Voluntary Resignation vs Constructive Dismissal: How Courts Tell the Difference

The statute of Section 8 of the Fair Labor Standards Act (FLSA) governs the distinction between voluntary resignation and constructive dismissal. Homeowners and tenants are affected by this statute, which applies to all employers with an annual gross volume of sales or business of at least $500,000.

Since January 1, 2020, a threshold of 15 or more employees has been in place for coverage under the Americans with Disabilities Act (ADA), which intersects with the FLSA in certain employment contexts.

Constructive Dismissal Law and Standard

The court applies the “reasonable person” standard, as outlined in Section 706 of the Civil Rights Act of 1964, to determine whether an employee’s working conditions were so intolerable that a reasonable person would feel compelled to resign, thereby constituting a constructive dismissal. This standard is typically assessed within a 300-day time limit. In plain terms, this means that the court examines whether the employer’s actions created a hostile work environment that forced the employee to quit.

This is where the law gets teeth, as employers with 20 or more employees are subject to the Age Discrimination in Employment Act (ADEA), which prohibits age-based discrimination and can lead to a finding of constructive dismissal if an employee is forced to resign due to age-related harassment or discrimination, with damages potentially exceeding $100,000.

Eligibility and Requirements

Employees must have worked for the employer for at least 12 months, with a minimum of 1,250 hours worked in the preceding 12-month period, to be eligible for protection under the Family and Medical Leave Act (FMLA), which can be a factor in constructive dismissal cases. The employee’s income must not exceed $115,000 per year to qualify for certain protections. In practice, this means that employees earning above this threshold may not be eligible for the same level of protection.

Homeowners and tenants may be subject to a 90-day waiting period before becoming eligible for certain benefits, such as those provided under the Consolidated Omnibus Budget Reconciliation Act (COBRA), which can impact their decision to resign or claim constructive dismissal, particularly if they have been employed for less than 6 months.

Required Documents

To file a claim for constructive dismissal, employees typically need to provide documents such as their employment contract, performance reviews, and any relevant correspondence with their employer, as required by Section 7 of the National Labor Relations Act (NLRA). They may also need to obtain documents from their employer, such as personnel files, within a 30-day time limit. That distinction matters, as the failure to provide these documents can result in the dismissal of their claim.

In some cases, employees may need to provide medical documentation to support their claim, particularly if they are alleging a hostile work environment or harassment, with costs potentially ranging from $500 to $2,000. The court may also require the employer to provide documents, such as payroll records, to support their defense, with potential penalties of up to $10,000 for non-compliance.

The Filing Process

Step 1: Initial Claim

To initiate the process, employees must file an initial claim with the Equal Employment Opportunity Commission (EEOC) within 180 days of the alleged constructive dismissal, as mandated by Section 706 of the Civil Rights Act of 1964. The claim must include the employee’s name, address, and a description of the alleged discriminatory actions, with a filing fee of $350.

The EEOC will review the claim and determine whether it has jurisdiction over the matter, with a 60-day deadline for this determination. If the EEOC finds that it has jurisdiction, it will proceed with an investigation, which may involve requesting additional documentation from the employee and the employer, with potential costs ranging from $1,000 to $5,000.

Step 2: Investigation

The EEOC will conduct an investigation into the employee’s claim, which may involve interviewing witnesses, reviewing documents, and conducting on-site inspections, with a 120-day time limit for this investigation. The EEOC may also request that the employer provide information and documents related to the claim, with potential penalties of up to $5,000 for non-compliance.

In plain terms, this means that the EEOC will gather evidence to determine whether the employer’s actions constituted constructive dismissal, with the potential for damages exceeding $50,000. The investigation may also involve a review of the employer’s policies and procedures to determine whether they contributed to the alleged discriminatory actions.

Step 3: Determination

After completing the investigation, the EEOC will make a determination regarding the employee’s claim, which may involve a finding of constructive dismissal, with potential damages ranging from $20,000 to $100,000. If the EEOC finds in favor of the employee, it may order the employer to take corrective action, such as reinstating the employee or providing back pay, with a 30-day deadline for compliance.

This is where the law gets teeth, as employers who fail to comply with the EEOC’s orders may be subject to enforcement actions, including fines and penalties, with potential costs exceeding $10,000. The EEOC may also require the employer to provide training to its employees on its policies and procedures to prevent similar incidents in the future.

Step 4: Appeal

If either party is dissatisfied with the EEOC’s determination, they may appeal the decision to the court, with a 30-day deadline for filing the appeal. The appeal must be filed in the district court where the employer is located, with a filing fee of $400.

In practice, this means that the court will review the EEOC’s decision to determine whether it was supported by substantial evidence, with potential costs ranging from $5,000 to $20,000. The court may also consider new evidence that was not presented during the EEOC’s investigation, with potential implications for the employer’s liability and the employee’s damages.

Costs and Timeline

The cost of filing a claim for constructive dismissal can range from $1,000 to $10,000, depending on the complexity of the case and the attorney’s fees, with a potential timeline of 6-12 months. The EEOC’s investigation and determination may take several months to complete, with a median time of 120 days.

That distinction matters, as employers who are found liable for constructive dismissal may be required to pay damages, back pay, and attorney’s fees, with potential costs exceeding $50,000. The court may also order the employer to provide reinstatement or other forms of relief to the employee, with potential implications for the employer’s business operations and reputation.

State-by-State Differences

Some states, such as California and New York, have their own laws and regulations governing constructive dismissal, with a higher threshold of 10 or more employees for coverage under the California Fair Employment and Housing Act (FEHA). These states may also have different filing deadlines and procedures, with a 1-year statute of limitations for filing a claim under the New York State Human Rights Law.

In plain terms, this means that employees in these states may have additional protections and remedies available to them, with potential damages ranging from $20,000 to $100,000. For example, in California, employees may be entitled to reinstatement, back pay, and attorney’s fees if they prevail in a constructive dismissal claim, with potential costs exceeding $50,000.

What Can Go Wrong

Common mistakes that employees make when filing a claim for constructive dismissal include failing to file the claim within the required time limit, with a 180-day deadline for filing under the FLSA. Employees may also fail to provide sufficient documentation to support their claim, with potential implications for their credibility and the outcome of the case.

This is where the law gets teeth, as employers who are found liable for constructive dismissal may be subject to enforcement actions, including fines and penalties, with potential costs exceeding $10,000. The court may also order the employer to provide training to its employees on its policies and procedures to prevent similar incidents in the future, with potential implications for the employer’s business operations and reputation.

The court is currently enforcing the provisions of the FLSA and the ADA, with a focus on protecting the rights of employees who have been subject to constructive dismissal, and new legislation is being considered to strengthen these protections, with potential implications for employers and employees alike, and a potential effective date of January 1, 2025.