Constructive Discharge Means Never Having to Say “You’re Fired”

April 21, 2009

Courts throughout the United States, including Wisconsin, have routinely used the concept of a “constructive” action in a myriad of circumstances to impose legal duties or obligations in the absence of specific formal requirements. For example, a landlord may be found to have “constructively evicted” a tenant when an apartment is uninhabitable even though the landlord didn’t commence formal eviction proceedings. Similarly, property held on behalf of another may be found to be part of a “constructive trust” in the absence of formal legal documents creating a trust. In the context of a discharge from employment, courts have found that employers may be deemed to have “constructively discharged” an employee when a reasonable person would feel compelled to resign by the difficult or unpleasant working conditions it imposes.

Test for Constructive Discharge
A constructive discharge occurs when an employer makes working conditions so intolerable that an employee feels forced to resign. At-will employees can generally be fired for no reason so long as it is nondiscriminatory or not against public policy. To prove a constructive discharge, the employee must establish that working conditions are so difficult or unpleasant that a reasonable person would feel compelled to resign because of a (1) discriminatory reason or (2) reason contrary to a well-defined public policy. Employees subject to just-cause provisions also can establish a constructive discharge if they can show the employer purposefully created an intolerable working environment so they would quit and avoid just-cause provisions. In other words, the constructive discharge doctrine recognizes that employers might refrain from directly terminating an employee and instead engage in conduct designed to force him to resign.

Circumstances Leading to Constructive Discharge
Wisconsin courts or administrative agencies have found constructive discharges under the following circumstances:

  • Instances of humiliating and physically intimidating conduct by a supervisor;
  • When an employee quit following an argument with a supervisor after the supervisor made a crude remark about the employee’s sexual activities;
  • When an employee quit after the owner of the business sexually harassed her; and
  • When an older man resigned following a poor performance review from his supervisor, who previously had stated that she had wanted to hire a younger woman rather than him, preferred an all-female staff, and was part of an organization called “Women Against Men,” which espoused the goal of getting men fired from the business in question.

Circumstances in which Constructive Discharge was Rejected
Wisconsin courts or administrative agencies have declined to find constructive discharges under the following circumstances:

  • Comments during a performance evaluation that the employee was doing just enough to get by;
  • Medical records showing the employee was under psychological stress when there was no evidence that the stress was the result of discriminatory or retaliatory working conditions;
  • Loss of prestige or supervisory duties standing alone;
  • Demotion standing alone;
  • Dissatisfaction with a job because of discrimination standing alone;
  • When the employee contributed to the working conditions she complained of and her failure to complain about the working conditions suggested her tacit approval of them;
  • Sporadic use of racial slurs; and
  • The employer’s failure to recognize the employee’s demand for equal pay.

Timing of Resignation
Like retaliation claims, the timing of a resignation is critical. If an employee continues to work under “intolerable” conditions for an extended period, he will have a hard time proving that the conditions were so intolerable that a reasonable person would have resigned. Similarly, an employee who quits work to take another job may not be found to have been constructively discharged. Rather, a court or administrative agency may decide that the reason for the resignation was not the employer’s conduct but was the result of the employee finding new employment.

If an employee quits because of discriminatory treatment but is unable to prove constructive discharge, his remedies are limited to any damages that have accrued up to the date of the resignation. The employee is not entitled to reinstatement or back pay for the loss of income following the resignation. If the employee is successful in proving a violation of a federal or Wisconsin statute, he also may be entitled to attorneys’ fees.

Bottom Line
While constructive discharge claims are not unusual, absent compelling circumstances, Wisconsin courts and administrative agencies generally are reluctant to find that an employee was in fact constructively discharged. Nonetheless, it is prudent to understand how constructive discharge claims arise so that you can be on alert to the potential for them. Whenever possible, it is better to eliminate the underlying conditions that may prompt an employee to file such a claim. Further, it is important to have written policies encouraging employees to report all instances in which they believe that they have been treated unfairly. Such reporting procedures should provide for alternative persons to receive complaints so employees cannot claim they were forced to report to the very person engaged in the alleged improper conduct.

Also, before their last day of work, encourage departing employees to complete exit interviews with open ended questions about any complaints they may have. Alternatively, personally interview departing employees and document the questions and answers. Exit interviews help identify employees who may be leaving because of allegedly intolerable conditions or may help to foreclose employees from making after-the-fact claims when they participated in exit interviews but neglected to raise any complaints.

To subscribe to email alerts from Axley Law Firm, click here.