On August 14, 2024, the Fourth Circuit Court of Appeals issued an opinion reversing a prior decision of the U.S. District Court for the Western District of North Carolina regarding wrongful discharge under North Carolina law. The Fourth Circuit held that former employees of a mental health counseling and substance use disorder treatment facility plausibly alleged a cause of action for wrongful termination in violation of an express public policy of the State of North Carolina.

While this was a federal case, the matter involved the interpretation of North Carolina law. In North Carolina, employment is generally presumed to be “at-will”; however, termination in violation of express public policy is one exception to this presumption. In order for a plaintiff’s wrongful discharge in violation of public policy to be successful, plaintiff must allege a specific North Carolina public policy that was violated and provide facts that plausibly show the violation.

In this case, the former employees alleged they were discharged in retaliation for actions taken in furtherance of their professional duties/standards of care as established by state law. The plaintiffs, mental health counselors, were concerned about a client in need of heightened medical services. In order to give these heightened services to the client, the assistant director needed to “green light” them. The assistant director refused to approve the heightened services, and the client died days later. The plaintiffs completed an incident report and made an internal complaint regarding the assistant director’s mishandling of the situation, which resulted in the plaintiffs not being able to complete the proper client report as required under North Carolina law.

The Western District of North Carolina dismissed plaintiffs’ claims finding (1) the cited public policy upon which plaintiffs relied was not clearly expressed; (2) that plaintiff did not plead specific factual allegations to support violations of legal requirements to support their claims; and (3) noted that the plaintiffs had not filed an official complaint with the state until after they were discharged.

On appeal, the Fourth Circuit determined that the plaintiffs did not need to invoke precise language to be successful on a wrongful discharge claim. Moreover, like the plaintiffs here, where a plaintiff: (1) specifies, by name, the statutory scheme and regulations in the complaint, and (2) alleges they were terminated in retaliation for actions taken as required by that same statutory scheme and regulations, the Fourth Circuit found that – under North Carolina law – a plaintiff has successfully pled factual allegations plausible to support their claim. The Fourth Circuit remanded the case to the district court for further proceedings.

As noted above, while this is a federal case, it likely applies only to employers in North Carolina. Moreover, while this case will not be binding precedent in North Carolina state courts, it will be persuasive authority. Spilman has a team of experienced employment attorneys who are able to advise and consult with management during the separation process to manage any liability exposure for wrongful discharge under North Carolina – or other state – law.