Post-Termination Comments May Create Liability (WI)

Wisconsin workers’ compensation law generally prevents employee personal injury claims against the employer, including claims for defamation of character. What happens, however, when the alleged defamation “injury” occurs after termination? The District III Wisconsin Court of Appeals, in the case of Anderson v. Hebert, 2010AP1992 (March 15, 2011) recently ruled that the workers compensation law does not bar a claim of defamation, where the alleged defamatory comments are made about a former employee.

The employee was the Barron County highway department’s patrol superintendent until November of 2007. Pursuant to a service contract with the State of Wisconsin, Barron County was responsible for routine maintenance and snow-removal on certain state-owned roads. The County was reimbursed for its work on the roads, and received a higher reimbursement rate if it had to use large trucks or snowplows.

In November of 2007, two highway department employees complained to the County Administrator that the superintendent had instructed them to use pickup trucks to maintain state roads, but to report that they had used larger equipment. This allowed the County to obtain a higher reimbursement from the State than it was entitled to.

The superintendent was placed on administrative leave pending investigation, and the County and State then audited the maintenance work. The audit found that the County had overcharged the State. The superintendent chose to resign.

Shortly after the employee resigned, the administrator made a number of statements to local media and during an open meeting of the County Board regarding the reason for his administrative leave, the State/County audit and what the audit “proved.” Based on these statements by the administrator, the former employee sued the County for defamation. The Circuit Court ultimately dismissed all of the claims, specifically finding that the defamation claim was barred by the Worker’s Compensation Act (“Act”). The former employee appealed.

The Court of Appeals reversed the Circuit Court, finding that an injury is only covered under the Act if, at the time of the injury:

(1) both the employer and employee are subject to the provisions of the Act; and

(2) the employee is performing service growing out of and incidental to his or her employment. Wis. Stat. § 102.03(1)(b)-(c)(1).

The Court of Appeals found that it was undisputed in this case that the alleged defamation to the employee did not occur until after he resigned. While reaffirming its position that the Act does bar pre-termination defamation claims, the Court of Appeals distinguished this case from a case involving injury to a current employee.

Lesson learned

Care is needed regarding what is said about an employee after termination. Employers have a limited right to communicate with existing employees regarding the reason for a former employee’s discharge, so as to allow employees to understand behavior expected by the employer. Employers also are exempt from civil liability for employment references made in good faith. However, statements which are not true or made with an intent to damage a former employee are not protected. Moreover, employer statements made to the media or the public do not have the same protections as those made to its workforce or prospective employers.

Managers and employees should be warned that statements about former employees to the media or others outside the workforce of the employer or statements about an employee that may be untrue or unproven may lead to personal liability. If an employer knows its managers are making such statements, or that non-managers are doing so at work or using work phones or computers to do so, the employer may be liable. Employers should have policies against discussing employees who have been terminated and only the company human resources department should respond to questions about former employees. These policies should also prohibit derogatory comments about co-employees or former co-employees on social media sites such as Facebook.