Employees who bring wrongful termination claims for so-called "whistleblowing" may recover a broader range of damages than in other wrongful termination lawsuits, according to the South Dakota Supreme Court made clear in a new decision.
South Dakota is an "employment at will" state, where, absent a contract or certain recognized exceptions, an employer can terminate an employee at any time. The exceptions to that doctrine situations where the employer's motivation for termination contravenes clear public policy, something known as retaliatory discharge. To date, the South Dakota Supreme Court has applied the exception to termination for refusal to commit a criminal act, for filing a workers' compensation claim and to "whistleblowing," the reporting of unlawful or criminal conduct to a supervisor or outside agency.
In Tiede v. CortTust Bank, N.A., the Court expressly made clear that retaliatory discharge claims are not contract actions but tort claims that arise independent of the contractual employment relationship. This is not only different from the other previously recognized exceptions to at-will employment, it allows recovery of different damages. In most employment termination cases, the terminated employee can recover the amounts they would have been due under the contract. Tort actions, however, can include recovery for other compensatory damages, such as emotional distress. Moreover, punitive damages are available in certain tort claims and because the underlying premise of a retaliatory discharge claim is violation of established public policy, they may be available in such actions.
In Tiede, the plaintiff claimed she was fired for disregarding directives from senior bank officials designed to stop her from filing with federal regulators reports she believed were required to be filed by federal law. In addition to saying this amounted to a tort claim, a unanimous Supreme Court reversed the trial court's determination that the action was pre-empted by federal banking law.