The Minnesota Workers’ Compensation Act.
The Minnesota Workers’ Compensation Act (“WCA”) created a system for employees to seek compensation for on-the-job injuries. Most disputes under the Act are heard by specialized worker’s compensation judges. One type of claim under the Act, however, is heard in district court – claims of retaliation or obstruction under Minn. Stat. § 176.82. That statute provides as follows:
176.82 ACTION FOR CIVIL DAMAGES FOR OBSTRUCTING EMPLOYEE SEEKING BENEFITS.
Subdivision 1. Retaliatory discharge. Any person discharging or threatening to discharge an employee for seeking workers’ compensation benefits or in any manner intentionally obstructing an employee seeking workers’ compensation benefits is liable in a civil action for damages incurred by the employee including any diminution in workers’ compensation benefits caused by a violation of this section including costs and reasonable attorney fees, and for punitive damages not to exceed three times the amount of any compensation benefit to which the employee is entitled. Damages awarded under this section shall not be offset by any workers’ compensation benefits to which the employee is entitled.
Subd. 2. Refusal to offer continued employment. An employer who, without reasonable cause, refuses to offer continued employment to its employee when employment is available within the employee’s physical limitations shall be liable in a civil action for one year’s wages. The wages are payable from the date of the refusal to offer continued employment, and at the same time and at the same rate as the employee’s preinjury wage, to continue during the period of the refusal up to a maximum of $15,000. These payments shall be in addition to any other payments provided by this chapter. In determining the availability of employment, the continuance in business of the employer shall be considered and written rules promulgated by the employer with respect to seniority or the provisions or any collective bargaining agreement shall govern. These payments shall not be covered by a contract of insurance. The employer shall be served directly and be a party to the claim. This subdivision shall not apply to employers who employ 15 or fewer full-time equivalent employees.
Schmitz v. U.S. Steel
The fact that retaliation claims fall outside of the normal procedures for workers’ compensation disputes has created some uncertainty over the years. Some of these questions were addressed by the Minnesota Supreme Court in Schmitz v. U.S. Steel Corp., 852 N.W.2d 669 (Minn. 2014) In Schmitz, the Court held that an employee is entitled to a jury trial in a claim for retaliatory discharge for seeking workers’ compensation benefits. The Court also held that, in a retaliatory discharge claim, an employer may not assert a Faragher/Ellerth defense to employer liability for a supervisor’s actions.
Background
Darrel Schmitz (“Schmitz”) was employed as a maintenance mechanic for U.S. Steel. On October 23, 2006, Schmitz injured his back while replacing a steel liner. Schmitz immediately reported the incident to his supervisor, foreman M.B. The next day, Schmitz called M.B. from home to tell him that his side and back felt strange. M.B. reported the call to his supervisor, L.S., and the two of them subsequently spoke to Schmitz. According to Schmitz, L.S. warned Schmitz against filing an accident report:
[L.S.] told me that the company would—was taking a big, dim view if I would fill out an accident report and they wouldn’t like it at all. And I said, “What are they going to do, fire me?” He said, “Well, without having to perjure [myself],” he said, “Yes.”
Two days later, after being examined by his doctor, Schmitz returned to work without any physical restrictions.
In December 2006, Schmitz injured his back at home. He filed a claim for workers’ compensation benefits in April 2007 for the December 2006 injury. A compensation judge denied the petition in June 2008 after concluding that Schmitz’s December 2006 injury was not work-related. Because of his December 2006 injury, Schmitz was not cleared to return to work until October 2007 and even then he had certain work restrictions that prevented him from performing the functions of a maintenance mechanic. U.S. Steel claimed that it did not have any job openings that could accommodate those restrictions and Schmitz never returned to work at U.S. Steel.
District Court Denies Jury Trial on Retaliatory Discharge Claim
Schmitz filed a complaint against U.S. Steel in district court. Schmitz asserted that U.S. Steel both threatened to discharge and discharged him for seeking workers’ compensation benefits, in violation of Minn. Stat. § 176.82, subd. 1. The district court granted U.S. Steel’s pretrial motion to quash Schmitz’s demand for a jury trial on the retaliatory discharge claim, concluding that Minn. Stat. § 176.82 does not provide such a right. Following a bench trial, the district court: (1) entered judgment for Schmitz on his threat-to-discharge claim, awarding $15,000 in emotional-distress damages; (2) rejected Schmitz’s retaliatory discharge claim; and (3) denied U.S. Steel’s posttrial motion seeking a finding that U.S. Steel satisfied the Faragher/Ellerth affirmative defense to supervisory misconduct on the threat-to-discharge claim.
The Minnesota Court of Appeals reversed the decision to deny of a jury trial on Schmitz’s retaliatory discharge claim and remanded the case for a jury trial. It concluded that a retaliatory discharge claim under Minn.Stat. § 176.82, subd. 1, that seeks only money damages is legal rather than equitable in nature and, therefore, Schmitz was guaranteed the right to a jury trial under the Minnesota Constitution. The Court of Appeals also ruled that there was no legal basis for permitting a Faragher/Ellerth affirmative defense to Schmitz’s threat-to-discharge claim. U.S. Steel then sought review by the Minnesota Supreme Court which agreed to hear the case.
Minnesota Supreme Court Holds Constitution Guarantees Jury Trial in Retaliatory Discharge Claims Under Workers’ Compensation Act
The Court first addressed the question of whether Schmitz had the right to a jury trial on his retaliatory discharge claim. The right to a jury trial must be found either in the Minnesota Constitution or provided specifically by statute. Section 176.82 provides a cause of action for retaliatory discharge for seeking workers’ compensation benefits, but it does not expressly provide a right to a jury trial. Because of this, the Court examined whether Schmitz had such a right under the Minnesota Constitution. Article I, Section 4, of the Constitution provides, “The right of trial by jury shall remain inviolate, and shall extend to all cases at law without regard to the amount in controversy.” The Court explained that this means a party is entitled to a trial by jury if a party raising that same theory for relief at the time the Minnesota Constitution was adopted also would have been entitled to a jury trial. In making this determination, the Court focuses not on whether the exact cause of action existed, but on the type of action—whether the claim is an action at law, for which the Constitution guarantees a right to a jury trial, or an action in equity, for which there is no constitutional guarantee to a jury trial.
Schmitz argued that, because his retaliatory discharge claim was legal in nature and he was seeking monetary instead of equitable relief, he was entitled to a jury trial. U.S. Steel argued that the Legislature was entitled to, and did, preclude the right to a jury trial when it created a new set of rights and remedies under the WCA as part of the mutual renunciation of common law rights and defenses by employers and employees in cases involving workplace injuries. In doing so, U.S. Steel asserted, the Legislature did not specifically include in the WCA the right to a jury trial under Minn. Stat. § 176.82.
The Court referred to an analogous situation it had addressed in Abraham v. Cnty. of Hennepin, 639 N.W.2d 342 (2002), involving an action alleging retaliatory discharge and a claim for money damages under the Whistleblower Act, Minn. Stat § 181.932–.935, and the Minnesota Occupational Safety and Health Act, Minn. Stat. § 182.669, subd. 1. In Abraham, the Court held that a retaliatory-discharge claim sounded in tort and that a tort action seeking money damages is an action at law with an attendant right to a jury trial.
The Court explained that Schmitz’s retaliatory discharge claim under Minn. Stat. § 176.82, subd. 1, like Abraham’s claims under the Whistleblower Act and the Minnesota Occupational Safety and Health Act, were legal in nature and, like Abraham, Schmitz sought only monetary damages. Seeing no basis to treat Schmitz’s claim any differently than the retaliatory discharge claims in Abraham, the Court held that Schmitz’s claim was a cause of action at law with a constitutional right to jury trial.
Responding to U.S. Steel’s argument that the Legislature precluded the right to a jury trial when it enacted the WCA, the Court agreed that the Legislature did create specific rights and remedies as part of a mutual renunciation of common law rights and defenses in cases involving workplace injuries. The Court went on to explain, however, that U.S. Steel’s reading of the Act to preclude the right to trial by jury for retaliatory discharge claims under section 176.82, subdivision 1, ignored the constitutional mandate that guarantees the right to a jury trial for causes of action at law, as well as the plain language of section 176.82, which refers to the retaliatory discharge claim as a “civil action” for damages.
The Court distinguished a retaliatory discharge claim from a workers’ compensation benefits claim, in which there is no right to a jury trial. In Breimhorst v. Beckman, 227 Minn. 409 (1949), the Court found no right to a jury trial for an injured employee’s claim for workers’ compensation benefits, concluding that a claim for workers’ compensation benefits differs from an action at law, which is a proceeding before a court and does not pertain to proceedings before quasi-judicial bodies. Breimhorst emphasized that when the Legislature abolished the common law work-injury tort, the Legislature replaced the tort claim with a new statutory remedy under the WCA. In the Schmitz opinion, the Court explained that Chapter 176, which generally provides that claims for workers’ compensation benefits are to be litigated before an executive branch compensation judge, eliminated common law remedies, including punitive damages. Within Chapter 176, however, Minn. Stat. § 176.82, subd. 1, explicitly provides for a civil cause of action and permits punitive damages in retaliatory discharge claims. The Court clarified that in Breimhorst, the cause of action was new, adequate, and fundamentally different, but in Schmitz the retaliatory discharge cause of action, while new to workers’ compensation, was not fundamentally different than such causes of action under the common law.
Minnesota Supreme Court Declines to Extend Faragher/Ellerth Defense to Retaliatory Discharge Claims
Finally, the Court addressed whether U.S. Steel was entitled to assert a Faragher/Ellerth defense to Schmitz’s threat-to-discharge claim. In Faragher v. City of Boca Raton, 524 U.S. 775 (1998) and Burlington Indust., Inc. v. Ellerth, 524 U.S. 742 (1998), the United States Supreme Court held that under agency principles, an employer is liable for actionable discrimination caused by a supervisor. The United States Supreme Court further held, however, that in sexual harassment cases involving a hostile environment created by a supervisor with immediate (or successively higher) authority over the employee, an employer may raise an affirmative defense to liability if no tangible employment action is taken and if the employer proves by a preponderance of the evidence (1) that the employer exercised reasonable care to prevent and correct promptly any sexually harassing behavior and (2) that the plaintiff employee unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer or to avoid harm otherwise.
In district court, Schmitz had testified that his foreman’s supervisor, L.S., told him that the company “would not look favorably upon” Schmitz if he filed an accident report. The district court concluded that U.S. Steel was not entitled to assert the Faragher/Ellerth defense to supervisor misconduct, and the court of appeals confirmed, concluding that U.S. Steel was vicariously liable for its supervisor’s threat to discharge an employee for seeking workers’ compensation benefits. The Minnesota Supreme Court declined to extend the Faragher/ Ellerth affirmative defense to claims beyond hostile environment sexual harassment, therefore affirming the court of appeals.
Lessons for Employers
Based on the decision in Schmitz, an employer who has been sued for retaliatory discharge under Section 176.82 should be aware that, if the suit goes to trial, the trial will be before a jury rather than only a judge. A jury trial significantly changes the way employers must prepare their defense, affecting trial strategy and the decision of whether to settle in advance of trial. Employers should also fully understand what actions may be considered a threat to discharge and train their supervisors and managers to avoid such actions, as the Minnesota Supreme Court will find the employer vicariously liable for the actions of a supervisor.
If you have any questions about Minnesota retaliatory discharge laws or you are an employer who has been sued for retaliatory discharge, please contact one of the Minnesota retaliatory discharge attorneys at Trepanier MacGillis Battina P.A. The firm can also assist you in drafting appropriate policies for reporting workplace injuries and provide supervisory training to reduce the risk of retaliation claims.
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About the Author: Trepanier MacGillis Battina P.A. is a Minnesota retaliatory discharge law firm located in Minneapolis, Minnesota. Their attorneys can be reached at 612.455.0500.