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Employment Torts: The Overlooked Threat
Tennessee Employment Torts Revisited
It is easy for employers to believe they have "litigation proofed" their human resources operations through careful preparation and planning. This is, of course, because they have sought an attorney's advice to make sure they are on top of employment law changes. Perhaps you have been lucky enough to receive employers' more common requests for updated I-9 forms, yearly diversity and antidiscrimination training sessions, and advice on Congress's latest amendments to the Family and Medical Leave Act. And, because you are not the typical attorney, you are watching out for the resolution of the Social Security No-Match debate like a hawk so you can be prepared for in-house counsel's detailed questions. It seems that you have covered all your bases in giving employment law advice ...
But have you considered the threat of the employment tort? Employees are not just restricted to filing workers' compensation claims or lawsuits under federal discrimination, labor and leave laws. In fact, there is a whole litany of state law employment torts that employees (and even non-employees) can pursue when they believe an employer has wronged them. The law in this area is moving quickly, and Tennessee is a hot spot because it, unlike some of its neighbors, recognizes a wider variety of these employment torts. It is important to understand when these kinds of claims can arise and how Tennessee courts are currently treating them so that you can help your clients comply with the law, implement defenses, and prevent tort liability.
Employment Torts to Watch Out For
The possibility of employment tort liability arises more often than you might think. Take, for example, a scenario illustrating the most common employment law advice question: the termination of an employee. You know the employee we are talking about " she is late to work every day, leaves early without permission, does poor work, and does not get along with anyone. What is worse, several customers have recently lodged complaints about the employee's attitude and violent temper. There is also some evidence to show that she may have helped herself to some of her employer's merchandise " without paying. When your client calls to ask for termination advice, the situation seems pretty simple. But do you think to ask the questions that will reveal the risk of tort liability? Has the employee recently filed a workers' compensation claim? Has the employee been retained on the premises since the theft? Is the employee at-will or does she have an employment contract?
These and other questions must be considered because plaintiffs are exploring employment torts as claims in addition to the more typical harassment or discrimination claims. Attorneys advising employers must consider tort liability when advising about routine employment decisions such as hiring, termination, promotions and employee discipline. Tort liability can also arise with business decisions and customer/client relations. The growing possibility of claims associated with these decisions is best illustrated by some recent Tennessee decisions as discussed below.
Retaliatory discharge is probably the most common employment tort alleged by employees. Tennessee, unlike other states, has two distinct causes of action for retaliatory discharge: (1) a common law tort remedy; and (2) a statutory remedy under the Tennessee Public Protection Act (TPPA). These remedies are intended to protect employees from being discharged for complying or attempting to comply with certain laws. This is known more commonly as "whistle-blowing."
The U.S. District Court for the Eastern District of Tennessee recently declined to enter summary judgment on a statutory retaliatory discharge claim. In Conley v. Yellow Freight System Inc., a truck driver with an excellent safety record was "indirectly" advised that he needed to complete his delivery routes more quickly. The truck driver responded to this implied direction by writing a letter to his supervisor explaining that, because safety under the Federal Motor Carrier Safety Act was his most important concern, he would not put himself or others at risk in order to decrease his "run times." The truck driver was fired shortly thereafter for allegedly violating an intermittently applied "sign-in/sign-out" policy. The court found that the truck driver presented sufficient evidence to show he had been discharged in retaliation for refusing to violate a federal safety statute, especially since a number of employees had violated the sign-in/sign-out policy without consequence. Although the company argued it never explicitly instructed the truck driver to drive faster or violate a safety regulation, the court concluded that the company's implied instruction was sufficient under Tennessee law.
The Conley case has an important point for employers as well as attorneys. For employers, what is said versus what is implied is immaterial " it is the overall communication to employees that matters. For attorneys, understand the purpose behind your client's policies and the consistency with which discipline is imposed. If your client wants to terminate an employee for a disciplinary violation, ask what evidence can be used to show that the policy that has been violated has meaning and is applied without fail to all employees.
Fraudulent Misrepresentation and Promissory Fraud
The torts of fraudulent misrepresentation and promissory fraud often arise where an employer extends, but later rescinds, an offer of employment and the prospective employee has relied upon the offer to his or her detriment. However, there are some situations where these torts may arise after the employment relationship has begun. For example, employers often communicate with their employees through newsletters, bulletin board postings, mass e-mails and office memoranda. At other times, supervisors and managers may communicate information to lower-level employees orally. Employees rely on the information contained in these communications, and if their reliance somehow harms them, the employer may be to blame.
Such an incident in Tennessee was recently adjudicated by the U.S. Court of Appeals for the Sixth Circuit. In Jackson v. Alstom Power Inc., a group of retired employees sued their former employer, claiming it had made fraudulent and negligent misrepresentations that separation pay would not be provided to any retiring employees, which induced them to retire by an immediately upcoming date. The court found no evidence that the managers' statements regarding the unavailability of separation pay were false when made. Although the employer was eventually able to provide separation pay to employees who retired at a later date, this was due to intervening economic conditions rather than an attempt to trick workers into retiring without the promise of this benefit.
The retired employees also alleged promissory fraud, which is a promise of a future action without the present intention to carry out the promise. However, the same factual allegation supporting the claim of misrepresentation " that management actually planned to offer separation pay in the future after they induced the majority of workers to retire " could not be supported.
The lesson to be learned from Jackson is care in communication. When important information (such as leave policy changes or the potential of a labor union campaign) is communicated to employees, be sure that all communications are consistent with one another. Sometimes the best way to do this is to consult with an attorney to draft formal communications to employees and managers, as well as sample "catch phrases" for managers to use when answering employee questions. This way, oral as well as written communications with employees are compatible and the employer's intended message is not muddled through varying interpretations.
Vicarious Liability " for Battery, Assault, or Almost Anything!
When advising employers, many employers may wonder why they should be concerned about their employees' actions. They may not be aware of how their employees' actions relate to employer responsibility. It is therefore important that you advise them of the risk of vicarious liability. Vicarious liability, or respondeat superior, is a theory used to impute liability for the actions of an employee upon his employer. This obviously opens employers up to a wide variety of claims, but most often for physical injuries resulting from an employee's battery or assault. Tennessee law limits these sorts of claims to injuries caused by an employee while engaged in his employer's business and acting within the scope of his employment " to avoid the risk of a plaintiff saddling your client with liability for its employee's most personal actions. Take, for example, Carter v. Bell, a recent Tennessee Court of Appeals case. In Carter, defendant's pharmacist initiated a romantic relationship with one of defendant's customers while he was on duty. Later, when the pharmacist's wife discovered the pair having relations at their home, she assaulted and beat the customer. The customer initially sought to impose vicarious liability for her injuries against her lover's employer, although she later voluntarily dropped that claim. The lesson from this case is not teaching misbehaving employees how "not to get caught," but advising employers on what policies or guidelines they have in place to show the employee was not acting in the course of their job duties, and that the employer does not ratify or condone such misbehavior. Planning and preparing for such incidents can provide employers with evidence against the imposition of vicarious liability.
Negligent Hiring, Supervision, Retention, Training ...
Negligence differs from vicarious liability because an employer can be independently liable for the intentional acts of its employees even when those acts occur outside the scope of employment. Liability can stem from the employer's "negligent" decision to hire, retain or properly supervise an employee after the employer has notice of the employee's propensity for injury-causing behavior. It is also important to note that Tennessee cases in this area tend to use these terms interchangeably, which risks the expansion of a single claim into two or three other causes of action.
The language in some Tennessee decisions is also so imprecise that it creates a risk of holding employers liable for negligence when there is even the slightest sign that an employee's wrongful act is imminent. The U.S. District Court for the Eastern District of Tennessee recently found an employer had enough notice of an employee's assault on a client when the client expressed concern to other employees that "someone was going to want to fight him" immediately before he was struck. The employer could not skirt liability for negligent hiring and supervision because the attack was foreseeable, however slight the notice may have been.
Tennessee's standard for a showing of foreseeability emphasizes the need for employers to pay attention to even the slightest signs of an employee's propensity to commit harmful acts on others. This standard may become even more significant in light of Tennessee's neighbors' recent adoption of laws allowing licensed firearms in employee vehicles while on company premises. The Tennessee legislature considered a similar law last year. While these laws do contain provisions protecting employers from legal actions resulting from the misuse of such firearms, it is currently unclear how these protections will be applied in practice. Should Tennessee decide to pass a similar law, the quantity of negligence actions against employers could increase as the low threshold for foreseeability meets an employer's constructive or actual knowledge of firearms in employee vehicles.
Employees and non-employees can sue for emotional injuries as well as physical ones. Tennessee recognizes two forms of emotional distress injuries: (1) the intentional infliction of emotional distress; and (2) the negligent infliction of emotional distress. For both types of claims, there must be a serious mental injury.
While these claims have very demanding standards, employers should be aware of the risk they pose. This is especially true where there is evidence that the employer is on notice of an employee's tendency to engage in the injurious conduct. The U.S. District Court for the Eastern District of Tennessee recently permitted a claim of intentional infliction of emotional distress to proceed against an employer where one of its delivery drivers was accused of exposing himself to the employer's customers. This was because there was evidence the employer knew the delivery driver had made suggestive comments to other customers in the past and had actually touched this customer only weeks before the exposure incident, and the employer permitted the driver to continue making deliveries to the injured customer. As illustrated by this case, if your client encounters an employee prone to outrageous conduct, your client should be aware of the risk of vicarious liability for the emotional distress caused by that conduct.
Civil Malicious Harassment
Discrimination claims based on race, color, ancestry, religion or national origin may also be refashioned as "civil malicious harassment." Tennessee provides for a claim of "civil malicious harassment" based on its criminal malicious harassment, or "hate crime" statute. Employers should be aware that such claims may be a part of a discrimination suit or may be brought where the plaintiff cannot bring a traditional Title VII claim. A Clarksville, Tenn., police officer recently brought both a Title VII and civil malicious harassment complaint against the city for alleged episodes of hazing by his supervisors and fellow officers, including the firing of a bullet into his home. However, he was unable to show that the alleged harassing conduct arose because of one of the statute's protected categories, and therefore his claim was dismissed. Not all employers may be so lucky. Civil malicious harassment claims are a risk employers should be aware of whenever conduct in the workplace could be considered discriminatory or resembling that of a "hate crime."
Invasion of Privacy
An employer can invade another's privacy either by its own actions or by those of its employees, and does so when it physically or otherwise intrudes on the solitude or seclusion of an employee. The intrusion must be more than a minor offense " it must be highly offensive to a reasonable person. These sorts of claims most often arise when medical or personal information is somehow disclosed in the workplace. However, invasion of privacy claims can also become a problem when an employee takes it upon himself to act unilaterally in relation to your client's customers, vendors or clients. These circumstances recently embroiled a popular Nashville hotel in litigation. In Garmley v. Opryland Hotel, a Texas distributor for a tool corporation received a massage during his stay while on a business trip. The distributor allegedly made inappropriate advances towards the hotel's masseuse. He sued the hotel for the public disclosure of private facts when the masseuse reported his conduct to his employer.
While Opryland Hotel was able to successfully defend the actions of its employee, other employers may not have the same result. As a rule, employers should have practices and training for employees in place so that their employees refrain from taking unapproved actions in relation to third parties with whom they interact. Instead, employees should bring their concerns to a supervisor or manager and allow the employer to take any necessary action. This will help employers to combat the risk of vicarious liability and any claims that the employees' actions were done in the scope of their employment. Employees should also be reminded to use their common sense. If they find themselves in a personal or private situation that makes them feel uncomfortable, they should remove themselves from that situation immediately and inform management of the reasons for their discomfort.
False Imprisonment and Malicious Prosecution
These two torts often go hand in hand. The circumstances leading to these suits typically involve retail clients and either customers or employees who are accused of shoplifting. The individual under suspicion is usually detained, questioned and, if a theft has occurred, prosecuted for that action. If the prosecution is abandoned by the employer or if the individual is acquitted, this can result in the individual's attempt to recover damages for false imprisonment and malicious prosecution.
Tennessee employers should be aware of the "shopkeeper's privilege," found at Tenn. Code Ann. section 40-7-116. This statute outlines when and how a merchant can detain an individual for suspected shoplifting. Be sure that clients susceptible to shoplifting are aware of this law and have designed their loss prevention policies around it. It is never a bad idea to review detention and interview procedures and provide employees with refresher training. These detention procedures should require management to seek the help of a third party outside of the immediate premises, such as a corporate human resources manager or security officer. Also remind your clients to inform you if they plan to prosecute a shoplifter " initiating and failing to follow through on a prosecution will leave them susceptible to suit.
A defamation suit can be based on the most normal of everyday interactions at work " comments made in a staff meeting, gossip in the break room, or statements made when giving an employment reference or during a termination session. A Tennessee employer recently found itself defending a defamation claim based on gossip. One of its employees resigned from her job as a hypnosis sales consultant. Following her resignation, she alleged her former supervisor made statements to others that she was having an affair with a married man. These kinds of statements have the potential to injure a person's character or reputation, so much so that an employer could be vicariously liable for an employee's knowingly false chit-chat. While an employer cannot have ears all over the office or control what rumors its employees pass along, it can warn its employees that idle chatter can have more serious repercussions than just hurt feelings.
Procurement of Breach of Contract
There is a risk of liability for procurement of breach of contract whenever an employee's employment contract is terminated. These sorts of claims are usually seen where an employee leaves one employer for a competitor and is restrained by a noncompete agreement, but can arise in other areas. This cause of action requires a three-party relationship " the employer, the employee and a "third party" who induces the breach of contract and becomes the defendant in the employee's suit. The suit is essentially aimed at the employer; however, if the third party is a corporate officer, liability may be found if the termination was motivated by interests other than the corporation's " in other words, for reasons outside of the corporate officer's duties.
A golf instructor recently sued his employer and its president for procurement of breach of contract after his employment contract was terminated. He claimed the incidental private benefit the president would receive from the closely held corporation's overall financial benefit from his termination was personal motivation enough to make the president a third party for procurement purposes. The court disagreed, saying without more, this would be the circumstance in any small business. Keep this case in mind when advising your smaller business clients in order to avoid this tort claim. If they are going to end the employment of a worker who has a contract, ask questions about the motivation for the termination. Because small business can be extremely personal and close-knit, be sure that the reason for the termination is business-related and can be supported by the corporation's interest rather than individual conflicts.
As these and other examples discussed above illustrate, it does not take a discrimination or harassment claim to land an employer in trouble. Outside of these traditional employment law concerns, there are risks in both employees' actions and an employer's inactions. To avoid exposure to liability for Tennessee's large variety of employment torts, advise your clients to take the following actions in the workplace:
(1) Run background checks before and during employment: There are legal issues associated with running a proper background check, but it is a good idea to do one before a job offer is extended. Employers can also do background checks on their employees after they have been hired and it is a useful tool when there is suspicion an employee is involved in criminal misconduct. Consider advising your business clients to implement a background check program and consult with an employment attorney to make sure the program is legally compliant " there are both federal and state laws on background checks, including the Fair Credit Reporting Act, with intricate requirements and significant deviations among the states.
(2) Training is key: Be sure employees receive adequate and documented training on everything from the employer's computer and Internet usage policy to proper safety and security measures. Every employee should receive notice of these policies, preferably in an employee handbook that the employee signs for and thereby acknowledges receiving. Consider putting the most important policies in a separate form for training sessions and including an acknowledgement section so there is dated and signed proof of when an employee was trained on the particular policy. And do not forget managers and executives " even the highest level employees should receive proper training. Think of training not only as a chance for education but for building a defense against everything from false imprisonment to negligent training and supervision claims.
(3) Reporting mechanism: Employers should provide employees with a clear reporting mechanism for complaints and any type of dispute claims. This mechanism can be anything from filing a direct complaint with the president of the company to setting up a confidential, toll-free complaint hotline number. The reporting mechanism should be communicated to employees at the outset of their employment and provided to employees in a written format. Employees should be encouraged to use the reporting mechanism and informed that no reprisals will result from its use. A clear reporting mechanism for complaints and dispute claims provides employers with not only a way to learn about and address problems, but also a defense against liability when employees fail to take advantage of the employer's complaint procedures.
(4) Investigate claims against employees: It is important to investigate claims of discrimination and sexual harassment, but these are not the only concerns that should spark an investigation. Complaints about employees, whether from their coworkers, managers, vendors, customers or any other third party, should spark concern and an immediate investigation into the allegations. Whether the complaint is as small as an employee's suspicious loitering or as serious as suspected drunk driving on the job, if it is brought to the employer's attention, the employer cannot ignore the complaint's possible significance.
Taking complaints seriously works to an employer's advantage in two ways " it ensures there is a record of company concern regarding employees' complaints (which works in favor of employers faced with a retaliatory discharge claim) and documents the investigation, resolution and response to complaints against employees (which bolsters a defense to a negligence claim). Being more cognizant of employees' activities can also help an employer weed out the bad apples before they have any further opportunities to cause a lawsuit.
(5) Be consistent with disciplining, evaluating and terminating an employee: Be consistent about the reasons for discipline, evaluations and employment terminations. Inform decision-makers about how to address these issues " before taking action, they should include all parties with relevant input, focus on documented, objective evidence and provable misconduct, and assess the situation for risk. This will pay off in the long run if the employer is defending a lawsuit. For example, nothing hurts a retaliatory discharge claim more than consistent, documented reasons for your client's decisions " especially when those reasons are supported by truthful performance evaluations. If an employer waffles back and forth between explanations for the discipline or termination, and the employee can point to great performance reviews that are inconsistent with the reason for the adverse action, the employee's claim that he or she was fired for blowing the whistle on the employer's accounting practices sounds a little more realistic. Performance evaluations, discipline and terminations are some of the most difficult aspects of being an employer, but diligence will likely prove to be beneficial later on.
1. Both the statutory and common law remedy require an employee to show he or she was discharged from an employment relationship. They differ, however, in the level of proof an employee must offer regarding his or her activities and their alleged impact on the employee's termination. The statutory cause examines whether the employee refused to "participate in, or remain silent about, illegal activities" on the part of his or her employer and whether this decision was the exclusive cause of his termination. The common law cause of action is more relaxed " it looks only at whether the employee "attempted" to exercise a statutory or constitutional right or comply with clear public policy and whether doing so was a "substantial factor" in the employee's termination. In comparison, the common law cause of action is an easier burden for employees to meet. Employees are free to pursue either or both of these remedies as one is not preemptive of the other. Guy v. Mutual of Omaha, 79 S.W. 3d 528 (Tenn. 2002). The statutory cause of action, however, may make punitive damages available to a plaintiff.
2. There may be some confusion regarding who is an "employee" under the TPPA because the definition section of the statute does not include private employees, even though the substantive provisions of the statute expressly reference private employees. In 1997, the Tennessee General Assembly approved an amended definition of "employee" under the TPPA to read "also includes an employee of the state ... or any other entity thereof." See 1997 Tenn. Public Acts 511. However, the codification of this amendment does not include the term "also." See Tenn. Code Ann. § 50-1-304 (a)(1) ("Employee includes an employee of the state ..."). The literal reading of this codified definition would exclude the application of the TPPA to private sector employees, which is in conflict with other portions of the statute which seem to assume coverage for private sector employees. See Tenn. Code Ann. § 50-1-304(c) ("In addition to all employees in private employment, this section applies to all employees who receive compensation from the federal government ..."). The Tennessee Supreme Court, however, has assumed coverage in light of the literal definition found in the statute. See Guy, 79 S.W. 3d at 537 ("Clearly, the General Assembly has recognized the importance of encouraging all employees " both public and private " to report infractions ..."). This is a possible issue for resolution by the Tennessee legislature.
3. See Conley v. Yellow Freight System Inc., 521 F. Supp. 2d 713 (E.D. Tenn. 2007).
4. 2006 U.S. App. LEXIS 21882 (6th Cir. Aug. 24, 2006).
5. 2007 Tenn. App. LEXIS 524 (Tenn. Ct. App. Aug. 15, 2007).
6. See Sparks v. Westgate Resorts Inc., 2007 U.S. Dist. LEXIS 79639, at **13-14 (E.D. Tenn. Oct. 26, 2007).
7. See "Georgia's Parking Lot Law Has Less Bang for Employers Than Predicted," Don Benson and Julie Jordan, Littler Mendelson ASAP June 2008, at http://www.littler.com/ PressPublications/Lists/ASAPs/ DispAsaps.aspx?id=1249&asapType=Southern; see also O.C.G.A. § 16-11-113; see also Fla. Stat. § 790.251.
8. See 2008 Tennessee Legislature House Bill 3063/Senate Bill 2928.
9. Boyl v. Merchants Dist. Inc., 2006 U.S. Dist. LEXIS 64672, at **14-17 (E.D. Tenn. Sept. 8, 2006).
10. Tenn. Code Ann. § 39-17-309
11. Hisel v. City of Clarksville, 2007 U.S. Dist. LEXIS 15145, at **43-44 (M.D. Tenn. March 2, 2007).
12. Garmley v. Opryland Hotel Nashville LLC, 2007 U.S. Dist. LEXIS 91766, at *4 (M.D. Tenn. Dec. 13, 2007).
13. Brock v. Positive Changes Hypnosis LLC, 2008 U.S. Dist. LEXIS 49281, at **24-27 (W.D. Tenn. June 26, 2008).
14. Rennell v. Through the Green Inc., 2008 Tenn. App. LEXIS 151 (Tenn. Ct. App. Mar. 14, 2008).
DONALD W. BENSON is a senior litigator at the Atlanta office of Littler Mendelson PC. He received his bachelor’s degree from Davidson College; his masters in philosophy from the University of Georgia; his law degree in 1984 form the University of Utah in Salt Lake City, Utah. He is a member of the Tennessee and Georgia bars and former judicial law clerk of Judges Robert Taylor and James Jarvis in the U.S.D.C., Eastern District of Tennessee. He can be reached at email@example.com.
GINA M. COOK represents and counsels management clients in all areas of employment law arising under state and federal law. She received her law degree from the University of Georgia in 2005, cum laude, and her bachelor’s from Berry College in 2002, summa cum laude. She has practiced in both Tennessee and Georgia and is currently an associate with Littler Mendelson PC in Atlanta.