Employers in Utah can fire their employees for any reason or no reason at all. There are limitations to this rule - you can't fire an employee, for example, based on race, gender, religion, or age, or if doing so would breach a contract. You also can't fire an employee if doing so would violate "public policy." This presentation walks through this third limitation on Utah's at-will doctrine, its scope and its pitfalls, and the ways to potentially avoid its traps.

1. 27th Annual Parsons Behle & Latimer EMPLOYMENT LAW SEMINAR
UTAH’S TORT OF WRONGFUL
TERMINATION IN VIOLATION
OF PUBLIC POLICY
Zack L. Winzeler
Alan S. Mouritsen
Salt Lake City, Utah
TUESDAY, APRIL 28, 2015 | THE LITTLE AMERICA HOTEL
parsonsbehle.com

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 As you probably already know, in Utah,
employment is at-will, meaning the
employer can fire an employee for any
reason or no reason at all, and the
employee can leave his or her job for any
reason or no reason at all.
At-Will

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 Race (Title VII)
 Sex (Title VII)
 Pregnancy (PDA)
 Disability (ADA)
 Caring for family member (FMLA)
 Veteran (USERRA)
 Sexual orientation?
Exceptions

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 Another exception with which you may be
less familiar
 Wrongful termination in violation of public
policy
 This is a tort, not statute-based
 Brings into play punitive damages
Wrongful Termination

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Dissecting the Tort

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 Adverse Employment Action (usually but
not always termination)
 “Clear” and “Substantial” Public Policy
 Employee’s Conduct Implicates Policy
 Adverse Employment Action Based on
Conduct
Four Elements

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“Clear”
“not always easily discernible”
waiting for “precise definition”

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 “Plainly Defined” in:
– Legislative Enactments
– Constitutional Standards
– Judicial Decisions
 But not:
– Regulations
“Clear”

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 Overarching importance
– No question as to its importance for the
promotion of the public good
– Much narrower than traditional notions of
public policy
– Maintain employer discretion
 Does the statute merely “regulate conduct
between private individuals”?
“Substantial”

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 Refusing to commit an illegal or wrongful
act
 Performing a public obligation, such as
accepting jury duty
 Exercising a legal right or privilege
 Reporting to a public authority criminal
activity of employer
Implicates Public Policy

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 The analysis under the wrongful-
termination tort follows the typical
McDonnell-Douglas framework
 Plaintiff establishes “prima facie” case
 Burden shifts to defendant to identify
lawful reason
 Plaintiff attempts to show that defendant’s
reason is “pre-textual”
McDonnell-Douglas Framework

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Examples – Hudgens – Facts
 Hudgens works at Prosper, Inc., a
“motivational coaching” company
 His immediate supervisor, Christopherson,
uses interesting motivational techniques
– Mustache drawing
– Wooden paddles
– Pulling out chairs

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 Christopherson challenges employees to
participate in “motivational exercise”
 Christopherson leads Hudgens and others
to hill outside the office
 Christopherson orders Hudgens to lay
down, with his head downhill
 Hudgens is held down while a gallon of
water is poured over his mouth and nose
Hudgens – Facts

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 Hudgens claims that he is constructively
discharged based on the waterboarding
 Court holds that constructive discharge
based on waterboarding implicates “clear
and substantial” public policy
 “physical and emotional integrity” of Utah
citizens
Hudgens – Policy

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Hudgens

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Trickier Situations – Rackley

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 Cathleen Rackley assists nursing home,
Fairview, with its efforts to comply with
federal and state law
 The VA is expected to send one of
Fairview’s residents, Ms. Mellen, a check
for $720
 Daughter-in-law tells Fairview to keep the
check a secret from Ms. Mellen
Rackley

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 Rackley is upset with the secrecy, and
thinks that Ms. Mellen should use the
money to buy a new wheelchair
 Rackley tells Ms. Mellen that her daughter-
in-law took the check
 Daughter-in-law tells Fairview, and
Fairview fires Rackley
Rackley . . . continued

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 Rackley says her conduct implicates a
clear and substantial public policy in favor
of residents managing their own money
 She cites the constitution, statutes, and
administrative regulations
 According to the court, only the regulations
say anything specifically about
management of money
Rackley – Policy

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 The Court says that regulations do not
qualify to establish a clear and substantial
public policy because they are not
constitutions, statutes, or judicial decisions
 Otherwise, the court explains, the tort will
be broadened beyond its basic purpose
and used to threaten employers who
follow the law
Rackley – Holding

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Person

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 Person worked at a residential treatment
center facility for teenagers
 State law required a staff-to-youth ratio of
at least one-to-four and facility bylaws
required residents to be separated
 Person consistently complained about
understaffing and separation, but did not
mention the state-mandated ratio
Person – Facts

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 Person identified a general policy that
such facilities must protect their residents
from harm
 Person further pointed to regulations that
required such facilities to implement a
four-to-one staff-to-student ratio.
Person – Policy

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 As to resident separation, the court held
that it was a matter of internal policy “not
directly mandated by legislation or
regulations”
 As to staff-to-resident ratio, the court held
that Person’s conduct did not implicate
that policy because his general complaints
did not reference state requirements
Person – Holding

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Ryan v. Dan’s Food Stores

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 Ryan is hired as a pharmacist at Dan’s
Foods
 Ryan routinely reports to his employer
prescriptions that he considers invalid or
illegitimate
 Complaints are made about Ryan’s
conduct as a pharmacist
 Ryan is fired
Ryan – Facts

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 Ryan says that public policy requires him
to verify the legitimacy of prescriptions
 Ryan’s first source of public policy
prohibited pharmacists only from
knowingly filling an improper prescription
and did not apply to Ryan’s conduct
Ryan – Policy

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 The court did note that the reporting of
criminal conduct typically gives rise to a
viable wrongful termination claim
 The court held that Ryan’s claim could
survive if, and only if, his reports as to
allegedly fraudulent prescriptions were
reports he was required to file because it
involved suspected criminal activity
Ryan – Holding

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Heslop v. Bank of Utah

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 Vice-President of Bank discovers
overstatement of Bank’s income
 He complains to his superiors about the
problem and demands immediate
resolution
 Bank required $1M-$2M to fix problem
 Bank decides to fix problem over time,
through installment payments
Heslop – Facts

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 Bank hides the deficiency from the
regulators and issues false call reports
(financial statements issued to the public)
 The deficiency is discovered and an
investigation ensues resulting in audit of
Bank
 Bank hires new management, who demote
Heslop to agricultural loan specialist
Heslop – Facts

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 Bank later decides not to do agricultural
loans and removes Heslop’s lending
authority
 Bank later forces Heslop’s resignation
over purported violation of Bank policy
 Heslop sues but the trial court dismisses
Heslop’s claim for wrongful termination in
violation of public policy
Heslop – Facts

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 The Utah Supreme Court reversed, finding
that Utah Financial Institutions Act
established public policy:
– It requires banks to issue accurate call reports
to the public
– It contains criminal penalties for violation of its
provisions
 Heslop furthered public policy by internally
reporting Bank’s violation of the Act
Heslop – Holding

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 Fox observed sales practice of account
churning – making existing accounts
appear as new accounts for commissions
 She reported the practices to MCI’s
management, who told her to “mind her
own business”
 Fox is terminated one week after company
completes its investigation into churning
Fox v. MCI Communications

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 Issue: Is termination in retaliation for
internal reporting of co-workers’ criminal
violations in violation of public policy?
 No claim for wrongful termination in
violation of public policy where employee
reports criminal violation to an employer,
rather than to public authorities
 The account churning created harm to
MCI, not to the public
Fox – Holding

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Fox – Account Churning

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 Three off-duty AOL employees in Ogden
meet in AOL parking lot to go target
shooting at gun range
 AOL’s security cameras capture two
employees transferring their firearms to
the third employee’s car
 Employees are terminated for violating
AOL policy that prohibited from carrying
firearms in AOL parking lot
Hansen v. AOL

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 Court is required to balance two
competing public policy interests:
– Employer’s right to regulate the workplace to
promote productivity, security, etc.
– Employee’s right to exercise constitutional
rights within the workplace (i.e., right to bear
arms)
 Court recognizes that both public policies
are “clear and substantial” under Utah law
Hansen – Holding

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 Court holds that, despite right to carry
firearms being clear and substantial policy,
that policy cannot supplant the right of
employer to regulate firearms in the
workplace
 Dismissal of employees’ claims for
wrongful termination in violation of public
policy upheld
Hansen – Holding

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Touchard v. La-Z-Boy

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 Termination of employee in retaliation for
filing a workers’ compensation claim
violates the public policy of Utah
 Employee who suffers only harassment or
discrimination for filing workers’
compensation claim does not have claim
for wrongful termination in violation of
public policy
Touchard v. La-Z-Boy

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 Employee terminated in violation for her
opposition to employer’s treatment of other
employees who are entitled to claim
workers’ compensation benefits does not
have claim for wrongful termination in
violation of public policy
Touchard – Holding

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 Terminating employee in retaliation for
acts that fall short of filing a workers’
compensation claim violates public policy:
– Preparing to file workers’ compensation claim
– Notifying the employer of intent to file workers’
compensation claim
– Discussing the potential workers’
compensation claim with co-workers
Stone v. M & M

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 Bank manager is victim of phishing scam
and sends $200K in wires to fraudsters
 Bank terminates manager’s employment
for failing to follow Bank’s policies in
verifying identity of wire requester
 Bank manager claims (after wire loss but
prior to termination) that Bank’s policies
are confusing and inconsistent
 Termination in violation of public policy?
Hypothetical #1

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 Wal-Mart employees detain a man for
shoplifting
 They notice the shoplifter is carrying a gun
 The employees grab the gun and restrain
the man until police arrive
 Wal-Mart fires the employees for violating
internal policy against violence
 Is their termination in violation of public
policy?
Hypothetical #2

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 Understand and investigate the
circumstances surrounding the proposed
termination
– Evaluate whether termination or employment
history could possibly implicate a clear and
substantial public policy
 Clearly document reasons for termination;
reasons given at time of termination will
govern in wrongful termination lawsuit
Recommendations

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 Treat similarly-situated employees alike to
avoid claims of pretext (i.e., if certain
action results in termination for one
employee, it should for the next employee)
 Obtain, where possible and necessary,
releases for all employment-related
claims, including claims for wrongful
termination in violation of public policy
Recommendations (cont.)

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 Zack L. Winzeler
801.536.6650
zwinzeler@parsonsbehle.com
 Alan S. Mouritsen
801.536.6927
amouritsen@parsonsbehle.com
Thank You