Constructive Discharge

Related Terms: Employee Termination

"Constructive discharge" is a legal doctrine originating in labor disputes going back to the 1930s. Originator of the doctrine was the National Labor Relations Board (NLRB) which was attempting to deal with situations in which employers forced employees to resign by creating intolerable working conditions, usually because the employees were engaged in union activities. The first use of the phrase was in an NLRB case in 1938 called In re Sterling Corset Co., 9 N.L.R.B. 858, 865. The doctrine has been frequently applied in cases brought under Title VII of the Civil Rights Act of 1964, initially in racial discrimination contexts. In recent decades constructive discharge has figured as a doctrine in dealing with sexual harassment cases.

Unemployment compensation is paid employees only when the employee is discharged involuntarily for no fault of his or her own or if the employee resigns but with a qualifying cause. An employee who simply resigns without a qualifying cause is not eligible; neither is an employee discharged for misconduct. Constructive discharge because of an intolerable working environment is one of the qualifying causes, along with illness and other causes. An employee who quits because of sexual harassment or other hostile conditions is constructively discharged; he or she may be found to be eligible for unemployment benefits and will have the right to sue the company for wrongful termination as well—although in this case, the employee took the action on his or her own initiative.

LEGAL HISTORY

In the case of constructive discharge for sexual harassment, the direct involvement of the employer—and thus the employer's liability—has been clarified in three Supreme Court judgments rendered in 1998 and 2004. The issue arises because sexual harassment is seen to arise from the personal desires of the harassing party. Unlike the cases arising from an employer's desire to keep unions out, sexual harassment carries no benefit for the employer. Thus the question arises: if one or more supervisors engage in sexual harassment of an employee, is the employer as such liable for such activity?

The courts, relying on long-established law, had held that if a supervisor uses his powers as an agent of the corporation in attempts to get sexual favors, the mere use of such powers by a supervisor automatically involves the employer in the harassment because those powers are delegated. Thus if a supervisor uses assignments, demotions, promotions, hiring or threat of discharge, and similar means in connection with sexual harassment, the employer is also implicated. But what if the sexual harassment "stands alone," as it were, and does not involve "employment actions"?

Faragher/Ellerth

Two such cases were decided by the Supreme Court in 1998. In one (Faragher v. Boca Raton) the plaintiff, Beth Ann Faragher sued the City of Boca Raton. She had resigned as a lifeguard in protest at the sexual harassment of two supervisors (Bill Terry and David Silverman) who had created a hostile environment by inappropriately touching and making lewd remarks. The District Court agreed with Faragher, but the Eleventh Circuit Court reversed the District Court's decision arguing that the two supervisors were just acting on their own, not as agents of the city. No "employment actions" were involved, in other words.

In the second case, with very similar facts, the District Court and the appellate court reached diametrically opposed conclusions. In this case (Burlington Industries, Inc. v. Ellerth) Kimberly Ellerth quit a job as a sales employee after claiming to have endured constant sexual harassment by a single supervisor (Ted Slowik). Ellerth claimed that he had on three occasions made remarks which she interpreted as threats that he would deny her certain job benefits. But this did not actually happen. In fact she was promoted. At the same time, she never filed a complaint against the supervisor although she knew that her employer, Burlington Industries, had a policy against sexual harassment. The District Court ruled against Ellerth but the Seventh Circuit Court reversed the ruling but in a confusing manner: eight separate opinions were rendered which did not result in a clear rationale for reversing the lower court.

The Supreme Court accepted these cases in an effort to make order and reached conclusions later referred to as Faragher/Ellerth. The Court held in essence that 1) the employer was strictly liable for a supervisor's actions if the action culminated in a tangible employment action, such as discharge, demotion, or undesirable reassignment; 2) in the absence of such a direct linkage, the employee may sue the employer anyway, but the employer has a right to a defense on the basis of having responsibly attempted to prevent such conduct; and 3) that the actions of the employee in using or not using available internal channels of reporting abuses should be part of the consideration.

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