Did My Employee Quit, Or Did I Fire Him?

There are times when an employee appears to have quit his job, but a court or a jury will determine that the employer has terminated him. That’s referred to as a constructive discharge. If an employer discriminates against an employee and makes his working conditions so intolerable that a reasonable employee in the same circumstances has no choice but to quit, it can be considered a constructive discharge that will subject the employer to increased liability. This article focuses on what’s considered a constructive discharge under Wisconsin and federal law.

What’s the Definition of Constructive Discharge?

Under federal law (including Title VII of the Civil Rights Act of 1964), constructive discharge is a situation in which an employer discriminates against an employee to the point that his “working conditions become so intolerable that a reasonable person in the employee’s position would have felt compelled to resign.” When an employee resigns under such circumstances, Title VII treats his resignation as tantamount to an actual discharge, even though he quit.

A constructive discharge claim has two basic elements. An employee must first prove his employer discriminated against him to the point that a reasonable person in his position would have felt compelled to resign. In addition, the employee must show that he actually resigned. A constructive discharge claim involves both an employee’s decision to leave and the precipitating conduct (e.g., discrimination based on his membership in a protected class or his opposition to discrimination in the workplace). Only after both elements are satisfied can the employee file a lawsuit to obtain relief. In that respect, a claim that an employer constructively discharged an employee is no different from a claim that the employer actually discharged the employee even though he resigned.

Under Wisconsin’s fair employment law, the definitions are generally the same. The policy behind the law is to balance an employer’s end run around termination with an employee’s burden of proof. Actual discharge carries significant legal consequences for employers, including possible liability for wrongful discharge. In an attempt to avoid liability, an employer may refrain from actually firing an employee, preferring instead to engage in conduct that causes her to quit. The doctrine of constructive discharge addresses such an attempted end run around wrongful discharge claims or other claims that require proof of an employer-initiated termination of employment.

How Bad Do Things Have to Get?

In Wisconsin, the aggrieved employee must prevail under an objective standard. That means she must establish that working conditions were so intolerable, a reasonable person confronted with the same circumstances would have felt compelled to resign.

Under current federal law, the employee must demonstrate not only that a hostile work environment existed but also that the abusive working environment was so intolerable, her resignation was an appropriate response. The conditions for a constructive discharge must be more egregious than the high standard for hostile work environment claims because an employee is ordinarily expected to remain employed while she’s seeking redress for an employment claim.

Should I Worry About Constructively Discharging Independent Contractors?

The short answer is no. However, the first question you should ask is whether you’re treating workers as employees or independent contractors. The independent contractor test is different depending on which law applies. For example, a worker can be an independent contractor for purposes of unemployment compensation, but not for purposes of worker’s compensation or wage and hour law.

If you have employees who are doing the same type of work as independent contractors, it’s likely that you should be treating the independent contractors as if they’re employees under the law. For most purposes, there’s clearly less risk if you simply treat workers as if they’re employees rather than independent contractors. However, if your workers are employees, you should be mindful of the constructive discharge doctrine.

Bottom Line

An employer’s actions speak louder than its words. Generally, to bring a claim under Wisconsin or federal law and recover the full gamut of remedies, an employee must suffer an adverse employment action. Adverse actions fall into one of three basic categories: (1) termination or reduction in compensation (including fringe benefits or commission rates), (2) transfers or changes in job duties that cause an employee’s skills to weaken and reduce his future career prospects, and (3) constructive discharge. Under certain circumstances, you cannot escape potential liability under either federal or Wisconsin law by coercing a resignation instead of formally uttering the words, “You’re fired.”

This article, slightly modified to note recent updates, was featured in the August 2019 issue of the Wisconsin Employment Law Letter, which is co-edited by Axley Brynelson Attorneys Saul Glazer and Michael Modl and published by BLR®—Business & Legal Resources. Reproduced here with the permission of BLR®—Business & Legal Resources.