“Constructive Dismissal” – What does it mean?

Posted on October 27, 2023

A constructive dismissal happens when you voluntarily quit because your employer created intolerable working conditions. Those conditions have to be bad enough that you have no reasonable alternative but to resign.

Even though you quit, the discharge is treated as a termination. If your employer had no right to fire you, it can lead to a wrongful termination claim.

What qualifies as constructive dismissal?

In California, if you claim to have been constructively terminated, you have to show the following two elements:

1. the employer, through its officers, directors, agents, or supervisory employees, intentionally created or knowingly permitted working conditions that were so intolerable that a reasonable person would have had no reasonable alternative but to quit,¹ and
2. you did, in fact, resign because of these working conditions.²

To be sufficiently intolerable, the working conditions generally must either be:

• unusually aggravated, or
• a continuous pattern.³

While single, isolated acts of misconduct by the employer are generally insufficient, they can support a constructive dismissal claim if they were a very serious incident.⁴

Constructive dismissal factors

Some factors that can help determine whether a resignation was actually a constructive dismissal are:

• how long you stayed on the job, in spite of the intolerable working environment,
• if you notified the employer of the intolerable working conditions,
• whether the employer investigated and tried to remedy your grievances,
• whether you suffered a crime (including a violent crime) at the hands of your employer, and
• whether the employer demanded that you commit a crime to keep your job.⁵

Many, but not all, constructive dismissals are unlawful. They are frequently a form of retaliation, which is a fundamental breach of your employment rights. In other cases, they can make such unreasonable changes to the employment contract that they amount to a serious breach of contract (express or implied contract). If this happens, it can lead to a wrongful termination claim.⁶

What are examples of constructive dismissal?

A Post Office employee of 35 years is passed over for promotion. He claims that he was not promoted because of his race. Two of his supervisors then accuse him of intentionally delaying the mail, which is a crime. An investigation finds no misconduct, but the employee is told that the charges will only be dropped if he either quits or relocates to an isolated location at a pay decrease.⁷

A maintenance worker making minimum wage was made to drive his personal truck for work-related errands. When he requested reimbursement for gas and maintenance, he was denied. He was assigned tasks that required extensive driving. Without reimbursement, the worker quit, claiming that he had no other choice with the costs of gas and his low wage.⁸

What are NOT examples of constructive dismissal?

A sales coordinator complained of possible illegal activity in the workplace. Several years later, he received subpar performance reviews. Based on these reviews, he quit.⁹

A sales manager received several poor reviews and was demoted. Based on the demotion, he quit and got a new job, then claimed that he was constructively discharged.¹⁰

When can I sue for constructive dismissal?

You have to file a wrongful termination claim before the applicable statute of limitations has expired. Which statute of limitations applies depends on why the constructive dismissal amounted to a wrongful dismissal.

Example: In California, the claim has to be filed within 2 years if it is based on a violation of public policy.¹¹ However, it has to be filed within 3 years if it invokes whistleblowing protections under California labor law.¹² These timeframes begin when the employee resigns, not when the intolerable workplace conditions occurred.¹³

Lawsuits not filed within the applicable period of time can be easily dismissed.

What about at-will employees?

If you are an at-will employee, you can be constructively discharged. However, when that discharge amounts to a wrongful termination is more limited than for other workers.

An at-will employee is someone who can quit or be let go for any reason or no reason, so long as it is not unlawful. Most employment relationships are presumed to be at-will, including in California.¹⁴ Generally, you are not at-will only when the contract of employment says so.

Grounds for wrongful termination claims

If you are an at-will employee, you can still file wrongful termination claims – including those done through a constructive dismissal – if the termination:

• violated an implied term of good faith and fair dealing,
• violated an implied continued employment contract,
• was contrary to public policy, or
• amounted to fraud or misrepresentation.

What is the average payout for a constructive dismissal lawsuit?

Employees who were wrongfully terminated, including through a constructive dismissal, tend to receive between $5,000 and $80,000 in compensation in a wrongful termination settlement. However, there is no “average” constructive unfair dismissal case. This means that there is no average payout.

Possible damages

The compensation available in a wrongful termination claim includes financial coverage for the following damages:

• wage loss, including front pay and back pay,
• non-wage benefits, like health insurance or commission pay,
• medical expenses, whether for medical conditions that stemmed from the termination or for out-of-pocket expenses that would have been covered by employer-provided healthcare,
• emotional distress from the termination,
• damage to reputation, and
• attorneys’ fees, when available.

Punitive damages may even be available, if the employer’s conduct was especially wrongful.

Factors that determine damages

These forms of compensation can fluctuate widely between cases. Some important factors include:

• the salary and benefits you received,
• the employer’s actions,
• whether you mitigated your damages by looking for a new job, and
• whether your reputation was damaged in the course of the termination.

Additional resources

For more information, refer to the following:

• Workplace Fairness – Employee rights organization with constructive termination info for California.
• Employee Rights – Summary of employee rights by the U.S. Equal Employment Opportunities Commission (EEOC).
• National Institute for Workers’ Rights – A non-profit organization that provides education, research, and legal assistance to protect and expand the legal rights of workers.
• What are workers’ rights? – Overview by the U.S. Department of Labor.
• National Labor Relations Board – An independent federal agency that protects the rights of private sector workers to improve their wages and working conditions.

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