You may think an employee who hands in their resignation can’t hold you legally responsible for their decision to quit. But a worker who claims their working conditions were intolerable can try to turn a resignation into a lawsuit for “constructive discharge.” As a new ruling involving sexual orientation bias demonstrates, you can avoid being the target of this type of suit if you learn about harassment problems early and rectify them before an employee feels there is no choice but to leave.
Supervisor Harasses Gay Employee
Daniel Kovatch was an insurance sales supervisor in the San Diego office of California Casualty Management Company. Kovatch claimed his supervisor, Dean Aldinger, repeatedly called him a “faggot” and made numerous offensive comments about his sexual orientation. The problems came to a head when Aldinger reportedly told Kovatch there was “no place for faggots in the company” and he would be fired the following day.
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Employee Goes On Leave
Kovatch immediately went on disability leave and filed a sexual orientation discrimination charge with the California Labor Commissioner. California Casualty notified Kovatch that it had investigated his complaint, but could not find any evidence to support his allegations.
Kovatch said he was told that he could come back to work for Aldinger and there would be no harassment, or he could take a position in another office, which he considered a demotion. Kovatch refused to work for Aldinger or accept the new job. When his leave ran out a few months later and he didn’t return, the company terminated him.
Kovatch ultimately sued, claiming he was constructively discharged, i.e., forced to leave, because he could no longer stand his boss’s anti-gay attitude. California Casualty tried to get the lawsuit thrown out without a trial, arguing that Kovatch was terminated because he failed to return to work after using up his disability leave, not because of his sexual orientation. And, the company contended, even if Kovatch was forced to resign, it wasn’t liable for damages because it offered to bring him back to work.
The California Court of Appeal refused to dismiss the case. It explained that in order for a person to have a claim for constructive discharge, the working conditions must be unusually aggravated or amount to a continuous pattern of harassment, so severe that a reasonable person would have no alternative but to quit.
The court ruled that a jury could find Aldinger’s treatment of Kovatch was intolerable. Plus, according to the court, a jury could also conclude that the choice between returning to what Kovatch considered to be a harassing environment or accepting a possible demotion may not have been sufficient corrective action for California Casualty to avoid responsibility. Consequently, Kovatch will be given the opportunity to have his case tried by a jury.
Court Upholds At-Will Agreement
Another issue in the case was Kovatch’s contention that his discharge amounted to a breach of contract because the company broke an unwritten promise not to terminate him without good cause.
On this point the court agreed with California Casualty that Kovatch was an at-will employee. It pointed out several steps the company had taken which established that Kovatch’s employment was at-will: his application form contained a statement that he could be terminated at any time, with or without cause; the employee handbook, which Kovatch acknowledged receiving, stated that employment was at-will; and he signed an employment agreement providing that his employment was subject to the terms of the employee handbook.
This part of the court’s ruling won’t affect Kovatch’s bias claim. That’s because the fact that an employee is at-will isn’t a defense to a charge of unlawful harassment or discrimination.
Strategies For Avoiding Lawsuits
Here are some useful rules to follow to help make sure workplace harassment problems don’t get out of hand:
- Catch problems early. The sooner you learn of a problem, the more time you’ll have to investigate and solve it before it explodes into a lawsuit. So it’s important to encourage employees to come forward with complaints. In this case, Kovatch didn’t complain to superiors until after he was on disability, and so the situation reached a critical point before the company ever had a chance to address it.
- Don’t punish the victim. When you try to correct a problem, make sure the victim isn’t penalized, such as being demoted or transferred to a less desirable position.
- Make sure your remedy solves the problem. A proposed solution that doesn’t work won’t help the employee and won’t get you off the hook. For example, if a jury believes Kovatch was harassed, it may not think much of California Casualty’s alleged suggestion that he work for Aldinger again, regardless of whether Aldinger received counseling or was disciplined.