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A Better Partnership
April 28, 2014

MSC holds that employer was free to let a whistleblower’s employment contract expire

Michigan employers may not be able to lawfully fire a whistleblower, but they can probably choose to not re-hire one, according to a unanimous decision authored by Justice Zahra in Wurtz v. Beecher Metropolitan District.  (Justice Cavanagh concurred only in the result.)  The Whistleblower Protection Act (WPA) protects whistleblowing employees from retaliatory adverse employment actions.  But the Court held those protections end once the employee’s contract has expired, absent some contractual provision to the contrary. Once the contract has ended, the employee enjoys the same status as any other prospective hire. Because Wurtz did not allege that his employer took adverse action against him during his term of employment, he failed to state a claim under the WPA.
Richard L. Wurtz sued the Beecher Metropolitan District (a water and sewage district) and its board members in the Genesee Circuit Court claiming wrongful termination in violation of the Whistleblowers’ Protection Act (WPA), MCL 15.361 et seq., and public policy. He served as the district’s administrator for exactly ten years under a contract he himself had drafted while he was the district’s attorney. Wurtz had reported an alleged Open Meetings Act violation and reported to the sheriff’s department and the newspaper improprieties in reimbursements for attendance at an out-of-state conference. Before his contract expired, the board voted to not renew Wurtz’s contract, but allowed him to finish his full 10-year term, and he received all his salary and benefits during that term.
On summary disposition, the trial court concluded that Wurtz could not satisfy the WPA’s elements because he had worked the entire term of his contract. The Court of Appeals reversed, holding that an employer’s failure to renew a contract employee’s fixed-term contract satisfied the WPA.  We blogged on that decision here, and on the Supreme Court’s order granting leave here.
The Supreme Court reversed and remanded.  The Court held that a WPA plaintiff must satisfy three elements:
(1) The employee was engaged in one of the protected activities listed in the provision.
(2) The employee was discharged, threatened, or otherwise discriminated against regarding his or her compensation, terms, conditions, location, or privileges of employment.
(3) A causal connection exists between the employee’s protected activity and the employer’s act of discharging, threatening, or otherwise discriminating against the employee.
In a rather lengthy and important footnote, the Court explained that the phrase “adverse employment action,” commonly used as shorthand for element (2), is a loaded term taken from federal and state anti-discrimination statutes, with connotations that do no justice to the WPA’s text.  After deriding earlier decisions for engaging in “telephone-game jurisprudence,” the Court held that the WPA, by its express language, protects only individuals who experience one or more of the statute’s enumerated adverse employment actions with respect to their status as employees. Because the WPA excludes job applicants and prospective employees, it also does not apply to someone seeking a contract renewal, as they should be treated the same as a new applicant. Accordingly, Wurtz had no recourse against the District or its board members for refusing to renew his contract.

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