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What Is Constructive Dismissal?

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In the United States, except for workers employed under collective bargaining agreements or formal employment contracts, employment is generally considered to occur on an at will basis that allows either the employee or the employer to terminate the employment relationship at any time, with or without a reason. This means that in general, when an employee voluntarily quits his or her job, unemployment benefits are not forthcoming. However, if an employee is able to sustain a claim of constructive dismissal, employers may be on the hook for unemployment benefits or face adverse legal action for damages.

Constructive Dismissal Defined

Constructive dismissal, also known as constructive discharge or constructive termination, occurs when an employee leaves a job because the working conditions make it impossible for him or her to remain. There are two requirements for making a claim of constructive dismissal.

  • A working environment so adverse that a reasonable person would find it intolerable
  • Intent to create or actual knowledge of intolerable working conditions by the employer

Except under extreme circumstances, a single adverse incident is generally not sufficient to sustain a claim of constructive dismissal. Examples of extreme circumstances that could justify an employee’s decision to resign immediately include demands to commit blatantly illegal acts or situations where the employee was placed in profound danger.

Under less than extreme circumstances, an employee must generally demonstrate that a continuing pattern of intolerable conditions persisted, and that that he or she made the employer aware of intolerable working conditions. Other considerations that could affect a claim of constructive dismissal include the length of time between the occurrence of a single egregious act and the resignation of the employee.

Constructive dismissal claims can also result from circumstances relating to discriminatory conditions or conduct, general harassment (versus sexual harassment) or retaliation. For instance, repeated refusal of an employer to pay overtime to which a worker is legally entitled may provide grounds for a claim of constructive dismissal.

In determining the merits of a claim of constructive dismissal, a consideration is made whether a “reasonable person” or a “reasonable woman” (in cases of sexual harassment claims brought by female workers) would have found the circumstances in question intolerable. The legal standards for “reasonable person” and “reasonable woman” are similar, but not identical.

The “Reasonable Person” Standard and Constructive Dismissal

For constructive dismissal cases that do not involve claims of sexual harassment, the standard of the “reasonable person” generally applies. The conduct of a “reasonable person” is defined as conduct that would be expected of a typical person faced with specific circumstances. The “reasonable person” standard is modified for children to comply with the general conduct of children of the same age. The “reasonable person” standard also relies heavily on actual knowledge, or knowledge that a person in a specific situation should have had.

The “Reasonable Woman” Standard and Constructive Dismissal

The “reasonable woman” refers to sexual harassment claims, and refers to how a typical woman would react to a circumstance of alleged sexual harassment. The “reasonable woman” standard accounts for differences in the way women perceive sexual conduct and speech from how men perceive the same conduct and speech. Jurisdictions that use the “reasonable woman” standard base their position on the recognition that women have traditionally been subjected to sexual violation and violence more often than men have been.

In applying the “reasonable woman” standard to claims of constructive dismissal, considerations would include whether a typical woman would have perceived that there was a sexual element to whatever intolerable conditions inspired her to leave her job. Examples of sexually related coercion leading to constructive dismissal would be repeated demands for sexual favors from a woman by a supervisor in exchange for salary increases or paid time off (quid pro quo sexual harassment) or persistent leering or unwanted comments about a woman’s looks or the way she dresses (hostile environment sexual harassment).

Employment Discrimination and Constructive Dismissal

Claims of constructive dismissal brought by employees who are disabled, or who are members of one or more protected classes frequently include an element of discriminatory conduct. For example, a disabled employee who quits because his or her employer refused to comply with a request for a reasonable accommodation may have a valid claim for constructive dismissal.

Remedies for Constructive Dismissal

Employees who are able to provide convincing support for a claim of constructive dismissal may be able to collect unemployment compensation. In addition, employees may be able to collect substantial monetary damages from their former employers, including:

  • Lost wages and benefits
  • Court costs and attorney’s fees
  • Compensatory damages for pain and suffering or mental distress
  • Punitive damages for especially egregious employer conduct

Avoiding Constructive Dismissal Claims

On one level, strategies for avoiding claims of constructive dismissal should be obvious: don’t discriminate or retaliate against employees, subject them to general or sexual harassment, or demand that they work in dangerous conditions or perform illegal acts. On a deeper level, employers can protect themselves by devising clear, written standards for proper conduct in the workplace, and along with developing fair, consistent grounds for dismissal – along with establishing safe, equitable working conditions.

Disclaimer: This article represents a general discussion of constructive dismissal and its potential legal consequences. It is not intended to provide legal advice. Please consult with an attorney in your jurisdiction specializing in employment related law with specific questions concerning your company and potential liability for constructive dismissal claims.

Audrey Henderson

Posted In: Legal, Management, Money

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