A divided Minnesota Supreme Court has reaffirmed longstanding precedent holding the presumption of the employee-employer relationship in Minnesota is “at-will.” Dukowitz v. Hannon Security Services, No. A11-1481 (Minn. Jan. 2, 2014). This means that either the employee or the employer can terminate the relationship with or without cause and with or without notice. The Court further held it will continue to make only narrow exceptions to the at-will rule, refusing to make such an exception for an employment termination following an employee’s application for unemployment benefits.
The plaintiff, Jane Kay Dukowitz, worked as a security officer for Hannon Security Services, initially working evening shifts. Hannon Security later offered her a daytime security officer position. The company informed her that the daytime position likely would not extend beyond the 2008 holiday season or would result in fewer than full-time hours after the holiday season. Knowing this, Dukowitz accepted the position.
After the holiday season, the daytime position ended with no other daytime position available for Dukowitz. Two days before the daytime position ending, Dukowitz applied for unemployment benefits. Prior to her last day on the daytime shift, Hannon Security terminated her employment for poor work performance, her unwillingness to work other shifts and a lack of business need.
Dukowitz subsequently initiated a lawsuit against her former employer claiming she was wrongfully discharged in retaliation for filing an unemployment compensation benefit claim.
The Minnesota State District Court dismissed her lawsuit, holding no cause of action existed in Minnesota law protecting an employee against unlawful retaliation for filing an unemployment benefit claim. The District Court also awarded the employer $1,361 in costs and disbursements for having to defend itself, rejecting Dukowitz’s claim that her indigent status should preclude such an award against her. The Minnesota Court of Appeals affirmed the District Court’s decision.
Dukowitz appealed and the Minnesota Supreme Court agreed to hear the case on the following issues: 1) whether Minnesota’s current public policy exception to the at-will doctrine extends to claims alleging retaliation for filing for unemployment compensation benefits; 2) if not, whether such a claim should be recognized under Minnesota common law; and 3) whether Dukowitz’s indigent status should preclude an award of costs and disbursements against her.
Supreme Court Decision
The Minnesota Supreme Court affirmed the lower court decisions. Citing clear precedent, the Court explained that Minnesota has been and continues to be an at-will employment state. The Court acknowledged that while it created an exception to the at-will employment doctrine (in Phipps v. Clark Oil, 408 N.W.2d 569 (1987)), the exception extended only to employees who were wrongfully discharged for “refusing to participate in an activity that the employee, in good faith, believes violates any state or federal law or rule or regulation adopted pursuant to law.” As Dukowitz had admitted, she was not asserting her employer asked her to engage in unlawful activity or that she refused to engage in such activity. Thus, the Court held the Phipps public-policy exception to the employment-at-will doctrine did not apply to Dukowitz.
The Court’s analysis did not end there. Dukowitz also argued that even if the Court did not find the Phipps exception was applicable, it should recognize a new common law cause of action for unlawful retaliation for filing a claim for unemployment benefits. Recognizing that the Minnesota Legislature is responsible for promulgating new laws, the Court declined to create a new common law cause of action. The Court reasoned that the Legislature enacted and created the unemployment compensation benefits system in Minnesota and that if the Legislature had wanted to create a retaliation cause of action within the system, it could have done so – it did not. Instead, the Legislature chose to create a criminal statute making it a crime to obstruct a person’s application for unemployment benefits. Because the Legislature considered and chose a different method for dealing with obstruction to the application or receipt of unemployment benefits, the Supreme Court determined it would not create a common law right to a retaliation claim.
Finally, the Court refused to bar the employer from obtaining a judgment for its costs and disbursements because of Dukowitz’s indigency. The Court found that both the Minnesota Statute Section 549.04 and the Minnesota Rule of Civil Procedure 54.04(a) make it mandatory that a party like the employer, which has incurred costs in defending itself, may be entitled to a judgment allowing it to recover those costs. The non-prevailing party’s indigency status does not eliminate a potential award for such reasonable costs and disbursements.
Justice Wilhemina Wright, joined by Justice Alan Page, dissented from the Court’s opinion. Justice Wright stated the Minnesota Supreme Court retained the right to tailor a new cause of action under the common law for retaliating against a person for filing a claim for unemployment benefits because the Legislature had been silent on the subject. She dissented based on the need to protect against such retaliation, opining that it was appropriate for the Minnesota Supreme Court to recognize such a cause of action. Justice Wright further noted that had the Court made the decision to do so, it would join the majority of states that recognize a civil cause of action for these types of retaliation claims.
Dukowitz reaffirms that the doctrine of “employment at-will” is alive and well in Minnesota. Employers may terminate an employee’s employment with or without notice, and with or without any reason, so long as the reason is lawful. Dukowitz also reaffirms that exceptions to the employment-at-will doctrine are to be construed narrowly and will not be casually expanded by the courts. In the wake of Dukowitz, Minnesota employers need to pay close attention to the Minnesota Legislature in the 2014 legislative session to see if it amends the unemployment statutes to create a civil retaliation claim, as many employment-related statutes provide for such claims.
Employees suing their employers, often after termination of employment, should take heed that their financial circumstances, including indigency that may have resulted from losing employment, may not relieve them from having to pay their employers’ reasonable defense costs and disbursements if the employee does not prevail.