WRONGFUL TERMINATION – The Public Policy Exception

It’s pretty well-known that Kentucky is a “terminable-at-will” state. Kentucky has no general law that requires employers to have a reason, good or bad, in order to terminate their employees. According to the Kentucky Supreme Court, an “employer may discharge his at-will employee for good cause, no cause, or for a cause that some might view as morally indefensible.”  Firestone Textile Co. Div. v. Meadows, 666 S.W.2d 730, 731 (Ky. 1984).

Despite this general rule, there are a number of situations in which employers are prohibited from firing workers. Termination because of discriminatory reasons, whether due to race, gender, sex, age, or disability, is an unlawful practice. There are also prohibitions against firing employees for filing workers’ compensation claims, or for reporting or filing complaints about unlawful activity. All of the exceptions to the “at-will” doctrine listed above are based on statutes that specifically prohibit termination under these circumstances. There is, however, one exception to this doctrine that isn’t based on any specific statute. It is commonly known as the public policy exception.

What is “Public Policy?”

To fully understand the public policy exception, it is necessary to understand what is meant by the term “public policy.” The term public policy describes the underlying principles behind our system of laws. Laws are (usually) not created arbitrarily — there tends to be a reason for why that law is being put into place. When a new law is being created, it is usually in response to a need or desire expressed by the public. For instance, a law that prohibits companies from dumping waste into rivers or streams is created because there is an expressed need for the public to have access to clean drinking water. This need is the public policy behind the law.

This is best illustrated with an example. Take the case of Hill v. Kentucky Lottery Corp., 327 S.W.3d 412 (Ky. 2010), for instance. In Hill, the plaintiffs, a husband and wife, were employed by the Kentucky Lottery Corporation (“the KLC”). The plaintiffs took issue with what they perceived as the KLC’s discrimination against a disabled co-worker. When the co-worker was terminated, one of the plaintiffs, Mrs. Hill, was instructed to testify untruthfully at the co-worker’s unemployment hearing. The KLC wanted Mrs. Hill to state at the hearing that her co-worker was not disabled, despite her belief that he was. After Mrs. Hill refused to commit perjury, a criminal action, both she and Mr. Hill were harassed, intimidated, and ultimately terminated.

public-policy-exception

Mr. and Mrs. Hill filed a lawsuit against KLC for retaliation and wrongful discharge in violation of public policy, among other claims. The Hills argued that, although no specific Kentucky statute prohibits an employer for terminating an employee for refusing to commit perjury, to do so was a violation of public policy because it was asking an employee to commit a crime. The trial court agreed that this situation fit the bill for a wrongful discharge in violation of public policy claim, and the jury, in two separate trials, found in favor for the Hills, awarding them a substantial sum.

Do you see how public policy comes into play in this case? Not only is committing perjury a crime, but there exists a strong public policy in encouraging truthfulness and discouraging false testimony at legal proceedings. Why? Because society values the resolution of legal disputes based on truthful facts. It is an inherent property of justice. If an employer was allowed to fire an employee for refusing to lie at a hearing, it would fly in the face of this important public policy, and would additionally encourage breaking the law.

The Elements of a “Discharge in Violation of Public Policy” Claim

Because this cause of action is not based on statute, but is instead based on case law, Kentucky courts have parsed together a framework for this type of claim. In order to prove a wrongful discharge in violation of public policy claim, a plaintiff has to establish:

(1) That the discharge is contrary to fundamental and well-defined public policy as evidenced by existing law; and

(2) That the policy in question is evidenced by a constitutional or statutory provision.

These requirements simply underscore the necessity that, whatever the public policy being invoked by the plaintiff, it should be backed up by existing law.

The scenario in Hill is one that is most often found in these types of wrongful discharge cases: an employer pressuring an employee to do something illegal, then firing that employee when he or she refuses. And in fact, this is one of two scenarios in which the Kentucky Supreme Court specifically recognizes a cause of action for wrongful discharge in violation of public policy.

 In Grzyb v. Evans, 700 S.W.2d 399, 402 (Ky. 1985), the Court stated that two situations justify an action for discharge in violation of public policy where no specific prohibition against termination exists. The first is described above. The second involves an employer discharging an employee for exercising a “right conferred by a well-established legislative enactment.”

 A “right conferred” by legislation is, simply put, some action that you are legally allowed to perform based on a specific piece of legislation. For instance, most Kentucky workers are allowed to take a ten minute break for every four hours of work they perform under KRS § 337.365. This is a right provided to workers through this specific statute. If an employer were to discharge an employee for exercising this right, that employer may well be liable for wrongful discharge.