Employees who sue their former employer for wrongful termination following a workplace investigation may feel compelled to bring a claim for defamation, based on their belief that the allegations and/or investigation findings harmed their professional reputation.
However, the California Court of Appeal recently reaffirmed the longstanding principle that an employee may not recover for defamation when that claim is based on the same conduct giving rise to the wrongful termination claim, and where the employee cannot show that they suffered harm beyond the loss of their employment.
In Hearn v. Pacific Gas and Electric Company, the plaintiff claimed that PG&E made false and damaging statements in its investigation report, which accused him of falsifying timecards and misusing company time. The plaintiff also brought wrongful termination and retaliation claims, alleging that PG&E terminated his employment not because of this misconduct, but because he had raised concerns about unsafe equipment. The plaintiff ultimately dismissed his claim for wrongful termination in violation of public policy, pursuing only his retaliation and defamation claims at trial.
Trial Court’s Ruling
At trial, the jury found that PG&E did not fire the plaintiff due to his safety claims and ruled against his retaliation claim. However, the jury rendered a verdict in the plaintiff’s favor on the defamation claim, finding that the investigation report that resulted in his termination was the source of defamatory statements, awarding the plaintiff $2.16 million in damages.
PG&E moved for judgment notwithstanding the verdict (JNOV) on the grounds that (1) the plaintiff had waived his defamation claim by conceding his damages from loss of employment were the same as his defamation damages and (2) that he could not pursue a tort claim based on the same conduct which formed his wrongful termination claim and where he alleged no injury apart from his termination. The trial court denied PG&E’s JNOV motion, and PG&E appealed.
Appellate Court’s Reversal
On appeal, the court reversed the defamation verdict, agreeing with PG&E that the plaintiff’s “claim for defamation is a claim for wrongful termination by another name” and he “cannot recover damages for wrongful termination by recasting his claim as one for defamation.” The appellate court emphasized that an employee cannot turn a wrongful termination claim into a defamation claim unless the purportedly false and defamatory statements caused harm beyond loss of employment.
Key Takeaways
In so ruling, the appellate court clarified and reinforced the principle that defamatory statements that are tied directly to an employee’s termination may not be separately actionable as a claim for defamation.
Employers faced with wrongful termination claims should watch out for duplicative defamation claims. Employees must overcome two hurdles: (1) the defamation claim must be based on conduct other than the conduct giving rise to the employee’s termination and (2) employees must show that they suffered harm to their professional reputation beyond the loss of their employment. If not, the defamation claim is essentially one of wrongful termination.
While this ruling is generally favorable to employers, it also underscores the importance of documentation and diligence when conducting workplace investigations and making termination decisions. Employers seeking guidance on these issues should reach out to their favorite CDF attorney.