In July of 2015, the American Law Institute published the first Restatement of Employment Law. The Restatementprovides a new lens through which employers, employees, and courts can evaluate the common law duties affecting the employment relationship.
The termination of the employment relationship is the event that generates the most employment law litigation, and chapter 5 of the Restatement offers a framework for evaluating claims that a discharge is actionable because it violates public policy. So long as the employee acts in a reasonable manner, section 5.02 of the Restatement provides that an employer may be subject to tort liability for wrongful discharge in violation of public policy if the employee
- refuses to commit an act that the employee reasonably and in good faith believes violates a law or other well-established public policy, such as a professional or occupational code of conduct protective of the public interest;
- performs a public duty or obligation that the employee reasonably and in good faith believes the law imposes;
- files a charge or claims a benefit in good faith under an employment statute or law, whether or not the charge is meritorious;
- refuses to waive a nonnegotiable or nonwaivable right when the employer’s insistence on the waiver as a condition of employment, or the court’s enforcement of the waiver, would violate well-established public policy;
- reports or inquires about conduct that the employee reasonably and in good faith believes violates a law or an established principle of a professional or occupational code of conduct protective of the public interest; or
- engages in other activity directly furthering a well-established public policy.
To date, no reported judicial decisions have applied this section or the companion sections of chapter 5, which define the tort generally (section 5.01) and identify sources of public policy (section 5.03). However, going forward, employers should anticipate that employees claiming to be whistleblowers, and employees discharged for refusing to adhere to directives of supervisors or managers, or for engaging in conduct contrary to company policy, will allege with increasing frequency that the terminations of their employment are actionable under this framework—either in addition to, or in lieu of, pursuing claims that the actual or alleged constructive discharge violated other federal or state statutory provisions.
Although an employee must prove that he or she acted “reasonably” and “in good faith” in order to prevail, the question of whether the underlying conduct meets the criteria set forth in section 5.02 may be a fact-intensive inquiry that is not readily decided as a matter of law at the summary judgment stage. Because an employee who prevails on a tort claim can recover the same categories of damages available under the familiar statutory frameworks—including past and future economic loss, noneconomic loss, reasonably foreseeable consequential damages, the expenses of reasonable efforts to mitigate damages and, under certain circumstances, punitive damages—employers and the human resource professionals who support them would be well-served by reviewing existing practices to ensure that they include a system of checks and balances that provides an opportunity for objective review of all relevant facts before an employee is discharged.
Similarly, those on the front line of making such decisions would be well-advised to evaluate whether employee conduct, even if inconsistent with company directives, might otherwise be reasonably interpreted to further some well-established public policy, or a well-established principle of a professional or occupational code of conduct intended to protect the public interest.