On Thursday, a 4-3 majority of the Virginia Supreme Court held in VanBuren v. Grubb that individuals such as supervisors or managers could be sued as individuals and held personally liable for the common law tort of wrongful termination (also known as wrongful discharge) in addition to whatever corporate liability the employer may have.
As a practical matter, this gives plaintiffs and their lawyers additional leverage when bringing suits that contain a cause of action for wrongful termination in Virginia by being able to name the former employee’s boss as a co-defendant. From the boss's perspective, this decision means that you, personally, could be named as a defendant and ultimately forced to satisfy a judgment for improperly firing an employee from your own pockets -- not just your company's. It also means that employers and their executives who operate in Virginia need to review their D&O insurance coverage with this potential exposure in mind.
In short: whether you're an executive or an employer, you need to know about this case and its implications on the employment relationship.
First, some basics: Wrongful termination is a common law tort that provides a narrow exception to the general principle that, unless the employment contract specifies otherwise, employment is “at will,” and an employer is typically free to fire an employee for “good reason, no reason, or bad reason.” Culler v. Blue Ridge Electric Cooperative, Inc., 422 S.E.2d 91 (S.C. 1992).
This is still the baseline rule in every state in the U.S., although there are now major exceptions that protect employees from being fired in certain circumstances. Obviously, the major change to the historical “at will” doctrine has been the adoption of federal and state anti-discrimination statutes that protect employees from being terminated on the basis of race, color, religion, sex, or national origin, such as Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq. We have, of course, discussed these sorts of cases at length here at Suits By Suits.
In addition to statutory exceptions to the “at will” doctrine, most courts have adopted judicial exceptions such as incorporating by reference the terms of an employee handbook into the employment contract when that handbook specifies that an employee will only be terminated for cause or under certain conditions. See, e.g., Weiner v. McGraw-Hill, Inc., 57 N.Y.2d 458 (1982).
Another such judicial exception is today’s topic: the common law tort of wrongful termination, which permits an employee who has been terminated without cause (i.e., for “no reason” or a “bad reason”) to sue his or her employer for reinstatement, back pay, and (in some cases) punitive damages if the termination would violate “established public policy.” Typically, these public policy exceptions are very narrow, involving either (a) the retaliatory discharge of an employee who reported an employer’s illegal conduct (the “whistle-blower defense”) or (b) an employee who was terminated for refusing to engage in illegal conduct.
These exceptions have led some overly exuberant commentators to declare the “at will” doctrine either dying or dead; we think those sorts of grand pronouncements are somewhat misplaced. For an in-depth discussion, see my colleague Bill Schreiner’s excellent two-part discussion of the case of Angela McCaskill here and here; the one-line take-away is that an employer probably does have the right to fire an employee simply because he or she disagrees with the employee’s political views expressed outside the workplace. That looks like the core of “at will” employment to me.
And VanBuren v. Grubb does not expand the otherwise narrow application of the tort of wrongful termination; in that case, the employee (VanBuren) was allegedly fired because she refused to have sex with her (married) supervisor. In addition to her statutory Title VII sexual harassment claims, VanBuren alleged wrongful termination because she refused to engage in criminal conduct, including adultery and “open and gross lewdness and lasciviousness," which is a core wrongful termination allegation.
Nevertheless, VanBuren v. Grubb is, to paraphrase Vice President Biden, a big deal, because the Virginia Supreme Court, on a certified question from the Fourth Circuit Court of Appeals, held for the first time that such claims could be brought not only against the employer in a corporate capacity, but against the individual actor who participated in the allegedly wrongful firing, such as a supervisor or manager.
Other jurisdictions are split on this question. Some, such as Iowa, New Jersey, and West Virginia, have permitted wrongful termination suits to be brought against individual supervisors on the theory that “individuals are liable for their own torts, even as agents acting on behalf of their employers.” Myers v. Alutiiq Int’l Solutions, LLC, 811 F.Supp.2d 261, 268 (D.D.C. 2011) (discussing cases and predicting that D.C. courts would permit individual liability for wrongful termination).
Other states, including California (Miklosy v. Regents of the University of California, 188 P.2d 629, 44 Cal.4th 876, 900-02 (Cal. 2008)), Illinois (Buckner v. Atlantic Plant Maintenance Co., 694 N.E.2d 565, 569-70 (Ill. 1998)), Kansas (Rebarchek v. Farmers Cooperative Elevator & Mercantile Ass’n, 35 P.3d 892, 903-04 (Kansas 2001), and Oregon (Schram v. Albertson’s, Inc., 934 P.2d 483, 490-91 (Ore. 1997)) have rejected efforts to expand the scope of wrongful termination suits to include supervisors in their individual capacities, relying largely on the principle that the duty that gives rise to the tort stems from the employment relationship itself and thus does not exist among employees, even where one employee is a supervisor. Accordingly, these cases hold that it is not possible for an agent to violate a duty in her personal capacity as a supervisor, because she has no such duty as an individual.
Last week, Virginia aligned itself with that former group of states, something that shifts the balance between employers and employees in favor of employees. Both sides need to be aware of this development.