Employers are all too familiar with the consistent erosion of the employment-at-will doctrine. For years, Ohio courts have established exception after exception to this foundation of the employer-employee relationship. Such public policy exemptions, especially coupled with increased whistleblower lawsuits, also are beginning to present ambiguity with respect to termination for cause. Among the most troublesome exceptions is the tort of wrongful discharge in violation of public policy, which may prohibit an employer from terminating an employee even if an employer has just cause for such termination. Indeed, as public policy exceptions have expanded, employers can find themselves in a state of uncertainty as to the standards for lawful termination of an employee.
In Coolidge v. Riverdale Local School District, a unanimous Ohio Supreme Court added to the public policy conundrum. Rejecting majority precedent in Ohio's lower courts and in other jurisdictions, the supreme court ruled that employers may not terminate an employee because of excessive absence or inability to work if the employee is receiving temporary total disability under Ohio's workers' compensation system and the absence or inability to work is directly related to the allowed condition. Such a termination would, according to the court, run afoul of the public policy reflected in the temporary total disability and anti-retaliation provisions of the Workers' Compensation Act. Ohio employers are now searching to identify options to respond to this decision, which appears to give a temporary total disability claimant legal protection and preference over any other absent employee.
Background
The case involved a straightforward fact pattern. Cheryl Coolidge was a public school teacher employed by Riverdale Local School District. Coolidge went on leave and received temporary total disability ("TTD") compensation after she was assaulted and seriously injured by one of her students. Her leave began in October 1998, and Coolidge was still off work when the school board terminated her teaching contract in September 2000. The reason for the termination was Coolidge's failure to return to work after she exhausted all leave available under the applicable collective bargaining agreement, school board policy, and her individual contract. Coolidge filed suit, arguing that public policy embodied in Ohio's Workers' Compensation Act protects an employee from a discharge based on absence from work when the reason for the absence is a work-related injury.
Although the lower courts avoided the public policy argument, the Ohio Supreme Court faced it head-on. Justice Resnick, writing for the court, called the public policy question the "overriding issue" in the case. Her zeal to address the question is not surprising given past characterization of the employment-at-will doctrine as "a harsh outgrowth of outdated and rustic notions."
Coolidge identified two sources of her public policy argument. First, she argued that the provision for TTD compensation was enacted to provide employees who were recovering from a work-related injury means to provide for themselves and their families until they were able to work. Second, Coolidge pointed to the anti-retaliation provision of the Workers' Compensation Act. Coolidge admittedly was not terminated for filing a workers' compensation claim. She argued, however, that the spirit of protection embedded in both sections should prevent employers from terminating an employee for absenteeism when the reason for the absence was a work-related injury.
The Ohio Supreme Court agreed. It reasoned that allowing an employer to discharge an employee solely because of absenteeism or physical incapacity during a period of TTD forces the employee to choose between the receipt of workers' compensation benefits and the loss of employment, just as allowing an employer to retaliate for filing a workers' compensation claim forces an employee to choose between applying for benefits and loss of employment.
In a statement that arguably leaves open a window of relief for employers, the court admitted that every absence-based discharge of a TTD compensation claimant is not tactically designed to frustrate the claimant's right to compensation. The court did not define, however, what exemptions, if any, could be available to an employer. Further, the court followed by stating that employees should have the right to benefits for the period of absence from work that is deemed medically necessary to recover. Finally, the court noted that since the Workers' Compensation Act was designed to provide an injured employee with the means to survive during a period of TTD, it would be inconsistent to allow the employer to terminate the employee solely because of the disability for which the employee is being compensated.
Impact of the Decision
There are two significant aspects to the Coolidge decision. First, under the guise of fairness, the court would appear to have created an inherently unfair situation. Apparently, employers must now treat TTD compensation claimants more advantageously than other absent workers. The court addressed, and then dismissed, this very concern. In its view, workers' compensation claimants are not similarly situated to other employees precisely because they are workers' compensation claimants. According to the court, the workers' compensation system redefines the employment relationship with respect to injury-induced or disability-related discharges. Thus, a workers' compensation claimant is protected by the provisions and policies of the Workers' Compensation Act, regardless of whether comparable protections are provided by other laws. Sounding the death knell of application of absence policies to TTD compensation claimants, the court noted that "[h]owever 'neutral' or 'evenhanded' an employer's absenteeism policy may be, it cannot override the statutory protections."
Second, the court called into question the long-standing rule that public policy doctrines do not apply to employees covered by a contract or collective bargaining agreement. Coolidge was not an employee at-will. Rather, she was only subject to termination for "good and just cause" pursuant to statute, the terms of her collective bargaining agreement, and her contract with the school district. The court stated that, regardless of her employment status, the school board could not discharge Coolidge for reasons repugnant to public policy. It reasoned:
R.C. 3319.16 does not immunize the board from the dictates of state policy, and it certainly does not provide teachers with less protection against wrongful discharges than the common law generally affords to at-will employees. Thus, if Coolidge can show that her discharge contravened public policy expressed in the Workers' Compensation Act, she will have established that her discharge was without good and just cause under R.C. 3319.16.
Then, in the discussion of the basis for its holding, the court relied on a Kansas decision that squarely rejected the argument that only at-will employees could bring claims for wrongful discharge in violation of public policy. These two portions of the Coolidge opinion adopted by a unanimous court certainly undermine an employer's ability to challenge a public policy claim brought by a contract employee.
The school board's motion for reconsideration was denied on January 21, 2004. Employers now have no choice but to adjust their policies and practices to conform with the decision. The most obvious step for employers to take is to exempt TTD compensation claimants from their neutral absence policies. Equally obvious is the fact that employees who are removed from TTD status fall outside the protection of the Coolidge decision. Thus, all employers should be aware of the bases for removal from TTD status. The statute provides that an employee will no longer receive TTD compensation when: (1) the employee has returned to work; (2) the employee's treating physician makes a written statement that the employee is capable of returning to the employee's former position; (3) work within the physical capabilities of the employee is made available by any employer; or (4) the employee has reached maximum medical improvement.
Under the first exception, employees are removed from TTD status if they return to any work, not just work for their employer. Ohio courts have held that even sporadic employment or self-employment can be a basis for cessation of TTD compensation. Given this exception, employers may want to develop a system to monitor a TTD compensation claimant's employment status while the employee is absent from the workplace. Employers should be mindful that any such system may have to comply with Fair Credit Reporting Act provisions governing investigations of employees.
Under the third basis of removal, an employee loses TTD status if work within the employee's physical limitations is made available by any employer. The statute requires an employee able to do work activity to register with the Ohio Department of Job and Family Services for assistance with a job search if the employer cannot offer work to the employee. A TTD claimant who removes herself from the full-time labor market may not be entitled to TTD compensation. Similarly, the rejection of a job offer may lead to the termination of TTD benefits. A question left unanswered by the Coolidge decision is whether an employee released to work actually "returns to work" if the employee is placed on layoff because the employer has no open position fitting the TTD employee's physical limitations. In such circumstances, there would be no cessation of employment and, arguably, no violation of Coolidge.
Pursuant to the above exceptions, employers may benefit from a uniform system for offering TTD compensation claimants alternative, light-duty positions. However, if the employee's condition is also a serious medical condition under the Family and Medical Leave Act, the employee has the right to refuse the light-duty position if the employee has protected leave available. Such FMLA leave, however, is only available for a maximum of 12 weeks in the applicable 12-month period and, thus, may only provide a limited period of time within which an employee can refuse light-duty work. Employers must also be sensitive in these situations to employees' rights under the Americans with Disabilities Act. An employee may be protected by the ADA even after losing TTD status depending on the employee's physical condition. If protected, a disabled employee may be entitled to remain employed with or without accommodation.
The second and fourth exceptions, which remove employees from TTD status when a treating physician releases the employee to perform the employee's former position and when the employee has reached maximum medical improvement, are generally helpful to employers. A seemingly logical action for employers to take is to rely on an employee's failure to comply with its internal policies regarding notice of medical status and submission of medical paperwork as a basis for discharge. However, the Coolidge decision limited an employer's ability to claim ignorance of an employee's status or condition and then argue that failure to comply with such policies provides a basis for termination. Coolidge did not apply for uncompensated leave as required by school board policy, and she did not respond to inquiries about her status for the upcoming school year. The court declared that an employee receiving TTD compensation may not be terminated for failing to complete leave of absence forms or failing to notify the employer as to the length of the absence where, as in the Coolidge case, the employer is otherwise on notice of the employee's condition and status because of the employer's participation in workers' compensation proceedings. Thus, even uncooperative employees may be protected from termination if there is any basis for an employer to know of the employee's TTD status.
With the Coolidge decision, the Ohio Supreme Court ostensibly tried to level the playing field by restricting an employer's ability to terminate a TTD compensation claimant. Justice Resnick, the author of the decision, has stated that to protect the rights of workers, a "proper balance must be maintained among the employer's interest in operating a business efficiently and profitably, the employee's interest in earning a livelihood, and society's interest in seeing its public policies carried out." This statement, however, provides no relief, especially to small employers who apparently must continue to operate their business with temporary replacement workers while an employee receives TTD compensation no matter how long such TTD status continues. In a state where more than $250 million in temporary total benefits were paid in fiscal year 2003 and where fewer injured workers return to the job each year, the decision may cause more harm than good. Once again, Ohio employers must rewrite their policies and procedures — and perhaps their employment contracts and collective bargaining agreements — to conform with this newly created public policy protection for workers.
Further Information
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