By Matthew French
Staff Writer

The South Carolina Supreme Court is once again considering a case that could have significant ramifications on employment law, particularly for small businesses.

The state’s high court earlier this year heard oral arguments on behalf of the South Carolina Chamber of Commerce and the South Carolina Policy Council, which are concerned about language the justices included in their decision in the case of Hessenthaler v. Tri-County Sister Help.

This case has created waves in employment law circles, as the issue addressed was whether an employee handbook constituted an employment contract. South Carolina is an employment at-will state, where employees can be dismissed from their positions for any cause or no cause at all.

At issue is a clause the high court included in their decision, which ruled against the plaintiff, who claimed she was fired from her position because of her race. The court ruled that the employee handbook was not a contract and that the plaintiff likely didn’t present a “preponderance of the evidence” showing she had been dismissed because of her race.

However, in the last paragraph of their ruling, the justices included a clause that says the plaintiff could sue for a different reason, were she to argue that she was wrongfully discharged under a violation of public policy.

And that, says attorney Ashley Abel, who recently presented arguments before the court, could open up new avenues of litigation for terminated employees, creating an unfair burden for the small business employers of the state. Small business employers, specifically those with fewer than 15 employees, are not subject to Title VII of the Civil Rights Act of 1964, which prohibits discrimination in the workplace. Because of that, employees who believe they were fired for discrimination need not file a complaint with the Equal Employment Opportunity Commission before filing a lawsuit.

Title VII exempts small businesses

The Civil Rights Act of 1964 specifically addresses the issue of discrimination and equal opportunity employment. However, it specifically says that employers of fewer than 15 people are exempt from the law.

“I think the reason Congress did that is because requiring smaller companies to comply with some of the regulatory burdens could be too difficult,” Abel says. “But that’s not to say small companies have a blanket coverage to discriminate.”

Title VII of the Civil Rights Act specifically prohibits employment discrimination based on race, color, religion, sex and national origin. The act also lays out specific courses of action that must be taken by employees who feel they were wrongfully terminated. However, since the smallest of businesses are not covered by Title VII, employees at these businesses do not have to go through the process, which includes filing a charge with the Equal Employment Opportunity Commission.

“We take this opportunity to hold that an employee, such as Hessenthaler, who works for an employer with less than 15 people, may bring a discrimination claim,” the court’s decision reads. “Therefore, an employee working for an entity employing 15 or more persons must comply with the grievance procedures set forth in Title VII, and an employee working for an entity employing less than 15 people may bring a discrimination claim in circuit court.”

Danger looms for small businesses

South Carolina law says that a person cannot be fired for a reason that has previously been addressed in a statute. For instance, a person reporting for jury duty cannot be fired for missing work because the state mandates that its citizens occasionally sit in judgment. By adding the “public policy” clause, the Supreme Court opened the door for employees to sue if they feel they were dismissed for any reason that violates public policy. However, what constitutes public policy is not defined.

“There is not a statute in South Carolina that specifically defines public policy,” says Cherie Blackburn, an employment attorney with the Charleston law firm of Nelson Mullins Riley and Scarborough. “The court in this case has created public policy that is not otherwise recognized by statute.”

The court’s decision stated that even an at-will employee could not be dismissed for reasons that violate public policy. Since it is against South Carolina public policy for a business to discriminate because of race, the court said the plaintiff could bring a race bias claim against her employer.

And that is dangerous for the state’s smallest employers who could very well lose their business if forced to defend themselves against a lawsuit, according to a written statement issued by Eric Schweitzer, a shareholder at the Columbia law office of Ogletree, Deakins, Nash, Smoak and Stewart.

“This ruling puts South Carolina’s small employers, the Mom and Pop businesses, in an unenviable spot,” Schweitzer says. “Defending even one meritless lawsuit can put them out of business, and there is no administrative alternative through the federal or state agencies to investigate and rule on a charge (of discrimination.)”

No one outside the court knows when that ruling will be issued, but Abel says he thinks it won’t be more than a few months.

Matthew French covers governmental policy and legislation for the Business Journal. E-mail him at mfrench@crbj.com.

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