If this opinion indicates that it is “FOR PUBLICATION,” it is subject to
revision until final publication in the Michigan Appeals Reports.
STATE OF MICHIGAN
COURT OF APPEALS
BURT SMITH, FOR PUBLICATION
August 19, 2021
Plaintiff-Appellant, 9:05 a.m.
v No. 353839
Macomb Circuit Court
TOWN AND COUNTRY PROPERTIES II, INC., LC No. 2020-000337-CZ
Defendant-Appellee.
Before: CAVANAGH, P.J., MURRAY, C.J., and REDFORD, JJ.
PER CURIAM.
In this action for wrongful discharge in violation of public policy, plaintiff appeals as of
right an order granting summary disposition to defendant. Plaintiff argues that the trial court erred
by ruling: (1) plaintiff had not created a genuine fact issue as to whether he was an employee, and
(2) independent contractors could not bring claims asserting wrongful discharge in violation of
public policy. We affirm.
This case arises out of the termination of the employment relationship between defendant
and plaintiff, who was an associate real estate broker at defendant’s real estate business from 2001
to 2018. Although plaintiff did not reference it in his complaint, on February 2, 2015 the parties
entered into an “Independent Contractor Agreement” which stated, among other things, that
plaintiff was an independent contractor. Specifically, paragraph A of Article IV, which is titled
“Independent Contractor,” states: “It is expressly agreed and understood between the parties that
the Sales Associate, in performance of his/her services hereunder, is not to be treated or otherwise
considered as an employee of Broker.” And paragraph D states: “As a consequence of Sale’s
Associate’s independent contractor status, Broker shall not be responsible for any federal, state or
local employment taxes for any purpose.” Further, paragraph A of Article VIII, which is titled
“Termination,” states: “In furtherance of the Independent Contractor status of Sales Associate, this
Agreement and the relationship created hereby, may be terminated by either party hereto, with or
without cause, at any time upon notice given to the other.” Consistent with that Agreement,
plaintiff’s entire compensation was in the form of commissions from the sale of real estate.
Defendant provided plaintiff with an office and office equipment, and plaintiff was required to
attend mandatory meetings and abide by various policies.
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One such policy, according to plaintiff, was that defendant required plaintiff to exclusively
use Title One, Inc. for the title policy and closing services on every real estate transaction,
regardless of the client’s wishes. However, plaintiff averred in his complaint, that this policy
violated the Real Estate Settlement Procedures Act (RESPA), 12 USC 2601 et seq., which allows
buyers and sellers to choose their settlement service provider. In accordance with the law, plaintiff
averred, he “refrained from steering [defendant’s] clients to Title One.” However, on November
29, 2018, the sales manager and plaintiff’s supervisor, John Goings, advised plaintiff through an
email that plaintiff would have to get approval from defendant’s president, John Kersten, to
complete a particular transaction that did not use Title One for the real estate transaction. Plaintiff
responded to the email, explaining that he could not demand that clients use a particular settlement
service provider exclusively because such a policy violated RESPA.
Thereafter, on December 20, 2018, plaintiff attended a meeting with Goings and Kersten.
Plaintiff recorded this meeting without advising Goings or Kersten that he was doing so.
Apparently during this meeting, Kersten told plaintiff that he was the broker and bore ultimate
responsibility for the transactions and, as such, he preferred that Title One be used because they
did good work, kept him informed of any issues, and because he had never heard of any problems
arising with Title One. Apparently, plaintiff responded that Title One was more expensive and
that the client had the right, under RESPA, to choose the title company. Plaintiff referred to
himself as an independent contractor, stating that he was not an employee, and implied that he did
not have to defer to Kersten’s preferences. Kersten reiterated that he was the broker, as well as
the owner of the company, and that plaintiff used defendant’s name, brand, and facilities in which
to conduct business; thus, regardless of the label, plaintiff “worked for” defendant. Eventually,
Kersten grew frustrated with plaintiff “lecturing” him, noted that “this conversation is going
nowhere,” and ended the meeting. About two hours later, plaintiff was informed by Goings that
he was terminated at Kersten’s directive.
On January 24, 2020, plaintiff filed this action asserting, in Count I, a claim of retaliatory
discharge in violation of public policy premised on his purported refusal—presumably as an
employee—to violate RESPA and, in Count II, a claim of retaliatory termination of employment
contract in violation of public policy premised on his purported refusal—presumably as an
independent contractor—to violate RESPA.
On March 16, 2020, defendant moved for summary disposition under MCR 2.116(C)(10),
arguing that plaintiff’s complaint must be dismissed because only an employee may bring
wrongful discharge claims and there was no genuine fact issue that plaintiff was not an employee
but an independent contractor, as set forth in the parties’ Independent Contractor Agreement
(which plaintiff failed to mention in his complaint) and as defined by MCL 339.2501(h). In
support of the motion, defendant submitted a copy of the parties’ Independent Contractor
Agreement, as well as an affidavit from defendant’s director of finance stating that, from 2015
through 2018, plaintiff was not an employee and was compensated “solely in the form of
commissions from the sale of real estate.”
Plaintiff responded to defendant’s motion, arguing that the motion was premature because
discovery was not complete. Further, plaintiff argued, the executed contract was not dispositive
as to plaintiff’s employment status as either an employee or an independent contractor for purposes
of this action. Rather, as set forth in Nationwide Mut Ins Co v Darden, 503 US 318, 322-324; 112
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S Ct 1344; 117 L Ed 2d 581 (1992) (a case concerning whether one is an “employee” for purposes
of ERISA, which “does not helpfully define” that term), the issue is determined by the “control
the hiring party has over the manner and means of the worker’s work product.” And, plaintiff
noted, “the labels that the parties use in such a relationship are not dispositive.” See Laster v Henry
Ford Health Sys, 316 Mich App 726, 735-736; 892 NW2d 442 (2016) (a case concerning vicarious
liability to a third party). In this case, plaintiff argued, after applying the “control test” to the facts
it was evident that plaintiff actually functioned as defendant’s employee and was not an
independent contractor. For example, plaintiff occupied defendant’s office space and used
defendant’s office supplies and equipment, attended defendant’s required meetings, and abided by
defendant’s mandatory office practices, policies, and procedures. That plaintiff signed a contract,
was paid through commissions, and was treated as an independent contractor for tax purposes did
not outweigh the other evidence presented by plaintiff that he was treated like an employee.
Moreover, plaintiff argued, even if he was considered an independent contractor, plaintiff may still
assert a claim of wrongful discharge in violation of public policy because he was terminated for
refusing to violate a law, RESPA. Accordingly, plaintiff argued, defendant’s motion for summary
disposition must be denied. In support of his responsive brief, plaintiff submitted his own affidavit
with attached documents supporting his claim that he was defendant’s employee rather than an
independent contractor. Plaintiff also submitted a thumb drive which allegedly contained a
recording of the December 20, 2018 meeting between plaintiff, Goings, and Kersten.
In its reply brief, defendant argued that plaintiff’s analysis was directly at odds with and
rendered meaningless MCL 339.2501(h)—which specifically defines an independent contractor
in the context of the real estate profession—and thus, the argument must be rejected. Plaintiff was
an independent contractor as defined by Michigan law, period. And because only employees can
assert claims of retaliatory discharge in violation of public policy, this entire matter must be
dismissed. Moreover, defendant argued, plaintiff’s audio recording was not admissible as
documentary evidence under MCR 2.116(G), and further, was recorded without the knowledge
and consent of Goings and Kersten. But, defendant noted, plaintiff admitted on the recording that
he was, indeed, an independent contractor.
On May 18, 2020, a hearing was held on defendant’s motion. Defendant argued that there
was no genuine fact issue that plaintiff was an independent contractor, and that his claims must
fail for that reason. Plaintiff met the statutory definition of an independent contractor in the real
estate context, and that should be dispositive. There was no caselaw to support the right of an
independent contractor to bring claims such as those alleged by plaintiff. Further discovery would
be a waste of time and resources because any documents plaintiff might want to use to dispute his
status as an independent contractor—like W-2s—would already be in his possession.
Plaintiff argued that the statutory definition of an independent contractor in the real estate
context is not dispositive; rather, it merely sets forth prerequisites that once met allows for the
application of the economic realities test or the control test.1 Under either test, plaintiff would be
considered an employee. But once there is an employment relationship, as defined in MCL
1
See, e.g., Clark v United Techs Auto, Inc, 459 Mich 681, 687-688; 594 NW2d 447 (1999); Kidder
v Miller-Davis Co, 455 Mich 25, 31-35; 564 NW2d 872 (1997), for discussion about these tests.
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339.2501(g), whether as an employee or an independent contractor, plaintiff argued, that
relationship cannot be terminated for reasons that violate public policy. Plaintiff also argued that
an independent contractor could bring claims for retaliatory discharge in violation of public policy
because such claims are rooted in tort law rather than contract law. Similarly, under the Civil
Rights Act (CRA), MCL 37.2101 et seq., one can bring a claim regardless of whether he or she is
an employee or independent contractor. Plaintiff also noted that it would also be bad public policy
to hold that independent contractors could be fired for refusing to violate a law.
In rebuttal, in addition to reiterating its other arguments, defendant argued that the court
should ignore plaintiff’s arguments based on MCL 339.2501(g) and on his analogy to civil-rights
law because they were not supported by appropriate briefing and were first raised during oral
argument. After significant discussions between the court and the parties, the court took the matter
under advisement.
On May 29, 2020, the trial court issued an opinion and order granting defendant’s motion
for summary disposition under MCR 2.116(C)(10). The court recognized plaintiff’s argument that
the independent contractor definition in MCL 339.2501(h) was not definitive for purposes of
determining whether he had a claim. However, the court reasoned that:
Plaintiff does not offer any suggestions as to the meaning of the statutory provision
if not to define the type of relationship between an associate real estate broker . . .
and a real estate broker. Even if the definition is to apply to pay practices, as
asserted by Plaintiff, it doesn’t necessarily follow that it doesn’t also apply to the
other aspects of the relationship between the parties.
The trial court further noted it was “undisputed that the provision defining an independent
contractor relationship is applicable to the facts of this case and that Plaintiff fits the description
of an independent contractor.” The court concluded that “Plaintiff has not presented sufficient
evidence or argument to create a genuine issue of material fact that he was not an independent
contractor of Defendant. Therefore, Count I must be dismissed.”
Regarding plaintiff’s argument that even if he was an independent contractor he was
entitled to bring a public policy claim for wrongful discharge, the court found persuasive the
reasoning in Pedell v Heartland Health Care Ctr, unpublished per curiam opinion of the Court of
Appeals, issued March 20, 2007 (Docket No. 271276), p 7. That case states:
“[E]mployment contracts . . . are presumptively terminable at the will of either party
. . . .” Thus, the public policy exception is an exception to the general rule that
employees are terminable at will. The public policy exception cannot apply to
independent contractors, because independent contractors are, by definition, not
employees. [Id. (citations omitted).]
As such, the court held that plaintiff had “no recourse under public policy,” so Count II also had
to be dismissed. Accordingly, plaintiff’s entire case against defendant was dismissed. This appeal
followed.
Plaintiff first argues that MCL 339.2501(h) is not dispositive of whether he was
defendant’s employee and, because he presented sufficient evidence to establish a genuine issue
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of material fact exists on that issue, defendant was not entitled to summary disposition. We
disagree.
A motion for summary disposition under MCR 2.116(C)(10) tests the factual support for a
claim. Stone v Auto-Owners Ins Co, 307 Mich App 169, 173; 858 NW2d 765 (2014) (citation
omitted). The pleadings, affidavits, and other documentary evidence is reviewed in the light most
favorable to the nonmoving party to determine whether a genuine issue of material fact exists for
the jury to decide. Walsh v Taylor, 263 Mich App 618, 621; 689 NW2d 506 (2004). If reasonable
minds could differ on an issue, a genuine issue of material fact exists. Allison v AEW Capital Mgt,
LLP, 481 Mich 419, 425; 751 NW2d 8 (2008).
This Court also reviews de novo issues of statutory interpretation. Makowski v Governor,
317 Mich App 434, 441; 894 NW2d 753 (2016). Our purpose in reviewing questions of statutory
construction is to discern and give effect to the Legislature’s intent. Echelon Homes, LLC v Carter
Lumber Co, 472 Mich 192, 196; 694 NW2d 544 (2005). Our analysis begins by examining the
plain language of the statute; if the language is unambiguous, no judicial construction is required
or permitted and the statute must be enforced as written. Id. (citation omitted).
Article 25 of the Occupational Code, MCL 339.2501 et seq., the real estate brokers act
(REBA), contains regulations that govern the real estate profession. MCL 339.2501 provides the
following definitions:
(a) “Associate broker” or “associate real estate broker” means an individual who
meets the requirements for licensure as a real estate broker under this article and
who is licensed as an associate real estate broker under section 2505 to provide real
estate brokerage services as an employee or independent contractor of a real estate
broker.
* * *
(g) “Employ” or “employment” means the relationship between a real estate broker
and an associate real estate broker or a real estate salesperson which may include
an independent contractor relationship. The existence of an independent contractor
relationship between a real estate broker and an individual licensed to the real estate
broker does not relieve the real estate broker of the responsibility to supervise acts
of the licensee that are regulated under this article.
(h) “Independent contractor relationship” means a relationship between a real estate
broker and an associate real estate broker or real estate salesperson that satisfies
both of the following conditions:
(i) A written agreement exists in which the real estate broker does not consider the
associate real estate broker or real estate salesperson as an employee for federal and
state income tax purposes.
(ii) At least 75% of the annual compensation paid by the real estate broker to the
associate real estate broker or real estate salesperson is from commissions from the
sale of real estate.
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It is clear that plaintiff’s relationship with defendant met the definition of “independent
contractor relationship” found at MCL 339.2501(h). The parties entered into an Independent
Contractor Agreement which provided, in paragraph A of Article IV, that: “It is expressly agreed
and understood between the parties that the Sales Associate, in performance of his/her services
hereunder, is not to be treated or otherwise considered as an employee of Broker.” And paragraph
D states: “As a consequence of Sale’s Associate’s independent contractor status, Broker shall not
be responsible for any federal, state or local employment taxes for any purpose.” Further,
plaintiff’s compensation was in the form of commissions from the sale of real estate.
Defendant and amicus curiae on behalf of Michigan Realtors argue, as the trial court held,
this definition of “independent contractor relationship” ends the inquiry into whether plaintiff was
an employee or independent contractor. Plaintiff argues that this definition is not dispositive of
his employment status as either an employee or independent contractor. But our obligation when
construing a statute is to discern the legislative intent that can be reasonably inferred from the
words in the statute. Chandler v Co of Muskegon, 467 Mich 315, 319; 652 NW2d 224 (2002).
And here, MCL 339.2501(a) plainly distinguishes between an associate broker who provides real
estate brokerage services as an “employee” of a real estate broker and an associate broker who
provides real estate brokerage services as an “independent contractor” of a real estate broker.
Plaintiff had an “independent contractor relationship” with defendant as defined by MCL
339.2501(h). Plain and clear statutory language must be enforced as written, Velez v Tuma, 492
Mich 1, 16-17; 821 NW2d 432 (2012), and when a statute defines a term, that definition alone
controls, Haynes v Neshewat, 477 Mich 29, 35; 729 NW2d 488 (2007). Because plaintiff, an
associate broker, entered into an Independent Contractor Agreement with defendant, the
employment status of plaintiff was definitive—he was an independent contractor and not an
employee. Accordingly, the trial court properly concluded that plaintiff failed to create a genuine
issue of material fact on the issue of his employment status as a real estate professional and
dismissed Count I of plaintiff’s complaint.
Next, plaintiff argues that even if he was an independent contractor he was not prohibited
from asserting a claim of wrongful discharge in violation of public policy. We disagree.
In general, Michigan law presumes employment relationships are terminable at the will of
either party for any or no reason. Suchodolski v Mich Consol Gas Co, 412 Mich 692, 694-695;
316 NW2d 710 (1982); Landin v Healthsource Saginaw, Inc, 305 Mich App 519, 523; 854 NW2d
152 (2014). However, there are three recognized public policy exceptions to the at-will
employment doctrine and they are based on the principle that the grounds for termination are so
contrary to public policy as to be actionable. Id. The three recognized exceptions have been
explained as follows:
(1) explicit legislative statements prohibiting the discharge, discipline, or
other adverse treatment of employees who act in accordance with a statutory right
or duty (e.g., the Civil Rights Act, MCL 37.2701; the Whistleblowers’ Protection
Act, MCL 15.362; the Persons With Disabilities Civil Rights Act, MCL 37.1602),
(2) where the alleged reason for the discharge was the failure or refusal of the
employee to violate a law in the course of employment (e.g., refusal to falsify
pollution reports; refusal to give false testimony before a legislative committee;
refusal to participate in a price-fixing scheme), and (3) where the reason for the
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discharge was the employee’s exercise of a right conferred by a well-established
legislative enactment (e.g., retaliation for filing workers’ compensation claims).
[Id. at 524, citing Suchodolski, 412 Mich at 695-696.]
Clearly, all three recognized exceptions refer to the adverse employment action occurring to an
“employee.”
In this case, plaintiff argues that the public policy exceptions to the at-will employment
doctrine—which have historically only applied to employees—should be extended to apply to
independent contractors. And, specifically here, plaintiff seeks a holding that independent
contractors can bring claims under the second exception—when they are terminated because they
refuse to violate a law. However, public policy exceptions to the at-will employment doctrine are
not to be created lightly. As this Court explained in Landin, 305 Mich App at 525-526, Michigan
courts do not have
unfettered discretion or authority to determine what may constitute sound public
policy exceptions to the at-will employment doctrine. As observed in Terrien v
Zwit, 467 Mich 56, 66-67; 648 NW2d 602 (2002):
In defining “public policy,” it is clear to us that this term must be
more than a different nomenclature for describing the personal
preferences of individual judges, for the proper exercise of the
judicial power is to determine from objective legal sources what
public policy is, and not to simply assert what such policy ought to
be on the basis of the subjective views of individual judges . . . .
In identifying the boundaries of public policy, we believe
that the focus of the judiciary must ultimately be upon the policies
that, in fact, have been adopted by the public through our various
legal processes, and are reflected in our state and federal
constitutions, our statutes, and the common law. See Twin City Pipe
Line Co v Harding Glass Co, 283 US 353, 357; 51 S Ct 476; 75 L
Ed 1112 (1931). The public policy of Michigan is not merely the
equivalent of the personal preferences of a majority of this Court;
rather, such a policy must ultimately be clearly rooted in the law.
There is no other proper means of ascertaining what constitutes our
public policy.
Consistent with this observation, the Terrien Court noted that as a general
rule, making social policy is a job for the Legislature, not the courts, id. at 67; 648
NW2d 602, and found instructive the United States Supreme Court’s mandate:
“ ‘Public policy is to be ascertained by reference to the laws and legal precedents
and not from general considerations of supposed public interests. As the term
“public policy” is vague, there must be found definite indications in the law of the
sovereign to justify the invalidation of a contract as contrary to that policy.’ ” Id.
at 68, quoting Muschany v United States, 324 US 49, 66; 65 S Ct 442; 89 L Ed 744
(1945). Thus, courts may only derive public policy from objective sources.
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Kimmelman[ v Heather Downs Mgt Ltd, 278 Mich App 569, 573; 753 NW2d 265
(2008)].
Notably, the three public policy exceptions recognized in Suchodolski entail
an employee’s exercising a right guaranteed by law, executing a duty required by
law, or refraining from violating the law. Id. These three recognized circumstances
remain the only three recognized exceptions and the list of exceptions has not been
expanded. While the Suchodolski Court’s enumeration of public policies that might
forbid termination of at-will employees may not have been phrased as if it were an
exhaustive list (id. at 573; 753 NW2d 265), our courts have yet to find a situation
meriting extension beyond the three circumstances detailed in Suchodolski.
[Landin, 305 Mich App at 525-526.]
Although the discussion in Landin related to expanding the number of exceptions to the at-
will employment doctrine, its reasoning applies with equal force to the decision whether to apply
or analogize those exceptions to the independent contractor context. Thus, plaintiff’s arguments
that essentially amount to urging that it would be “good public policy” to allow independent
contractors to bring certain actions for wrongful discharge are not persuasive.
In fact, recognition of the wrongful discharge cause of action has, from the earliest
Michigan cases, been clearly tied to employees in the at-will employment context. In one early
case, this Court reasoned:
It is apparently true that the employment relationship present in this case was an
employment at will. And, while it is generally true that either party may terminate
an employment at will for any reason or for no reason, that rule is not absolute. It
is too well-settled to require citation that an employer at will may not suddenly
terminate the employment of persons because of their sex, race, or religion.
Likewise, the better view is that an employer at will is not free to discharge an
employee when the reason for the discharge is an intention on the part of the
employer to contravene the public policy of this state. [Sventko v Kroger Co, 69
Mich App 644, 646-647; 245 NW2d 151 (1976) (footnote omitted).]
In another early case, this Court explained:
This Court has recognized exceptions to the well-established rule that at will
employment contracts are terminable at any time for any reason by either party.
These exceptions were created to prevent individuals from contravening the public
policy of this state.
It is without question that the public policy of this state does not condone
attempts to violate its duly enacted laws.
Plaintiff claims that defendants discharged him from their employ when he
refused to manipulate and adjust sampling results used for pollution control reports
. . . . Such action would clearly violate the law of this state. [Trombetta v Detroit,
Toledo & Ironton R Co, 81 Mich App 489, 495-496; 265 NW2d 385 (1978)
(citations omitted).]
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When our Supreme Court endorsed the doctrine, it stated:
In general, in the absence of a contractual basis for holding otherwise, either
party to an employment contract for an indefinite term may terminate it at any time
for any, or no, reason. However, an exception has been recognized to that rule,
based on the principle that some grounds for discharging an employee are so
contrary to public policy as to be actionable. [Suchodolski, 412 Mich at 694-695
(citation omitted).]
The reasoning of these cases extended only to at-will employment relationships between
employees and employers, and not to independent contractors.
Because extending the at-will employment public policy exceptions to independent
contractors would clearly be an expansion of the current doctrine, we conclude that more specific
indications of the state’s desire to protect independent contractors in this context is required.
Plaintiff offers relatively little in this regard. In fact, courts in several states have ruled that public
policy exceptions to at-will employment doctrines do not protect independent contractors. See,
e.g., Bishop & Assoc, LLC v Ameren Corp, 520 SW3d 463, 471 (Mo, 2017); Harvey v Care
Initiatives, Inc, 634 NW2d 681, 683 (Iowa, 2001); McNeill v Security Benefit Life Ins Co, 28 F3d
891, 893 (CA 8, 1994); Cogan v Harford Mem Hosp, 843 F Supp 1013, 1022 (D Md, 1994). On
appeal, plaintiff has not referred us to any persuasive authority that supports the extension of the
public policy exceptions to the at-will employment doctrine outside the context of the employer-
employee relationship. While it may be sound public policy to extend the public policy exceptions
outside the context of the employer-employee relationship and to independent contractors like
plaintiff, such a decision should come from the Legislature or the Supreme Court. In our
estimation the prevailing legal norms and legal theories governing both independent contractors
and the at-will doctrine have not changed since the adoption of the public-policy exception to the
at-will doctrine such that the doctrine should be expanded to cover independent contractors. Price
v High Pointe Oil Co Inc, 493 Mich 238, 242-243; 828 NW2d 660 (2013). Accordingly, we agree
with the trial court that plaintiff had “no recourse under public policy” with regard to defendant’s
termination of their employment relationship.
Affirmed.
/s/ Mark J. Cavanagh
/s/ Christopher M. Murray
/s/ James Robert Redford
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