Can You Fire an Employee For Applying For Unemployment Benefits?

Yes – the Minnesota Supreme Court recently held that an employer does not violate public policy by terminating an employee for applying for unemployment benefits, but employers should still be cautious about doing so.

In Dukowitz v. Hannon Security Services, A11-1481 (Minn., Jan. 2, 2014), the plaintiff applied for unemployment benefits after her work hours were reduced due to the elimination of her daytime shift. When the plaintiff initially suggested to her supervisor that she might apply for unemployment benefits, her supervisor openly questioned whether he should terminate her employment. When the plaintiff’s employment was terminated several months later, the plaintiff sued and alleged that her termination was wrongful because it violated the public policy of the State of Minnesota.

Under Minnesota law, there is a narrow public policy exception to the employment-at-will rule under which an employer may be subject to liability for terminating an employee because of the employee’s good faith refusal to violate the law. SeePhipps v. Clark Oil & Refining Corp., 408 N.W.2d 569 (Minn. 1987). In Dukowitz, the court held that the plaintiff failed to state a claim under this narrow exception because she did not allege that her termination resulted from a refusal to commit an act that she, in good faith, believed to be illegal.

The Dukowitz court also rejected the plaintiff’s argument that the court should recognize a new cause of action under which an employer can be liable whenever the discharge of an employee violates a public policy of the State of Minnesota. The court held that this broad new cause of action would be more appropriate for legislative consideration, particularly because it would interfere with the employment-at-will rule. The court also expressed concern about the lack of any clear definition of what constitutes a “public policy,” remarking that the advocates of the rule could not “delineate the contours of the tort that they urge us to adopt.”

The irony of the Dukowitz decision, however, is that by terminating the employee for applying for unemployment benefits, the employer is essentially assuring that the employee will apply for unemployment benefits again. At that point, it would likely be difficult to convince an unemployment law judge that the employee’s initial application for benefits constituted employment misconduct sufficient to disqualify the employee from receiving unemployment benefits post-termination.

In addition, employers should also be aware that it is a misdemeanor under Minnesota law for an employer to “directly or indirectly . . . obstruct or impede an application or continued request for unemployment benefits.” Minn. Stat. § 268.192, subd. 1.

Takeaway: The Dukowitz decision is good for employers because it reinforces the doctrine of at will employment. The decision is also a victory for employers because it rejected an effort to recognize a broad new cause of action against employers. At the same time, it is largely a self-defeating task for an employer to terminate an employee for applying for unemployment benefits. Employers must also be cautious not to “obstruct or impede” an employee’s application for benefits.