On January 2, 2014, the Minnesota Supreme Court issued its opinion in Dukowitz v. Hannon Security Services, holding that termination due to an employee’s application for unemployment benefits does not give rise to a common law wrongful discharge claim. The decision is helpful to employers because it confirms that discharge in violation of public policy is a very narrow exception to Minnesota’s employment at-will rule, and because the court expressly declined to create an unemployment compensation retaliation cause of action.

The plaintiff in Dukowitz worked as a security officer. The defendant-employer informed her that after her temporary position ended, the employer would not have hours available for her in the following months. The employee claimed that she told her supervisor that she would need to apply for unemployment benefits and, in response, her supervisor made a comment about terminating her employment. When her hours were reduced, the plaintiff applied for unemployment benefits. Approximately three months later, she was terminated. She brought a claim for wrongful discharge, alleging that her employer violated public policy when it terminated her in retaliation for her application for unemployment benefits. The Minnesota District Court granted summary judgment for the employer on the ground that common law wrongful discharge claims are limited to circumstances in which an employee is fired for refusing to violate the law, and the Minnesota Court of Appeals affirmed.

On appeal, the Minnesota Supreme Court first reiterated that the employment relationship in Minnesota is at-will. In Phipps v. Clark Oil & Refining Corp., 408 N.W.2d 569 (Minn. 1987), the court recognized a narrow public policy exception applicable when an employee is discharged for refusing to participate in an activity that the employee, in good faith, believes to be illegal. In Dukowitz, the court concluded that the employee’s conduct did not fall under the Phipps exception.

Second, the court declined to extend that rule or recognize a new cause of action for terminations resulting from an employee’s application for unemployment benefits. The court reasoned that the legislature is primarily responsible for establishing new causes of action, and that the legislature had already established statutory administrative and criminal penalties to address an employer’s conduct that obstructs or impedes applications for unemployment benefits. In addition, the court explained that a broader rule—under which an employer is liable whenever a court can identify a clear statement of public policy that the employer violated by discharging an employee—would be difficult to define and limit.

Notably, newly appointed Justice Wright authored a dissent, joined by Justice Page. The dissenting justices contended that the public policy exception should be expanded, noting that Phipps could be interpreted more broadly and that Minnesota’s narrow view of the public policy exception is inconsistent with the majority of other states. The dissent reasoned that Minnesota’s unemployment statutes set forth a clear statement of public policy in favor of making benefits available to underemployed and unemployed workers, and that recognizing the plaintiff’s claim would foster additional deterrence.

Takeaway Points

This ruling confirms that, under Minnesota common law, employees may bring a claim for discharge in violation of public policy only in narrow circumstances. Employers should take care, however, not to take adverse action against employees for conduct that is protected, such as if the employee refuses to participate in conduct the employee believes is illegal, makes a good-faith report of a violation or suspected violation of the law, or seeks workers’ compensation benefits. Employment retaliation claims have been on the rise, and this trend is likely to continue.