Burden-shifting analysis under Michigan's WPA

Q We want to terminate an employee for performance issues. However, once he realized he was in trouble performance-wise, he began complaining internally about state contract violations. We recently had a site visit investigation from the state, and we suspect the employee anonymously complained. Can we still terminate his employment, or will he have a claim under Michigan's Whistleblowers' Protection Act (WPA)?

A The WPA, M.C.L. § 15.362, prohibits employers from discharging, threatening, or otherwise discriminating against an employee in his compensation, terms, conditions, location, or privileges of employment because he, or a person acting on his behalf, reported or is about to report, orally or in writing, a violation or a suspected violation of a law or regulation. To establish a prima facie (minimally sufficient) case under the WPA, an employee must show that (1) he was engaged in protected activity as defined in the WPA, (2) he suffered an adverse employment action, and (3) there is a causal connection between the protected activity and the adverse action.

Complaining internally does not constitute protected activity. Therefore, unless the employee can show that he actually did complain to the state or that he was about to complain to the state, he won't be able to establish the first element of his prima facie case. Assuming your employee does (or did) complain and you end up terminating his employment, he will have to establish a causal connection.

Michigan courts have held that for causation to exist, an employee must provide objective notice of the alleged report to his employer. Furthermore, the objective notice must be provided to the person who actually makes the decision to terminate the whistleblower's employment. If the decision maker doesn't know about the report of wrongdoing, there is no causal connection between the protected activity and the adverse employment action.

If the employee is able to establish the basic elements of a WPA case, then the burden shifts to the employer to establish a legitimate business reason for the adverse employment action. As with other burden-shifting standards, if the employer produces evidence of a legitimate business reason, the burden shifts back to the employee to establish that the employer's proffered reasons were a mere pretext, or excuse, for the adverse employment action.

Performance concerns constitute a legitimate reason to terminate someone's employment. However, you should make sure that the employee's performance issues are well documented and that you have evidence of your concerns about his performance before he started complaining about the alleged contract violations. The Michigan Supreme Court has made it clear that an employee who is expecting to be terminated cannot use the WPA as a shield to avoid termination.

As long as your documentation supports the fact that you had performance concerns that led to your decision to terminate the employee before he started to complain, I don't think you're at high risk for liability. Also, I would caution your managers and supervisors not to "speculate" about who may have filed the complaint with the state. In this case, what you don't know can hurt you if you verbalize your speculations.

Susan is a shareholder with Vercruysse Murray, P.C., in Detroit. You can reach her at shiser@vmpclaw.com or 248-540-4987.