Opinion ID: 2543127
Heading Depth: 2
Heading Rank: 1

Heading: an employee who has been terminated for exercising rights under the workers' compensation act has a wrongful discharge cause of action

Text: ¶ 6 A discharged employee has a cause of action under the public policy exception if his or her termination violated a clear and substantial public policy. Hansen v. Am. Online, Inc., 2004 UT 62, ¶ 7, 96 P.3d 950. We have previously identified four categories that invoke a clear and substantial public policy: (1) discharging an employee for refusing to commit an illegal or wrongful act; (2) discharging an employee for performing a public obligation; (3) discharging an employee for exercising a legal right or privilege; and (4) discharging an employee for reporting an employer's criminal activities to the appropriate authorities. Ryan v. Dan's Food Stores, Inc., 972 P.2d 395, 408 (Utah 1998). ¶ 7 We have not yet had the opportunity to consider whether retaliatory discharge for claiming workers' compensation benefits falls under one of the public policy categories. We did mention workers' compensation claims as an example of the third category in Ryan, 972 P.2d at 408, but the issue was not before us in that case, nor had it been decided in any prior case. Thus, Ryan did not conclusively establish that claiming workers' compensation benefits constituted the exercise of a legal right or privilege for purposes of the public policy exception to the at-will rule. We now conduct that analysis. ¶ 8 Under the Utah Workers' Compensation Act (the Act), Utah Code Ann. §§ 34A-2-101 to -905 (2005 & Supp.2006), [a]n employee . . . who is injured . . . by accident arising out of and in the course of the employee's employment is entitled to compensation pursuant to the provisions of the Act. Id. § 34A-2-401(1) (2005); see also id. § 34A-2-105(1) (2005). By its terms, the Act establishes that an employee injured in the course of employment has a right to receive workers' compensation benefits. Thus, if an employee's attempts to claim workers' compensation fall within one of the recognized categories of public policy, it must be because it is the exercise of a legal right or privilege. ¶ 9 Nevertheless, the fact that an employee can point to a legal right or privilege does not automatically mean that the employee has established a clear and substantial public policy for purposes of the exception to the at-will rule. We have recognized that the exercise of a legal right or privilege category poses analytical challenges different from, and generally greater than, [the other categories of the public policy exception]. Hansen, 2004 UT 62, ¶ 10, 96 P.3d 950. With regard to the other categories, we have explained that [a]n employer owes a duty to an employee . . . not to exploit the employment relationship by demanding that an employee choose between continued employment and violating a law or failing to perform a public obligation of clear and substantial import. Id. This is because an employer's use of termination to coerce an employee to commit unlawful acts or avoid public obligations serves no legitimate economic objective and corrodes civil society. Id. In contrast, an employer's attempts to dissuade or prevent an employee from exercising a legal right may not always lack a legitimate objective. Rather, when the exercise of a legal right category is implicated, both the employer and the employee may be able to invoke public policy in aid of their cause. Id. ¶ 11. This was the case in Hansen, where the employer terminated three employees for possessing firearms on business premises in violation of company policy. Id. ¶¶ 1-5. The employees argued that their termination contravened public policy because they had a constitutional right to keep and bear arms, id. ¶¶ 13-14, while the employer invoked its right to maintain a safe workplace, see id. ¶ 14 & n. 6. Recognizing that both the employer and the employee could support their positions with public policy, this court stated: The analysis of whether the public policy exception applies to a particular legal right or privilege will frequently require a balancing of competing legitimate interests: the interests of the employer to regulate the workplace environment to promote productivity, security, and similar lawful business objectives, and the interests of the employees to maximize access to their statutory and constitutional rights within the workplace. Id. ¶ 11. ¶ 10 Thus, under Hansen, we must determine whether an employee's exercise of his or her workers' compensation rights invokes a clear and substantial public policy that outweighs the employer's interests in regulat[ing] the workplace environment to promote productivity, security, and similar lawful business objectives. Id.
¶ 11 In order to conduct the balancing required by Hansen, we first determine whether the exercise of workers' compensation rights amounts to a public policy that is both clear and substantial. We make determinations of clear and substantial public policy under the at-will rule on a case-by-case basis. Indeed, we have stated that determining what employee conduct implicates or furthers a clear and substantial public policy is a still-developing inquiry. Although we have established certain conduct that will almost always implicate a clear and substantial public policy . . . there are other situations that we will have to address as they come before us. Ryan, 972 P.2d at 408. When making determinations of public policy for purposes of the exception to the at-will rule, we will construe public policies narrowly[,] . . . applying only those principles which are so substantial and fundamental that there can be virtually no question as to their importance for promotion of the public good. Berube v. Fashion Ctr., Ltd., 771 P.2d 1033, 1043 (Utah 1989). This is much narrower than what may typically be characterized as `public policy.' Ryan, 972 P.2d at 405 (defining public policy as `community common sense and common conscience' and `general and well-settled public opinion relating to [people's] plain, palpable duty to [others].' (alterations in original) (quoting Black's Law Dictionary, 1231 (6th ed.1990))). ¶ 12 We begin our discussion of the status of workers' compensation under the public policy exception by addressing whether the exercise of workers' compensation rights furthers a clear public policy. We conclude that it does. A public policy is `clear' only if plainly defined by legislative enactments, constitutional standards, or judicial decisions. Ryan, 972 P.2d at 405. In this case, the Utah Legislature has declared that [a]n employee . . . who is injured . . . by accident arising out of and in the course of the employee's employment is entitled to compensation pursuant to the provisions of the Act. Utah Code Ann. § 34A-2-401(1); see also id. § 34A-2-105(1). An employee's right to compensation for injuries sustained in the course of employment arises irrespective of negligence on the part of employers or employees. Sheppick v. Albertson's, Inc., 922 P.2d 769, 773 (Utah 1996). In accordance with the Act's requirement that an employee injured in the course of employment has the right to compensation, the Act requires an employer to secure the payment of workers' compensation benefits for its employees, Utah Code Ann. § 34A-2-201 (2005), and imposes criminal penalties on employers who fail to comply, id. § 34A-2-209 (2005). We think that by adopting the Act and imposing penalties on an employer for noncompliance, the legislature plainly established the public policy that an employee injured in the scope of employment has the right to receive compensation. ¶ 13 However, it is not enough that a public policy be clear; it must also be substantial. To determine whether a public policy is substantial, we conduct a two-step inquiry. First, we ask whether the policy in question is one of overarching importance to the public as opposed to the parties only. Retherford v. AT & T Commc'ns of the Mountain States, Inc., 844 P.2d 949, 966 (Utah 1992). A policy that affects a duty that inures solely to the benefit of the employer and employee is generally insufficient to give rise to a substantial and important public policy. Ryan, 972 P.2d at 405. Second, we ask whether the public interest is so strong and the policy so clear and weighty that we should place the policy beyond the reach of contract, thereby constituting a bar to discharge that parties cannot modify, even when freely willing and of equal bargaining power. Retherford, 844 P.2d at 966. ¶ 14 We conclude that workers' compensation is a policy of overarching importance to the public, as opposed to the parties only. Id. at 966. This court has previously discussed the policy underlying workers' compensation. The Workers' Compensation Act was enacted to provide economic protection for employees who sustain injuries arising out of their employment, therefore alleviating hardship upon workers and their families. Drake v. Indus. Comm'n, 939 P.2d 177, 182 (Utah 1997) (internal quotation marks omitted). Accordingly, we have stated that we will liberally construe the Act in favor of employee compensation. Olsen v. Samuel McIntyre Inv. Co., 956 P.2d 257, 260 (Utah 1998). While workers' compensation provides economic support for injured workers and their families, it was not enacted solely for their benefit. Rather, workers' compensation was designed to provide speedy compensation to injured workers, Sheppick, 922 P.2d at 773, thereby reliev[ing] society of the care and support of the unfortunate victims of industrial accidents. Reteuna v. Indus. Comm'n, 55 Utah 258, 185 P. 535, 537 (1919) (emphasis added). Indeed, this court has stated, `The theory of workmen's compensation is based largely upon the doctrine that society itself is vitally concerned in the prompt payment of compensation to injured and the dependents of killed employs [sic]. It is a matter relating to the promotion of the general welfare. ' Id. (emphasis added) (quoting Rosen Steel v. Niles Forge & Mfg. Co., 7 Neg. & Comp. Cases Ann. 798). ¶ 15 The text of the Act lends further support to the proposition that workers' compensation is not just a private benefit affecting only the interests of the employer and the employee. For example, the Act provides a means by which an injured employee can obtain compensation even where his or her employer fails to comply with the Act's requirements. Utah Code Ann. § 34A-2-208(1) (2005). To this end, the Act creates the Uninsured Employers' Fund to assist[ ] in the payments of workers' compensation benefits to any person entitled to the benefits, if: . . . that person's employer . . . does not have sufficient funds . . . to cover workers' compensation liabilities. Id. § 34A-2-704(1) (2005). Moreover, an employer who fails to provide sufficient workers' compensation insurance is guilty of a class B misdemeanor. Id. § 34A-2-209(1)(a)(I). Similarly, it is a criminal misdemeanor for an employer to deduct[ ] any portion of the [workers' compensation insurance] premium from the wages or salary of any employee entitled to the benefits of [the Act]. Id. § 34A-2-108(3) (2005). ¶ 16 Workers' compensation not only is a question . . . of . . . importance to the public, but also furthers a public interest [that] is so strong . . . that we should place the policy beyond the reach of contract. Retherford, 844 P.2d at 966. Evidence of this lies within the text of the Act itself. Section 34A-2-108(1) declares that an agreement by an employee to waive the employee's rights to compensation . . . is not valid. [1] Similarly, that section provides that an employee's agreement to pay any portion of the [insurance] premium paid by his employer is not valid. Id. § 34A-2-108(2). Thus, by statute, an employer cannot relieve itself of its obligation to provide workers' compensation by asking employees to contract away their rights. The legislature itself has placed workers' compensation beyond the reach of contract. It follows that an employer should not be able to free itself of its workers' compensation obligations by discharging employees entitled to workers' compensation benefits. Accordingly, we hold that workers' compensation constitutes public policy that is both clear and substantial.
¶ 17 Having concluded that workers' compensation represents a clear and substantial public policy, we now must weigh that policy against La-Z-Boy's interests. In this case, La-Z-Boy has invoked the policy that underlies at-will employment  that employers ought to be able to manage their workforces and regulate their workplace environments to promote productivity, security, and similar lawful business objectives. However, an employer's ability to regulate its workforce primarily inures to the benefit of the employer and the employee, not to the public in general. Moreover, while there may be public policies underlying an employer's general ability to manage its employees free from judicial interference, we can think of no public policy that would be furthered by permitting employers to discharge employees who seek to exercise their workers' compensation rights. ¶ 18 In contrast to La-Z-Boy's stated interests, La-Z-Boy's employees raise a public policy that provides a benefit outside of the private employer-employee relationship. By design, workers' compensation benefits the public as a whole. See supra ¶ 14. It follows, then, that limiting an employer's ability to interfere with workers' compensation serves the greater good. We therefore conclude that in order to give effect to the legislature's pronouncement that workers' compensation is in the public's interest, an employer's right to workplace autonomy must yield. [2] Accordingly, an employer owes its employees a duty not to exploit the employment relationship by forcing employees to choose between their jobs and compensation under the Act. See Hansen, 2004 UT 62, ¶ 10, 96 P.3d 950. ¶ 19 We therefore hold that an employee's exercise of workers' compensation rights constitutes the exercise of a legal right that embodies a clear and substantial public policy. An employer who terminates an employee in retaliation for the employee's exercise of that right has violated a clear and substantial public policy and may be sued for wrongful discharge by the discharged employee.
¶ 20 La-Z-Boy has argued that the Act prohibits this court from using workers' compensation as the basis of a wrongful discharge cause of action because (1) the Act does not include a retaliation provision, and (2) the Act provides employees with their exclusive remedy against their employer. ¶ 21 La-Z-Boy notes, correctly, that the Act does not contain a provision that forbids an employer to discharge an employee in retaliation for claiming workers' compensation. According to La-Z-Boy, this court should not allow an employee who has been the subject of a retaliatory termination to bring a wrongful discharge cause of action in the absence of an anti-retaliation provision. To lend support to its argument, La-Z-Boy points to this court's general reluctance to construe a statute to include a private cause of action where the statute does not specifically provide one. It is true that Utah courts are reluctant to imply a private statutory cause of action in the absence of express statutory language. Buckner v. Kennard, 2004 UT 78, ¶ 40, 99 P.3d 842. In this case, however, we are not determining whether the Act includes a private statutory cause of action. Rather, we are applying our common law wrongful discharge cause of action to retaliatory termination for the exercise of rights guaranteed by the Act. Because wrongful discharge is a common law claim, this determination is entirely within our province. The lack of an anti-retaliation provision in the Act does not affect this court's ability to recognize this state's public policy for purposes of a wrongful discharge cause of action. ¶ 22 Moreover, the absence of an anti-retaliation provision does not diminish the Act's function as a source of clear and substantial public policy. There would be no more effective means of undermining the purposes behind the Act than allowing an employer to terminate an employee in retaliation for filing workers' compensation claims. See Frampton v. Cent. Ind. Gas Co., 260 Ind. 249, 297 N.E.2d 425, 427 (1973). As the Indiana Supreme Court stated, The [Workers' Compensation Act] creates a duty in the employer to compensate employees for work-related injuries (through insurance) and a right in the employee to receive such compensation. But in order for the goals of the Act to be realized and for public policy to be effectuated, the employee must be able to exercise his right in an unfettered fashion without being subject to reprisal. If employers are permitted to penalize employees for filing workmen's compensation claims, a most important public policy will be undermined. The fear of being discharged would have a deleterious effect on the exercise of a statutory right. Employees will not file claims for justly deserved compensation  opting, instead to continue their employment without incident. The end result, of course, is that the employer is effectively relieved of his obligation. Id. (construing a provision in the Indiana workers' compensation statute that prohibited an employer's use of any device to relieve the employer of his workers' compensation obligations). In other words, the recognition of a retaliatory discharge cause of action for seeking workers' compensation benefits is essential to maintaining an employee's rights under the Act. ¶ 23 Other courts have also concluded that workers' compensation implicates a clear public policy for wrongful discharge purposes despite the lack of a statutory prohibition against retaliation. For example, in Hansen v. Harrah's, 100 Nev. 60, 675 P.2d 394, 395 (1984), two casino workers brought wrongful discharge suits alleging they were terminated for filing workers' compensation claims. The Nevada Supreme Court held that the failure of the legislature to enact a statute expressly forbidding retaliatory discharge for filing workmen's compensation claims [did] not preclude [the court] from providing a remedy for what [it] conclude[d] to be tortious behavior. Id. at 396. In so holding, the court reasoned that Nevada's workmen's compensation laws reflect a clear public policy favoring economic security for employees injured while in the course of their employment. Id. Furthermore, the court realized that [f]ailure to recognize the cause of action of retaliatory discharge for filing a workmen's compensation claim would only undermine [the Nevada Workmen's Compensation Act] and the strong public policy behind its enactment. Id. Other states have used similar reasoning to adopt a public policy exception to the at-will rule to make discharge in retaliation for filing workers' compensation claims an actionable tort. See Lathrop v. Entenmann's, Inc., 770 P.2d 1367, 1373 (Colo.Ct.App.1989) (concluding that since an employee is granted the specific right to apply for and receive compensation under the [Workers' Compensation Act], an employer's retaliation against such an employee for his exercise of such right violates Colorado's public policy . . . [that] provides the basis for a common law claim by the employee to recover damages sustained . . . as a result); Kelsay v. Motorola, Inc., 74 Ill.2d 172, 23 Ill.Dec. 559, 384 N.E.2d 353, 358-61 (1978) (recognizing that the Illinois Legislature did not intend to make injured employees choose between compensation and their jobs and thus holding that the plaintiff had a retaliatory discharge cause of action, despite the lack of a legislative anti-retaliation pronouncement at the time of discharge); Murphy v. City of Topeka-Shawnee County Dep't of Labor Servs., 6 Kan.App.2d 488, 630 P.2d 186, 192-93 (1981) (holding that the plaintiff alleged a valid cause of action for retaliatory discharge where he was terminated for claiming workers' compensation rights, despite the lack of a retaliation provision in Act, because allowing an employer to coerce employees in the free exercise of their rights under the act would substantially subvert the purpose of the act); Firestone Textile Co. Div. v. Meadows, 666 S.W.2d 730, 732-34 (Ky.1983) (recognizing a cause of action for discharge in retaliation for filing workers' compensation claims even though, at the time, the Kentucky Workers' Compensation Act did not contain a retaliation provision); Jackson v. Morris Commc'ns Corp., 265 Neb. 423, 657 N.W.2d 634, 640-41 (2003) (recognizing that the Nebraska Workers' Compensation Act was promulgated to serve an important public purpose that would be undermined if employees fear retaliation, and thus recognizing a public policy exception to the at-will rule for retaliatory discharge due to the exercise of workers' compensation rights even though the statute did not contain an anti-retaliation provision); Shick v. Shirey, 552 Pa. 590, 716 A.2d 1231, 1237 (1998) (holding that the termination of an at-will employee for filing a workers' compensation claim violates public policy despite the lack of a retaliation provision in the statute). ¶ 24 We also hold that the exclusivity provision of the Act does not bar an employee's wrongful discharge cause of action. Under the Act, [t]he right to recover compensation . . . for injuries sustained by an employee . . . shall be the exclusive remedy against the employer. Utah Code Ann. § 34A-2-105. However, [i]t is well settled that the Act covers only mental and physical injuries sustained on the job. Shattuck-Owen v. Snowbird Corp., 2000 UT 94, ¶ 19, 16 P.3d 555. Accordingly, the exclusivity provision only bars common-law tort actions requiring proof of physical or mental injury. Id. In this case, the employees' wrongful discharge cause of action does not arise out of work-related physical or mental injuries. Therefore, the exclusivity provision does not hinder an employee's wrongful discharge cause of action brought against an employer who has discharged an employee in retaliation for the employee's exercise of rights. ¶ 25 Having concluded that an employee who has been terminated for exercising his or her workers' compensation rights has a wrongful discharge cause of action under the public policy exception to the at-will rule, we turn to the federal court's remaining questions of whether this cause of action extends to constructive discharge, to workplace discrimination or harassment, or to the termination of an employee who has not actually sought compensation but who has opposed his or her employer's treatment of injured employees.