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Employees in Arkansas who claim to have been discharged for reporting an employer’s violation of law may still recover in a wrongful discharge case even if it turns out that the alleged violation did not occur, according to a recent decision by the Arkansas Court of Appeals. In TFS of Gurdon v. Hook, 2015 Ark. App. 601, the appeals court upheld a judgment in favor of a former employee who reported conduct she believed constituted a violation of law. The Court rejected the employer’s argument that the former employee was required to prove that the conduct she reported actually was a violation of law.
Generally, Arkansas is an employment-at-will state. In the absence of an employment contract protecting the employee, an employer may terminate an employee at any time without cause. There is an exception for cases in which the at-will employee is fired in violation of a well-established public policy of the state. Arkansas public policy protects employees who report violations of law; employers may not discharge such employees in retaliation for reporting violations. One question before the Court of Appeals in the Hook case was whether the former employee could recover without proving to the jury that the employer violated some law.
Kay Hook alleged that she was fired by TFS of Gurdon for complaining about and reporting suspected Medicaid fraud. TFS argued that none of the complaints dealt with actual violations of state or federal law. It also contended that, after an audit, no Medicaid fraud was found. The Court of Appeals held that all that is required to sustain a wrongful discharge claim is that the employee reported a violation of law and was discharged in retaliation for making the report. The Court explained that “there is no precedent for the argument that an employee in a wrongful-discharge claim must also prove an actual violation of law in addition to proving that she was terminated for reporting suspected violations of law.”
The Hook decision provides a warning for employers who choose to react to an employee’s contention that state or federal laws are being violated in the workplace. Even when no such laws have been broken, the decision on how to proceed as to such an employee should be made with an understanding of the possible consequences.