An employee is wrongfully discharged under Kentucky law where a substantial factor for the termination is the employee's refusal to violate the law in the course of employment. This is an exception to the at-will employment doctrine that the Kentucky Supreme Court recognized in 1983 in the case of Firestone Textile v. Meadows, 666 S.W.2d 730 (Ky. 1983). In recent years, the notion had taken hold and been advanced in a number of federal district court rulings and non-precedential decisions by the Kentucky Court of Appeals. The Sixth Circuit rejected this argument recently in Alexander v. Eagle Mfg., which, alas, is itself a non-precedential decision.
The plaintiff, Alexander, became aware of allegedly fraudulent business practices going on by at least some employees at his company. He protested the actions and stated his intention to report them the following day to the company's human resources department. He was fired before he got a chance to do so. In response, Alexander contacted the HR department and explained why he'd been fired and later contacted the head of the company, all to no avail.
Alexander filed suit in federal court alleging a tort claim of wrongful discharge. The district court granted the employer's motion to dismiss.The basis for Alexander's claim was that he was discharged for refusing to violate various Kentucky laws – KRS 517.020 (deceptive business practices); KRS 517.050 (falsifying business records); KRS 514.040 (theft by deception) and several provisions of Kentucky's Uniform Commercial Code. The district court ruled that Alexander could not establish his wrongful discharge claim, because he was never affirmatively requested to violate any law.
Alexander argued that the basis for his claim was "that he witnessed unlawful activity within the company, objected to it, and proactively refuse to participate in it." The Sixth Circuit surveyed the case law and did not find that any precedential case had established an explicit request from the employer that the employee violate the law as an additional element for the tort of wrongful discharge in Kentucky. This is correct; there is no such case.
Therefore, the court concluded that an explicit request by the employer that the employee violate a law was not and would not be required under Kentucky law, explaining as follows:
Presumably, the policy behind this exception [to the doctrine of at-will employment] is to prevent an employee from having to choose between losing his job and breaking the law. The policy is implicated, of course, when an employer affirmatively requests that the employee violate the law. But it is also implicated when an employee learns of illegal activity and, although not directly invited to participate by his employer, knows he will inevitably become complicit in the illegality by performing his normal work responsibilities. We think it likely that the Kentucky Supreme Court would apply this exception to not only the former situation, but also the latter.
Unfortunately, however, for Alexander, none of this helped him, because it was not apparent from his complaint, according to the court, that he would have inevitably been forced to participate or become complicit in any illegal activity. Also, his complaint does not "plausibly suggest that the activity Alexander observed was anything more than an isolated incident. "In short, although his coworkers may have been engaging in illegal activity, Alexander, himself, was never affirmatively asked to violate the law, nor did his position make it inevitable that he would be forced to do so."
The Sixth Circuit did offer some meaningless solace to Alexander observing that his situation was "an inequity" and that "we do not condone Eagle's alleged conduct," while also encouraging the Kentucky General Assembly to enact a whistleblower statute that might be applicable to Alexander's situation.
Do not, repeat, do not hold your breath as to that last one.
Still, the Sixth Circuit does offer some coherent and helpful analysis of the wrongful discharge tort under Kentucky law.