Opinion ID: 2581048
Heading Depth: 1
Heading Rank: 7

Heading: Limiting Lost Wages to Two Weeks

Text: The superior court ruled that since Kinzel was an at-will employee subject to termination upon two weeks notice without cause, Kinzel was entitled to lost wages for no more than two weeks pay. Kinzel claims that this limitation was erroneous because his retaliatory discharge action should be considered an action in tort rather than contract. He argues that it follows from the tort nature of his claim that his lost wages claim should not be limited to the two-week notice period and further that emotional distress damages, loss of consortium damages, and punitive damages were eliminated by the court's ruling that his retaliation claim could only be recognized in contract. Discovery responds that this argument is not a basis for reversal since it relates only to the measure of damages and the jury found for Discovery on the liability issues relating to the wrongful termination claim. Discovery also argues that breaches of the covenant of good faith and fair dealing have consistently been held to be contract actions in Alaska, that the proper measure of damages in a wrongful termination contract case is the employee's reasonable expectations, and that Kinzel's reasonable expectations did not extend beyond the two-week notice of termination period to which he was entitled as an at-will employee. In reply, Kinzel argues that if at-will employees were limited to two weeks severance pay on claims for retaliatory discharge this would actually encourage employers to fire at-will employees who reported to OSH; the consequences to the employer would be slight and the incentive to be rid of a gadfly would be great. Kinzel also contends that in virtually every state that has considered the issue, employer retaliation for filing a safety-related complaint is considered a tort, that the measure of damages for the tortious discharge of an at-will employee is based on the employee's expectation of continued employment, and relevant to this is the employee's past history with the company. He notes that he had worked for Discovery for nearly six years and thus his expectation of continued employment could not fairly be limited to two weeks. Discovery is correct that this issue is not grounds for reversal. It relates to damages only, and the jury returned a no-liability verdict. But since the verdict must be reversed on other grounds, we believe that it is advisable to address the issue briefly for guidance upon retrial. In Reed v. Municipality of Anchorage an employee alleged that he had been fired in retaliation for filing a job safety complaint. [27] We held that the whistleblower statute, AS 18.60.089, does not confer a private cause of action, but that the employee had a common law remedy for his retaliatory discharge claim. [28] He alleged that his termination for whistleblowing was a violation of the covenant of good faith and fair dealing that is implied in employment contracts. [29] We agreed. In so ruling we did not imply that the employee's claim was not also a tort claim. The employee apparently only sought recognition of his claim as one sounding in contract. In reaching our conclusion that AS 18.60.089 did not preclude a suit for retaliatory discharge we noted that our conclusion was similar to the conclusion reached by the New Jersey Supreme Court in Cerracchio v. Alden Leeds, Inc., [30] which permitted a tort action to recover damages based upon [the employee's] discharge in violation of the public policy of this state.... [31] In ARCO Alaska, Inc. v. Akers the issue was whether this state will permit tort recovery when the implied covenant of good faith and fair dealing is breached in an employment contract and the breach violates no explicit public policy. [32] We answered this question in the negative. But we specifically stated that we were not deciding whether a tort claim could be maintained where a discharge violated an explicit public policy. [33] In Central Bering Sea Fishermen's Association v. Anderson an employee with a one-year contract brought a claim for, among other theories, constructive retaliatory discharge. [34] We did not indicate whether we considered this claim to sound in tort or contract. We held that damages should be limited to the unexpired term of the contract, citing the normal rule that a wrongfully discharged employee is entitled to the total amount of the agreed upon salary for the unexpired term of his employment. [35] We recognized that cases may exist where the specific term of an employment contract should not limit lost earnings damages. [36] But we held that the employee's claim in Anderson was not such a case because the employee was to occupy a new position in a new company created by a new government program, allocating shares in a volatile industry. [37] In the present case violations of explicit public policies  protection of whistleblowers who file safety complaints or workers who file workers' compensation claims  are alleged. [38] In these circumstances we believe that it is appropriate to allow a tort remedy to more effectively deter prohibited conduct. We thus join the numerous authorities that have so ruled. [39] The parties have only touched on what the appropriate measure of damages for lost wages would be for the tortious discharge of a whistleblower. We decline to attempt a definitive ruling on this subject based on the briefing before us. Instead, this is a subject that should be addressed on remand.