Employers May Be Liable for Employee Resignations

When evaluating potential liability for employment-related claims, employers often focus on terminated employees; after all, we tend to describe them generally as “wrongful termination” claims. However, a pair of recently published appellate decisions involving the same employer illustrate ways in which employees may bring “wrongful termination” claims despite the lack of an employer-initiated termination (Ortiz v. Dameron Hospital Association, No. C081091 (Cal Ct. App. July 17, 2019); Galvan v. Dameron Hospital Association, No. C081092 (Cal. Ct. App. July 17, 2019) (Dameron Hospital cases)).

The Dameron Hospital cases involve substantially similar facts. The plaintiffs, Shirley Galvan and Nancy Ortiz alleged that their supervisor, Doreen Alvarez, treated them each so poorly based upon their age and national origin that each felt they had no other option but to quit their jobs. Galvan and Ortiz then sued Dameron Hospital Association (Dameron) and Alvarez, amongst others, claiming that Alvarez’s conduct violated the California Fair Employment and Housing Act (FEHA) because Alvarez “constructively discharged” them based upon their age and national origin.

What is Constructive Discharge?

As the phrase “wrongful termination” implies, such claims generally require an employer-initiated termination as opposed to an employee deciding to quit. Many employers think, “If I don’t actually fire the employee, then I can’t be sued for wrongful termination.” Along this logical, yet inaccurate, interpretation of the law, employers may engage in pervasive, aggravated conduct designed to motivate the employee to quit. Follow the logic? The employees quit; I didn’t fire them. This thinking is flawed, however, as the courts label conduct that makes life so unbearable that the employee quits a “constructive discharge,” which falls into the category of “wrongful termination” and exposes the not-so-crafty employer to a lawsuit.

In the Dameron Hospital cases, the trial court dismissed Galvan’s and Ortiz’s FEHA claims because the plantiffs couldn’t show that they were subjected to an employer-initiated adverse employment action. The appellate court reversed the trial court’s decision, however, holding that both plaintiffs established a triable issue of fact as to whether they were constructively discharged.

The Effects of a Rogue Supervisor

In 2011, Alvarez became Galvan’s and Ortiz’s supervisor. Both Galvin and Ortiz are Filipino and learned English as a second language (ESL). Every time Alvarez met her employees, she provided negative feedback and singled out her ESL employees, often criticizing their speech, grammar and accent. During one meeting, Alvarez criticized their English skills, telling them that her young son could understand and follow directions better than they could. On another occasion, Alvarez remarked that her Filipino employees did not speak English well, and that she was tired of attending meetings where Filipino and older workers were present.

In addition, Alvarez routinely made negative comments to other staff about her employees. She called some “old dummies,” her Filipino employees “stupid,” and she continually stated that she was surprised any of her employees got their jobs because they don’t speak English well.

Alvarez also schemed to create justifications to terminate Galvan and Ortiz. For example, Alvarez transferred Ortiz to a unit where Ortiz had no experience in an effort to negatively affect Ortiz’s job performance. Alvarez also falsely accused Ortiz of sleeping on the job, which is a terminable offense under Dameron policy. Further, Alvarez administered a test to her employees to evaluate their ability to read electrocardiograms (EKGs). Alvarez’s employees do not have EKG monitors and Alvarez suspected that her employees would fail this test, which would help provide further justification for Alvarez to terminate them.

Alvarez consistently engaged in the conduct described above from 2011 through the middle of 2012 when both Galvan and Ortiz chose to quit because of the ongoing harassment. Galvan took a medical leave of absence from Dameron due to Alvarez’s conduct and chose never to return. Ortiz resigned her position because she was afraid that Alvarez was trying to terminate her without a valid reason, which would impact her employment history.

In reversing the trial court, the appellate court found that both Galvan and Ortiz presented sufficient evidence to show that their working conditions were so intolerable that any reasonable employee in their position would resign. The court focused on Alvarez’s continual pattern of demeaning Galvan’s and Ortiz’s accents, insulting their intelligence and criticizing their English skills.

As if Alvarez’s conduct leading to two simultaneous wrongful termination cases was bad enough, it gets worse: Dameron is defending six simultaneous wrongful termination cases, all of which are based upon Alvarez’s conduct from 2011 through 2012!

Strict Liability for a Supervisor’s Actions

As many of us have learned through harassment prevention training, employers can be held liable under theFEHA for the actions of its supervisors. This is true even when the employer is unaware of its supervisor’s actions. As Dameron discovered the hard way, this rule extends to constructive discharges. Dameron argued that it was unaware of Alvarez’s conduct prior to Galvan’s and Ortiz’s resignations and, thus, it did not permit or condone Alvarez’s behavior.

Further, Dameron demonstrated that it took several appropriate measures to curb this type of harassment and discrimination. Dameron distributed its anti-discrimination and anti-harassment policies to all its employees; provided a hotline for employees to report suspect unlawful activity and harassment; and provided its employees with its Corporate Compliance Code of Conduct, which contains guidelines for appropriate workplace behavior.

However, constructive discharge requires either the employer, or employees who effectively represent the employer, such as supervisory employees, to have intentionally created or knowingly permitted the intolerable working conditions. The court found no trouble concluding that Alvarez, as Galvan’s and Ortiz’s supervisor, intentionally created persistent, intolerable working conditions as described above. The appellate court held that a jury could find Dameron liable for Alvarez’s conduct.

Key Takeaways for Employers

  • Supervise your supervisors. Employers provide supervisors with a great deal of discretion to assist with daily operations because employers often choose their supervisors based upon who they can trust to work without direct supervision. As demonstrated above, however, supervisors can create significant liability if left unchecked. Employers should maintain regular lines of communication with their supervisors. Employers can schedule regular one-on-one meetings to discuss the supervisor’s staff and whether there are any issues. This will help an employer verify whether a supervisor is providing appropriate feedback to the supervisor’s employees, or whether the supervisor is creating negative feedback for illegitimate, non-business reasons. Further, employers can regularly check-in with the supervisor’s employees, even anonymously, to see how the supervisor’s conduct is affecting employees and whether there are any issues that higher-level management should address with the supervisor.
  • Maintain robust, open door policies that high-level management treats seriously. Employers should include the “open door” policy in its handbook and regularly remind all employees that workplace concerns may always be brought to management’s attention and appropriate action will be taken. If employees trust that their employer properly handles workplace issues, employees will report conduct that will help the employer discover and address inappropriate workplace behavior from supervisors before the issue snowballs into liability and lawsuits.
  • Conduct supervisor training. Because of the unique role supervisors fill in the workplace, they should regularly undergo various training programs beyond what is legally mandated. In addition to reinforcing the supervisor’s own role in creating liability for the employer, additional management training will assist supervisors with personnel management and learning techniques for improving operational efficiency within the organization.

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