Prince Yeates employment lawyers Mark Wagner and John Chindlund recently completed a broad summary of Utah employment law for inclusion in an upcoming compendium of state labor and employment laws for Primerus, an exclusive international society of nearly 200 independent peer-reviewed law firms in more than 40 countries. Although the summary was generally intended to educate in-house counsel and other Primerus member law firms, we thought we would share it with you in a series of weekly FAQs over the next several months. Our third installment is below.
Question of the Week: Are there any public policy exceptions to the employment-at-will doctrine in Utah?
Last week, we discussed express statutory exceptions to the employment at-will doctrine in Utah. Those are statutes that expressly state that an employer may not fire someone for a specific reason (like sex or color, for example). However, as discussed below, even statutes (or other sources of law) that say nothing about terminating an employee might make it wrongful for an employer to discharge an employee in certain circumstances. This is the result of a judicially created exception to the employment-at-will presumption, which is founded in notions of “public policy.”
The Public Policy Exception in General
An employer may not discharge an employee if doing so would violate “a clear and substantial public policy” of the state of Utah. Ray v. Wal-Mart Stores, Inc., 2015 UT 83, ¶ 12. In this context, “public policy” is “‘much narrower than traditional notions of public policy,’ so as to not unduly infringe on an employer’s discretion in discharging employees.” Id. at ¶ 13 (quoting Rackley v. Fairview Care Ctrs., Inc., 2001 UT 32, ¶ 15).
A public policy is “clear” only if it is plainly defined by a statute, constitutional standard, or judicial decision. Dixon, 1999 UT, at ¶ 31 (internal quotations and citations omitted). And, the policy not only must be “clear,” it also must be “substantial” and truly “public.” In other words, it must, “further substantial public, as opposed to private, interests.” Ryan, 972 P.2d at 405 (italics in original).
Categories of Public Policies that Can Give Rise to a Wrongful Discharge Claim in Utah
To date, the Utah Supreme Court has identified four categories of public policies that may provide a basis for a claim of wrongful discharge claim in violation of public policy:
- refusing to commit an illegal or wrongful act, such as refusing to violate the antitrust laws;
- performing a public obligation, such as accepting jury duty;
- exercising a legal right or privilege, such as filing a workers’ compensation claim; or
- reporting criminal activity of the employer to a public authority.
A Balancing Act
The first, second, and third categories are relatively straightforward. However, the third category of public policies (exercising a legal right or privilege) is more difficult to apply. Hansen v. Am. Online, Inc., 2004 UT 62, ¶ 10. This is because when this category is implicated, both employees and employers may be able to invoke public policy in support of their respective positions. Id. at ¶ 11. Employees have an interest in maximizing access to their statutory and constitutional rights in the workplace. Id. At the same time, employers have an interest in regulating the workplace environment to promote productivity, security, and similar lawful business objectives. Id.
Thus, when considering this category, Utah courts conduct a balancing analysis to determine “whether countervailing policies outweigh the policy at issue.” Ray, 2015 UT 83, ¶ 14. This balancing analysis has two steps. The first step is to 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). If a policy affects a duty that runs solely to the benefit of the employer and employee, it generally will not rise to the level of a substantial public policy. Ryan, 972 P.2d at 405. The second step is to ask, “whether the public interest is so strong and the policy so clear and weighty” that the policy should be beyond the reach of contract, such that parties should not be not allowed to modify it, even when freely willing and have equal bargaining power. Retherford, 844 P.2d at 966.
Specific Areas in Which the Claim of Wrongful Discharge in Violation of Public Policy Have Been Recognized
As of the date of this post, the Utah Supreme Court has recognized causes of action for discharge in violation of public policy in the following areas:
- exercising the right of self-defense embodied in the Utah Constitution and Utah’s “stand your ground” statute in situations where an employee is unable to withdraw without imminent threat of death or serious bodily harm, Ray, 2015 UT 83, ¶73;
- seeking benefits under Utah Workers’ Compensation Act, Touchard v. La-Z-Boy Inc., 2006 UT 71, ¶19 ;
- making an internal report about a bank’s noncompliance with state reporting requirements, Heslop v. Bank of Utah, 839 P.2d 828 (Utah 1992); and
- refusing to falsify tax documents. Peterson, 832 P.2d 1280 (Utah 1992).
Discharge in violation of public policy is a tort. Heslop, 839 P.2d at 836. As a result, a successful plaintiff may recover damages for general and consequential injuries resulting from a wrongful termination. Id. at 840. In the context of this tort, consequential damages include attorney fees because “[e]mployers can reasonably foresee that wrongfully terminated employees will be forced to file suit to enforce their employment contracts and will foreseeably incur attorney fees.” Id. at 840-841.
Check back for next week’s post about the third exception to the at-will employment presumption—implied contracts.
 This cause of action extends to situations involving claims of constructive discharge. Id. at ¶ 17. However, no cause of action exists for retaliatory harassment or discrimination that does not result in an actual or constructive discharge for having exercised a legal right or privilege. Id. at ¶ 29. And, no cause of action exists for an employee who was discharged for merely opposing an employer’s treatment of other employees who exercise a legal right or privilege. Id. at ¶¶ 42-46.
Mark A. Wagner concentrates his practice in employment law, homeowners association law, and health care law, and serves as Chair of the firm’s Employment and Labor Practice Group.