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The Missouri Supreme Court Adopts the Public-Policy Exception to the At-Will Employment Doctrine in Wrongful Discharge Claims

Posted on December 13th, 2010

Missouri is an at-will employment state, meaning an employer can discharge an employee for any reason or no reason at all and the discharged employee has no cause of action against the employer for wrongful termination.  Previously, the Missouri appellate courts have recognized a “narrow” public-policy exception to this doctrine; however, the Supreme Court has never explicitly adopted the exception until now. 

On February 9, 2010, the Missouri Supreme Court issued a trilogy of opinions involving the public-policy exception to the at-will employment doctrine.

In Fleshner v. Pepose Vision Institute, 304 S.W.3d 81 (2010), the Court held an at-will employee can sue her employer on a wrongful termination claim alleging the employer fired her because of either her refusal to violate the law or her whistle-blowing.  Fleshner, an at-will employee of PVI, received a call at home from a Department of Labor investigator who was inquiring into the hours worked by PVI employees.  She reported the conversation to her supervisor and was subsequently terminated.  Fleshner filed an action asserting wrongful termination in violation of public policy.  A jury awarded her $30,000 in actual damages and $95,000 in punitive damages.

Recognizing a cause of action for wrongful termination under the public-policy exception, the Court defined the exception as follows: An at-will employee may not be terminated: (1) for refusing to violate the law or any well-established and clear mandate of public policy as expressed in the constitution, statutes, regulations promulgated pursuant to statute, or rules created by a governmental body, or (2) for reporting wrong doing or violations of law to superiors or public authorities.  If an employer terminates an employee for either reason, the employee has a cause of action in tort for wrongful discharge based on the public-policy exception. 

The Court also addressed which standard of causation was appropriate; the “exclusive cause” standard, the “because of” standard, or the “contributing factor” standard.  PVI argued that the trial court erred in instructing the jury that it had to find that PVI terminated Fleshner “because she communicated with the United States Department of Labor.”   PVI argued the appropriate causal standard was the more strict “exclusive cause” standard.  The Court concluded, however, that the exclusive causation standard is inconsistent with the proximate cause standard typically employed in tort cases.

While prior cases indicated that “exclusive causation” is the appropriate standard for cases asserting retaliation in the workers’ compensation statutory context, the Court determined that “exclusive causation” is not the proper standard for wrongful discharge based on the public-policy exception.  Under this standard, an employer could assert that while the employee’s reporting or refusal played a part in the decision to terminate, the employee was fired for another reason.  Furthermore, the Court found that such a standard would result in an exception that fails to accomplish its task of protecting employees who refuse to violate the law or public policy.    

Ultimately, the Missouri Supreme Court adopted the “contributing factor” standard noting that recent employment discharge cases articulate this causation standard – whether an illegitimate purpose was a “contributing factor” in the employment decision – which was adopted in 2005 through MAI 31.24.  Thus, under this standard, an employee need only show that a “whistle-blowing” activity played a role in the employer’s termination decision.

The Court also held that Fleshner’s claim was not preempted by the Fair Labor Standards Act (FLSA) because the remedies under the FLSA do not comprehend and envelop common law wrongful discharge remedies, thereby allowing for punitive damages claims. 

Finally, the Court noted that Missouri public policy is not determined by personal opinions but must be found in a constitutional provision, a statute, or regulation promulgated pursuant to a statute created by a governmental body.  The employee does not need to rely on a “direct” violation; instead, the public policy must be “reflected by” one of the above. Additionally, the reported violation does not need to affect the employee personally nor does the law need to prohibit or penalize retaliation against those reporting it.  Here, public policy was reflected by the minimum wage law that employees should be encouraged to communicate with labor investigators about their employers’ overtime compensation without fear of retaliation. 

In Keveney v. Missouri Military Academy, 304 S.W.3d 98 (2010), the Court held that a wrongful discharge in violation of public policy claim applies equally to at-will employees and contract employees.  Previously, the Missouri Court of Appeals had refused to extend such a claim to employees who have the benefit of a written employment contract. 

In this case, Keveney worked at MMA as a teacher pursuant to a written employment contract providing that the academy could terminate Keveney for cause.  Keveney, terminated in October of 2003, filed an action alleging wrongful discharge and breach of contract seeking punitive damages and damages for emotional distress.  Specifically, he alleged his termination resulted from his insistence that his superiors report to DFS evidence that a student was being abused.  He alleged his superiors refused to report the student’s bruises and was told his job would be jeopardized if he reported to DFS.  Keveney was discharged the same day he reported the suspected abuse to his superiors.  The circuit court dismissed the wrongful discharge claim but the jury awarded Keveney $13,300 in damages for breach of contract. 

To date, Missouri courts have declined to extend the wrongful discharge cause of action to contract employees; however, there are at least three reasons for allowing contract employees to pursue an action under this exception.  First, limiting this cause of action to at-will employees implicitly rests on the incorrect assumption that the constitutional, statutory, or regulatory interests at issue can be limited through private contracts.  Second, when an employer’s actions violate not only the employment contract but also clear and substantial public policy, the employer is liable for two breaches, one in contract and one in tort; the employer must bear the consequences of its actions.  Third, allowing contract employees to pursue a claim for wrongful discharge places them on the “same footing as at-will employees while also encouraging employers to refrain from coercing employees into a dilemma of choosing between their livelihoods and reporting serious misconduct in the workplace”.  Thus, contract employees can now pursue a claim for wrongful discharge. 

In Margiotta v. Christian Hospital Northeast Northwest, 2010 Mo. Lexis 12 (2010), the Court held that employee’s acts did not constitute reporting violations of law or public policy to his superiors, commonly referred to as “whistle-blowing,” in that the reported acts did not entail “serious misconduct that constitutes a violation of the law and of well established and clearly mandated public policy.”

Margiotta, an at-will medical image technician, claimed he was fired for continuously reporting safety violations to administrators.  He based his claim upon a federal regulation which established, in general, that hospital patients have a right to receive medical care in a safe setting.   Reviewing the regulation, the Court found that it operates solely for the protection of the patient and does not grant protection to, or authorize any affirmative conduct by, an employee.  Moreover, the federal regulation does not prohibit the acts which Margiotta reported.  The Court found the vague regulation relied upon was insufficient to support a claim for wrongful discharge in violation of public policy, because such a claim must be based upon a constitution, statute, regulation or rule that specifically proscribes the conduct alleged by the employee to have been violated.  The Court will not force a legal duty on parties who have agreed to an at-will relationship or a contractual employment relationship absent a “sufficiently definite” constitutional provision, statute, regulation based on statute or rule promulgated by a governmental body that clearly gives notice to the parties of its requirements.  Thus, the hospital was entitled to summary judgment as a matter of law.   

What do these cases mean?

Through these cases, the Missouri Supreme Court has strengthened its protections for employees who expose wrongdoing by their employers or refuse to violate the law.  There is no doubt that Missouri common law recognizes public policy wrongful discharge claims for all employees, both at-will and contractual.  Consequently, a contract employee may now battle on two fronts – breach of contract and common law wrongful discharge, with the latter now allowing claims for punitive damages.  The Court has also lessened the burden of proof by adopting the “contributing factor” standard.  Clearly, the lower standard favors terminated employees, who must now merely establish that their reporting of a violation of law or refusal to violate the law or public policy was but one reason or “contributing factor” for their discharge, rather than the “exclusive cause”. 

On the other hand, the Missouri Supreme Court has adopted a narrow definition of what constitutes a violation of public policy.  An employee claiming wrongful discharge must now plead and prove (1) that he reported to his superiors or public authority serious misconduct by the employer that (2) constituted a violation of the law and of well established and clearly mandated public policy. 

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