lawsuit in state court.  A recent case from the Virginia Supreme Court followed the lead of other state courts by holding that both the employer as well as the individual employee that terminated the plaintiff can now be held individually liable for the tort of wrongful discharge in violation of public policy. See Vanburen v. Grubb, 2012 Va. Lexis 194 (November 1, 2012)  In arriving at its decision, the Virginia Supreme Court reviewed the following cases from other states: (D.C.) Myers v. Alutiiq Int'l Solutions, LLC, 811 F.Supp.2d 261, 269 (D.D.C. 2011); (Arizona) Higgins v. Assmann Elecs., Inc., 217 Ariz. 289, 173 P.3d 453, 458 (Ariz. Ct. App. 2007); (Iowa) Jasper v. H. Nizam, Inc., 764 N.W.2d 751, 776 (Iowa 2009); (New Jersey)  Ballinger v. Delaware River Port Auth., 172 N.J. 586, 800 A.2d 97, 110 (N.J. 2002); (Pennsylvania) Kamensky v. Roemer Inc., 1 Pa. D. & C. 4th 497, 499 (Pa. 1988); and (West Virginia) Harless v. First Nat'l Bank in Fairmont, 169 W. Va. 673, 289 S.E.2d 692, 698, 699 (W. Va. 1982). These states will not shield the manager or supervisor from liability under the theory of agency but will allow joint and severally liability of the manager and the employer.

Imagine the headache of having to defend a wrongful discharge tort case in a state court where both the insured corporate entity and the individual manager are defendants. When the manager resides in the same state as the plaintiff (which will most often be the case) the defendants will most likely be unable to remove the case to the more favorable federal courts. Litigation in the state courts is more likely to proceed to a trial by jury where the outcome can be uncertain.  Moreover, a conflict of interest may arise between the individual manager and the employer thereby requiring separate counsel for each defendant. Both defendants might face punitive or exemplary damages which are not dischargeable in bankruptcy and sometimes not covered by their insurance policy.   

    Of course, the best policy is always prevention. Many plaintiffs in cases of wrongful retaliatory discharge rely on the timing of the discharge or other adverse action as a means to prove intent. The logic is that if the employee was fired immediately or soon after engaging in a certain protected act or refusing to engage in an act, then the termination must have been motivated by the employees protected conduct. This argument is even more effective if there is no prior record of poor performance or disciplinary issues contained in the employee’s human resources file.  Accordingly, supervisors should avoid immediately terminating an employee until they have consulted with their Human Resources or Legal Department to determine the best course of action. Also, employers should be sure to always document any performance issues or disciplinary actions taken against an employee. Such documentation can often be used a evidence to counter the plaintiff’s argument that his protected conduct was the motivating basis for the adverse employment action.