Court News Ohio
Court News Ohio
Court News Ohio

Wrongful Termination Claim Not Allowed in Case Involving Unemployment Reporting Dispute

A Medina County court correctly dismissed the lawsuit of a restaurant server who claimed she was fired after confronting the restaurant owner for allegedly underreporting her earnings to the Bureau of Unemployment Compensation and paying less than what was due to the state, the Ohio Supreme Court ruled today.

A Supreme Court majority reversed a Ninth District Court of Appeals’ decision, which would have allowed Christine House to pursue her case against Riverstone Taverne and its owner Bruce Iacoveilli. The Court concluded that a former employee cannot maintain a wrongful termination lawsuit when Ohio law has adequate means to protect the public policy asserted by the former employee as a basis for  the claim.

Writing for the Court majority, Justice Patrick F. Fischer stated that House could not prove a key element to succeed in a wrongful-termination-in-violation-of-public-policy case.  He wrote that the public policy asserted by House is not jeopardized because R.C. Chapter 4141 has several provisions that “adequately discourage the employer’s wrongful conduct and are sufficient to protect society’s interest in ensuring employers accurately report employees’ pay and tips to the Bureau of Unemployment Compensation.”

Chief Justice Maureen O’Connor and Justices Judith L. French and R. Patrick DeWine joined Justice Fischer’s opinion. Justice Sharon L. Kennedy concurred in judgment only.

In a dissenting opinion, Justice Melody J. Stewart wrote that the state would hardly ever be able to detect underreporting of unemployment taxes if it were not for employees alerting the bureau. Without protecting employees against retaliation, the Court majority does more to encourage underreporting than any provision in the law can do to discourage it, she stated.

Justice Michael P. Donnelly joined Justice Stewart’s opinion.

Underreporting Claim Leads to Dispute
House claimed she told Iacovelli that he was underreporting her income to the state. If her income were underreported, she would receive less unemployment compensation than she would be entitled to receive if she lost her job. Iacovelli fired House, alleging she created “drama.” House filed a lawsuit, claiming wrongful termination in violation of public policy.

House charged that she reported to Iacovelli that the restaurant was in violation of provisions in R.C. Chapter 4141, which covers the unemployment compensation. The trial court dismissed her case, and she appealed to the Ninth District, which reversed the trial court.  The Ninth District concluded that House must be allowed to pursue her claim “in order to avoid fostering an environment where employees face the prospect of losing their jobs when they seek to obtain benefits they have earned under the law.”

Iacovelli appealed to the Supreme Court, which agreed to hear the case.

Court Examines Whether R.C. 4141 Jeopardized Without Employee Remedy
The majority opinion noted that Ohio is an employment at-will state, a rule that allows an employer to fire an at-will worker for any cause or no cause, and an employee can quit a job for any reason.

The Court explained there are exceptions to the general at-will rule, including wrongful termination in violation of public policy. A worker must prove four elements to succeed in a lawsuit claiming wrongful termination in violation of public policy: (1) that a clear public policy exists; (2) dismissing employees under the circumstances would jeopardize the public policy; (3) the dismissal was motivated by conduct related to the public policy; and (4) the employer lacked an overriding business justification for the dismissal.

Justice Fischer explained that the second element, known as the “jeopardy” element, was the key issue of dispute between House and her employer. The Court had to determine if dismissing employees under circumstances such as House’s jeopardizes the public policy expressed in the unemployment compensation law that employers should accurately report employees’ pay and tips.

The opinion explained there is less of a need for a wrongful-termination-in-violation-of-public-policy claim when a statute includes methods to discourage violations of the law. It noted that R.C. Chapter 4141 has several provisions that punish employers who fail to comply with the requirements. The Court noted that R.C. 4141.20(B) allows the director of the Department of Job and Family Services to assess a forfeiture to the employer, no less than $50 and no more than $1,000, for an employer failing to file unemployment compensation contributions and wage reports, and R.C. 4141.27 allows the director to institute a lawsuit against an employer that fails to comply with unemployment compensation laws.

House argued that allowing an employee to sue for wrongful termination is needed to protect workers who were fired for informing their employers of their failures to comply with the law. Without employees being able to safely report infractions, the public policy of assuring employer compliance is jeopardized, she maintained.

The Court disagreed, and the opinion noted that in prior cases that permitted the lawsuits, the issue involved public policies “that protect substantial rights of the employee,” such as family and medical leave, age discrimination, sexual harassment, and workplace safety. In those cases, the public policies specifically protect employees, the opinion stated, but in this case, the public policy announced is to protect the government’s interest— the accurate reporting of wages to the Bureau of Unemployment Compensation.

The court determined that a wrongful-termination-in-violation-of-public-policy claim was unnecessary to protect the public policy because the state has adequate methods to protect society’s interest and to discourage employers from failing to comply with the law.

The opinion noted that even assuming the lawsuit was permitted, it may only protect the employee’s interest by preventing retaliation by an employer alleged to have underreported wages. A successful suit would not necessarily result in an employer complying with the law and accurately reporting pursuant to R.C. Chapter 4141. The Court also observed that R.C. Chapter 4141 does not contain a whistleblower provision and does not serve to protect the employee.

“Had the General Assembly wished to create substantive rights for the employee in this case, it could have done so. Simply stated, the public policy recognized by the trial court is sufficiently protected by the remedies in R.C. Chapter 4141,” the Court concluded.

Dissent Maintains Public Policy at Risk
In her dissent, Justice Stewart wrote the majority distinguishes House’s case from those it has allowed by stating the public policy of accurate employee wage reporting exists only to protect the government’s interest. However, several laws that are important to protecting the community at large do not have a provision to protect an employee who is fired for refusing to break the law, and the state benefits from allowing employees to file wrongful-termination lawsuits, she stated. House was asked to lie about being terminated due to lack of work.

The dissenting opinion pointed to a scenario where an employee at a chemical-manufacturer might be told by his supervisor to dump toxic waste into the Ohio River. Knowing that doing so would be a criminal violation and harm others, the employee refuses and is fired. The opinion stated that, according to the majority opinion, the employee would not be able to maintain a wrongful termination lawsuit. That leaves an employee with the difficult choice of breaking the law or risking being fired for refusing to break the law.

“When the employee has some recourse against his employer for wrongful termination, this choice becomes much easier, and the employer might think twice before asking an employee to engage in illegal conduct in the first place,” the dissent stated.

The dissent also stated the majority failed to explain why it found underreporting wages was only a governmental interest and not a protection of an employee right. The fund out of which unemployment compensation is paid comes entirely from the contributions employers are ordered to pay by law.

“Contrary to the majority’s position, this court’s earlier case law shows that the public policy behind accurately reporting employee wages is meant to protect a substantial right of the employee — the right to receive his fair share of unemployment compensation —  in the event of an employee’s termination through no fault of his own,” the dissent stated.

The dissent concluded that without providing employees protection against retaliation from firing, the provisions in R.C. Chapter 4141 does not adequately protect the state against the purposeful underreporting of wages by employers.

2018-0434. House v. Iacovelli, Slip Opinion No. 2020-Ohio-435.

Video camera icon View oral argument video of this case.

Please note: Opinion summaries are prepared by the Office of Public Information for the general public and news media. Opinion summaries are not prepared for every opinion, but only for noteworthy cases. Opinion summaries are not to be considered as official headnotes or syllabi of court opinions. The full text of this and other court opinions are available online.

Adobe PDF PDF files may be viewed, printed, and searched using the free Acrobat® Reader
Acrobat Reader is a trademark of Adobe Systems Incorporated.