Constructive Discharge: Everything You Need to Know
Constructive discharge or constructive termination is a term used in employment law when an employee resigns due to intolerable work environment by the employer.7 min read
Updated July 14, 2020:
What Is Constructive Discharge?
Constructive discharge, also known as constructive termination or constructive dismissal, is a term used in employment law when an employee resigns due to an intolerable work environment created by the employer. Instead of directly terminating the employee, the employer chooses to create working conditions that are so unbearable, or possibly even illegal, that the employee is induced to voluntarily quit their job.
Normally, an employee is not eligible for unemployment compensation if they resign from their job. However, if a constructive discharge situation exists, the employee should still qualify for unemployment benefits. When filing their claim with their local unemployment office, the employee should explain that they were forced to resign due to employer misconduct and/or mistreatment.
The History of Constructive Discharge
The National Labor Relations Board (NLRB) developed the concept of constructive discharge during the labor union movement in the United States. The NLRB developed the concept in the 1930s to impede efforts by companies who discouraged their employees from unionizing or forced unionized employees to voluntarily quit their positions. The legal concept currently applies to both unionized and non-unionized employees.
In accordance with employment law, most states recognize constructive discharge. For legal purposes, the employee's resignation is disregarded since the relationship between the employer and the employee was effectively terminated by the circumstances of the employer's poor conduct, which forced the employee to vacate their position. As such, a constructive discharge is considered as a termination by the employer. If it can be proven that the employer's actions constitute illegal conduct or a breach of a written or implied employment contract, the employee could have a binding claim for wrongful constructive discharge.
What Constitutes "Intolerable Working Conditions"?
Employees are presumed to have an at-will relationship with their employer, which means that an employer may terminate them at any time, with or without cause. Assuming that neither the employer or the employee has breached a contract or broken a law, employers are generally not required to treat their employees fairly or to provide stress-free working conditions. Instead, the expectation is that employers are not to act in a discriminatory or illegal way. In the absence of these considerations, courts generally won't accept constructive dismissal claims without sufficient proof of hostile working conditions that lead to a constructive discharge.
An employee cannot resign from their position and then claim that they were constructively dismissed. It is not enough for an employee to simply state or believe that an employer treated them poorly, or for the employee to leave because they are no longer happy with their job. A cruel boss or bullying employees does not constitute intolerable working conditions unless certain criteria of abuse are met.
The onus is on the employee to prove that the actual working conditions of their job were objectively unbearable. In California, an employee is required to prove that, under similar hostile working circumstances, the average person would likewise be compelled to quit their job in order to free themselves from such conditions. It must also be proven that the employer intended to force a resignation or that the employer was well aware of the hostile working conditions.
It is not easy to meet the requirements of proof for such circumstances. In some cases, even basic discrimination, such as inequitable pay based on gender, may not meet the required standards of a constructive discharge claim. To prove a claim of constructive discharge, an employee must provide evidence that the employer engaged in extraordinarily poor conduct. This can include:
- Physical harassment
- Sexual harassment
- Employer retaliation after filing a complaint
- Verbal abuse
- Unwarranted denial of a promotion
- An unwarranted demotion and subsequent humiliation
- An unwarranted reduction in wages
- Continued mistreatment by the employer after an employee filed a complaint
A worker that claims constructive dismissal must prove that the conditions that led to their voluntary resignation were inappropriately adverse, and that they would cause any reasonable and competent employee not to remain on the job. This is known as the reasonable person standard.
A solitary negative performance appraisal or other isolated acts is not enough to establish unusually egregious employment conditions. An ongoing pattern of an employer's egregious conduct is necessary in order to consider an employee's resignation as a case of constructive discharge. However, a single instance of violent crime by the employer against the employee, for example, or an employer demanding that an employee commit an illegal act may be enough to constitute intolerable working conditions.
Courts focus on the following factors to determine whether or not an employer's conduct has created a hostile working environment that subsequently led to the employee voluntarily quitting their job:
- Whether or not the employee was asked or forced to participate in an illegal activity
- The amount of time that passed between the allegedly illegal behavior and the employee's subsequent resignation
- Whether or not the employer duly acknowledged or investigated the employee's complaints
- The nature of the employer's unlawful conduct
Employer Knowledge and Intent
An employee must prove that it was the employer's intention to induce the employee to resign their position by creating or maintaining an intolerable working environment. Alternatively, if another employee or a group of employees at the company created these conditions, the employee who has resigned must prove that the employer was fully aware of the situation. If an employer ought to have known about the intolerable working conditions but did not, then the courts would not consider a constructive discharge claim.
Employees are required to notify management or someone in a position of authority within the company of the intolerable conditions. This gives the employer an opportunity to fix the situation. If the employee has not informed management or the employer has not learned of the situation independently, then the employee will be unable to prove a claim of constructive discharge.
Discrimination and Harassment
Discrimination is illegal. The legal concept of constructive discharge has been extended by the U.S. Supreme Court to cases brought under the Age Discrimination in Employment Act (ADEA) and Title VII of the Civil Rights Act. These are federal laws that prohibit employee discrimination and harassment based on specific protected characteristics. Should an employee resign because they were discriminated against or harassed based on a protected characteristic, they may have a valid claim of wrongful termination. These characteristics include discrimination against an employee based on their:
- Skin color
- National origin
- Physical ability
- Genetic Information
In California, it is also illegal to discriminate against employees based on sexual orientation. In Illinois, employers cannot discriminate against an employee based on their credit history.
Discrimination or harassment based on any of these protected characteristics that caused an employee to resign voluntarily may result in a wrongful termination lawsuit, even if the employee technically quit their position.
Employers are prohibited from retaliating against an employee during their employment. They also cannot retaliate against an employee who has been forced out of their job and has subsequently filed a complaint regarding unlawful workplace behavior such as harassment or discrimination.
Hostility that results from the following actions may be considered valid grounds for making a constructive discharge claim:
- Taking leave protected under the Family and Medical Leave Act (FMLA)
- Seeking accommodation under the Americans With Disabilities Act (ADA)
- Filing a workers' compensation claim
- Demanding overtime pay to which an employee is entitled by law
- Making a claim as protected under a whistleblower statute
Other reasons may be considered, depending on the employment laws of the state where the situation occurred.
Unionized and Non-Unionized Employees
Employees are encouraged by the National Labor Relations Act to exercise their right to collective bargaining. There are some exceptions to the rules when it comes to the formation of unions. Certain industries and employee types do not automatically have the right to unionization. Employees generally attempt to form unions in order to negotiate:
- Higher wages
- Greater benefit compensation
- Fair treatment
- Safe and suitable working conditions
Federal labor laws protect employee unionization. Therefore, it is illegal for an employer to prevent the formation of unions. Nevertheless, some employers may oppose the formation of unions by their employees rather than take the necessary steps to satisfy their employees such that they do not feel the need to unionize at all.
Employers who are against the unionization of their employees may use methods such as threats or intimidation or even physical or verbal abuse to discourage them. As a result, some employees choose to leave the job than remain under such abusive circumstances.
Alternatively, rather than openly discouraging employees to unionize, the employer may simply create an intolerable working environment that forces employees to quit rather than go through the steps required to form a union.
Although employer retaliation is illegal, employers have been known to retaliate against employees who have made an effort to form a union.
Though the legal concept of constructive dismissal came about during the union movement, courts have extended it to include situations that involve non-unionized employees as well. The rules differ slightly for non-unionized and unionized employees. However, the concept remains that if an employee is deemed to have quit their job due to intolerable working conditions, the resignation is legally considered to be a wrongful termination.
Under the National Labor Relations Act, employees have successfully sued companies by relying on the Act's constructive discharge provision. The U.S. Supreme Court permitted these employees to sue, maintaining that when an employer "purposely creates working conditions so intolerable that the employee has no option but to resign."
The Results of a Successful Constructive Dismissal Case
An employee who is able to prove their constructive discharge claim may be entitled to monetary damages from their employer. The damages available vary based on the legal claims made regarding the reason for the constructive discharge. Depending on the circumstances, damages could include:
- Back pay
- Front pay
- Wages or benefits lost as a result of the forced resignation
- Wages or benefits lost going forward until a new job can be found
- Legal expenses, including court costs
- Compensatory damages, including compensation for pain and suffering or mental distress experienced due to the discharge, and/or punitive damages
- An award that punishes the employer for particularly egregious misconduct
An Employee's Duty
Many people quit their jobs on a regular basis. Many people do so because they feel that they have been treated unfairly or even abused during their employment. If an employee feels that they have been purposely subjected to an unbearable work environment by their employer, it is that employee's duty to report the existence of such working conditions to management. An employee is required to show that he or she made an effort to make an employer aware of the situation before resigning to allow the employer a chance to remedy the situation and avoid legal action. However, if the employer ignores the complaint, an employee may have grounds to take legal action through a constructive discharge claim.
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