MD Court Says Retaliatory "Non-Renewal" of Contract Same as Retaliatory Firing

In a case of first impression, a Maryland appellate court held that a state trial court erred when it held that a retaliatory discharge claim may only be maintained when the employee is terminated or discharged during the period of a contractual agreement and prior to the expiration of that agreement [Miller-Phoenix v. Baltimore City Bd. of Sch. Comm’rs, 2020 Md. App. LEXIS 507 (May 29, 2020)]. Reversing the trial court’s decision granting summary judgment in favor of the former employer, the appellate court held that the tort of wrongful termination [e.g., retaliatory discharge] may lie when an employer decides to terminate an employment relationship by declining to renew an employment agreement for which the parties anticipated the reasonable possibility of renewal.

Background

Plaintiff was employed by the school board as a teacher from 1992 to 2017, except for one five-year hiatus. Throughout that period, plaintiff alleged that he observed various violations of policies, violations of laws, and abuse of authority and that he reported these issues to his union, the Board, news reporters, and elected officials.

Shortly after beginning the 2016-1017 school year, plaintiff went on leave under the Family & Medical Leave Act, due to PTSD he claimed was caused by work experiences during his prior teaching assignments. A dispute arose as to whether his teaching certification had expired and the plaintiff and the board signed a Provisional Contract with a stated term of July 1, 2016 to June 30, 2017.

One day after plaintiff signed the contract, he sent an email to his school principal in which he expressed an intent to submit a workers’ compensation claim for PTSD. He did so in December 2016. In late April 2017, the board sent the plaintiff an email indicating his contract would not be renewed.

Plaintiff subsequently filed suit in the circuit court alleging, inter alia, that the Board had discharged him in retaliation for his complaints about the Board’s misconduct, and that he had been discharged him in retaliation for filing his workers’ compensation claim.

The trial court granted the board’s motion for summary judgment on all counts of plaintiff’s complaint. As to the retaliatory discharge count, the trial court held that plaintiff had not been “discharged,” but rather the contract had not been renewed, as was within the board’s rights.

Appellate Court’s Decision

The appellate court acknowledged that Maryland’s appellate courts had only applied the tort of wrongful termination to employees at will and contractual employees in the middle of their contractual terms. As the Board had emphasized, plaintiff was neither. The question, therefore, was whether that distinction mattered for purposes of the tort. The court concluded that it did not.

The court stressed that society’s concerns with the vulnerability of employees who have alleged work-related injuries were as much present in a situation such as that of the plaintiff, who had a reasonable expectation that his contract would be renewed, as they were in the case of at will employees or employees fired in the middle of their contractual terms.

As to the board’s ingenious argument that it had not “done” anything; it merely had refrained from renewing the contract, the court stressed that the “wrongful” element of the tort of wrongful termination isn’t so much the termination as it is the motivation for it. The issue wasn’t whether or not the board had the right to refuse to renew the contract; the issue was whether it had abused that right.

Board’s Rationale Would Create a Two-Tiered System

The court finally observed that, as a practical matter, the position urged by the Board would effectively create a two-tiered system in which fixed-term contract employees were afforded fewer rights than those serving at-will. That is, employers who engage employees under renewable term contracts would be free to terminate those relationships for reasons antithetical to public policy, while employers who engaged employees on an at will basis would not. The court declined to adopt that result.