F. Opening the Employment Relationship to New Tort Actions

Special Protections for Exercising "Public Policy" Rights

As has been discussed earlier, with the exception of intentional tort and workers' compensation, the employment relationship has traditionally and in general been litigated within the common law contract setting, not within the tort setting. If an employer was perceived as discharging an employee wrongfully, the question of remedy was generally pursued within the context of the employment "contract" between the employee and the employer. Such is the case with Toussaint, for example. However, in recent years, the plaintiffs' bar has been aggressively pursuing new tort theories for recovering on a wrongful discharge claim, and is starting to have success.

Tort claims in the employment setting may include such elements as tortious interference with contractual relations, fraud, intentional infliction of emotional distress, and defamation. For a while during this decade, the Michigan courts had also opened up a major new tort theory for negligent breach of an implied contract (in a sense, a tort cousin to Toussaint), focusing on negligent evaluation of the complaining employee. But here, for once, the court thought better of it after some consideration, and closed off this cause of action. [44]

However, while staying relatively reserved in the traditional line of tort cases, the Michigan judiciary opened up a new tort cause of action centered on "public policy" considerations that has very troubling implications. In Goins v. Ford Motor Co., [45] the Michigan Court of Appeals decided that a discharged employee could bring a tort action claiming that the employer unlawfully discharged the employee for exercising public policy rights in a setting unrelated to the immediate employment setting.

Plaintiff Goins was hired as a tabor relations employee at defendant's Woodhaven plant in 1977, but discharged 5 months later. Prior to applying at the Woodhaven plant, Goins had applied at defendant's world headquarters and other sites, each time informing Ford on its medical history forms that he had sustained a work-related knee injury while employed for General Motors in 1971. Each time, Goins failed to get the job. At Woodhaven, plaintiff did not provide this information. When Ford discovered the falsification of the medical history form, Goins was fired. Gains subsequently brought suit against Ford claiming wrongful discharge for filing a workers' compensation claim while employed at General Motors.

The court found for the plaintiff, citing "public policy". Pointing out that it is contrary to public policy for an employer to discharge an employee in retaliation for filing a workers' compensation claim, the court found no reason "to limit this rule only to employers who fire employees who file claims against them rather than against previous employers. The public policy extends to situations . . . where the employee argues an unlawful or retaliatory discharge because he or she filed a worker's compensation claim against any employer, including a previous employer." The court saw no manifest injustice in the failure of the trial judge to instruct the jury that plaintiff could not invoke a public policy ground for wrongful discharge if he was found to have lied on his medical history form.

This ruling is troubling from a number of perspectives. First, the practical result of the decision is to effectively prohibit an employer from inquiring about a job applicant's workers' compensation history. This results because any employer inquiry into an applicant's workers' compensation history creates a question of fact for jury determination, should the employer subsequently fail to hire the employee. The employer must refrain from inquiring about previous workers' compensation filings or risk a certain jury trial, should a job applicant decide to sue. But such a result seems unfairly confining upon the employer. After all, the information concerning an applicant's workers' compensation history would seem to be quite valuable for reaching judgement on whether or not to hire the applicant and for what type of work to hire an applicant. Should employers be denied this information simply because the filing of a workers' compensation claim is a public policy right? If the answer is yes, then the employer has been denied the important discretionary right to make a decision on whom to hire based on physical fitness. This aspect of Goins is troubling enough.

Much more significant is the potential new avenue of litigation Goins opens up in general. The decision extends the prohibition on employee discharge for exercising public policy rights from the immediate employer/employee setting, where it is basically contained and at least partially controllable by the employer, to a wide open area where anything in the employee's past or present is relevant. In effect, as soon as the employer has knowledge about any employee or applicant activities with "public policy" qualities, the employer may be subject to a tort claim, should he decide to terminate or discipline or fail to promote or fail to hire an employee or applicant. It becomes irrelevant at what point in time the employee or applicant engaged in the exercise of a "public policy" right, or whether that exercise had anything to do with the employer. As long as the employee or applicant has an "aura" of "public policy" surrounding her, the employer faces a potential tort claim.

Does the "public policy" exercising employee gain special status? In practice, the answer is yes. Just as if the employee belonged to any other protected category (race, religion, sex, handicapper-status, etc.), the employer must take extra caution, extra care, in making management decisions with regard to that employee. And how does the employer do that in an area as indeterminate and subject to change as "public policy"? After all, actionable exercise of "public policy" can encompass just about anything, depending on the particular philosophy, politics, or whim of the judge before whom a case is tried or the appeal panel before which the case is reviewed. "Public policy" is a term so open to the judicial winds of change, that the potential for protected actions seems endless.

The employer is essentially faced with a potential cause of action which he cannot effectively control. It would be difficult enough to make decisions when the exercise of "public policy" relates directly to the immediate employment relationship. It becomes virtually impossible when the "public policy" activity took place somewhere else, such as with a previous employer. When the employer loses control, a natural response is managerial timidity – over-caution in organizing the workplace, over-caution in making personnel changes (whether they be for the better of the business or not, whether they be for the better of the individuals involved or not), over-caution in hiring. Better to hire the most bland employee than ask tough questions which could result in a lawsuit somewhere down the line. Better to make promotions with mathematical routine, than reward the best and risk a lawsuit by those viewed as less effective employees. Better to avoid individualized attention to employees in the workplace (regardless of its managerial benefits), than to have that special attention turned into a fault at trial.

Such employer timidity harms everyone except the potentially complaining individual. The efficiency and effectiveness of the business is hurt, which harms not just the business owner, but also the business' employees and consumers of the business' products or services. Employees are forced to work in a more impersonal, inflexible environment, where managers are discouraged from knowing too much about their employees. Good employees have reduced opportunities for promotion ahead of less competent individuals. Creative new ideas for organization of the business are less likely to be tried.

If the employer's ability to make basic personnel decisions is so significantly limited by the risk of litigation that only general managerial timidity is the result, what possible goal can perpetuation of the cause of action have? At that point, the cause of action seems to exist merely to provide yet one more possible avenue for individual compensation. All pretense of causation or encouragement of desirable employer behavior is lost, leaving only raw redistribution of wealth.

Goins is just a slice, but also a very representative one, of the judicial expan­sionism that has consumed the Michigan legal system in the last three decades. By creating the broader public policy tort for employment decisions, the court is giving itself the opportunity to intervene at any time to stop an employer decision it does not like. If the court does not like the reason for a discharge or a promotion or a failure to hire, it always has the option of saying that the particular reason used by the employer is a violation of public policy. The court in effect always has the opportunity to supersede the employer in an employment decision. In substitution for a free market, we have a court-controlled market.

Decisions like Goins and Toussaint and Renny establish a theory for the substitution of court discretion for employer discretion, where the only thing keeping the courts from taking over completely is their own sense of reserve. Based on what we have already seen, that reserve offers little comfort. Indeed, the desire for social manipulation and market control exhibited by Michigan's judiciary is so strong that remedial action restoring a more free market is absolutely essential.