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Vol. 73, No. 7, July 2000

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The Plaintiffs' Perspective

Hausman Eliminates Wrongful
Discharge for Protecting Public Policy

by Carol N. Skinner

Employer advocates may argue that Hausman was decided the way it was merely because the facts of the case were so egregious that a remedy had to be fashioned to address the plaintiffs' specific problem. This is an over-simplistic view. What happened to Jane Hausman and Karen Wright was not a blip on the screen. Many would-be reporters of abuse or neglect of vulnerable persons, whether they be the elderly, infirm, incompetent, or children, face a Hobson's choice. They can come forward with their concerns and risk retaliation, or remain silent and thus share in the blame for the unlawful conduct. These reporters may be employees (including employees from temporary agencies) of facilities caring for the vulnerable person, the vulnerable person him or herself, or a friend or relative of that person. Retaliation can take the form of loss of job and professional standing, as occurred in Hausman, further abuse, loss of privileges, demotion, ostracization, and isolation.

Hausman was decided as it was because the case illustrated the real-life problems resulting from the overly restrictive interpretation of the public policy exception to the employment-at-will rule adopted by the Wisconsin Supreme Court in 1986 in Bushko v. Miller Brewing Co.⁵ Following a well-reasoned opinion in Brockmeyer v. Dun & Bradstreet, which held that "an employee has a cause of action for wrongful discharge when the discharge is contrary to a fundamental and well-defined public policy as evidenced by existing law," the Bushko court retreated. The plaintiff in Bushko claimed he was fired for making internal complaints about plant safety, hazardous waste, and honesty. The employer argued that it had every right to discharge its employee, as he had no contract of employment. Obviously troubled by the prospect of every adverse employment decision being open to court scrutiny, and thus swallowing up the employment-at-will rule, the Bushko court sought to balance the employer's and employees' interests. It opted to limit the public policy exception (and thus an actionable claim for wrongful discharge) to those employees fired for refusing a command, instruction, or request of the employer to violate public policy as established in existing law.⁶

The stated impetus for the Bushko court's restriction of the public policy exception was to preserve an employer's right to make personnel decisions unfettered by the possibility of frivolous lawsuits by disgruntled employees who could seemingly challenge any adverse employment action merely because they had engaged in "praiseworthy conduct." The fallacy of this reasoning stems from a misinterpretation of the balancing act language of Brockmeyer, which was reiterated by the supreme court in Hausman:

"We believe that the adoption of a narrowly circumscribed public policy exception properly balances the interests of employees, employers, and the public. Employee job security interests are safeguarded against employer actions that undermine fundamental policy preferences. Employers retain sufficient flexibility to make needed personnel decisions. ... Finally, the public is protected against frivolous lawsuits, since courts will be able to screen cases on motions to dismiss for failure to state a claim or for summary judgment if the discharged employee cannot allege a clear expression of public policy."⁷

The problem with Bushko's "balancing act" is that it goes far beyond the concern of Brockmeyer, which was that discharged employees be able to allege a clear expression of public policy or face dismissal of their claim. In fact, Bushko eliminates many claims where employees can allege a clear expression of public policy, in favor of employers "retaining sufficient flexibility to make needed personnel decisions." This was never the intent of Brockmeyer. Allowing employers to retain "flexibility to make personnel decisions" at what cost? Yes, an employer's power to discipline and discharge employees must certainly be protected, but not at the cost of public safety. As the concurring opinion in Bushko pointed out, "The unifying principle of the Brockmeyer doctrine is that an employer may not use the power to discharge to undermine a fundamental and well-defined public policy embodied in the literal language or in the spirit of a statute or constitutional provision. Not only employees but also the public would suffer if the discharge power enhanced the abilities of employers to violate public policy."⁸

The facts of the Hausman case clearly illustrated that the Bushko limits were unworkable. Two reporters of suspected elder abuse were fired for reporting, and yet without remedy. The tail was now wagging the dog, and many meritorious claims were falling through the enormous chasms left in the wake of Bushko. Rather than overruling Bushko, however, the supreme court carved out an exception to its restrictive language. Because the plaintiffs in Hausman were bound by law to take action such as reporting suspected abuse, the court used that fact to extend protection to the plaintiffs. It concluded that the public policy exception to the employment-at-will doctrine may apply beyond the four corners of Bushko:

"The public policy of protecting nursing home residents from abuse is fundamental and well-defined. Where the law imposes an affirmative obligation upon an employee to prevent abuse or neglect of nursing home residents and the employee fulfills that obligation by reporting the abuse, an employer's termination of employment for fulfillment of the legal obligation exposes the employer to a wrongful termination action."⁹

The Effects of Hausman

While Hausman was working its way through the court system, various elder advocacy groups were lobbying for legislative amendments to existing law to protect vulnerable adults and children by protecting those who were in a position to ensure their safety, the prospective reporters. Those efforts were largely successful, and three statutes were changed to increase that protection. (Please see the accompanying sidebar.)

Although Hausman involved nursing home employees, there is no reason to limit its holding to this group. Hausman can be read to protect any employee who is legally obligated to take action in the public interest, and is fired for doing so. As the Hausman court pointed out, "The employer's personnel decisions are not impermissibly interfered with by a requirement that the employer not retaliate against an employee complying with the dictates of a fundamental public policy statement."¹⁰ Examples include those employees legally mandated to report not only abuse, but fraudulent practices, disease control issues, child endangerment, and ethics violations.

Yet, one must ask, did the Hausman court go far enough in protecting employees who come forward? If an airline employee is not legally required to report falsified aircraft maintenance reports, do we want to let his employer fire him for doing so? How about the meat packer employee who is aware that her employer is using unsafe handling practices in order to cut costs? The interest in retaining an employer's "flexibility to make needed personnel decisions" pales in comparison to public health and safety issues such as these.

The "floodgate" argument often discussed in the public policy cases, that every termination will be open to scrutiny,¹¹ is overblown. Courts routinely screen cases in many areas of law, particularly in the employment arena. And an employer's intent, that is, whether the adverse decision was based on the employee's sex, race, age, or other protected status, is always at issue. Despite this, employers' motions for summary judgment are granted quite often. Courts can be trusted to intelligently distinguish between issues of public health and safety, and issues internal to an employer that do not affect the public's health or safety. The line of demarcation should be whether an employee was truly acting in the interest of public health or safety, not whether there is some little-known law requiring the employee to take a particular action.

Interestingly, there is a statute that protects whistle-blowing employees in the public sector, but not those in the private sector. Section 230.83 of the Wisconsin Statutes prohibits the state from retaliating or threatening to retaliate against an employee who discloses certain information to persons such as his/her supervisor, attorney, collective bargaining agent, or a legislator. The information disclosed may include information the employee reasonably believes demonstrates a violation of any state or federal law, rule, or regulation, as well as mismanagement or abuse of authority in state or local government, a substantial waste of public funds, or a danger to public health and safety.

But where are most of the issues concerning public health and safety going to arise? It is the private sector that is responsible for producing our automobiles, airplanes, buses, trains, machines, medical supplies and equipment, pharmaceuticals, foods, and health care products, as well as providing many services affecting the public. Section 230.83 is a good start. While it is laudable to protect state employees who report mismanagement or abuse of authority, there really are more pressing issues at hand, namely, public safety in the vast majority of settings, the private sector.

Changes in Practice Resulting from Hausman

Carol N. Skinner, Indiana University - Bloomington 1984, has been a shareholder with Bakke Norman S.C., New Richmond, since 1990. She limits her practice almost exclusively to employment law, representing employees and employers. She also serves on the board of the State Bar's Labor and Employment Law Section, has presented programs to employers' associations and the State Bar on employment topics, and is a member of the Wisconsin and National Employment Lawyers' Associations.

Employment law practitioners must consider this expansion of the public policy exception to the employment-at-will doctrine, as well as the statutory changes protecting employees and others, whether representing prospective plaintiffs or employers. Employers need to be advised that nonemployees who report abuse also are protected from retaliation. This includes individuals from temporary employment agencies and independent contractors. Agencies administering discrimination claims (the Equal Rights Division and the Personnel Commission) must be aware that their jurisdictions have been increased. Obviously, more employees will have wrongful discharge claims, at least until employers become aware that they may not retaliate against an employee for doing something he or she is legally obliged to do.

The result does not have to be a win for employees and a loss for employers. Adequately educating employers about common law wrongful discharge, as well as the statutory changes relating to retaliation for reporting, can bring about the desired outcome for everyone. Eliminating wrongful discharges of employees for protecting public policy is a win-win situation. The public policy is promoted, not thwarted; the employee is not fired; and the employer is not sued. The Hausman decision is just one step closer to justice for all.

Endnotes

¹ Hausman and Wright v. LIRC, Case Nos. 96-CV-797 and 798, (Dane County Cir. Ct., May 6, 1997) affirming LIRC's March 7, 1996, decision.

² Brockmeyer v. Dun & Bradstreet, 113 Wis. 2d 561, 335 N.W.2d 834 (1983).

³ Jane Hausman and Karen Wright v. St. Croix Care Center, 207 Wis. 2d 400, 558 N.W.2d 893 (Ct. App. 1996).

⁴ Jane Hausman and Karen Wright v. St. Croix Care Center, 214 Wis. 2d 655, 571 N.W.2d 393 (1997).

⁵ Bushko v. Miller Brewing Co., 134 Wis. 2d 136, 396 N.W.2d 167 (1986).

⁶ Id. at 142, 396 N.W.2d at 171.

⁷ Brockmeyer, 113 Wis. 2d at 574, 335 N.W.2d at 841; Hausman, 214 Wis. 2d at 667, 571 N.W.2d at 398. (Emphasis added.)

⁸ Bushko, 134 Wis. 2d at 157, 396 N.W.2d at 177 (Abrahamson, S., concurring, joined by Bablitch, W. and Heffernan, N.).

⁹ Hausman, 214 Wis. 2d at 669, 571 N.W.2d at 399.

¹⁰ Id. at 668, 571 N.W.2d at 399.

¹¹ See, e.g., Brockmeyer, 113 Wis. 2d at 569, 335 N.W.2d at 839; Bushko, 134 Wis. 2d at 146, 396 N.W.2d at 173; Hausman, 214 Wis. 2d at 667, 571 N.W.2d at 399; Wandry v. Bulls Eye Credit Union, 129 Wis. 2d 37, 54-55, 384 N.W.2d 167,179 (1986) (Steinmetz, J. dissenting).