It
is important for the courts to recognize the public policy exception to at-will
employment because it prevents employers from firing employees for following
statutes and other rules. The Supreme
Court of Missouri first recognized a cause of action for wrongful discharge in
violation of public policy in 2010.[1] In Newsome,
the Supreme Court of Missouri expanded the public policy exception to at-will
employment.[2] The court upheld an employee’s claim against
a school district for wrongful discharge in violation of public policy when the
employee refused to alter the school district’s contract in violation of the
policy behind a statute.
I.
Facts and Holding
Cary Newsome
worked for the Kansas City School District (the District) as the purchasing
manager.[3] He was responsible for administering the
District’s purchasing and contracting in compliance with state law and the
District’s policies.[4] He sued the District for wrongful discharge
in violation of public policy.[5]
Two
separate incidents are the subject of the case.[6] First, in June of 2011, the District’s
Superintendent asked Newsome to change the purchase order so that Ron Epps, an
independent consultant, could receive payment for more visits than were specified
in the original contract.[7] Newsome refused to alter the contract because
he believed it was illegal to alter the District’s contract after the fact and
reported the incident to his supervisor.[8]
Later that
week, the District approved the purchase of three Ford Explorers, but the
dealership was only able to provide Escapes by the desired purchase date.[9] The District wanted to continue with the
purchase for substantially the same price even though the Escapes were less
expensive vehicles.[10] Newsome reported this to his supervisor
because he believed it violated state law and the District’s policies.[11] Newsome’s supervisor initially agreed but
later changed her mind.[12] When Newsome objected, his supervisor told
him that she “didn’t want to hear anything else about it” and that he “needed
to take care of it.”[13] Three days after the second incident, the District
told Newsome he could resign or be terminated.[14]
II. Legal
Background
Missouri adheres
to the at-will doctrine, meaning that an employer can discharge an employee for
any reason or no reason at all.[15] Wrongful discharge in violation of public
policy is an exception to the at-will employment doctrine.[16] The cause of action may arise when the
employee “refus[es] 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 . . . report[s] wrongdoing or violations of the law to superiors or
public authorities.”[17] The employee must also prove that the
employer discharged the employee, the employee’s refusal to violate public policy
or whistleblowing was a contributing factor to the discharge, and the employee
sustained damages.[18]
In 2010, the
Supreme Court of Missouri first recognized the public policy exception to
at-will employment.[19]
That year, the Supreme Court of Missouri
decided three cases regarding whether the employee was discharged for following
a clearly mandated public policy.[20] The first two cases favored employees. In Fleshner
v. Repose Vision Institute, P.C., the court held that reporting unfair
labor practices to a federal investigator was covered by the policy of the Fair
Labor Standards Act even though the statute said that the employee must report
violations to state officials to prosecute a violation of the statute.[21] In Keveney
v. Missouri Military Academy, a teacher told school administrators that he
believed a child was suffering abuse because he saw bruises on the child and
was fired on the same day.[22] The court held that the employee stated a
claim for wrongful discharge for refusing to perform an illegal act because a
Missouri statute clearly designates teachers as mandatory reporters of
suspected child abuse.[23]
The third case
favored employers by holding that an employee cannot rely on vague statues. In Margiotta
v. Christian Hospital Northeast Northwest, the court held that the employee
did not have a claim for wrongful discharge under a whistleblower theory
because the statutes the employee relied on were too vague.[24] In Newsome,
the court had to determine if the statute the employee relied on was too vague
to support his claim for wrongful discharge in violation of public policy.
III. Instant
Decision
In Newsome, the court held that firing Newsome
for refusing to alter an independent contractor’s contract or telling his
supervisor that the District wanted to purchase Escapes rather than Explorers qualified
as wrongful discharge in violation of public policy.[25]
The
court held that the Escapes purchase order violated public policy.[26] Newsome argued that both the Epps payment
request and the Escapes purchase order were outside the terms of the District’s
contracts.[27] He argued that changing the terms of a
contract is prohibited by section 432.070 of the Missouri Revised Statues.[28] The statute says that a school district may
not make a contract unless it is within the scope of the district’s power and
it must be “made upon a consideration wholly to be performed or executed
subsequent to making the contract.”[29]
The court noted that the public policy
does not have to be explicitly stated in the statute, rather, it must be “reflected by a. . . statute. . . or a rule created by a governmental body.”[30]
Therefore, the court agreed with Newsome
because the court found that the statute’s purpose was to ensure that the terms
of the contract are “fixed when the contract is entered into.”[31]
The District
argued that the Escapes purchase order did not violate public policy because
the District only made a request to purchase the Escapes rather than actually
making the purchase.[32] The court held that reporting the District’s
intent to go through with the purchase was sufficient[33]
because the purpose of the public policy exception is to discourage employers from
firing employees who are acting for the benefit of society.[34] The court reasoned that holding otherwise
would be inconsistent with that purpose.[35]
The court
held that the Epps payment request also violated public policy.[36] The District again argued that only requests
for payment were made, not actual payments.[37] However, the court held that the requests
were sufficient because the action was “submitted under a refusal theory, not a
whistleblower theory.”[38] Therefore, the court held that the trial
court did not err in overruling the District’s motion for judgment
notwithstanding the verdict.[39]
IV. Comment
When courts
determine whether to uphold an employee’s claim for wrongful discharge in
violation of public policy, the court must balance the benefits of at-will
employment against protecting employees and the public. The
at-will doctrine favors employers.[40] It is important because it is “[r]ooted in
freedom of contract and private property principles, designed to yield
efficiencies across a broad range of industries.”[41] The public policy exception favors
employees. It is important because allowing
employers to fire employees for following statutes and other rules would be
contrary to the public good,[42]
and it would lead to a disincentive to follow the law.
While Missouri courts state that wrongful
discharge in violation of public policy is a narrow exception to the at-will
employment doctrine and is reserved for violations of clearly expressed public
policy, the courts have continued to expand the doctrine.[43]
Previous cases upheld employees’ claims
when a statute required or prohibited the action at issue.[44] For example, Fleshner took a small step away from looking exclusively at the
plain language of the statute when the court held that the public policy
protected the reporting of wrongdoing to both federal investigators and state
officials.[45] Newsome extended that principle by
granting protection to Newsome for refusing to violate the policy behind a statute
as interpreted by a prior case, even though the interpretation was further
removed from the plain language of the statute.[46] Additionally, Newsome, unlike Fleshner
and Keveny, held that an intent to
violate public policy was sufficient. Newsome gave employees greater
protection under the public policy exception.
While greater protection for employees
likely benefits the public as well as employees, it could be harmful to
employers. Employers may face greater
uncertainty about whether they can fire an employee because the public policy
must simply be reflected by a statute
or other rule; it does not have to be explicitly stated. Increased litigation and settlement costs may
result in small businesses closing or decreasing in size.[47] Overall, greater protection for employees who
blow the whistle or refuse to violate public policy likely benefits society
because it encourages both employers and employees to uphold laws that are
intended to protect the public; however, it is important to keep the costs in
mind as well.
- Ariel Kiefer
[4] Id.
[5] Id.
[6] Id.
[7] Id. This incident will be referred to as the “Epps
payment request.”
[8] Id.
[9] Id. This
incident will be referred to as the “Escapes purchase order.”
[10] Id.
[11] Id.
[12] Id.
[13] Id.
[14] Id. Newsome initially chose to resign and signed
a release of claims, but he timely revoked it and was terminated. Id.
[21] Id. at 93.
[22] Keveney v. Mo.
Military Acad., 304 S.W.3d 98, 101 (Mo. 2010) (en banc).
[23] Id. at
104.
[24] Margiotta v.
Christian Hosp. Ne. Nw., 315 S.W.3d 342, 348 (Mo. 2010) (en banc).
[25] Newsome, 2017 WL 2119347, at *4.
The court reviewed the evidence in response to the District’s motion for
judgment notwithstanding the verdict. Id. at *2.
[26] Id.
[27] Id.
[28] Id.; Mo. Rev. Stat. § 432.070 (West
2017).
[29] Mo. Rev. Stat. § 432.070.
[33] Id.
[35] Id.
[36] Id.
[37] Id.
[38] Id.
[39] Id.
[40] See Margiotta v. Christian Hosp. Ne.
Nw., 315 S.W.3d 342, 346 (Mo. 2010) (en banc).
[41] Id. (quoting
James A. Sonne, Firing Thoreau: Conscience and
At–Will Employment, 9 U. Pa. J. Lab. & Emp. L. 235
(2007)).
[43] Mark G. Jacobs, Donated
Organ Gives Employee a Second Chance. . . To Get To Trial, 22 Mo. Emp. L. Letter 1 (2012).
[44] See Part II, supra.
[47] Jay Goltz, Top 10 Reasons Small Businesses Fail, N.Y.Times, Jan. 5, 2011,
https://boss.blogs.nytimes.com/2011/01/05/top-10-reasons-small-businesses-fail/.
