Legal Clinic

Forcing a Resignation

Micromanaging an employee and making working conditions intolerable in the hope that the worker will resign leave a company open to litigation based on "constructive discharge." It's up to HR leaders to educate managers on how to avoid such potential claims.

Monday, February 6, 2012
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Question: A management employee broke his leg last year and took leave under the Family and Medical Leave Act. Although the employee's doctor ordered full bed rest for two weeks, the vice president and co-owner ordered him back to work after one week and threatened to replace him. The employee returned to work, and since that time, I have seen what I would consider a "constructive discharge" developing.

The vice president is all over the manager and micro-manages everything the manager does. The vice president believes the company is shielded from liability because we are in an at-will employment state. What can I tell the vice president about potential liability, other than the FMLA violation, that his actions may be causing for the company? 

Answer: You are correct to be concerned about the vice president's actions and misperceptions, and you should address the situation as soon as possible. Inform the vice president and the manager of the following:

The employment-at-will doctrine does not shield a company from any and all liability associated with terminating an employee.

Generally, an employment-at-will relationship permits either the employer or the employee to terminate the relationship at any time, for any reason whatsoever, or for no reason at all. However, because of the potential for abuse, courts and legislatures have created a number of exceptions that require the employer to have "good cause" to terminate the employee, or that delineate bases on which an employer is not permitted to terminate employees.

For example, federal and state laws prohibit an employer from terminating the employment relationship for discriminatory or retaliatory reasons such as race, age, sex, religion, disability or handicap, veterans' status and similar traits.

Likewise, many states recognize the common law tort of wrongful discharge in violation of public policy as an exception to the at-will rule. See 10-259 Labor & Employment Law ยง 259.05. Accordingly, inform the vice president that -- contrary to his belief -- exceptions to the at-will employment doctrine exist, which may subject the company to liability associated with terminating an employee.

Constructive Discharge

An employer may be liable for constructive discharge when the employer's conduct forces an employee to quit. 

Constructive discharge is recognized under the Americans with Disabilities Act, Section 1981, Section 1983, the Age Discrimination in Employment Act, and most state Fair Employment Practices laws, and applies to both at-will and contractual employment relationships.

Constructive discharge occurs when the "employer's conduct effectively forces an employee to resign." Turner v. Anheuser-Busch, Inc. 7 Cal. 4th 1238, 1244 (1994). The forced resignation is then "legally regarded as a firing rather than a resignation." Id. at 1245.

An employee who succeeds in proving that he was constructively discharged may receive back pay and attorneys' fees, as well as other remedies such as compensatory damages.

Constructive-discharge claims are fairly difficult to prove. To establish such a claim, the employee must prove by a preponderance of the evidence "that the employer either intentionally created or knowingly permitted working conditions that were so intolerable or aggravated at the time of the employee's resignation that a reasonable employer would realize that a reasonable person in the employee's position would be compelled to resign." Id. at 1251.

Thus, the employee must prove that (1) the working conditions he experienced were intolerable, (2) the employer either created the intolerable conditions intentionally or allowed them to exist and (3) a reasonable person under those circumstances would have resigned.

To establish intolerable conditions, the employee must show that the "conditions giving rise to the resignation [are] sufficiently extraordinary and egregious to overcome the normal motivation of a competent, diligent and reasonable employee to remain on the job." Id. at 1246.

Some courts recognize that this element may be met by establishing one egregious incident of discrimination, while others require the employee to demonstrate "aggravating factors," such as a continuous and pervasive pattern of discriminatory treatment spanning a substantial period of time.

Under this analysis, courts will consider the length of time between the onset of the allegedly intolerable condition and the employee's resignation as one relevant factor. Id. at 1254.

Generally, courts have found that one day's disappointment about a transfer of job duties is not intolerable and does not constitute a reasonable basis for resigning, whereas an ongoing pattern of abusive conduct may be deemed intolerable.

The majority of courts require that the employer (i.e., officers, directors, managing agents or supervisory employees) expressly created or was aware of the intolerable conditions. See Turner v. Anheuser-Busch, Inc. 7 Cal. 4th 1238, 1248 (1994).

Establishing the employer's intent or knowledge of the intolerable conditions requires proof of "deliberate action on the part of the employer ... . Something beyond mere negligence or ineffectiveness is required." Mack v. Otis Elevator Co., 326 F.3d 116, 128 (2d Cir. 2003).

A minority of courts, including the Fourth Circuit, however, require evidence that the employer expressly intended to force the employee to resign. Turner, 7 Cal. 4th at 1248.

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Conversely, the Ninth Circuit makes no reference to employer intent, but merely views the totality of the circumstances to determine whether a reasonable person in the employee's position would have felt compelled to quit. Id. at 1246.

Likewise, some courts, including the Fifth and Eighth Circuits, also require the employee to establish additional evidence that the employee allowed the employer a sufficient time to correct the offensive conditions.

Last, the trier of fact must find that the working conditions were so difficult or unpleasant that a reasonable person in the employee's shoes would have felt compelled to resign.

Under this objective standard, courts will not consider an employee's subjective feelings. See Strozinksky v. Sch. Dist. Of Brown Deer, 2000 WI 97, 64 (Wis. 2000).

Notably, most courts hold that the employer need not have intended for the employee to resign or even foresee this result; the focus is not on the employer, but whether the employee's decision was objectively reasonable.

To give perspective, the constructive-discharge standard is a higher standard of proof than that required to establish a hostile-work-environment claim. See e.g. Mack, 326 F.3d at 116.

Generally, claims of constructive discharge based solely on a discrimination in pay, a denial of a pay raise, a denial of a promotion, a poor performance rating or general inequality of benefits or working conditions are insufficient and will fail.

Here, although a constructive-discharge claim will be difficult to prove in light of the at-will employment relationship, the vice president's actions have the potential to place the company at risk for a constructive-discharge claim if the employee resigns and can subsequently prove that the vice president's conduct forced him to resign and that a reasonable employee would have felt compelled to resign under the circumstances.

Given this potential for liability, and the high defense costs associated with defending against such claims (even if the employer ultimately prevails) -- advise the vice president that his actions will likely lead to litigation costs related to a claim for not only constructive discharge, but also a disability discrimination, FMLA-violation claim and a retaliation claim.

Explain that the vice president must follow the company's disciplinary procedure and employment policies, and may not encourage the manager to resign by changing his job duties or making his working conditions intolerable.

Keisha-Ann G. Gray is senior counsel in the Labor & Employment Law Department of Proskauer in New York and co-chair of the Department's Employment Litigation and Arbitration Practice Group.

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