Preventing the Professional’s Impossible Choice: Paving the Path for Ethical Codes as Public Policy in the Context of Wrongful Discharge in South Carolina
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Preventing the Professional’s Impossible Choice: Paving the Path for Recognizing Ethical Codes as Public Policy in the Context of Wrongful Discharge in South Carolina
Matthew B. Abney[ * ] * * A native of Aiken, South Carolina, Matthew holds a B.A. summa cum laude in History from Presbyterian College. At the University of South Carolina School of Law, Matthew’s particular interest is employment litigation and counseling. In addition to tutoring first-year contract law, he is currently an Articles Editor on the South Carolina Law Review. Last summer he worked for Cromer Babb Porter & Hicks and plans to spend this summer with Gignilliat, Savitz & Bettis. He wants to give a special thanks to his wife, Sophia, his research supervisor, Professor Ami Leventis, and the South Carolina Law Review. Close*
The following narrative illustrates a dilemma faced by professionals in South Carolina that this Note will analyze and propose to solve. Imagine a certified public accountant working for a privately held South Carolina company employed at-will to oversee special projects while maintaining a general oversight role.[1]1 While this hypothetical is based in South Carolina, the underlying facts are based on Rocky Mountain Hosp. & Med. Serv. v. Mariani, 916 P.2d 519, 521–23 (Colo. 1996). Close The accountant discovers some questionable accounting practices, including failing to record certain transactions and reducing certain costs to misrepresent the profitability of the company.[2]2 Id. at 521. Close Realizing these practices violate her ethical code of conduct, the accountant repeatedly brings these concerns to her supervisor until she is eventually terminated for voicing her concerns.[3]3 Id. at 522. Close The accountant considers bringing a claim for wrongful discharge in violation of public policy against her former employer for terminating her after she refused to knowingly misrepresent facts concerning the company’s financial status in violation of her ethical code.[4]4 In South Carolina, it is unethical for an accountant to “knowingly misrepresent facts” concerning an entity’s financial status according to the AICPA Integrity and Objectivity Rule. AICPA Code of Pro. Conduct, § 1.100.001 (Am. Inst. of Certified Pub. Accts. 2014); see also S.C. Code Ann. § 40-2-110(7) (2004) (establishing the AICPA’s Code of Professional Conduct as the governing code of ethics for South Carolina accountants). Close
As it currently stands in South Carolina, the accountant would likely have no remedy against her former employer, assuming the employer’s practices did not violate state[5]5 The South Carolina Whistleblower Act only protects reports made against a “public body” rather than private entities such as the above hypothetical hospital. See S.C. Code Ann. § 8-27-10 (2015). Close or federal[6]6 The Sarbanes-Oxley Act of 2002 only provides whistleblower protection for employees of publicly traded corporations rather than privately held companies such as the above hypothetical hospital. 18 U.S.C. § 1514A. But see Lawson v. FMR LLC, 571 U.S. 429, 459 (2014) (holding that “§ 1514A’s whistleblower protection includes employees of a public company’s private contractors and subcontractors” such as accounting and law firm employees who audit and counsel publicly traded companies like mutual funds). Close laws, because South Carolina has yet to recognize ethical codes as a source of public policy in a wrongful discharge action.[7]7 No South Carolina Court has taken up the specific issue of whether an accountant can state a wrongful discharge action based on their ethical code, but other professions have been denied the claim. See Novak v. Joye, Locklair & Powers, P.C., No. 2010-UP-225, 2010 WL 10079883, at *2 (S.C. Ct. App. Apr. 1, 2010) (refusing to extend public policy into to the South Carolina Rules of Professional Conduct governing attorneys); see also Miller v. Fairfield Cmtys., Inc., 299 S.C. 23, 26–27, 382 S.E.2d 16, 18–19 (S.C. Ct. App. 1989) (finding that administrative regulations for real estate brokers are insufficient to state a wrongful discharge action). But see Nolte v. Gibbs Int’l, Inc., 335 S.C. 72, 75, 515 S.E.2d 101, 103 (S.C. Ct. App. 1999) for a case where an accountant successfully stated a wrongful discharge claim after they were terminated for refusing to participate in their employer’s fraudulent accounting practices because the practices violated several state and federal laws. Close This Note aims to fill the gap of employee protection existing between the Sarbanes-Oxley Act and the South Carolina Whistleblower Act by relying on the tort of wrongful discharge in violation of public policy.
Employment at-will allows an employer or employee to unilaterally terminate an employment relationship for any reason or no reason at all.[8]8 Culler v. Blue Ridge Elec. Coop., Inc., 309 S.C. 243, 245, 422 S.E.2d 91, 92 (1992). Close This long-standing, yet maligned doctrine has been the majority rule in the United States since the early nineteenth century.[9]9 Deborah A. Ballam, Employment-at-Will: The Impending Death of a Doctrine, 37 Am. Bus. L.J. 653, 654 (2000). Close The one nationally recognized exception is wrongful discharge in violation of public policy.[10]10 Charles J. Muhl, The Employment-at-Will Doctrine: Three Major Exceptions, Monthly Lab. Rev., Jan. 2001, at 3, 4 (“The public-policy exception is the most widely accepted exception, recognized in 43 of the 50 States.”). Close In most states, an employee has a cause of action for wrongful discharge when that employee’s termination contravenes the public policy of the state.[11]11 See id. Close South Carolina recognizes the public policy exception; to invoke it, an employee must show (1) they were discharged from at-will employment, (2) the discharge was retaliatory, and (3) the discharge violated a “clear mandate of public policy.”[12]12 Ludwick v. This Minute of Carolina, Inc., 287 S.C. 219, 225, 337 S.E.2d 213, 216 (1985). Close Generally, the public policy exception in South Carolina protects employees from termination for refusing to violate the law or if the termination itself is a violation of the law.[13]13 Id. Close However, “law” is a broad term that, depending on the jurisdiction, can encompass several legal authorities, ranging from criminal codes to ethical provisions.[14]14 Thomas L. Cluff, Jr., In Defense of a Narrow Public Policy Exception of the Employment at Will Rule, 16 Miss. Coll. L. Rev. 437, 449 (1996). Close The breadth of the term “law” creates a critical question: what legal authorities can provide the basis for an employee’s wrongful discharge claim that relies on the public policy exception?[15]15 See Dicomes v. State, 782 P.2d 1002, 1006–07 (Wash. 1989) (providing examples of public policy violation). Close
The public policy exception’s contours are uncertain and often debated.[16]16 Compare Cluff, supra note 14, at 448 (advocating for a public policy exception that requires an employee point to a specific legal authority that prohibits certain conduct), with J. Wilson Parker, At-Will Employment and the Common Law: A Modest Proposal to De-Marginalize Employment Law, 81 Iowa L. Rev. 347, 402–03 (1995) (arguing for courts, rather than legislature, to state public policy such that wrongful discharge claims do not have to rely on specific statutory authorities). Close Some scholars advocate for a narrow public policy exception that balances the interests of both employer and employee.[17]17 See Cluff, supra note 14, at 447–54. Close Many reasons support a narrow public policy exception, but maintaining flexibility in the marketplace is the most compelling justification.[18]18 Id. at 444–45. Close As one scholar put it, “The significance of the employment at will rule is ensconced in one single word—flexibility.”[19]19 Id. at 444. Close An overly expansive public policy exception erodes that flexibility by forcing employers to defend their employment decisions no matter how justified.[20]20 Id. at 446 (“The . . . insidious danger, . . . is that an employer may justly discharge an employee only at the risk of being compelled to defend a suit for retaliatory discharge. If such a cause of action generally could be maintained, employers, particularly those in small businesses, would be thrust into economic dilemma by every employment decision.”) (alterations in original). Close Defending employment decisions is not only burdensome for any employer who will have to replace the terminated employee, but it is also costly.[21]21 Id. at 445. Close For example, some scholars estimate that defending an employment lawsuit in California costs nearly $80,000, and these defense costs are in addition to the already high costs of finding a replacement following any termination.[22]22 Id. at 446. Close
Some scholars, on the other hand, advocate for a broad public policy exception that would eliminate the power of state legislatures to declare public policy.[23]23 See Parker, supra note 16, at 402–03 (“Courts should recognize tort liability if a discharge involves any reason that a court would not enforce if the reason had been articulated in a term contract. Under this proposal, courts are not restricted solely to policies promulgated by the legislature. Rather, courts should hold tortious any discharge that violates public policy as articulated in any legitimate source of policy–whether executive, legislative, or judicial.”) (footnotes omitted). Close Others have gone as far as to advocate for federal legislation standardizing all public policy exceptions across states.[24]24 See Michael A. Katz, Still Crazy After All These Years: The Employment At-Will Doctrine and Public Policy Exceptions, 10 Atl. L.J. 1, 1 (2007) (arguing for either a federalization of public policy exceptions or abolition of the employment at-will doctrine). Close These arguments, however, presume the impending demise of the employment at-will doctrine in the United States.[25]25 See id.; see also Ballam, supra note 9, at 654–56. Close Rather, this Note, in lockstep with the decisions of South Carolina courts, accepts employment at-will as generally beneficial if certain exceptions are recognized.[26]26 See Prescott v. Farmers Tel. Coop., Inc., 335 S.C. 330, 335, 516 S.E.2d 923, 925 (1999) (“We find the policy of employment at-will provides necessary flexibility for the marketplace and is, ultimately, an incentive to economic development.”). Close An in-depth analysis of the employment at-will doctrine is beyond the scope of this Note due to the vast amount of scholarship discussing the merits of the doctrine.[27]27 See Ballam, supra note 9; Richard A. Epstein, In Defense of the Contract at Will, 51 U. Chi. L. Rev. 947 (1984) (“The persistent tension between private ordering and government regulation exists in virtually every area known to the law, and in none has that tension been more pronounced than in the law of employer and employee relations.”);Nancy Baumgarten, “Sometimes the Road Less Traveled is Less Traveled for a Reason”: The Need for Change in Georgia’s Employment-At-Will Doctrine and Refusal to Adopt the Public Policy Exception, 35 Ga. L. Rev. 1021 (2001) (providing “a general overview of the historical development of the employment-at-will doctrine and its exceptions”); Lawrence E. Blades, Employment at Will vs. Individual Freedom: On Limiting the Abusive Exercise of Employer Power, 67 Colum. L. Rev. 1404 (1967) (“It is the fear of being discharged which above all else renders the great majority of employees vulnerable to employer coercion.”). Close Additionally, despite arguments advocating for the doctrine to be abandoned,[28]28 Ballam, supra note 9, at 687 (“The future of employment-at-will, then, is that it has no future. One of the most important developments in employment law in the first decade of the new millennium will be the express acknowledgment of the death of this doctrine.”). Close the at-will employment doctrine remains the majority rule in the United States.[29]29 See Muhl, supra note 10, at 3. Close
In between these two approaches lies a middle ground argument for recognizing professional ethical codes as sources of public policy. Although some scholarship supporting the recognition of public policy in professional ethical codes exists, most of this scholarship focuses exclusively on ethical codes for attorneys.[30]30 See Cathyrn C. Dakin, Protecting Attorneys Against Wrongful Discharge: Extension of the Public Policy Exception, 44 Case W. Res. L. Rev. 1043, 1044–47 (1995) (“[E]xtending the public policy exception is unnecessary because attorneys are bound by an ethical code which adequately protects the public interest.”); Sara A. Corello, In-House Counsel’s Right to Sue for Retaliatory Discharge, 92 Colum. L. Rev. 389, 389 (1992) (arguing that “in-house attorneys should have the right to sue for retaliatory discharge when they are dismissed for refusing to violate their professional ethics or for urging their employers to comply with the law”); Terri Martin Kirik, Retaliatory Discharge for Attorney-Employees in Private Practice: To Do, or Not to Do, the “Right Thing”, 33 J. Marshall L. Rev. 383, 384 (2000) (“According to the Illinois Supreme Court, an attorney who takes the ethical high road by following the Rules of Professional Responsibility does not have the foundation for a claim of retaliatory discharge.”); Daniel S. Reynolds, Wrongful Discharge of Employed Counsel, 1 Geo. J. Legal Ethics 553, 553 (1988) (“In most American jurisdictions, the fired employee would probably be able to assert a claim of wrongful discharge against the corporate employer. But not, it appears, if the employee is a lawyer.”); Anthony J. Blackwell, Wieder’s Paradox: Reporting Legal Misconduct in Law Firms, 1992/1993 Ann. Surv. Am. L. 9, 11 (1993) (“[A]ttorneys who observe fraternal misconduct may be faced with a choice between preserving their ethics or preserving their jobs. Given such a choice, it is understandable that many lawyers may be dissuaded from reporting ethical breaches within the profession.”). Close This Note, however, focuses on the ethical code governing accountants in South Carolina because accountants have the clearest path for gaining recognition of their ethical codes as public policy.[31]31See infra notes 185–86 and accompanying text. Close Further, the path for accountants advocated by this Note will lay the foundation for other professions seeking recognition of their ethical codes as sources of public policy in a wrongful discharge claim.
This Note’s proposal is to prevent the dilemma faced by professionals similar to the accountant in the introduction. The impossible choice arises when, as a condition of continued employment, an employer requires an employee to violate the law.[32]32 See Ludwick v. This Minute of Carolina, Inc., 287 S.C. 219, 225, 337 S.E.2d 213, 216 (1985). Close Some courts maintain that the criminal law is the only source of public policy in a wrongful discharge claim.[33]33 See Hillman v. Nueces Cnty., 579 S.W.3d 354, 358 (Tex. 2019) (reinforcing earlier holdings that require an employer coerce a violation of the criminal law as the only means of stating a wrongful discharge). Close Other courts recognize civil or administrative law as sources of public policy.[34]34 See Winkelman v. Beloit Mem’l Hosp., 483 N.W.2d 211, 212 (Wis. 1992) (holding a nurse properly stated a wrongful discharge claim when she would have faced administrative penalties for following her employer’s directive). Close Some courts who have recognized public policy in civil or administrative law deemphasize the law itself and focus on whether the violated law reflects an intention by the legislature to create policy.[35]35 See id. at 215 (“The facts of this case make clear that public policy that is fundamental and important may be enunciated in administrative rules . . . . An administrative rule, as well as a statutory or constitutional provision, may contain a clear expression of public policy.”). Close Regardless of the requirement for a specific authority of law or a focus on legislative intent, professionals face a specific dilemma when, as a condition of continued employment, they must violate their ethical code.
The professional’s dilemma is best summarized by the Colorado Supreme Court’s Rocky Mountain Hospital decision, in which the court stated, “[a] professional employee forced to choose between violating his or her ethical obligations or being terminated is placed in an intolerable position.”[36]36 Rocky Mountain Hosp. & Med. Serv. v. Mariani, 916 P.2d 519, 525 (Colo. 1996). Close For instance, South Carolina accountants who violate their code of ethics could be subject to professional consequences.[37]37 See S.C. Code Ann. § 40-2-110 (2004). Close To avoid this “intolerable position,” this Note seeks to recognize as public policy the accounting ethical code that, if violated, levies professional consequences such as suspension, an administrative fine, or license revocation.[38]38 These sanctions, except for malpractice, are listed under § 40-2-110 as possible punishments for violation of the Accountant’s Code of Ethics as published by the American Institute of Certified Public Accountants (“AICPA”). Close The professional’s dilemma will be effectively prevented by establishing a rule that deters employer-coerced violations of ethical rules.
Some employees have argued that a condition of continued employment that contravenes “personal morals” of the employee based on professional judgment is sufficient to state a wrongful discharge claim.[39]39 See Pierce v. Ortho Pharm. Corp., 417 A.2d 505, 514 (N.J. 1980) (holding that “[a]n employee does not have a right to continued employment when he or she refuses to conduct research simply because it would contravene his or her personal morals”). Close Similarly, some scholars have argued that an employee’s “reasonable belief” that the employer action violates public policy is sufficient.[40]40 See Kenneth J. Wilbur, Wrongful Discharge of Attorneys: A Cause of Action to Further Professional Responsibility, 92 Dick. L. Rev. 777, 778–79 (1988) (“While at first glance it would seem that merely providing protection in situations where the requested act in fact would have been a violation would be sufficient, the application of the Code’s provisions is such a subtle art that, in many situations, what constitutes a violation may be subject to good faith debate.”). Close However, unlike a coerced violation of a recognized ethical code, neither of these approaches creates “equally destructive alternatives” for an employee to confront.[41]41 Strozinsky v. Sch. Dist. of Brown Deer, 614 N.W.2d 443, 455 (Wis. 2000) (quoting Hausman v. St. Croix Care Ctr., 571 N.W.2d 393, 398 (Wis. 1997)). Close Therefore, under a personal moral or reasonable belief standard, an employee, as a condition of continued employment, may never face equally destructive alternatives and the ensuing impossible choice of termination or ethical sanction. Thus, to state a wrongful discharge claim based on the public policy exception, a professional employee must show that, had they followed their employer’s directive, they would have been subject to an ethical sanction.[42]42 Cf. Antley v. Shepherd, 340 S.C. 541, 550, 532 S.E.2d 294, 298 (S.C. Ct. App. 2000), aff’d as modified, 349 S.C. 600, 601, 564 S.E.2d 116, 116 (2002) (dispelling plaintiff’s argument that she reasonably believed her employer’s directive to violate the law despite the directive not being illegal). Close This requirement adequately ensures the employee’s choice was ethically impossible rather than morally impractical.[43]43 Cf. Pierce, 417 A.2d at 514 (requiring the plaintiff to show her employer’s actions would have resulted in medical malpractice or violation of a specific ethical code). Close
Since the adoption of the public policy exception in 1959 with the California Court of Appeal’s decision in Petermann v. Teamsters Local 396,[44]44 344 P.2d 25 (Cal. Ct. App. 1959); Teresa A. Cheek, The Employment-At-Will Doctrine in Delaware: A Survey, 6 Del. L. Rev. 311, 315–16 (2003). Close courts have struggled with properly defining the boundaries of public policy in the context of a wrongful discharge.[45]45 See Parnar v. Americana Hotels, Inc., 652 P.2d 625, 630–31 (Haw. 1982) (finding the concept of public policy vague); see also Collier v. Insignia Fin. Grp., 981 P.2d 321, 323 (Okla. 1999) (recognizing the difficulty in defining “amorphous” notions of public policy). Close Generally, almost all courts agree that the policy must come from the legislature, either through statutes or the state’s constitution.[46]46 See Muhl, supra note 10, at 4. Close However, courts tend to differ on two grounds: first, what can serve as the language of the legislature, and second, how to interpret that language.[47]47 See id. at 5–7. Close
First, courts differ on the legal authorities that can provide predicate policy for the purposes of a wrongful discharge claim.[48]48 See Brockmeyer v. Dun & Bradstreet, 335 N.W.2d 834, 839–40 (Wis. 1983) (explaining the difference between states that identify public policy strictly from statutory law and those that rely on judicially defined notions of policy). Close For example, some states, such as Texas, adopt a hardline deference to the legislature to create statutory exceptions to the employment at-will doctrine.[49]49 See Sawyer v. E.I. Du Pont De Nemours & Co., 430 S.W.3d 396, 399 (Tex. 2014) (explaining that the Legislature has created a few narrow exceptions prohibiting discharge, but Texas courts have created only one exception: prohibiting an employee from being discharged for refusing to perform an illegal act). Close On the other hand, Colorado recognized ethical codes as public policy quite early in its wrongful discharge jurisprudence.[50]50 See Rocky Mountain Hosp. & Med. Serv. v. Mariani, 916 P.2d 519, 524 (Colo. 1996) (recognizing Colorado State Board of Accountancy Rules of Professional Conduct Rule 7.3, as public policy for purposes of a wrongful discharge claim). Close South Carolina, like most states that recognize the public policy exception, currently sits in the middle of these two approaches.[51]51 Compare Donevant v. Town of Surfside Beach, 422 S.C. 264, 266–67, 811 S.E.2d 744, 745–46 (2018) (finding public policy in the state’s Building Code based on public policy statement in statute establishing Building Code), with Sawyer, 430 S.W.3d at 399 (requiring the legislature to create statutory exceptions to employment at-will except in cases where the employee was fired for refusing to commit illegal acts), and Rocky Mountain, 916 P.2d at 524–25 (recognizing ethical codes as public policy despite the lack of specific legislative exception to employment at-will). Close South Carolina courts recognize the General Assembly has the sole power to explicitly declare whether a statute contains the public policy of the state.[52]52 See Taghivand v. Rite Aid Corp., 411 S.C. 240, 247–48, 768 S.E.2d 385, 389 (2015); see also Muhl, supra note 10, at 5 Map 1. Close However, once a statute contains a statement of public policy, the statute’s entire scheme is considered public policy, including regulations that might be promulgated in furtherance of the statute’s goals.[53]53 See Donevant, 422 S.C. at 266–67, 811 S.E.2d at 745 (finding the building code necessary for the pursuit of the state’s public policy to ensure safety in building construction). Close
Second, courts differ on whether to interpret the language of the legislature broadly or narrowly, with most courts adopting a narrow interpretation based on the plain language of the law.[54]54 See Muhl, supra note 10, at 4–5, 5 Map 1. Close A narrow interpretation of the legislature’s language typically requires a “clear and articulable definition of policy.”[55]55 Taghivand, 411 S.C. at 248, 768 S.E.2d at 389; see also Muhl, supra note 10, at 4–5. Close A broad standard allows a court to imply the policy from the statute’s text to protect notions of public good.[56]56 Wandry v. Bull’s Eye Credit Union, 384 N.W.2d 325, 329 (Wis. 1986); see also Muhl, supra note 10, at 4–5. Close South Carolina embodies the narrow interpretation and courts require the General Assembly to declare public policy.[57]57 See Taghivand, 411 S.C. at 248, 768 S.E.2d at 389. Close
This Note proceeds in three parts. Part II will discuss the current state of South Carolina’s definition of public policy in the context of a wrongful discharge action as relevant to accountants regulated under Title 40 of the South Carolina Code.[58]58 See S.C. Code Ann. §§ 40-2-5 to -600. Close Part III surveys various states that have chosen to recognize public policy in ethical codes. Part IV advocates for the South Carolina Supreme Court to recognize public policy in the accounting code of ethics which, if violated, would result in suspension, revocation of license, or an administrative fine. Finally, this Note recommends that other professionals seeking to prevent employer coerced violations of their ethical codes to lobby the General Assembly to add clear statements of public policy to other statutory schemes enumerated under Title 40.
South Carolina first recognized the public policy exception to the at-will doctrine in 1985 in Ludwick v. This Minute of Carolina, Inc.[59]59 Ludwick v. This Minute of Carolina, Inc., 287 S.C. 219, 225, 337 S.E.2d 213, 216 (1985) (recognizing public policy exception where employer threatened termination if his employee complied with a subpoena). Close Since Ludwick, South Carolina has seen a steady expansion of what legal authorities can constitute public policy.[60]60 See Culler v. Blue Ridge Elec. Coop., Inc., 309 S.C. 243, 246, 422 S.E.2d 91, 92–93 (1992); Garner v. Morrison Knudsen Corp., 318 S.C. 223, 226, 456 S.E.2d 907, 909 (1995) (“While we have applied the public policy exception to situations where an employer requires an employee to violate a criminal law, and situations where the reason for the employee’s termination was itself a violation of the criminal law, we have never held the exception is limited to these situations.”); Donevant v. Town of Surfside Beach, 422 S.C. 264, 266, 811 S.E.2d 744, 745 (2018). Close The interests of the discharged employee and the General Assembly’s authority to promulgate policy have been critical in the court’s development of the public policy exception.[61]61 Stiles v. Am. Gen. Life Ins. Co., 335 S.C. 222, 228, 516 S.E.2d 449, 452 (1999) (“The Ludwick public policy exception is designed to serve two important policy goals: (1) the vindication of the state’s interest by prohibiting termination in violation of the clear mandate of public policy; and (2) the protection of at-will employees who are often without a remedy when terminated in violation of public policy.”); see also Citizens’ Bank v. Heyward, 135 S.C. 190, 204, 133 S.E. 709, 713 (1925) (“The primary source of the declaration of public policy of the state is the General Assembly; the courts assume this prerogative only in the absence of legislative declaration.”). Close Likewise, the interest of the employer to not be “unduly fettered in exercising his rightful prerogative to select employees” has also been influential in the court’s decisions.[62]62 Ludwick, 287 S.C. at 225, 337 S.E.2d at 216. Close Therefore, recognizing new legal authority that can serve as predicate public policy for wrongful discharge actions requires balancing the interests of employees, employers, and the General Assembly.[63]63 See id.; see also Stiles, 335 S.C. at 228, 516 S.E.2d at 452; cf. Pierce v. Ortho Pharm. Corp., 417 A.2d 505, 511 (N.J. 1980) (stating that the interest of the employee, employer, and public must be weighed when determining whether to recognize public policy). See generally Elletta Sangrey Callahan, The Public Policy Exception to the Employment at Will Rule Comes of Age: A Proposed Framework for Analysis, 29 Am. Bus. L.J. 481, 486–87 (1991) (recognizing the need to balance the interests of the employee, employer, and society when analyzing a wrongful discharge in violation of public policy claim). Close
Initially, the court in Ludwick, without saying it explicitly, seemed to limit predicate public policy to the criminal law.[64]64 See Ludwick, 287 S.C. at 225, 337 S.E.2d at 216. Close In Ludwick, the plaintiff, an at-will seamstress, was served with a subpoena to appear for a state board’s hearing.[65]65 Id. at 220–21, 337 S.E.2d at 213–14. Close Her employer stated that if she honored the subpoena and testified at the hearing, then she would be terminated from her job.[66]66 Id. at 221, 337 S.E.2d at 214. Close Failure to obey the subpoena would result in a criminal penalty of a fine or incarceration.[67]67 Id. at 225, 337 S.E.2d at 216; see also S.C. Code Ann. § 41-29-210(2) (1976) (“A person who, without just cause, fails or refuses to attend and testify . . . if it is in his power to do this in accordance with a subpoena of the department or a duly authorized representative, must be punished by a fine of not less than twenty nor more than two hundred dollars or by imprisonment for not more than thirty days.”). Close Therefore, the plaintiff faced “the dilemma of choosing between her livelihood, on the one hand, and obedience to the law of the state, on the other.”[68]68 Ludwick, 287 S.C. at 225, 337 S.E.2d at 216. Close
The court held that an employee could state a wrongful discharge in violation of public policy claim where “an employer requires an at-will employee, as a condition of retaining employment, to violate the law.”[69]69 Id. Close While recognizing the difficulty of “determining a precise definition of . . . ‘public policy,’” the court did not set an outer limit of what legal authorities can constitute public policy.[70]70 Id. at 223, 337 S.E.2d at 215. Close Rather, the facts of the case suggested that the presence of a criminal penalty was the key factor.[71]71 See id. at 225, 337 S.E.2d at 216. Close
Many lower courts originally interpreted Ludwick as limiting predicate public policy in a wrongful discharge claim to the criminal law.[72]72 See Miller v. Fairfield Cmtys., Inc., 299 S.C. 23, 26–27, 382 S.E.2d 16, 19 (S.C. Ct. App. 1989) (“From the discussion in Ludwick it seems clear the Supreme Court did not consider public policy outside the sphere of criminal sanctions.”). Close For example, in Miller v. Fairfield Communities, Inc., the Court of Appeals addressed the issue of whether Title 40’s regulation of real estate brokers could serve as public policy in a wrongful discharge action.[73]73 Id. at 26, 382 S.E.2d at 18–19. Close The plaintiffs, a husband and wife, brought a claim for wrongful termination of the husband’s employment from his at-will position as a golf professional at the defendant-resort.[74]74 Id. at 24–25, 382 S.E.2d at 17–18. Close After discovering that the wife, a real estate agent, was employed with one of the resort’s competitors, the resort gave the husband an ultimatum of either resigning or convincing his wife to resign from her job.[75]75 Id. Close The husband chose to resign.[76]76 Id. at 25, 382 S.E.2d at 18. Close
The plaintiffs argued that the wife could not resign from her position or else she would have been subject to criminal penalties for misrepresenting to her clients that she would be their sole listing agent.[77]77 Id. at 26, 382 S.E.2d at 18–19. Close The plaintiffs cited a former code provision that governed listing agents and fined or incarcerated agents for any conduct in a real estate transaction which “demonstrates bad faith, dishonesty, untrustworthiness[,] or incompetency in such a manner as to endanger the interest of the public.”[78]78 Id. at 26, 382 S.E.2d at 18; S.C. Code Ann. § 40–57–170(4) (repealed 2017). Close Alternatively, the plaintiffs argued that the wife would have been subject to administrative sanctions had she resigned and failed to remain the listing agent for her clients.[79]79 Miller, 299 S.C. at 26, 382 S.E.2d at 18–19. Close The plaintiffs claimed that forcing an employee to incur criminal or administrative penalties as conditions of continued employment would violate public policy.[80]80 Id. at 26–27, 382 S.E.2d at 19. Close
The Court, however, found that the wife would not have been subject to criminal penalties because three months prior to the plaintiff’s resignation giving rise to their claim the General Assembly had amended the laws governing real estate agents to eliminate criminal penalties for all conduct except for practicing without a license.[81]81 Id. at 26, 382 S.E.2d at 18–19. Close Turning to the administrative penalties, the court relied on a narrow reading of Ludwick and stated that “it seems clear the Supreme Court did not consider public policy outside the sphere of criminal sanctions.”[82]82 Id. at 26–27, 382 S.E.2d at 19. Close Essentially, the court interpreted Ludwick to apply only to choices between jail time or termination.[83]83 See id.; see also Culler v. Blue Ridge Elec. Coop., Inc., 309 S.C. 243, 245–46, 422 S.E.2d 91, 92 (1992). Close Interestingly, the court indicated a willingness to find public policy in Title 40’s provisions, but only those provisions that carry a potential penalty of incarceration.[84]84 See Miller, 299 S.C. at 26–27, 382 S.E.2d at 19 (“[W]hile a violation of the prohibitions of [S.C. Code Ann. § 40-57-170] subjects a person to certain administrative sanctions such violation does not subject one to criminal penalties. . . . From the discussion in Ludwick it seems clear the Supreme Court did not consider public policy outside the sphere of criminal sanctions.”). Close
The Supreme Court clarified Ludwick’s limitations seven years later in Culler v. Blue Ridge Electric Co-op., Inc. by holding that the public policy exception extended “at least to legislatively defined ‘Crimes Against Public Policy.’”[85]85 Culler, 309 S.C. at 246, 422 S.E.2d at 93. Close Under Chapter 17 of South Carolina’s criminal code, the General Assembly has identified specific crimes that constitute violations of the state’s public policy.[86]86 See generally S.C. Code Ann. § 16-17-10 to -770 (2015) (enumerating crimes against public policy such as providing alcohol to minors or discriminating against another person for their political views). Close Relying on this identification, the Culler decision recognized public policy in criminal laws that solely levy a fine against the violator.[87]87 Compare Miller, 299 S.C. at 26–27, 382 S.E.2d at 19 (limiting the protection of the public policy exception to laws that carry criminal penalties if violated), with Culler, 309 S.C. at 245–46, 422 S.E.2d at 92–93 (recognizing public policy protection beyond laws that carry criminal penalties if violated). Close For example, some of the statutorily defined Crimes Against Public Policy do not levy a punishment of incarceration if violated.[88]88See S.C. Code Ann. § 16-17-670 (2015) (imposing only a monetary fine of twenty-five dollars per offense for failures to keep a record of crosstie transactions); S.C. Code Ann. § 16-17-500(E)(1)(a) (2015) (imposing only a monetary fine for a first time offender who gives alcohol or tobacco to a minor). Close
The Culler decision clarified that determining public policy requires focusing on the legislature’s intent to establish public policy in a statute, rather than on the sanction an employee might have faced from a statute.[89]89 Culler, 309 S.C. at 245–46, 422 S.E.2d at 92–93; see also Citizens’ Bank v. Heyward, 135 S.C. 190, 133 S.E. 709, 713 (1925) (“The primary source of the declaration of the public policy of the state is the General Assembly; the courts assume this prerogative only in the absence of legislative declaration.”). Close Realizing the original purpose of Ludwick as preventing terminations that violate a “clear mandate of public policy,” the Culler decision reoriented the analysis to focus on legislative intent to establish policy.[90]90 Culler, 309 S.C. at 246, 422 S.E.2d at 93. Close In the court’s view, “legislatively defined ‘Crimes Against Public Policy’” is exactly the type of legislative intent required to establish public policy.[91]91 See id. Close
From the outset of South Carolina’s public policy exception jurisprudence, the goal of preventing the impossible choice played an important role in the court’s reasoning.[92]92 See Ludwick v. This Minute of Carolina, Inc., 287 S.C. 219, 225, 337 S.E.2d 213, 216 (1985); see also Miller, 299 S.C. at 26–27, 382 S.E.2d at 19. Close While public policy was initially limited to laws that, if violated, carry criminal penalties such as incarceration, the court eventually expanded public policy out from the criminal law and focused on the legislative intent to establish policy.[93]93 See Culler, 309 S.C. at 246, 422 S.E.2d at 92–93. Close
Ten years after Ludwick, the Supreme Court held that actions for wrongful discharge in violation of public policy were no longer limited to situations where “an employer requires an employee to violate a criminal law . . . and . . . situations where the reason for the employee’s termination was itself a violation of the criminal law.”[94]94 Garner v. Morrison Knudsen Corp., 318 S.C. 223, 226, 456 S.E.2d 907, 909 (1995) (emphasis added). Close The Garner v. Morrison Knudsen Corp. decision clarified Ludwick by recognizing public policy in a wrongful discharge action in legal authorities outside of criminal law.[95]95 See id. Close However, the decision did little else to clarify what legal authorities apart from criminal law might serve as predicate public policy as the “ultimate question whether the public policy exception to the employment at-will doctrine is applicable in this case” was not addressed.[96]96 Id. at 227 n.3, 456 S.E.2d at 910. Close Given the case’s procedural posture of dismissal via a 12(b)(6) motion, the facts of the case had not been fully developed and, therefore, could not be fully analyzed by the court.[97]97 See id. Close Primarily, however, the Garner decision opened the door for greater expansion of the public policy exception in a wrongful discharge action.[98]98 See id. at 226, 456 S.E.2d at 909; see also C.F.W. Manning, II, Public Policy Exception Open to Possible Expansion in Employment-at-Will Situations, 48 S.C. L. Rev. 133 (1996) (“In Garner v. Morrison Knudsen Corp. the South Carolina Supreme Court held that the public policy exception to the employment-at-will doctrine is not strictly limited to instances when an employer requires an employee to violate a criminal law or when the termination of the employee is itself a violation of the law. As a result, it appears that South Carolina’s formally conservative approach to the public policy exception is now open to expansion.”) (footnotes omitted). Close
Following Garner, the Court of Appeals dismissed several wrongful discharge claims and left state trial courts scrambling to define the contours of the open-ended decision.[99]99 See generally Nolte v. Gibbs Int’l, Inc., 335 S.C. 72, 515 S.E.2d 101 (S.C. Ct. App. 1999) (reversing summary judgment and remanding to the trial level to determine if a wrongful discharge could be established); Keiger v. Citgo, Coastal Petroleum, Inc., 326 S.C. 369, 373, 482 S.E.2d 792, 794 (S.C. Ct. App. 1997) (reversing motion to dismiss for failure to state a claim based on the novelty of the issue raised by plaintiff). Close In the midst of this scramble, the Court of Appeals took up the issue of whether the South Carolina Rules of Professional Conduct (SCRPC), the ethical code for attorneys, could serve as public policy in a wrongful discharge action.[100]100 See Novak v. Joye, Locklair & Powers, P.C., No. 2010-UP-225, 2010 WL 10079883, at *2 (S.C. Ct. App. Apr. 1, 2010). Close In Novak v. Joye, Locklair & Powers, P.C., the court held that because the SCRPC was not codified by the legislature, it could not serve as public policy in a wrongful discharge action.[101]101 Id. Close Further, the court recognized that the SCRPC is not considered substantive law because a violation is not considered per se proof of legal malpractice.[102]102 See id. (citing Weatherford v. Price, 340 S.C. 572, 580–81, 532 S.E.2d 310, 314–15 (S.C. Ct. App. 2000) (stating that violation of the SCRPC is not proof of malpractice per se)). Close
Soon after the Novak decision, however, two Supreme Court decisions changed the landscape of the public policy exception in a wrongful discharge action.[103]103 See Taghivand v. Rite Aid Corp., 411 S.C. 240, 248, 768 S.E.2d 385, 389 (2015) (requiring a “clear and articulable definition of policy from the General Assembly” to state a wrongful discharge claim); Donevant v. Town of Surfside Beach, 422 S.C. 264, 267, 811 S.E.2d 744, 746 (2018) (recognizing an example of a “clear mandate of public policy” in the South Carolina Building Code). Close First, the presence of a clear mandate of public policy from the legislature is required.[104]104 Taghivand, 411 S.C. at 248, 768 S.E.2d at 389. Close Second, a statute containing a policy statement is sufficient to infer legislative intent to declare the public policy of the state.[105]105 See Donevant, 422 S.C. at 266–67, 811 S.E.2d at 745–46. Close These two decisions, read in conjunction with one another, undermine the appellate court’s reasoning in Novak when applied to professions that contain a clear statement of public policy from the General Assembly.
First, in Taghivand v. Rite Aid Corp., the plaintiff, a store manager fired for reporting crimes of shoplifting at the store, argued that South Carolina recognizes a strong public policy in crime prevention through its statutory scheme and justice system.[106]106 Taghivand, 411 S.C. at 246, 768 S.E.2d at 388. Close However, the court was unpersuaded and refused to imply policy where the General Assembly had chosen not to include a more “clear and articulable definition of policy.”[107]107 Id. at 248, 768 S.E.2d at 389. Close The Taghivand decision set the stage for the Supreme Court to finally identify the type of legislative statement required to recognize public policy.
Second, in 2018, the South Carolina Supreme Court in Donevant v. Town of Surfside Beach explicitly identified an example of legislative language necessary to recognize public policy.[108]108 See Donevant, 422 S.C. at 266–67, 811 S.E.2d at 745–46. Close Unlike Ludwick, in which the court specifically noted the criminal punishment the employee would face for refusing to follow the subpoena, the Supreme Court’s Donevant decision was not concerned with the plaintiff’s lack of criminal law punishment.[109]109 Compare id. at 267, 811 S.E.2d at 745–46 (failing to require the plaintiff face a criminal penalty had she not enforced the building code), with Ludwick v. This Minute of Carolina, Inc., 287 S.C. 219, 225, 337 S.E.2d 213, 216 (1985) (specifically discussing the plaintiff’s potential criminal liability if she chose to follow the employer’s directive). Close Instead, the court’s analysis relied on the presence of a clear statement of policy from the legislature.[110]110 See Donevant, 422 S.C. at 266, 811 S.E.2d at 745; see also S.C. Code Ann. § 6-9-5 (2004) (stating the public policy for building codes in South Carolina). Close
In Donevant, a building official employed by a town was terminated for issuing a stop-work order after discovering that construction work was being done without a proper permit.[111]111 Donevant, 422 S.C. at 266, 811 S.E.2d at 745. Close The court first explained the origin of the South Carolina Building Code (SCBC) as being adopted by the state Building Code Council, an agency of the state’s Department of Labor, Licensing, and Regulation.[112]112 Id. at 265, 811 S.E.2d at 745. Close Given the defendant-town’s adoption of the SCBC,[113]113 Id. at 266 n.2, 811 S.E.2d at 745. Close the town and its building official were bound to “enforce compliance with the provisions of this code” and “issue all necessary notices or orders to ensure compliance.”[114]114 Id. at 266, 811 S.E.2d at 745. Close The court also found that the SCBC placed an affirmative duty on any person seeking to construct a building to first acquire a permit.[115]115 Id. Close
Thus, when the building official discovered the lack of a permit, she was obligated by the SCBC to halt construction.[116]116 Id.; see Int’l Bldg. Code § 104.3 (Int’l Code Council 2021) (“The building official shall issue necessary notices or orders to ensure compliance with this code”) (emphasis added). Close Failure to halt construction would have resulted in civil “discipline ranging from a letter of caution to a revocation of her license as a building official.”[117]117 Donevant v. Town of Surfside Beach, 414 S.C. 396, 403, 778 S.E.2d 320, 324 (S.C. Ct. App. 2015), aff’d, 422 S.C. 264, 811 S.E.2d 744 (2018). Close Alternatively, the building official could have been subject to a charge of misconduct in office.[118]118 Id. at 413, 778 S.E.2d at 330, aff’d, 422 S.C. 264, 811 S.E.2d 744 (2018). Close Therefore, the defendant-town’s decision to terminate her was a violation of the General Assembly’s public policy to “maintain reasonable standards of construction in buildings and other structures in the State consistent with the public health, safety, and welfare of its citizens.”[119]119 See Donevant, 422 S.C. at 266–67, 811 S.E.2d at 745–46; see also S.C. Code Ann. § 6-9-5 (2004). Close The court stated, “[t]his case fits squarely within the long-established limits of the public policy exception to the at-will employment doctrine because firing Donevant for enforcing the building code violates a clear mandate of public policy.”[120]120 Donevant, 422 S.C. at 267, 811 S.E.2d at 746. Close
In its decision affirmed by the Supreme Court, the Court of Appeals reasoned that “[i]t is difficult to imagine a more clear declaration of public policy than language stating ‘[t]he public policy of South Carolina is. . . .’”[121]121 Donevant, 414 S.C. at 415, 778 S.E.2d at 331, aff’d, 422 S.C. 264, 811 S.E.2d 744 (2018) (emphasis in original). Close Additionally, the court noted that “even if [plaintiff] violated a law that only carried a civil penalty, it would not be fatal to her claim for retaliatory discharge.”[122]122 Id. at 408, 778 S.E.2d at 327, aff’d, 422 S.C. 264, 811 S.E.2d 744 (2018) (“Nothing in Barron or later decisions by our supreme court hold the employer must require the employee to violate a criminal law in order for the public policy exception to apply.”). Close Consistent with Garner’s holding, the Court of Appeals further held that “there could be situations where an employee was terminated in violation of public policy even if she was not required by her employer to violate the law or the reason for her termination was not a violation of criminal law.”[123]123 Id. at 414, 778 S.E.2d at 330, aff’d, 422 S.C. 264, 811 S.E.2d 744 (2018). Close
Consequently, Donevant marks the full departure from criminal law as the sole statement of public policy in a wrongful discharge action.[124]124 See id. at 408, 778 S.E.2d at 327, aff’d, 422 S.C. 264, 811 S.E.2d 744 (2018); see also Donevant, 422 S.C. at 266, 811 S.E.2d at 745. Close Therefore, if the General Assembly has explicitly imbued a statute with a clear statement of public policy, then interference by an employer with an employee advancing the legislature’s goals will give the employee a cause of action for wrongful discharge in the event of termination.[125]125 See Donevant, 422 S.C. at 267, 811 S.E.2d at 746; see also Donevant, 414 S.C. at 408, 778 S.E.2d at 327, aff’d, 422 S.C. 264, 811 S.E.2d 744 (2018). Close
The Donevant decision from the Supreme Court created a wider path for employees pursuing wrongful discharge claims. First, an employee must be able to point to a clear mandate of public policy from the legislature with language such as “[t]he public policy of South Carolina is. . . .”[126]126 Donevant, 414 S.C. at 415, 778 S.E.2d at 331, aff’d, 422 S.C. 264, 811 S.E.2d 744 (2018) (emphasis in original). Close Second, the employee must be advancing the public policy of the state when they are discharged, and the employer’s decision to terminate must interfere with the public policy being advanced by the employee.[127]127 See Donevant, 422 S.C. at 266, 811 S.E.2d at 745 (finding the building official’s issuance of a stop work order an action taken in furtherance of the state’s public policy to “maintain reasonable standards of construction in buildings,” and the defendant town’s decision to terminate the official to be in violation of that policy). Close Finally, the employee’s decision to advance the state’s public policy must be mandatory as enforced by some sort of legal penalty for failure to act on that duty.[128]128 See id. at 266–67, 811 S.E.2d at 745; Donevant, 414 S.C. at 413, 778 S.E.2d at 330, aff’d, 422 S.C. 264, 811 S.E.2d 744 (2018) (finding the building official could have been subject to a charge of misconduct in office or an administrative penalty such as revocation of her building official’s license or a letter of caution for failing to enforce the building code). Close Under Donevant, employees are no longer reliant on the criminal law as the sole source of public policy, so long as the General Assembly has provided a clear statement of policy in an applicable statute on which the employee can rely.[129]129 See Donevant, 422 S.C. at 267–68, 811 S.E.2d at 745–46. Close
There are several methods states use for identifying public policy in wrongful discharge actions, but most agree that public policy should primarily emanate from the state legislature.[130]130 Muhl, supra note 10, at 5 Map 1. Close The following Sections will discuss states that, unlike South Carolina, have already explicitly recognized professional ethical codes as sources of public policy. While Colorado provides the cleanest comparison to South Carolina in terms of requiring the legislature to enunciate public policy,[131]131 See id. (noting that both South Carolina and Colorado require the Legislature to enunciate public policy). Close New Jersey and Missouri provide a path for South Carolina to recognize ethical codes as sources of public policy in a way that retains deference to the General Assembly and ensures employers retain their flexibility in termination decisions.[132]132 See Pierce v. Ortho Pharm. Corp., 417 A.2d 505, 512 (N.J. 1980) (recognizing ethical codes as public policy in a wrongful discharge action with the requirement that the employee point to a “recognized code of ethics of the employee’s profession” rather than relying on their personal morals); see also DeFoe v. Am. Fam. Mut. Ins. Co., 526 S.W.3d 236, 243 (Mo. Ct. App. 2017) (“The purpose behind the need for a ‘clear mandate of public policy’ is to clarify the duties imposed upon employers, thereby allowing them to effectively avoid liability pitfalls.”). Close
Colorado courts, while initially limiting public policy to statutes and constitutional provisions, eventually recognized ethical codes as public policy in 1996.[133]133 See Rocky Mountain Hosp. & Med. Serv. v. Mariani, 916 P.2d 519, 524 (Colo. 1996). Close The Colorado Supreme Court, in an en banc decision in Rocky Mountain Hospital & Medical Service v. Mariani, held that professionals could rely on ethical codes as a source of public policy in a wrongful discharge action.[134]134 Id. at 528. Close The plaintiff, a licensed certified public accountant (CPA) employed by the defendant hospital system, complained to her supervisors concerning “questionable accounting practices.”[135]135 Id. at 521. Close Some of the questionable practices included recording an asset bought by one company on the books of another company.[136]136 Id. at 522. Close Plaintiff alleged that many of these practices were violations of her accounting ethical code.[137]137 Id. at 523. Close
In validating the recognition of ethical codes as public policy, the Colorado Supreme Court stated that “[a] professional employee forced to choose between violating his or her ethical obligations or being terminated is placed in an intolerable position.”[138]138 Id. at 525. Close The Colorado state legislature, in its statutory scheme establishing the state Board of Accountancy, declared, “[i]t is . . . in the interest of the citizens of the state of Colorado and a proper exercise of the police power of the state of Colorado to provide for the licensing and registration of certified public accountants.”[139]139 See Colo. Rev. Stat. Ann. § 12-100-101 (2019). Close Given the Colorado state legislature’s declaration of public policy in establishing the state Board of Accountancy, the court found the ethical rules regulating the profession serve an important public purpose of ensuring accuracy in financial reporting.[140]140 Rocky Mountain Hosp & Med. Serv., 916 P.2d at 526 (relying on the legislature’s declaration of purpose in finding an important public policy advanced by accounting rules); see also § 12-100-101 (“It is declared to be in the interest of the citizens of the state of Colorado and a proper exercise of the police power of the state of Colorado to provide for the licensing and registration of certified public accountants, to ensure that persons who hold themselves out as possessing professional qualifications as certified public accountants are, in fact, qualified to render accounting services of a professional nature, and to provide for regulation of certified public accountants employed, serving clients, or doing business in Colorado and the maintenance of high standards of professional conduct by those licensed and registered as certified public accountants.”). Close
Colorado’s formulation for determining whether an ethical code can serve as predicate policy is narrowly tailored to ensure employers are aware of which ethical code provisions an employee can rely on in their wrongful discharge claim.[141]141 See Rocky Mountain Hosp. & Med. Serv., 916 P.2d at 525 (“[P]ublic policy must be clearly mandated such that the acceptable behavior is concrete and discernible as opposed to a broad hortatory statement of policy that gives little direction as to the bounds of proper behavior.”). Close Some of the limitations for a professional who seeks to rely on their ethical code in a wrongful discharge claim require the public policy be enunciated in an ethical rule referenced in a statute, and the policy must prevent or demand certain conduct from the professional.[142]142 See id. Close
The Supreme Court of New Jersey issued the seminal case from a state recognizing public policy in ethical codes.[143]143 See Pierce v. Ortho Pharm. Corp., 417 A.2d 505, 513 (N.J. 1980); see also R. Scott Oswald & Michael L. Vogelsang, Jr., The ABCs of Common Law Wrongful Termination Claims in the Washington Metropolitan Region, 3 Am. U. Lab. & Emp. L.F. 197, 201 (2013). Close The court in Pierce v. Ortho Pharmaceutical Corp. held that a professional code of ethics, when designed to serve the interests of the public, can serve as predicate policy in a wrongful discharge claim.[144]144 See Pierce, 417 A.2d at 512. Close The court, however, limited a plaintiff’s ability to rely on ethical codes by requiring an employee to point to a “clear mandate of public policy” rather than personal morals of the plaintiff employee.[145]145 Id. (“Employees who are professionals owe a special duty to abide not only by federal and state law, but also by the recognized codes of ethics of their professions. That duty may oblige them to decline to perform acts required by their employers. However, an employee should not have the right to prevent his or her employer from pursuing its business because the employee perceives that a particular business decision violates the employee’s personal morals, as distinguished from the recognized code of ethics of the employee’s profession.”). Close
In Pierce, the plaintiff employee, a medical doctor, resigned after she refused to continue formulating and lab testing a controversial medicine that was awaiting approval for human testing by the FDA.[146]146 Id. at 513. Close The plaintiff felt that applying to the FDA to test the medicine on humans was unnecessary and unethical given the potential dangers associated with the drug.[147]147 Id. at 507. Close Pointing to the Hippocratic Oath as her only source of public policy, the plaintiff argued that she was ethically bound to cease working on development of the drug, especially with human testing imminent pending FDA approval.[148]148 Id. at 513 (pointing to the Hippocratic Oath which provides in part, “I will prescribe regimen for the good of my patients according to my ability and my judgment and never do harm to anyone”). Close
The court placed professional ethical codes on the same level as federal and state law by saying professional employees are bound by a special duty to abide by all three.[149]149 Id. at 512 (“Employees who are professionals owe a special duty to abide not only by federal and state law, but also by the recognized codes of ethics of their professions.”). Close The court, however, was unpersuaded by the plaintiff’s argument that she was in danger of violating federal law or her ethical codes.[150]150 See id. at 513. Close The court noted that Plaintiff’s employer was not requiring human testing prior to FDA approval of the drug’s formulation, so the employer was not actually violating federal law that required FDA approval prior to human testing.[151]151 Id. Close Therefore, the plaintiff was never at risk of violating federal law unless the FDA denied the request for human testing, and the employer then required plaintiff to pursue illegal testing of a controversial drug that could harm human test subjects.[152]152 Id. at 513. Close
Next, the court found that the plaintiff was not at risk of violating the Hippocratic Oath when she was terminated because the drug, though controversial, was not yet being tested on humans.[153]153 See id. Close The Hippocratic Oath contained no prohibitions on “research that does not involve tests on humans and that cannot lead to such tests without governmental approval.”[154]154 Id. Close Therefore, the plaintiff failed to show that, as a condition of continued employment, she was forced to violate the Hippocratic Oath.[155]155 See id. Close Despite the plaintiff being unable to state a claim for wrongful discharge, the Pierce decision cemented the viability of ethical codes as predicate public policy, and its reasoning has been relied on by several other courts faced with the same issue.[156]156 See Rocky Mountain Hosp. & Med. Serv. v. Mariani, 916 P.2d 519, 525 (Colo. 1996); Boyle v. Vista Eyewear, Inc., 700 S.W.2d 859, 871 (Mo. Ct. App. 1985); c.f. Birthisel v. Tri-Cities Health Servs. Corp., 424 S.E.2d 606, 613 (W. Va. Ct. App. 1992) (discussing Pierce but failing to find a wrongful discharge based on facts showing employer’s actions did not coerce a violation of any ethical code). Close
Judge Pashman, the lone dissenter in Pierce, argued that, given the novelty of the issue presented, the plaintiff’s claim should not be dismissed by summary judgment motion; rather, the plaintiff should be allowed to present her case at trial.[157]157 Pierce, 417 A.2d at 518 (Pashman, J., dissenting). Close Although the plaintiff failed to plead sufficient facts to show a violation of public policy, Judge Pashman offered up several potential methods the plaintiff could have used in stating her claim.[158]158 Id. at 515–17 (citing four codes of medical ethics that “establish standards for the participation of doctors in clinical experimentation on humans,” which would have provided a basis for denying defendant’s motion for summary judgment). Close One method was that because New Jersey law authorizes revocation of a doctor’s license if the doctor engages in gross malpractice, had the plaintiff been allowed to proceed with her claim, she may have been able to show that following her employer’s controversial directive might have resulted in the revocation of her license to practice medicine as an act of gross negligence.[159]159 See id. at 518 (“If plaintiff could prove that defendant discharged her for refusing to engage in ‘gross malpractice,’ defendant would be liable for its violation of a ‘clear mandate of public policy.’”) (Pashman, J., dissenting). Close Pashman concluded his dissent stating, “[p]laintiff has been denied the benefit of the rule which she has sought to vindicate her professional conscience.”[160]160 Id. at 521 (Pashman, J., dissenting). Close
Likewise, Missouri recognized ethical codes as a source of public policy with the decision in DeFoe v. American Family Mutual Insurance Co.[161]161 See DeFoe v. Am. Fam. Mut. Ins. Co., 526 S.W.3d 236, 241 (Mo. Ct. App. 2017). Missouri recognized the credibility of ethical codes as public policy in a case prior to DeFoe, but the court did not elaborate on the issue. See Boyle v. Vista Eyewear, Inc., 700 S.W.2d 859, 871 (Mo. Ct. App. 1985) (recognizing the possibility that “in certain instances” ethical codes could serve as predicate public policy in a wrongful discharge claim). Close In DeFoe, the court held that an attorney pointing to the state’s rules of professional conduct as public policy in a wrongful discharge claim must articulate a “clear mandate of public policy.”[162]162 See DeFoe, 526 S.W.3d at 243. Close The plaintiff argued that his employer, by assigning a heavy caseload, was interfering with his ability to provide competent representation.[163]163 Id. at 242–43. Close The plaintiff relied on two ethical code provisions to support his argument, but the court held that neither provision, when applied to the plaintiff’s case, provided a clear mandate of policy.[164]164 Id. at 243. Close The court also pointed out that neither ethical provision discussed workload in any way.[165]165 Id. Close In dismissing the argument, the court noted that, while an increased caseload could affect competence, “an attorney’s ability to competently handle any given caseload varies greatly by not only the individual attorney but also the complexity of each individual case.”[166]166 Id. Close
Essentially, the court was hesitant to apply the two ethical provisions because an employer would be unable to gauge competence of an individual attorney based solely on their caseload.[167]167 See id. at 243–44. Close While the court did recognize the ability of ethical codes to serve as public policy, the requirement of a clear mandate prevents employees from bringing claims based solely on their professional judgment rather than a definite violation of the ethical rule.[168]168 See id. at 243. Close
The DeFoe court shared many of the same concerns from Rocky Mountain and Pierce concerning the reliability of ethical codes as sources of public policy.[169]169 Compare id. at 243–44 (discussing issues with ethical codes that rely on abstract ideas such as competence without specifically preventing or demanding certain conduct), with Rocky Mountain Hosp. & Med. Serv. v. Mariani, 916 P.2d 519, 525 (Colo. 1996) (explicitly requiring an ethical provision “provide a clear mandate to act or not to act in a particular way” to serve as predicate policy), and Pierce v. Ortho Pharm. Corp., 417 A.2d 505, 512 (1980) (holding that a plaintiff employee’s personal morals, as opposed to a recognized code of ethics, is insufficient public policy for purposes of a wrongful discharge action). Close The decisions, though sharing similar concerns, came out differently based on the plaintiff’s ability to point to a specific rule that prevents or demands certain conduct.[170]170 Compare Rocky Mountain Hosp. & Med. Serv., 916 P.2d at 526 (relying on ethical provision that specifically mandates accuracy in financial reporting and abstinence from knowingly misrepresenting facts), with DeFoe, 526 S.W.3d at 242–44 (holding that, because neither ethical provision relied on by plaintiff directly address caseloads of attorneys, a violation based entirely on professional judgment is insufficient to establish a clear mandate of public policy). Close The plaintiff in DeFoe failed to identify a specific ethical provision preventing attorneys from having an unmanageable workload; therefore, his claim was unsuccessful.[171]171 See DeFoe, 526 S.W.3d at 243. Close
South Carolina’s statutory scheme regulating accountants is similar to Colorado’s statutory scheme,[172]172 Compare S.C. Code Ann. § 40-2-10 to -600 (establishing state Board of Accountancy responsible for selecting an ethical code to govern the profession), with Colo. Rev. Stat. Ann. § 12-100-101 (2019) (delegating authority to the state Board of Accountancy to select and enforce a code of professional conduct). Close so the Rocky Mountain decision’s analysis provides a path for South Carolina to follow when recognizing accounting ethical codes as sources of public policy. Accountants in South Carolina are generally regulated under Title 40 of the South Carolina Code, and accountant conduct is subject to ethical provisions adopted by the State Board of Accountancy.[173]173 S.C. Code Ann. § 40-2-70 (2014). See generally S.C. Code Ann. § 40-2-5 to -600. Close The first section of the statutory scheme regulating accountants proclaims the following: “It is the policy of this State, and the purpose of this chapter, to promote the reliability of information used for guidance in financial transactions or for accounting or for assessing the financial status or performance of commercial, noncommercial, and governmental enterprises.”[174]174 S.C. Code Ann. § 40-2-5 (2011) (emphasis added). Close From there, the chapter establishes a state Board of Accountancy responsible for the “administration and enforcement” of the entire chapter.[175]175 S.C. Code Ann. § 40-2-10 (2019). Close
Explicitly stated in the statute, the powers and duties of the state’s Board of Accountancy include “adopt[ing] a code of professional ethics appropriate to the profession.”[176]176 S.C. Code Ann. § 40-2-70 (2014). Close From this statutory requirement to adopt a code of ethics, the Board of Accountancy established the “Ethical Standards of the [American Institute of Certified Public Accountants’] AICPA” as the ethical code governing accountants in South Carolina.[177]177 S.C. Code Ann. Regs. 1-10(A) (2020). Close According to the South Carolina Code of Regulations for the Board of Accountancy, “[l]icensees shall . . . not engage in any acts discreditable to the profession as defined by the Ethical Standards of the AICPA.”[178]178 Id. Close The AICPA’s Rules of Professional Conduct define certain behavior or conduct that constitutes an “act discreditable to the profession.”[179]179 See AICPA Code of Pro. Conduct, § 1.400 (Am. Inst. of Certified Pub. Accts. 2014). Close Additionally, the statutory chapter allows for administrative discipline if the AICPA Professional Standards are violated.[180]180 S.C. Code Ann. § 40-2-110(7) (2011) (“[T]he board may revoke, suspend, refuse to renew, reprimand, censure, or limit the scope of practice of a licensee and impose an administrative fine not exceeding ten thousand dollars per violation. The board also may place a licensee on probation . . . for any one or more of the following reasons: (7) violation of the code of professional ethics adopted by the board or of the AICPA Professional Standards: Code of Professional Conduct[.]”). Close Given the State Board of Accountancy’s adoption of the AICPA’s Professional Standards as the governing ethical code for accountants in South Carolina, accountants licensed by the state of South Carolina are subject, in their professional activities, to the AICPA’s Ethical Standards.[181]181 Id.; S.C. Code Ann. Regs. 1-10(A) (2020). Close
According to § 40-2-110(7) of the South Carolina Code, upon a hearing and a showing of a violation of the AICPA’s Ethical Standards, “the board may revoke, suspend, refuse to renew, reprimand, censure, or limit the scope of practice of a licensee and impose an administrative fine not exceeding ten thousand dollars per violation.”[182]182 See § 40-2-110(7). Close Although an accountant cannot face criminal charges for violating the AICPA’s ethical provisions, the administrative penalties can be just as detrimental when the professional’s reputation, finances, or license to practice is at risk. Therefore, an accountant coerced to violate their ethical code as a condition of continued employment is “placed in an intolerable position” and must confront the impossible choice as defined in the beginning of this Note.[183]183 As previously noted, South Carolina does not currently recognize ethical codes as sources of public policy, so the professional employee has no remedy and must either abide by their employer’s unethical directive or face termination. See Novak v. Joye, Locklair & Powers, P.C., No. 2010-UP-225, 2010 WL 10079883, at *2 (S.C. Ct. App. Apr. 1, 2010) (refusing to extend public policy into to the South Carolina Rules of Professional Conduct governing attorneys). Close
Like Colorado’s progression in recognizing accounting ethical codes as sources of public policy, the South Carolina Supreme Court should recognize public policy for purposes of a wrongful discharge action in the AICPA’s ethical provisions pursuant to Chapter 2 of Title 40 of the South Carolina Code.[184]184 See § 40-2-110(7) (establishing the AICPA’s Code of Professional Conduct as the governing code of ethics for South Carolina accountants). Close The General Assembly, by including a clear and articulable statement of policy in the statute’s first section, expressed an intent for Chapter 2 of Title 40 to act as the public policy of the state.[185]185 See S.C. Code Ann. § 40-2-5 (2011) (“It is the policy of this State, and the purpose of this chapter, to promote the reliability of information used for guidance in financial transactions or for accounting or for assessing the financial status or performance of commercial, noncommercial, and governmental enterprises.”). Close Recognizing public policy in the AICPA’s Ethical Standards as adopted by the state Board of Accountancy is consistent with the court’s holding in Donevant that recognized public policy in the building code as fitting “squarely within the long-established limits of the public policy exception to the at-will employment doctrine.”[186]186 Donevant v. Town of Surfside Beach, 422 S.C. 264, 267, 811 S.E.2d 744, 746 (2018). Close Drawing from the holding in Donevant, accountants should be able to rely on their ethical code to pursue a wrongful discharge in violation of public policy under this Note’s proposal.
First, the General Assembly has imbued the statutory scheme regulating accountants with a clear statement of public policy.[187]187 See S.C. Code Ann. § 40-2-5 (2011). Close According to the holding in Donevant, a statute’s statement of policy is sufficient to identify public policy for purposes of a wrongful discharge claim.[188]188 See Donevant, 422 S.C. at 266–67, 811 S.E.2d at 745; see also Taghivand v. Rite Aid Corp., 411 S.C. 240, 248, 768 S.E.2d 385, 389 (2015). Close The statutory scheme regulating accountants contains a clear statement of public policy from the legislature, unlike the statutory scheme regulating attorneys that lacks a clear statement of public policy.[189]189 Compare S.C. Code Ann. § 40-5-10 to -600 (lacking a policy statement from the legislature), with S.C. Code Ann. § 40-2-5 (2011) (containing a statement of policy from the legislature “to promote the reliability of information used for guidance in financial transactions” in the accounting field). Close
Further, while the Novak decision noted that the SCRPC was not promulgated by the legislature and therefore could not serve as predicate public policy in a wrongful discharge claim,[190]190 Novak v. Joye, Locklair & Powers, P.C., No. 2010-UP-225, 2010 WL 10079883, at *2 (S.C. Ct. App. Apr. 1, 2010). Close the Donevant decision recognized public policy in the SCBC which was adopted by the South Carolina Building Codes Council rather than the General Assembly.[191]191 See Donevant, 422 S.C. at 265, 811 S.E.2d at 745. Close Similar to the SCBC which was delegated to a state agency to adopt and modify, the General Assembly entrusted the State Board of Accountancy with the adoption and modification of a code of professional ethics to govern accountants.[192]192 See S.C. Code Ann. § 40-2-70(4) (Supp. 2018). Close Finally, a violation of the AICPA’s Professional Standards was identified as a basis for discipline by the General Assembly.[193]193 See S.C. Code Ann. § 40-2-110(7). Close Therefore, the holding from Novak is inapplicable to accountants in light of the Donevant decision because the statute governing accountants contains a clear statement of public policy, and the Supreme Court has recognized public policy in legal authorities delegated from and promulgated by the General Assembly.[194]194 See Donevant, 422 S.C. at 266–67, 811 S.E.2d at 745 (identifying an example of a legislative statement of policy sufficient to establish public policy); see also Taghivand v. Rite Aid Corp., 411 S.C. 240, 248, 768 S.E.2d 385, 389 (2015) (establishing the standard that a “clear and articulable definition of policy” is required to establish public policy). Close
Second, an accountant-employee attempting to ensure accuracy in financial reporting according to the AICPA’s ethical requirement,[195]195 See AICPA Code of Pro. Conduct, § 1.400.40 (Am. Inst. of Certified Pub. Accts. 2014). Close is advancing the public policy of the state. The policy of the state, as expressed by the General Assembly, is to “promote the reliability of information used for guidance in financial transactions or for accounting or for assessing the financial status or performance of commercial, noncommercial, and governmental enterprises.”[196]196 S.C. Code Ann. § 40-2-5 (2004). Close Therefore, if the employee is discharged for advancing the public policy of the state—contrary to the orders of their employer—the employer’s decision to terminate violates the public policy as stated in § 40-2-5 of the South Carolina Code.[197]197 Cf. Donevant, 422 S.C. at 266–68, 811 S.E.2d at 745–46 (finding, in part, that the plaintiff-employee could rely on the Code as public policy in her wrongful discharge action because she was advancing the public policy of the state to “maintain reasonable standards of construction in buildings” by ensuring compliance with the Building Code when she was terminated). Close
Finally, the employee’s decision to advance the state’s public policy is mandatory because compliance with the accounting ethical rules is enforced by administrative penalties such as an administrative fine, suspension, or license revocation.[198]198 See S.C. Code Ann. § 40-2-100 (2011) (laying out possible sanctions for violations, other than malpractice, of the Accountant’s Code of Ethics as published by the AICPA). Close If an employer, as a condition of continued employment, requires violation of an ethical rule, then the accountant-employee must confront the professional’s impossible choice: obey the employer’s unethical order and potentially face administrative sanctions, or refuse and face termination. Compliance with the ethical standards of the AICPA is not discretionary; it is mandatory.[199]199 See S.C. Code Ann. Regs. 1-10(A) (2020) (“Licensees shall . . . not engage in any acts discreditable to the profession as defined by the Ethical Standards of the AICPA.”) (emphasis added). Close
Consequently, if an employer’s directive interferes with the state’s interest in ensuring “the reliability of information . . . in financial transactions,” then the employee should be able to pursue a claim of wrongful discharge based on the public policy exception.[200]200 § 40-2-100; cf. Donevant, 422 S.C. at 266–67, 811 S.E.2d at 745–46 (holding, in part, that the plaintiff-employee could rely on the Code as public policy in her wrongful discharge action because the defendant-employer’s decision to terminate interfered with the employee’s mandatory duty to ensure compliance with the state’s building code). Close Similar to the building official in Donevant who was attempting to uphold the state’s policy “to maintain reasonable standards of construction in buildings” when she was terminated,[201]201 Donevant, 422 S.C. at 266–67, 811 S.E.2d at 745–46. Close an accountant attempting to safeguard accurate reporting should have the remedy of a wrongful discharge claim if terminated for refusing to violate their ethical code.
An employer forcing its employee to knowingly misrepresent facts is a clear violation of the accountant’s ethical code, and the practice violates the General Assembly’s interest in maintaining accuracy in financial reporting.[202]202 See AICPA Code of Pro. Conduct, § 2.100.001 (Am. Inst. of Certified Pub. Accts. 2014); see AICPA Code of Pro. Conduct, § 1.400.40 (Am. Inst. of Certified Pub. Accts. 2014). Close Rather than only analyzing the interest of the General Assembly, this Note’s proposal requires weighing the interests of all three groups who will be affected by the recognition of accounting ethical codes as a source of public policy.
Recognizing ethical codes as a source of public policy in a wrongful discharge action requires weighing the interests of three groups: employees, employers, and the General Assembly. First, the recognition protects accountants by preventing the impossible choice and empowering accountants who side with their ethical rules.[203]203 See Rocky Mountain Hosp. & Med. Serv. v. Mariani, 916 P.2d 519, 525 (Colo. 1996); see also Strozinsky v. Sch. Dist. of Brown Deer, 614 N.W.2d 443, 455 (Wis. 2002). Close Second, the employer retains its flexibility in the marketplace because the employer should already be encouraging adherence to ethical codes that apply to its accountant employees.[204]204 See Tyler K. Wilkinson, Welcome the Whistleblowers, 23 No. 4 Wis. Emp. L. Letter 1 (2014) (arguing that health care employers should encourage whistleblowing to promote “a culture of compliance” in the workplace). Close Lastly, recognizing ethical codes as proposed maintains power to determine public policy with the General Assembly pursuant to Donevant and Taghivand because a clear statement of policy must still be present in the professional’s controlling statute under Title 40.[205]205 See Donevant, 422 S.C. at 266, 811 S.E.2d at 745; Taghivand v. Rite Aid Corp., 411 S.C. 240, 248, 768 S.E.2d 385, 389 (2015). Close
The added protection to the employee is straightforward. Simply put, recognizing accounting ethical codes as public policy for purposes of a claim for wrongful discharge prevents the professional’s impossible choice. The dilemma is effectively prevented by empowering accountants to comply with ethical rules rather than only punishing those who fail to follow them.[206]206 Cf. Balla v. Gambro, Inc., 584 N.E.2d 104, 113 (Ill. 1991) (Freeman, J., dissent) (“[T]his court must take whatever steps it can, within the bounds of the law, to give lawyers incentives to abide by their ethical obligations, beyond the satisfaction inherent in their doing so.”). Close An accountant would not have to confront an impossible choice, for they would comply with the ethical rules and still seek a remedy against their employer in the form of a wrongful discharge claim.
On the other hand, dismissing all wrongful discharge claims relying on professional ethical codes as public policy would send a strong message to professional employees that “it is economically more advantageous to keep quiet than to follow the dictates of the [ethical rules].”[207]207 See Jacobson v. Knepper & Moga, P.C., 706 N.E.2d 491, 494 (Ill. 1998) (Freeman, J., dissent) (discussing the need for a wrongful discharge action for attorneys to incentivize compliance with the rules). Close Additionally, allowing an employer, absent fear of any repercussions, to terminate an employee who stood up for the ethical obligations of their profession “give[s] the assistance and protection of the courts to scoundrels.”[208]208 Balla, 584 N.E.2d at 114 (Freeman, J., dissent). Close Therefore, protecting the interests of the professional employee not only prevents the impossible choice, but also empowers accountants to follow their ethical code.
As for the employer, no real harm is done by recognizing the accounting ethical code as public policy in wrongful discharge claims because the employer should already be encouraging adherence to ethical codes that apply to its accountant employees. First, the employer itself is likely already subject to compliance with its own ethical rules. For example, a public accounting firm’s employees and supervisors who make termination decisions are mostly accountants and, therefore, subject to the state Board of Accountancy’s code of professional ethics.[209]209 See S.C. Code Ann. § 40-2-70(4) (2014) (granting Board of Accountancy power to promulgate a code of ethics for members of the profession). Close Second, employers who may not themselves be subject to ethical rules but who hire accountants subject to ethical rules should want their employees, if for no other reason than public perception, to comply with the rules.[210]210 Cf. Wilkinson, supra note 203, at 1 (arguing that health care employers should encourage whistleblowing to promote “a culture of compliance” in the workplace). Close Finally, the standard proposed by this Note ensures employers will not face frivolous suits predicated on personal morals or professional judgment of the employee. As previously stated, the accountant employee must be able to prove they were faced with an impossible choice of termination or discipline for violating an ethical rule.
Some employers have argued that ethical codes, being constantly updated and revised, are too variable to provide notice to employers of what constitutes public policy.[211]211 Rocky Mountain Hosp. & Med. Serv. v. Mariani, 916 P.2d 519, 524 (Colo. 1996). Close Courts have dispensed with the variability argument by stating that ethical codes, being “central to a professional employee’s activities[,]” may create conflict with employer demands.[212]212 Id. at 525. Close Hence, when an employer demand arises that poses a conflict with an employee’s ethical code, an impossible choice is created that places an employee in an “intolerable position.”[213]213 Id. Close According to the Colorado Supreme Court, “[i]t is just such a situation that the public policy exception was meant to prevent.”[214]214 Id. Close Ultimately, the employer is in no worse position by the expansion because employers should encourage adherence to accounting ethical codes, and a proper standard will prevent frivolous claims based on personal morals or professional judgment of the employee.
Finally, turning to the interest of the General Assembly, the power to declare policy still rests with the legislature under this proposal. The General Assembly intentionally placed a clear statement of policy into the statutory scheme regulating accountants, and this statement cannot be ignored.[215]215 See Donevant v. Town of Surfside Beach, 414 S.C. 396, 415, 778 S.E.2d 320, 331 (Ct. App. 2015), aff’d, 422 S.C. 264, 811 S.E.2d 744 (2018) (“It is difficult to imagine a more clear declaration of public policy than language stating ‘[t]he public policy of South Carolina is….’ We cannot ignore the significance of such clear language in a statute.”). Close This Note does not advocate for the Supreme Court to assume the prerogative of policy maker. Rather, its goal is for the Supreme Court to fully realize the legislature’s statement of policy and give accountants the protection of public policy enunciated by the legislature nearly twenty years ago.[216]216 See S.C. Code Ann. § 40-2-5 (amending Chapter 2 to include a clear statement of public policy in July of 2004). Close However, if an accountant wishes to prove their wrongful discharge claim by showing the employer forced them to violate ethical rules, certain limits are required to balance the interests of the employer and employee.
The Pierce decision illustrates the type of analysis required to maintain the employer’s flexibility while still preventing the impossible choice for accountants. The court in Pierce specifically noted that the plaintiff-doctor failed to prove that, had she complied with her supervisor’s orders, she would have violated the Hippocratic Oath.[217]217 See Pierce v. Ortho Pharm. Corp., 417 A.2d 505, 508 (N.J. 1980). Close Requiring accountants to show an ethical rule violation if the accountant followed the employer’s directive would ensure only those accountants faced with an impossible choice can bring wrongful discharge claims. This requirement also ensures that professional employers are not faced with frivolous claims based primarily on personal morals or professional judgment of the employee, rather than concrete ethical rules.[218]218 See id. at 512 (“[A]n employee should not have the right to prevent his or her employer from pursuing its business because the employee perceives that a particular business decision violates the employee’s personal morals, as distinguished from the recognized code of ethics of the employee’s profession.”); Wilbur, supra note 39, at 791–92 (“[A]llowing subordinate lawyers too much freedom to define the scope of their duties will subject the supervisory lawyer to endless second guessing, which will make managing a law firm or legal department even more difficult.”). Close The linchpin of the accountant’s claim hinges on their ability to show the employer’s directive, if followed, constituted a violation of the AICPA’s ethical rules. Unlike the plaintiff-doctor in Pierce who failed to show her employer’s directive would have caused her to violate the Hippocratic Oath,[219]219 See Pierce, 417 A.2d at 513. Close an accountant must show the employer’s command would result in an ethical violation.
Some scholarship advocates for a standard that merely requires the professional show a “reasonable belief” that the employer’s proposed conduct would violate the ethical rule.[220]220 See Wilbur, supra note 39, at 778–79 (focusing exclusively on ability of attorneys to state a wrongful discharge claim based on the attorney’s “reasonable belief” that an employer’s directive violates the Rules of Professional Conduct). Close However, this truncated analysis fails to address the common concern that an employee may not be subject to discipline for following the employer’s directive.[221]221 See Novak v. Joye, Locklair & Powers, P.C., No. 2010-UP-225, 2010 WL 10079883, at *2 (S.C. Ct. App. Apr. 1, 2010) (holding that an attorney cannot rely on the SCRPC as a source of public policy because there is no guarantee that a violation of the SCRPC will result in discipline for the attorney); see also Pierce, 417 A.2d at 508. Close If an accountant decides to pursue a wrongful discharge theory on the grounds that their employer, as a condition of continued employment, required a violation of ethical rules, the accountant must be able to prove that, had they sided with their employer’s unethical command, they would have been subject to an administrative penalty. License revocation, suspension, or fine are all forms of discipline that can result from a violation of accounting ethical rules.[222]222 See S.C. Code Ann. § 40-2-110(7) (2004). Close Therefore, an accountant employee bringing a wrongful discharge claim relying on their ethical code as the source of public policy must show that discipline would have resulted had they followed their employer’s directive. By requiring the employee to prove an ethical violation coupled with discipline had they sided with the employer, a court can accurately gauge whether the employee faced an impossible choice deserving of relief.
Finally, this Note lays the groundwork for other professional employees in South Carolina who may seek to rely on their ethical codes as sources of public policy in a wrongful discharge action. There are approximately seventy professions enumerated under Title 40 of the South Carolina Code;[223]223 See generally S.C. Code Ann. § 40-2-5 to -600. Close of these, only two have clear statements of public policy similar to the statement for the statute controlling accountants.[224]224 See S.C. Code Ann. § 40-22-2 (2013) (“It is the policy of this State and the purpose of this chapter to encourage the development of professional engineers and surveyors in this State and to promote the accountability for engineering practice and surveying practice in a global economy.”); S.C. Code Ann. § 40-56-1 (“It is the policy of this State, and the purpose of this chapter, to promote the safety of the public and the environment by effective regulation of pyrotechnics.”). Close Accordingly, only engineers and surveyors would share a similar path with accountants for gaining the recognition of their ethical codes under this Note’s proposal. Given the uniform severity of the impossible choice for professionals governed by ethical codes, certain professionals such as doctors and lawyers may desire the protection of public policy in their ethical codes. However, without a clear statement from the legislature, as required by Taghivand, courts are unlikely to imply legislative intent to declare policy.[225]225 See Taghivand v. Rite Aid Corp., 411 S.C. 240, 248, 768 S.E.2d 385, 389 (2015). Close Specifically, attorneys face a difficult path considering the decision in Novak, but a clear statement of policy from the legislature would satisfy the requirements later imposed by Taghivand and Donevant for recognizing ethical codes as public policy in a wrongful discharge action. Therefore, professionals with ethical codes seeking enhanced protection from employer abuses should lobby the General Assembly to amend their respective statutory schemes to include clear statements of policy. The General Assembly, in the interests of preventing the impossible choice for professional employees in South Carolina, should consider declaring the policy of the state in professions enumerated under Title 40 that have ethical codes enforced by administrative penalties.
In the interest of preventing the professional’s impossible choice, the South Carolina Supreme Court should recognize the AICPA’s Rules of Professional Conduct as public policy if, as a condition of continued employment, the employer requires the accountant to violate those rules. To prevent wrongful discharge claims based solely on personal morals, the employee must be able to show that, had they followed their employer’s directive, administrative penalties such as suspension, license revocation, or fine would have been levied. This moderate proposal not only maintains South Carolina’s adherence to employment at-will but the General Assembly also retains its power to declare public policy.