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Constructive discharge
By Small Business Encyclopedia [July 9th, 2008]
The term "constructive discharge" describes a situation in which an employee is forced to quit a job because the employer has made working conditions intolerable. Working conditions may be considered intolerable if, for example, the employee is discriminated against or harassed, or if he or she suffers a negative change in pay, benefits, or workload for reasons that are not performance-related. In most cases, an employee who voluntarily leaves a company—as opposed to one whose employment is terminated by the company against his or her will—is not entitled to unemployment benefits and loses the right to sue the company for wrongful termination.
But the law recognizes constructive discharge as an exception to this rule. "In an increasing number of cases, employees are quitting their jobs, filing wrongful discharge suits against their former employers, and—here's the kicker—coming out a winner," J.D. Thorne wrote in an article for Small Business Reports. "The courts have reasoned in these cases that the employers made the workers' jobs so unbearable that they would rather quit than suffer more abuse. Being compelled to quit was much the same as being unfairly discharged. This claim, commonly known as constructive discharge, essentially excuses the employee from being the one to sever the employment relationship."
Legal Standards and Applicable Penalties
In order to sue successfully on the basis of constructive discharge, an employee must prove in court that the working conditions he or she experienced were intolerable. In addition, the employee must prove that the intolerable conditions were directly attributable to the employer. In other words, the employer either created the intolerable conditions intentionally or allowed them to exist. Some courts differ about the degree of employer intent required for constructive discharge, but as the San Diego Business Journal observed, most agree that the following must occur: 1) The employer's conduct effectively forced the employee to resign; 2) A continuous pattern of employer misconduct existed; 3) Conditions were so egregious and intolerable that any reasonable person would have quit.
The most common problems cited by employees in constructive discharge complaints include a loss of pay or benefits, an abnormal increase or decrease in workload, or discrimination under the Americans with Disabilities Act, equal employment opportunity laws, or unfair labor practice statutes. Constructive discharge suits may also be triggered when an employer is abusive toward an employee, particularly when that employee is a member of a protected class by virtue of gender, race, or age. Improper disciplinary actions can also be cause for a constructive discharge complaint, although employers can criticize employees' job performance and deny benefits for reasons that are business related.
In recent years, as the number of legal actions related to constructive discharge have increased, some states have strengthened the burden of proof for employees. Rather than simply proving that working conditions were intolerable, some employees now must also show that the employer knew about the poor conditions and could have remedied the situation. "Unless an employee can prove that you deliberately made working conditions so intolerable that the worker was forced to quit, then a court probably won't find the company guilty of constructive discharge," Thorne explained.
Some states also require employees to notify their employer of the problem and give them a fair chance to fix it. The idea behind such measures is to make it unnecessary for employees to quit in order to see their problems resolved, as well as to prevent employers from being blind sided by employees who quit and then sue for wrongful discharge. In Arizona, for example, employees must provide 15 days' written notice of their intention to quit for cause. The employer then has that time to make necessary changes in working conditions. If the employee is not satisfied with the employer's response and still decides to quit, then he or she is entitled to file suit for constructive discharge. The Arizona law does provide an exception, however, for employees who encounter working conditions so serious that they must leave the company immediately.
On the other hand, some courts have expanded the definition of constructive discharge to enable employees on leave to suit their employers. "An employee may still be successful in a constructive discharge lawsuit even though the employee never quits the job, if the company deliberately allowed such an intolerable workplace situation to exist that the employee ends up on permanent unpaid medical leave," explained Mary-Kathryn Zachary in Supervision. "[The court] held there was no real difference between the situation of an employee who quit because of intolerable working conditions or one who became disabled and placed on leave as a result of such conditions…. Thus, an employee may successfully bring a constructive discharge case without actually terminating employment."
The penalties a company can face if a former employee sues successfully for constructive discharge can be severe. As Thorne noted, the usual penalties include both back pay (the amount of wages the employee would have been paid had they continued working for the company up until the time of the lawsuit) and front pay (an amount based on the employee's remaining work years and the expected length of time it will take him or her to find a similar job), as well as reimbursement of attorney fees. There also may be monetary damages, compensatory damages for pain and suffering or mental distress, and punitive damages of up to $300,000 in some discrimination cases. Employees who win constructive discharge cases are usually not reinstated, however, because it would be counterproductive to return them to an intolerable working environment.
How to Avoid Constructive Discharge Lawsuits
Small business owners can take a number of steps to strengthen their defenses against charges of constructive discharge. One option is to implement a formal complaint system and encourage employees to make use of it. These systems, when effectively implemented, give the company a chance to rectify problems before they lead to lawsuits. Another recommendation is to establish and follow company guidelines for informing employees of performance problems and taking disciplinary action. "Don't unnecessarily put the employee in a 'sink or swim' situation," counseled the San Diego Business Journal. "Conduct regular training sessions. Ensure employees receive performance feedback regularly and understand company expectations." In addition, small businesses should ensure that any necessary downsizing measures are undertaken using objective rather than subjective criteria.
Another important suggestion for small business owners is never to change the conditions of employment in order to get employees to resign rather than having to fire them. "Attempts to force an employee to resign by making working conditions intolerable or changing job duties, is not a good idea," wrote Kristen Gerencher in InfoWorld. In fact, such attempts can have a deleterious impact on the morale of supervisors or other employees charged with implementing such a strategy. Instead, companies should always follow their standard procedures for discipline and termination. These procedures should include probation periods for employees with performance problems. It may also be helpful to request a letter of resignation from employees who quit voluntarily and keep it on file as evidence of their reasons for leaving the company. Finally, exit interviews should be made mandatory for all employees who leave the company. The exit interview gives management an opportunity to iron out differences with employees who quit with hard feelings toward the company.
But the best policies a small business can follow to avoid being sued for constructive discharge, however, are to promote fair management practices and stamp out any negative environmental conditions that begin percolating the workplace. After all, a healthy working environment not only helps keep constructive discharge lawsuits away, but also promotes over-all business success. "The best advice, as always, is to play it straight with employees," Thorne wrote. "There's no substitute for allowing them to air grievances, correcting problems with working conditions, and disciplining them fairly for unsatisfactory work."
Small Business Encyclopedia. Encyclopedia of Small Business. Copyright © 2002 by The Gale Group, Inc. All rights reserved.
United States 8th Circuit Court of Appeals Reports
UNITED STATES v. CITY OF INDEPENDENCE, 05-4489 (8th Cir.
12-22-2006) United States Equal Employment Opportunity
Commission, Plaintiff � Appellant, Richard Hopkins,
Intervenor Plaintiff, v. City of Independence, Missouri,
Defendant � Appellee.; AARP Foundation Litigation,
Amicus Curiae on Behalf of Appellant., United States Equal
Employment Opportunity Commission, Plaintiff, Richard
Hopkins, Intervenor Plaintiff � Appellant, v. City
of Independence, Missouri, Defendant � Appellee No.
05-4489, No. 05-4490. United States Court of Appeals,
Eighth Circuit. Submitted: September 28, 2006. Filed:
December 22, 2006.
Appeal from the United States District Court for the
Western District of Missouri.
Before WOLLMAN, BOWMAN, and BENTON, Circuit Judges.
BENTON, Circuit Judge.
The Equal Employment Opportunity Commission (EEOC) and
Richard W. Hopkins sued the city of Independence, Missouri,
alleging constructive discharge and a violation of the Age
Discrimination in Employment Act (ADEA) and Missouri Human
Rights Act (MHRA). The district court granted summary
judgment to the city on all counts. Having jurisdiction
under 28 U.S.C. � 1291, this court reverses as to
the age discrimination claim, but affirms on the
constructive discharge claim.
I.
Under the city's "Leave Donation Program," employees may
donate up to 40 hours of vacation, personal-business, and
sick leave to other employees who have a medical condition
preventing them from working and exhaust all paid leave.
Qualified employees may receive up to 1,040 hours of
donated leave, equal to six months' work.
To qualify for the Program, an employee must (1) be
approved for extended medical leave of absence, (2) be able
to earn and use accrued sick leave hours, (3) successfully
have completed the initial six-month probation, (4) exhaust
vacation, personal-business, and sick leave, accrued
holidays, and compensatory time, (5) not be receiving or
entitled to receive long-term-disability benefits, and (6)
"not be eligible for regular retirement." The city's
Personnel Policies and Procedures Manual defines regular
retirement eligibility as "age sixty (60)" and "vested" in
the city's pension plan (requiring five years of
local-government service).
Before the adoption of the Program in 1998, the city's
Administrative Specialist informed the Personnel Board:
I have the following concerns about restrictions included
in Paragraph 1 of the Proposed Leave Donation Program.
"The employee must not be eligible for regular
retirement." Even though eligible for regular retirement,
that may not be what would be in the best interests of the
City or the employee, i.e., if the employee will only be
off for a few months. Regular retirement age is young.
Including this appears to be a form of age discrimination.
Hopkins began working for the city as a Code Compliance
Officer in 1994, which entails driving a truck to inspect
property and investigate complaints. On November 4, 2002,
Hopkins was hospitalized and diagnosed with ventricular
tachycardia, a form of heart disease involving rapid
heartbeat. Hopkins's physician determined that he was unable
to drive for six months following any episode of VT.
City employees became aware of Hopkins's medical condition
and began donating leave to him pursuant to the Program.
The city's Human Resources Administrator told Hopkins, "I
didn't know that you were that old," and that he was
ineligible for the Program. Hopkins asked, "What do you
mean?" The administrator responded, "Well, you're of
retirement age, Richard, you're over 60. You can't draw
donated leave time." As a result, Hopkins was denied
participation in the Program.
On November 21, 2002, Hopkins and his wife met with his
supervisor, the Human Resources Administrator, and other
city personnel to discuss his options. Hopkins's wife
avers: "During the meeting the City's Donated Leave Program
was discussed and Richard was informed that he was
ineligible to utilize the Program due to his age." Unable to
drive due to his condition, Hopkins's options included
clerical work, retirement, or accommodation under the
Americans with Disabilities Act. Hopkins did not resume
working, but used unpaid leave under the Family Medical
Leave Act (FMLA) until it expired in January 2003.
On February 3, Hopkins indicated that his doctor would not
release him to drive before May. He then applied for
long-term-disability and requested to extend his FMLA
leave. The city approved his extension for unpaid leave. On
March 14, Hopkins again informed the city that his doctor
had continued his driving restriction. On March 24, city
officials met with him to discuss his options. The city
summarized the meeting in a letter to Hopkins: "In our
opinion, these options include: 1) resignation; 2) an
Accommodation Request form be completed by April 7th; 3)
retirement; and 4) long-term-disability." Later, he
submitted his retirement papers, noting the submission was
"under coercion and threat of losing my benefits." The city
responded: "It was not and is not our intention to suggest
that you be required to choose the option of retiring. For
that reason, the City is holding your LAGERS retirement
paperwork until April 28, 2003 to allow you time to
reconsider your options." The record shows no further
developments until Hopkins's retirement took effect on June
1, 2003.
II. This court reviews de novo the grant of summary
judgment, viewing the record most favorably to the
non-moving party. See McClure v. Career Sys. Dev. Corp.,
447 F.3d 1133, 1135 (8th Cir. 2006); Cremona v. R.S. Bacon
Veneer Co., 433 F.3d 617, 619 (8th Cir. 2006). Summary
judgment is appropriate if the record shows "that there is
no genuine issue as to any material fact and that the
moving party is entitled to a judgment as a matter of law."
Fed.R.Civ.P. 56(c); Knowles v. Citicorp Mortgage, Inc., 142
F.3d 1082, 1085 (8th Cir. 1998).
A.
Hopkins alleges he was disqualified from the Leave Donation
Program because of his age, in violation of the ADEA.
Hopkins's MHRA claim is analyzed under the same analysis as
the ADEA claim. See Mathes v. Furniture Brands Int'l, 266
F.3d 884, 885 (8th Cir. 2001).
The ADEA provides: "It shall be unlawful for an employer to
. . . discriminate against any individual with respect to
his compensation, terms, conditions, or privileges of
employment, because of such individual's age." 29 U.S.C.
� 623(a)(1). In a disparate treatment case,
liability depends on whether age actually motivated the
employer's decision. Reeves v. Sanderson Plumbing Prods.,
Inc., 530 U.S. 133, 141 (2000); Hazen Paper Co. v. Biggins,
507 U.S. 604, 610 (1993). To succeed on a disparate
treatment claim, the plaintiff must show the employee's age
"actually played a role in [the employer's decisionmaking]
process and had a determinative influence on the outcome."
Reeves, 530 U.S. at 141, quoting Hazen Paper, 507 U.S. at
610.
Viewing the facts favorably to Hopkins, his age "actually
played a role" in the employer's decisionmaking. First,
after city employees began donating leave to Hopkins, the
city's Human Resources Administrator called him to tell him
he could not participate in the Program. She said, "I
didn't know that you were that old." Hopkins asked, "What
do you mean?" The administrator responded, "Well, you're of
retirement age, Richard, you're over 60. You can't draw
donated leave time." Second, according to Hopkins's wife,
at the next meeting with key administrators, Hopkins "was
informed that he was ineligible to utilize the Program due
to his age." These statements are not mere stray remarks in
the workplace "unrelated to the decisional process itself."
See Price Waterhouse v. Hopkins, 490 U.S. 228, 277 (1989)
(O'Connor, J., concurring). The statements, viewed most
favorably to Hopkins, are statements by decision makers
related to the decisional process. See id.
These oral statements are direct evidence of age
discrimination. "Direct evidence is evidence showing a
specific link between the alleged discriminatory animus and
the challenged decision, sufficient to support a finding by
a reasonable fact finder that an illegitimate criterion
actually motivated the adverse employment action." Quick v.
Wal-Mart Stores, Inc., 441 F.3d 606, 609 (8th Cir. 2006),
quoting Griffith v. City of Des Moines, 387 F.3d 733, 736
(8th Cir. 2004). See EEOC v. Liberal R-II School Dist, 314
F.3d 920, 923 (8th Cir. 2002) (direct evidence may include
evidence of actions or remarks of the employer that reflect
a discriminatory attitude); see also Kneibert v. Thomson
Newspapers, Mich. Inc., 129 F.3d 444,452 (8th Cir. 1997);
Radabaugh v. Zip Feed Mills, Inc., 997 F.2d 444,449 (1993).
This case is not like Hanebrink v. Brown Shoe Co., 110 F.3d
644, 646, 647 (8th Cir. 1997), where the plaintiff himself
testified that no one at the employer said anything that
suggested that he was discriminated against because of his
age.
The second part of a successful disparate treatment claim
is that age "had a determinative influence on the outcome."
Hazen Paper, 507 U.S. at 610. The city protests at length
that age did not have a determinative influence on its
decision to refuse leave donation. The city argues that
since Hopkins's disqualification from the Program depends
essentially on two characteristics � passing age 60
and attaining five years of service � retirement
eligibility is not a proxy for age. But see Hazen Paper,
507 U.S. at 613 ("Nor do we rule out the possibility of . .
. liability under . . . the ADEA where the decision to fire
the employee was motivated both by the employee's age and
by his pension status"). The city emphasizes that the terms
of the Program itself do not expressly mention age and that
its motive is to prevent "retirement eligible employees
from abusing the policy by drawing 1040 hours of donated
leave immediately before retiring." The city relies on the
language in Hazen Paper: "When the employer's decision is
wholly motivated by factors other than age, the problem of
inaccurate and stigmatizing stereotypes disappears. . . .
even if the motivating factor is correlated to age, as
pension status typically is." Id. at 611 (emphasis added);
see also EEOC v. McDonnell Douglas Corp., 191 F.3d 948,
951, 952 (8th Cir. 1999) ("employment decisions motivated
by factors other than age (such as salary, seniority, or
retirement eligibility), even when such factors correlate
with age, do not constitute age discrimination"); Cooney v.
Union Pacific R.R. Co., 258 F.3d 731, 735 (8th Cir. 2001)
(same).
The district court agreed that Hopkins's disqualification
from the Program was merely correlated with age. The court
stressed that some employees under 60 cannot participate in
the Program (due to, e.g., probation status, availability
of other leave), while some employees over 60 � with
less than five years service � may participate in
the Program (which are apparently about ten percent of all
employees over 60). The district court distinguished cases
where the program at issue explicitly used age to deny
benefits. See Auerbach v. Bd. of Educ., 136 F.3d 104, 110
(2d Cir. 1998) ("age, not years of service, is the factor
behind the disparate treatment" when "teachers under the age
of 55 who have fulfilled the service requirement have the
future option to receive the retirement incentive
benefits"); Huff v. UARCO, Inc., 122 F.3d 374, 388 (7th
Cir. 1997) (when an employee loses a lump sum payout upon
attaining age 55 with 10 years service, the employer's
"policy draws an express line between workers over
fifty-five and those under"); EEOC v. Borden's, Inc., 724
F.2d 1390, 1393 (9th Cir. 1984) (a severance pay policy
excluding individuals eligible for retirement violates the
ADEA when based on reaching age 55 with 10 years service).
See also EEOC v. Jefferson County Sheriff's Dep't, 467 F.3d
571, 579-80 (6th Cir. 2006) (en banc) (when a
disability-retirement-benefits plan excludes
hazardous-category employees age 55 and older who reach
normal retirement age, the plan is facially
discriminatory); Erie County Retirees Ass'n v. County of
Erie, 220 F.3d 193, 211 (3d Cir. 2000) (excluding a group
from benefits based on Medicare status violates the ADEA
since "medicare eligibility follows ineluctably upon
attaining age 65" and thus, "is a direct proxy for age");
Johnson v. State of New York, 49 F.3d 75, 79-80 (2d Cir.
1995) ("the decision to require dual status, with
consequent mandatory retirement at 60, is not merely
correlated with age; unlike Hazen Paper, the employer's
decision here in fact implements an age-based criterion").
The city and the district court ignore that the
"correlated" language in Hazen applies only where the
employer's decision is "wholly" motivated by factors other
than age. See Hazen Paper, 507 U.S. at 611. The key is what
the employer supposes about age: "Pension status may be a
proxy for age . . . in the sense that the employer may
suppose a correlation between the two factors and act
accordingly." Id. at 613; see also Slather v. Sather
Truking Corp., 78 F.3d 415, 418-19 (8th Cir. 1996) ("Age
discrimination may exist when an employer terminates an
employee based on a factor such as experience or salary when
the employer presupposes a correlation with age and uses
that factor as a proxy for age").
Based on the direct evidence that the city's Human
Resources Administrator and other personnel decisionmakers
said the disqualification was because of age and acted
accordingly, Hopkins raises a genuine issue of material
fact as to what the employer supposed about age. In this
case, unlike EEOC v. McDonnell Douglas, the discriminatory
acts were not "isolated" but were the standard operating
procedure for the Leave Donation Program. Compare McDonnell
Douglas, 191 F.3d at 952. The ADEA "requires the employer
to ignore an employee's age" in making employment
decisions. Hazen Paper, 507 U.S. at 612.
Because there are genuine issues as to material facts, the
district court should not have granted summary judgment on
the ADEA and MHRA claims.
B.
"Constructive discharge occurs when an employer
deliberately makes an employee's work environment so
intolerable that resignation is the employee's only
plausible alternative." Williams v. City of Kansas City,
223 F.3d 749, 753 (8th Cir. 2000) (applying Missouri law).
"The conduct complained of must have been severe or
pervasive enough to create an objectively hostile or
abusive work environment, and additionally the plaintiff
must subjectively perceive the environment to be abusive."
Johnson v. Runyon, 137 F.3d 1081, 1083 (8th Cir.1998)
(internal quotations omitted). "The employer's actions must
have been intended to force the employee to quit." Tatom v.
Georgia-Pacific Corp., 228 F.3d 926, 932 (8th Cir. 2000).
Here, the evidence (viewed favorably to Hopkins) does not
show a constructive discharge. The city met several times
with Hopkins to discuss his options, including clerical
work, accommodation under the Americans with Disabilities
Act, and long-term-disability. When Hopkins wrote that his
retirement was "under coercion and threat of losing my
benefits," the City responded: "It was not and is not our
intention to suggest that you be required to choose the
option of retiring. For that reason, the City is holding
your LAGERS retirement paperwork until April 28, 2003 to
allow you time to reconsider your options." The city's
holding of his retirement request, grant of leave without
pay, and willingness to discuss other options demonstrate
that it did not create a work environment so intolerable
that a reasonable employee would be compelled to quit.
Hopkins argues that the denial of the Leave Donation
Program in November 2002 "set into motion the circumstances
that culminated with his discharge." Because his paid leave
ended November 21, 2002, the Program would have allowed him
(at most) to remain an employee until the end of May 2003.
It is undisputed that Hopkins could not perform his job by
driving until October 2003 (at the earliest). The denial of
the Leave Donation Program did not, on the facts of this
case, cause his discharge. The district court properly
granted summary judgment on the constructive discharge
claim.
III.
The judgment of the district court is reversed in part,
affirmed in part, and the case remanded.
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