At-will employment is the normal employer-employee relationship in South Carolina. In 2004, the state legislature passed a law stating that handbooks that took certain reasonable steps did not create a contractual exception to at-will employment. An open question was, how broad was the public-policy exception to at-will employment? The South Carolina Supreme Court recently addressed that question. Read on to see what it decided.
In 2005, the town of Surfside Beach hired Jacklyn Donevant as its building official. In that capacity, she served as the head of the building department and was the only town employee who could approve building permits or issue stop-work orders. (A stop-work order is an order given by the building official to stop work, completely shutting down the work.)
In December 2010, the town hired Jim Duckett as its administrator. During Duckett's tenure, there was an ongoing controversy about the vacancy of the Pier Restaurant, which was located on a pier in Surfside Beach. The town acquired ownership of the restaurant in 2008. Shortly thereafter, the longtime tenant of the restaurant vacated the premises, leaving the space vacant and depriving the town of expected revenue. The town had trouble finding a new tenant. The vacancy of the restaurant became a prominent, public issue in the town, with several newspaper articles appearing. As the town administrator, Duckett worked to help find a new tenant. The record indicated that Duckett and Donevant did not get along.
In December 2011, Donevant was diagnosed with breast cancer and took 12 weeks of medical leave. During her absence, the town was forced to contract with the city of Myrtle Beach to perform her building official duties because no other town employee was qualified to perform them. The city of Myrtle Beach assumed the responsibility of reviewing plans, issuing permits, conducting inspections, and issuing stop-work orders within Surfside Beach's jurisdiction.
While Donevant was on leave, Duckett found a new tenant to occupy the vacant Pier Restaurant space. The new tenant wanted to remodel the interior of the restaurant. Because Donevant was on leave, Myrtle Beach issued the tenant a demolition permit allowing for "demo interior of building only." The demolition permit was the only permit issued to the restaurant during Donevant's sick leave. However, the tenant applied for a construction permit that was pending under "plan review." While Donevant was on leave, Duckett visited the restaurant frequently and remained in contact with Myrtle Beach about the construction plans.
On March 13, 2012, Donevant returned from sick leave. Before allowing her to resume her duties as building official, Duckett required her to meet with him and requested that Debra Hermann, the town clerk, observe the meeting. During the meeting, Duckett informed Donevant that she would resume all her job duties, but he warned that if she "change[d] anything that was done . . . in [her] absence," he would fire her. Duckett testified that the reason for the instruction was to prevent Donevant from revisiting any decisions made by Myrtle Beach during her absence. After the meeting, Hermann prepared a memorandum that stated:
Duckett explained that [Donevant] was now officially returned to work; however, he gave her a direct order that she could not and would not change, ameliorate, or in any other manner amend any action that was taken during her absence. That if she did so, she would be fired.
On March 19, Duckett instructed Micki Fellner, Surfside Beach's deputy administrator, to inform Donevant that she could no longer report to him and was required to report directly to Duckett. Duckett had previously informed all employees, including Donevant, that Fellner "was in charge when [Duckett] wasn't there" and "had the same authority [Duckett] had when [he] was there."
Donevant testified that shortly after returning to work, she discovered that new construction was underway at the Pier Restaurant by reading a local newspaper article. After reading the article, she contacted Myrtle Beach and learned that no construction permit had been issued. Thereafter, she drove to the restaurant to inspect the premises. She testified that new construction had started at the restaurant. According to Donevant, the contractors had cut openings for doors and windows, studded a new wall, and installed plumbing, electrical components, and subflooring. In her opinion, the work constituted "construction" and therefore required a construction permit before it could be lawfully performed. She testified that allowing unpermitted construction to continue in the town's jurisdiction posed a significant safety risk to the public:
It was unsafe and it was dangerous. They had openings that anybody could step in and fall. There [were] loose wires and plumbing. There was stuff that had [not] been inspected, how do you know whether it [was] safe or not. We have to protect the public. The pier is a busy place. A lot of kids go [out] there.
Donevant issued a stop-work order to halt construction at the restaurant and taped the order to the door. After issuing the order, she called Fellner on her way back to the office. She testified that she called to discuss an unrelated matter and was not "reporting" that she had issued the stop-work order. During the conversation, however, she told Fellner about the stop-work order for the unpermitted construction at the restaurant.
The next day, Duckett called Donevant into his office for a meeting. During the meeting, he said he could not believe she stopped work at the restaurant after all the effort he had put into the project. Duckett turned his attention to three papers lying face-down on his desk. He turned over the first paper, which was a written reprimand stating Donevant had disobeyed his order to report all matters to him, not Fellner. Donevant refused to sign the reprimand, claiming it was untrue because she had not "reported" the stop-work order to Fellner. She further stated that Duckett never told her she was required to report that she issued a stop-work order.
After Donevant refused to sign the reprimand, Duckett turned over the second paper, which was an order of suspension. Donevant testified that although she disagreed with the suspension, she signed the document and served a three-day suspension because she "needed to work" and suspected the third document on Duckett's desk was a termination notice. According to her, Duckett suspended her "for putting a stop-work order, for doing [her] job."
On March 25, Donevant returned to work following her suspension. On that date, she delivered a letter to Duckett:
My suspension was not right. All I did was follow the law, which you did [not] want me to follow. Like I told you the other day, I will follow the law even if that means not following your instructions. You have been picking on me and treating me badly for a long time even though I do my work by the book and I am dedicated to the town.
On April 4, Duckett terminated Donevant. She testified that he did not provide a reason for her termination. He later informed the South Carolina Department of Employment and Workforce that her termination was due to "operational changes." Donevant asserted that Duckett fired her in retaliation for issuing the stop-work order for unpermitted construction at the restaurant.
Donevant sued the town for wrongful termination under the public-policy exception to at-will employment. A jury decided against the town, and the town appealed the trial court's denial of its motion for a directed verdict-i.e., the judge should have entered an order that no reasonable jury could reach a decision other than to dismiss the case.
The town argued to the court of appeals that by denying its motion for a directed verdict, the trial court erred in expanding the public-policy exception to at-will employment beyond situations where the employer requires the employee to violate a criminal law or the reason for the employee's termination is a violation of a criminal law. The town further asserted that the trial court's denial of its motion was in error because the public-policy exception does not apply to terminations of government employees who insist on performing an act that is discretionary.
Court of appeals' decision
The court of appeals determined that based on its review of the building code, the building official-Donevant-was the only party authorized to issue a stop-work order for code violations. In the appeals court's view, Donevant had the sole discretion to determine whether to issue a stop-work order. The court wrote that the law required her to take action to enforce compliance with the building code when she saw unpermitted construction at the restaurant. Because the construction at the restaurant violated the building code, the law required her to take action to enforce compliance with the code.
To carry out her legal duty to "enforce compliance" with the building code, Donevant issued a stop-work order as required by law. The statutory and building code provisions at issue required her action of enforcing compliance with the building code. The appeals court agreed with the trial court that Donevant's claim fell "clearly within what our courts have already articulated what the law is"-that "she was required by her employer to violate the law." By suspending Donevant and ultimately terminating her for issuing the stop-work order at the restaurant, Duckett effectively discharged her for refusing to violate the law.
The appeals court found that Donevant's claim for retaliatory discharge fell within a recognized exception to the at-will-employment doctrine in South Carolina because she was required by her employer, "as a condition of continued employment, to break the law." In addition, the appeals court noted that although she was fired for refusing to violate the law, she presented a cognizable claim that she was terminated in violation of a clear mandate of public policy. An at-will employee has a tort (wrongful act) claim for wrongful termination if she suffers a retaliatory termination in violation of a clear mandate of public policy. In this case, the public-policy violation was the town requiring Donevant to violate the law-i.e., not issue stop-work orders when she was required to do so by statute.
However, the appeals court observed that based on its reading of previous court decisions, there could be situations where an employee is terminated in violation of public policy even if she was not required to violate the law by her employer or the reason for her termination was not a violation of a criminal law. The court pointed out that an exception to the doctrine of at-will employment, which is firmly rooted in South Carolina public policy, should emanate from the General Assembly and should come from a court only when the legislature has not spoken. In this case, the General Assembly enacted a law that the appeals court held was public policy. Therefore, the court found that the public-policy exception applied.
Supreme court's decision
The supreme court framed the issue as follows: "Based on the record as it appears to us, the question on appeal is whether it is a violation of a clear mandate of public policy to fire a building official for enforcing the building code." Based on its framing of the question, the court found this case fit squarely within the long-established limits of the public-policy exception to the at-will-employment doctrine because firing Donevant for enforcing the building code violated a clear mandate of public policy.
While the town made several arguments to support its contention that the court of appeals' decision expanded the public-policy exception, the supreme court found that the court of appeals effectively refuted the arguments. However, the supreme court addressed one argument-that Donevant's claim did not fit within the public-policy exception because her decision to issue a stop-work order was discretionary.
The supreme court noted that Donevant enforced the building code and that the law required her to take action to enforce compliance with the building code when she saw unpermitted construction. Therefore, she was enforcing a clear mandate of public policy when she issued the stop-work order. Firing her for carrying out her mandatory responsibility to enforce the building code violated public policy, and the public-policy exception applied to her claim because she was fired for enforcing the code.
Lessons for employers
Employers should expect to see more claims framed as public-policy exceptions to the at-will-employment doctrine. Both the court of appeals and the supreme court indicated that public policy can be created by either the legislature or the courts.
The supreme court's framing of the issue-whether it is a violation of a clear mandate of public policy to fire a building official for enforcing the building code-needs to be looked at in light of its discussion of the mandatory language in the statute in question versus other statutes that may establish or create discretionary responsibilities. If a responsibility is truly discretionary, the employer may be able to argue that there is not a viable public-policy claim. A former employee will almost always argue that a statute is mandatory in nature, and the employer must be able to point to language that is discretionary, not mandatory. Failing to do so likely will lead to a jury deciding whether there is a violation.
Always involve your counsel before making termination decisions. You are well advised to dive deep into any statute you intend to rely on or that may come into play when making a termination decision. Also, be aware that the public-policy exception to at-will employment may well be broader than you think it is.
For more information on the BLR, click here. For more information on the South Carolina Employment Law Letter, click here.