The employment-at-will doctrine allows Michigan employers to terminate an employee at any time, for any reason, or for no reason. Nonetheless, the Michigan Supreme Court has declared that "some grounds for discharging an employee are so contrary to public policy as to be actionable." This is known as the Public Policy Exception to Employment At-Will. While there is no bright-line rule as to what this means, a few generally recognized exceptions have developed over time.
One exception is found in Michigan's Whistleblower Protection Act ("WPA"). The WPA has been the subject of much litigation, including questions as to whether certain claims are preempted by the WPA. Common law claims of discharge in violation of public policy are preempted by the WPA, which is important because claims brought under the WPA are subject to a 90-day statute of limitations.
Another oft-litigated WPA issue is the scope of “protected activity.” Until recently the courts had not addressed whether the report of a future violation of law constitutes protected activity.
THE EDEL-HARRELSON DECISION
On February 1, 2016, the Michigan Supreme Court decided Pace v Edel-Harrelson, which significantly alters the protections of the WPA. In Pace the plaintiff sued her former employer for wrongful termination in violation of the WPA. Plaintiff claimed she was terminated because she reported that a co-worker planned to use state grant money unlawfully, to purchase the co-worker's daughter a stove. The WPA provides, in relevant part, that “An employer shall not discharge, threaten, or otherwise discriminate against an employee […] because the employee, […], reports or is about to report, […], a violation or a suspected violation of a law […].”
The Court ruled that the WPA did not apply in Pace. The Court explained that "'a violation or suspected violation' refers to an existing violation" not a future violation that may or may not occur. The Court therefore held that "because plaintiff reported a suspected future violation of a law, not a suspected existing violation, plaintiff did not engage in "protected activity." The Court expounded, explaining that even where an employee believes at the time of reporting that a violation had already occurred, if the employee does not express that belief and merely reports a possible future violation, the employee has not engaged in conduct protected by the WPA.
THE PUBLIC POLICY EXCEPTION
This result seems to require an employee to wait until a violation of law is currently or has already taken place before being secure in his or her ability to report the violation with protection from any retaliation. Further, this appears to be a win for employers. Neither, however, might be true. Because the Court held that the WPA does not apply, plaintiff's claim of discharge in violation of public policy is no longer preempted. As such, the Court of Appeals, on remand, will determine the merits of the public policy claim. If plaintiff's discharge is ultimately found to have been in violation of public policy, this case's narrowing of the protections of the WPA will be essentially nullified, and employees' reports of future violations of law will be subject to a longer statute of limitations than prescribed in the WPA.
Pace significantly narrows the protections of the WPA, for now. Pace has potentially been placed in “Public Policy Limbo,” and the courts could soon rule that termination of an employee for reporting future or planned violations of law is against public policy, essentially abrogating the Pace holding, and providing more protection for employees who report violations before they occur, in the form of a longer statute of limitations. Perhaps, however, the Supreme Court's decision will garner the attention of the Legislature, and the Legislature will take action to clarify whether the WPA protects reports of future violations of law.