An essential element of most employment discrimination claims is that the employee suffered an adverse employment action. An employee who resigns often has difficulty making out a prima facie case of discrimination. An exception to this general rule is where the employee suffers a constructive discharge. Stated another way, where the employee can prove that the employer, because of the employee’s protected category, made the work conditions so intolerable that a reasonable person would feel compelled to resign, a resignation may constitute an adverse employment action.
Because an employee’s resignation and claim of constructive discharge allows the employee to substitute his decision to quit for an employer’s decision to take advise action, the threshold for proving a claim of constructive discharge is, and should be, quite high.
A recent case from the Fifth Circuit exemplifies this high standard. In Perret et al. v. Nationwide Mutual Insurance Company, two employees sued the company in race and age discrimination suits (arising under the Texas Commission on Human Rights Act) after they resigned following their placement on a performance improvement plan. One employee resigned after he was placed on a PIP and was thereafter denied a quarterly bonus (that he had otherwise apparently earned) because of a company policy denying bonuses to employees on PIPs. The second employee resigned several months after taking a leave of absence which was immediately preceded by the company’s placing the employee on a PIP. A jury found in favor of the employees but the Fifth Circuit reversed the judgment in their favor.
The Fifth Circuit identified the factors an employee can utilize to establish that the working conditions have become objectively intolerable. Those factors include:
- a demotion;
- a reduction in salary;
- a reduction in job responsibilities;
- a reassignment to menial or degrading work;
- badgering, harassment, or humiliation by the employer calculated to encourage the employee’s resignation;
- offers of early retirement that would make the employee worse off whether the offer was accepted or not;
- an ultimatum from the employer that the employee quit or be fired.
In reversing the judgment for the employees, the Court acknowledged that one plaintiff had a quarterly bonus withheld because he was placed on a PIP, but noted the absence any other factors to support of constructive discharge. As to the second plaintiff who was only placed on the PIP (and did not suffer a missed bonus), the Court found significant, that following the PIP, the employee took two months of leave of absence where he was away from the work area. Under those circumstances, the Court stated that it was difficult to conclude that he was placed under intolerable working conditions. Finally, the Court found significant that there was no evidence that Nationwide Mutual’s PIP process inevitably led to the termination of employees and therefore a reasonable employee would not have been compelled to resign following placement on a performance improvement plan –even when coupled with a bonus denial.
The takeaway from Perret is that to establish a constructive discharge claim, merely placement of the employee on a performance improvement plan, even would coupled with a bonus denial, is insufficient as a matter of law to establish a constructive discharge.
You can download a full copy of Perret et al. v. Nationwide Mut. Ins. Co., here.
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