Adverse Employment Action and an Expired Employment Contract: Time for the Michigan Supreme Court to Review

In Wurtz v. Beecher Metropolitan District, the Michigan Supreme Court will address the issue of whether a plaintiff in an action brought under the Michigan Whistleblowers' Protection Act can suffer an adverse employment action when the defendant did not renew or extend plaintiff's employment contract which did not have a renewal clause. The Court also stated it would address the issue of whether there was a fair likelihood that additional discovery would have produced evidence creating a genuine issue of material fact. In a 2-1 decision [an enhanced version of this opinion is available to lexis.com subscribers], a panel of the court of appeals reversed the trial court's dismissal of the case;  the trial court had held that the issue was one of first impression and that the because the contract expired, there was no adverse employment action.

The panel majority stated that the definition of adverse employment action was the same under the whistleblowers' act as the civil rights act. Although there is no case on point under the whistleblowers' act, the Michigan cases suggest that a non renewal would be an adverse employment action and referred to federal cases under Title VII as providing support for the position. The panel stated that to hold non renewal cannot under any circumstances qualify as an adverse employment action because the contractual employee has no expectation of further employment past the contract expiration would create an arbitrary distinction between contractual and at will employees who have no expectation of further employment from day to day. As a result, the panel declined to hold that as a matter of law, the failure to renew an employment contract cannot be an adverse employment action under the whistleblowers' act.

The dissent stated that the majority had not only rewritten plaintiff's contract but also added language to the act to create a new cause of action for pre- or post-employment conduct which does not exist. The act clearly requires the existence of an employment relationship. Absent a contractual obligation or a legal duty to consider an extension of a contract, a cause of action under the act is not available when an employee finishes a fixed term contract. As a result, no amount of additional discovery would have assisted the plaintiff in developing his case. There is no basis for treating the case as a failure to renew in the absence of a clause providing for renewal. The fact that a cause of action may exist under the civil rights act is of no import since that act provides a claim may be brought for pre-employment conduct. Plaintiff's contract concluded by its own terms without interference from defendants. There was no adverse employment action.

The facts of the case involved the plaintiff's disagreement with expenses associated with a trip to San Diego taken by the board of the water district, and his subsequent meeting with the sheriff, which led to a criminal trial against the board members. During discovery, defendants asserted their 5th amendment rights to avoid being deposed since the criminal case was ongoing. Plaintiff was deposed.

The discovery issue may very well focus on whether the conduct which fell with the coverage of the act was discussed at anytime before the contract expired. The board acted on a motion not to extend the contract after the plaintiff had expressed a desire to continue his employment. The Michigan Supreme Court may address the issue of the impact of discussion of the protected activity before and in during the consideration of the motion not to extend the contract. If there had been no such discussion which could serve as evidence of an unlawful motive, and if the contract had expired, there would seem to be no basis for the claim. In hindsight, if the board had allowed the contract to expire without considering the motion on extension, there would seem to be little basis for a claim. A decision is expected this winter.

For additional Labor and Employment law insights from John Holmquist, visit the Michigan Employment Law Connection.

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