News & Information

CCH® UNEMPLOYMENT INSURANCE — 09/28/12

Court denies Michigan employee’s claim that he was wrongfully refused rehire in retaliation for seeking UI benefits

Affirming dismissal of a discharged Wal-Mart employee’s claim that he was wrongfully denied rehire in retaliation for having filed for unemployment benefits, the Sixth Circuit found no basis to hold that Michigan courts would even recognize a public policy claim in the context of a failure to hire or rehire (Berrington v. Wal-Mart Stores, Inc., No. 11-1988, August 30, 2012). Finding it clear that Michigan courts did not recognize such a cause of action, the appeals court also denied the employee’s bid to have the question certified to the state’s Supreme Court.

Background

During his several years of employment with Wal-Mart, the employee had taken a number of approved leaves of absence. In February 2007, he began a leave of absence that was approved through April 30. He did not return to work on that date, but did not update his paperwork because he mistakenly believed he did not need to do so. A couple of weeks later, a personnel manager told him to update the paperwork, and although he obliged, three days later he was terminated for failing to return at the end of his leave.

The employee thought he had been involuntarily terminated and applied for unemployment benefits. Wal-Mart opposed his application, asserting that he had quit his job of his own volition. Termination documents reflected that he had voluntarily terminated his employment by failing to return from a leave of absence and also recommended rehiring him. While the dispute over unemployment benefits continued, 90 days passed and the employee reapplied for a job with the company. He was not offered a position, and after another 90 days, he reapplied a second time without success. In the interim, the store at which he applied had hired a number of employees to positions for which he was qualified.

No public policy claim existed

At issue was whether Michigan law recognizes a public policy cause of action for an employer’s wrongful refusal to rehire because an individual claimed unemployment benefits—a question that the Michigan Supreme Court has yet to answer. Although the employee insisted that the state Supreme Court “would not hesitate” to recognize such a claim in order to vindicate the state legislature’s established public policy of encouraging dismissed workers to file for unemployment benefits, the appeals court held otherwise.

In Michigan, public policy proscriptions against terminating an at-will employee are found most often in one of three situations: (1) adverse treatment of employees who act in accordance with a statutory right or duty; (2) an employee’s failure or refusal to violate a law in the course of employment; or (3) an employee’s exercise of a right conferred by a well-established legislative enactment. The employee argued that his claim for wrongful failure to rehire was cognizable as a violation of Michigan’s public policy under the third category—to prohibit retaliation against employees for exercising a right conferred by a well-established legislative enactment.

He urged that the Michigan legislature had expressly declared a strong public policy for providing unemployment benefits to deserving individuals. Furthermore, he pointed to a case in which a federal district court in Michigan allowed an employee to pursue his common law claim alleging he was wrongfully discharged in retaliation for having filed for unemployment benefits. On this basis, he claimed that his failure to rehire claim should similarly be recognized because the established public policy behind the unemployment compensation legislation is as strong against refusing to rehire an employee on the basis of claiming unemployment benefits as it is against terminating an employee on that basis.

However, the appeals court recognized a fault in the employee’s argument, noting there was a common denominator in all of the recognized public policy exceptions to at-will employment—the existence of an employment relationship. Conversely, an employee’s right to be hired or rehired by an employer had never been recognized as actionable under common law on public policy grounds. Indeed, the employee acknowledged that no Michigan state court had ever considered whether a failure to rehire may violate public policy, nor had a decision from any jurisdiction enforced a retaliatory failure to rehire claim in state common law or public policy, absent some other statutory basis.

In sum, although the employee’s proposed equation of failure to rehire with termination was not without its supporters, there was no indication from binding or persuasive authority that Michigan courts would recognize such a claim. Thus, even if the appeals court were inclined to accept this rationale, precedent precluded such a finding. Accordingly, the district court was correct in declining to carve this unprecedented category of public policy claims out of Michigan law.

Certification unwarranted

The appeals court rejected the employee’s request to certify the question to the Michigan Supreme Court. It noted that although it had discretion to certify unsettled questions of state law to a state supreme court, “federal courts generally will not trouble our sister state courts every time an arguably unsettled question of state law comes across our desks.” Thus, because it was clear that Michigan courts did not recognize the cause of action that the employee attempted to assert, certification was not appropriate (Marjorie Johnson, Attorney/Employment Law Analyst).