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In a 3-2 decision officially released today, the Connecticut Supreme Court relied on a little-used statute to expand the narrow wrongful discharge claim available to employees who believe they have been fired in violation of an important public policy.

The case is one that only an employment lawyer could love as it turns on definitions of phrases like “sum of money”, “refund of wages” and “representation or … understanding” ; employers will likely find the topic somewhat arcane but the case will have a real-world impact to some, particularly those that think of starting an outside business venture with an employee.

As I’ve discussed before, the Court has recognized that a wrongful discharge claim can arise when the legislature has stated an important public policy (as found in some statutes) but has not provided a right to sue under the statute itself. For example, firing an employee who refused an order to notarize a false affidavit can form the basis of a wrongful discharge claim even though there’s no statute explicitly stating otherwise.

In the new case, Dunn v. Northeast Helicopters Flight Services, LLC, the court relied on Conn. Gen. Stat. Sec. 31-73(b) to find an important public policy that prevents employers from firing employees under some circumstances.

No doubt you’ve overlooked this statute before. In fact, the only time I think I mentioned it was a 2017 post about exotic dancers who sued the clubs they performed at and claimed that the contracts that required them to forfeit certain sums of money they received violated this statute because it was a refund of wages. An arbitrator agreed.

Conn. Gen. Stat. Sec. 31-73 (b), a 1949 statute that has not been amended since, states, in relevant part:

No employer … shall, directly or indirectly, demand, request, receive or exact any refund of wages, fee, sum of money or contribution from any person, or deduct any part of the wages agreed to be paid, upon the representation or the understanding that such refund of wages, fee, sum of money, contribution or deduction is necessary to secure employment or continue in employment. No such person shall require, request or demand that any person agree to make payment of any refund of wages, fee, contribution or deduction from wages in order to obtain employment or continue in employment.

In this case, the employer and the employee were discussing a fee-sharing arrangement for a new role that the employee was taking an examination for. Here, the state Supreme Court found that this statute is fairly far reaching and therefore, terminating an employee who the employer understands is refusing to return a sum of money (or in this case, share fees) would violate the public policy in the statute.

Indeed, according to the Court, its language was written in “broad and sweeping language” and “does not include any explicit limitations”.

How would an employee prove such a claim? The court sets out a roadmap:

To prevail on a claim of wrongful discharge in violation of the public policy in the statute, the employee still must adduce evidence linking the termination to the demand or request and demonstrating that the employer in fact understood, or intended, that the employee’s acquiescence was necessary for continued employment. Such evidence may include proof that, as here, the employee was discharged immediately after rejecting the demand for the sum of money. The employer, however, has the opportunity to rebut the employee’s evidence by demonstrating that the termination and the demand or request were unrelated.

So here’s where things get interesting. Suppose an employer proposes to an employee a new enterprise outside of the employer’s primary business pursuits and offers a 50/50 split. If the employee turns down such a request, and the employer dismisses the employee because of that, a potential wrongful discharge claim could arise.

But the court said that was for the legislature to fix, not the court. “This does not interfere with the parties’ abilities to develop mutually beneficial arrangements, so long as the continued employment of the employee is not used as a leveraging tactic to achieve it”. Moreover, “should the legislature decide [the statute] sweeps too broadly and chills legitimate business pursuits between employer and employee, it is, of course, free to amend the statute”.

The dissent by Justice Mullins (and joined by the Chief Justice) strongly disagreed with the finding because any request or demand for future fees concerned “unrealized funds from a proposed future business venture between the parties.” The dissent observed that the employer “did not leverage the plaintiff’s employment in an attempt to exact a sum of money. Rather, the plaintiff and the defendant were merely discussing a potential future business venture.”

As I said at the outset, the case may have limited reach but it’s not without teeth. Employers should be cautious about proposing any outside business ventures that would ultimately impact the employee’s existing relationship with the employer. And as always, be sure to consult with your attorney to avoid falling into this situation.