Constructive Discharge: An Outlaw Employment Separation?

The "take this job and shove it" outlaw cry of the ‘70s doesn’t fare well in the context of employment litigation, unemployment insurance, and COBRA-subsidies. Although there are circumstances where walking out is entirely understandable and necessary there are ongoing implications that too many people discover too late.  I explore a few of these under current law, December of 2009.

Wrongful Termination

It may occur to you after you jump ship that you have a valid claim against your former employer for Wrongful Termination.  Promises were breached, conduct was discriminatory and violated your civil rights, you were forced to commit acts that are repugnant to the public policy considerations of the State of California, or you were the victim of unlawful retaliation.  But, you quit…you weren’t fired!

If you were Constructively Discharged, i.e. forced to quit, then a Wrongful Termination claim may be workable. However, the burden is now on you to show that the working conditions or treatment was so intolerable that any reasonable employee would have had no reasonable alternative but to resign.  And, that the condition and treatment that was so objectionable was fairly close in time to your decision to resign.  Your former employer’s attorney may well argue in response that you had alternatives and/or you failed to give the employer notice and the opportunity to resolve the problems. 

So, in addition to proving your claim for Wrongful Termination, your attorney needs to get your claim over the hurtle of being judged a voluntary resignation.  

Unemployment Insurance

Basically, UI benefits are for employees who lose employment through no fault of their own and who wanted to remain employed.  Resigning appears to disqualify the former employee from receiving benefits.

Again, if you were Constructively Discharged, i.e. forced to quit, your employment, then an Unemployment Insurance claim should be approved. However, the burden is now on you to show that there was good cause for quitting.  Good cause factors are defined, in summary, as substantial motivating factors causing the claimant to leave work, at the time of leaving, whether or not work connected, that are real, substantial, and compelling and would cause a reasonable person genuinely desirous of retaining employment to leave work under the same circumstances.  And, it gets more technical from here on in the eyes of the EDD.

COBRA Subsidy

As of this writing is seems likely that some form of the 65% COBRA subsidy will survive into the beginning of 2010. Qualification for the COBRA subsidy is more technical, statutory, then the subjects above and includes language like the “unilateral authority of the employer” was the reason for the employment ending.  Suffice to say, a Constructive Discharge is not likely to prompt an employer to code qualification for the COBRA subsidy into its records.

There Are Often Alternatives

Your attorney should explore the alternatives to a Constructive Discharge with you in advance of your resigning a job.  Besides clarifying your status as to the above, your insurance benefits, vacation accruals, holiday pay and other valuable benefits and privileges of employment can be protected while the carefully timing of your separation of employment under favorable terms. 

If you have a choice, don’t be an outlaw; plan for what comes next.