From the November 1999 issue of Entrepreneur

Life was looking good for a Pittsburgh waitress when she was promoted to maitre d' and pastry chef at the restaurant where she worked, an uncharacteristic move from ownership that made her the only woman in a management position there. But within a few months, it seemed that the promotion must have been a mistake.

She found she was excluded from management meetings and had difficulty ordering supplies. Later, she discovered the owner and the general manager had decided they didn't want a woman as maitre d' because she didn't "fit the mold." She learned the general manager had boasted she wouldn't be there long and asked the chef to find a man to replace her. Then the chef accused her of stealing and drinking on the job--charges, she later alleged, suggested by the owner of the business. She even found wine bottles wrapped in an apron, hidden in her locker as if she'd stolen them. After numerous unsuccessful attempts to discuss all this with the owner, she finally resigned--then sued over sex discrimination, claiming that, in effect, she'd been illegally terminated.

The legal concept at work here is "constructive discharge," which means the employee resigned because the employer made conditions at work so intolerable that no one in his or her right mind would want to continue at the job. In some cases, it's a legitimate charge brought by people who were forced out by outrageous behavior on the part of their employers. In others, it's used by disgruntled former employees trying to find a hook to hang a lawsuit on. "Constructive discharge is often alleged, but rarely successful," says employment attorney Paul Salvatore of Proskauer Rose LLP in New York City. "[Typically,] you have to prove to the jury that the employer deliberately created conditions so intolerable that any reasonable person would quit." Some courts adopt a more objective standard: that the employer knowingly permitted a pattern of behavior with the foreseeable result of intolerable working conditions. Either way, it's difficult for a plaintiff to prove.


Steven C. Bahls, dean of Capital University Law School in Columbus, Ohio, teaches entrepreneurship law. Freelance writer Jane Easter Bahls specializes in business and legal topics.

Illegal Termination

Salvatore notes the charge of constructive discharge doesn't stand alone because it's not illegal in itself to terminate someone. Unless there's a contract to the contrary, employment is "at will" in most states, meaning employees may be discharged at any time for any reason--good or bad--except on the basis of race, religion, gender, national origin or, in some states, sexual orientation. You also can't terminate someone if doing so violates public policy. For instance, it's illegal to fire a whistle-blower for alerting the authorities to your illegal dumping or unsafe products.

In the restaurant case, the former employee argued she was a victim of both constructive discharge and sex discrimination. The case bounced back and forth between the U.S. District Court and the U.S. Court of Appeals, but eventually, the former employee won.

Courts have ruled that constructive discharge takes more than just a demotion, reduction in pay or failure to promote a employee. Employers have a right to do these things. Constructive discharge requires a whole pattern of behavior aimed at making conditions at work intolerable. For instance, says Philadelphia attorney Michael Ossip of Morgan, Lewis & Bockius LLP, a court might take notice if the employer takes away the employee's office and secretary, cuts his salary in half, and assigns him a desk in the boiler room.

Consider another Pennsylvania case. A female sales representative was succeeding in a territory with several major accounts. When she became pregnant, her supervisor told her that he doubted her ability to combine motherhood with a sales career. When she returned to work after a miscarriage, she learned that she'd been transferred to a less desirable territory. Company executives had promised a lucrative territory in Pennsylvania to a man they wanted to transfer, and the only other comparable territory available was already served by a man. Not only was the decision a slap in the face to the woman, but it resulted in such a steep drop in earning potential that she resigned--and sued over constructive discharge and sex discrimination. The court concluded that the company had sacrificed the female sales rep rather than the male because of her gender and pregnancy. She was awarded more than $100,000 in back pay.

Can We Talk?

Jennifer Kearns, an attorney with Brobeck Phleger & Harrison LLP in San Diego who specializes in employment law, notes there's no need to force an employee to quit, because most states presume an at-will relationship unless otherwise agreed. However, she adds, it's important to cement the at-will relationship early on, particularly in employee-friendly states such as California, where courts are willing to consider 10 years of bonuses, awards and promotions as evidence of an implied promise of continued employment (unless there's a downturn in the company or the employee does something seriously wrong).

"If there's no formalization of the at-will relationship, that sort of case might go to a jury," Kearns says. She advises having employees countersign letters acknowledging that you make no promise of continued employment, may alter job duties at any time, and may terminate the relationship for any reason as a condition of employment.

There's more you can do to avoid constructive-discharge lawsuits--or win one if you do get sued. "I see these claims more and more, as employees and attorneys latch on to the concept that you can quit and still sue," Ossip says. Some suggestions from the experts:

  • If you get wind that an employee considers working conditions intolerable, find out what he or she finds unacceptable and discuss possible solutions.
  • When an employee says there's a safety or environmental regulation being violated, investigate and resolve the situation. Do not take action against the employee because of the complaint.
  • Be consistent with your own policies and guidelines.
  • Keep good records so you can document why you decided to reassign job duties or territories, promote one employee rather than another, and so forth.
  • If an employee quits and then alleges mistreatment, send a letter saying he or she was welcome to stay and wasn't discharged. "It may help you build a case," Ossip says.

Most steps you'd take to reduce constructive-discharge claims come down to good communication, observes Joseph Yamin, a business lawyer with Beier Howlett in Bloomfield Hills, Michigan. Your goal as an employer is to have productive employees, so good communication can only help your business.

Contact Sources

Beier Howlett, (248) 645-9400, jyamin@beierhowlett.com

Brobeck Phleger & Harrison LLP, http://www.brobeck.com

Morgan, Lewis & Bockius LLP, http://www.mlb.com

Proskauer Rose LLP, (212) 969-3022, psalvatore@proskauer.com