New California Decision Examines the Scope of Constructive Discharge
On December 31, 2013, in Vasquez v. Franklin Management Real Estate Fund, Inc., the California Court of Appeal held that a maintenance technician, who alleged that he was constructively discharged in violation of public policy when his employer refused to reimburse gas mileage, pleaded facts sufficient to support a cause of action. Accordingly, the appellate court held that the trial court abused its discretion by sustaining the employer’s demurrer without leave to amend. While at first glance, employers may shudder at the expansion of constructive discharge claims, the case actually has a narrow, fact-specific holding.
The plaintiff was a maintenance technician who did maintenance work on various properties owned or managed by his employer. The technician’s supervisors instructed him to drive his own truck for work-related errands, such as going to the hardware store to buy necessary maintenance supplies. The technician estimated that he drove at least 30 miles per day running errands related to his employment. He repeatedly told his supervisors that he could not afford gasoline and vehicle maintenance, “repeatedly informed his supervisors of his dire situation,” and “implored them to reimburse him.” The supervisors consistently informed the technician that he would not be reimbursed. After months of repeated requests, the technician told his supervisor that he could not “tolerate the work environment of only being paid $10.00 per hour, not being paid for gas and having to drive around town for work without being reimbursed for mileage.” His employer continued to refuse reimbursement for mileage, so the technician had “no choice but to resign.”
The technician brought suit for violation of Labor Code section 2802, constructive wrongful termination in violation of public policy, and intentional infliction of emotional distress.
The Constructive Discharge Claim:
The California Supreme Court previously explained in Turner v. Anheuser-Busch, Inc., 7 Cal. 4th 1238, 1251 (1994), that “to establish constructive discharge, an employee must plead and prove… that the employer either intentionally created or knowingly permitted working conditions that were so intolerable or aggravated at the time of the employee’s resignation that a reasonable employer would realize that a reasonable person in the employee’s position would be compelled to resign.” Further, an employee may not simply “quit and sue.” The circumstances require an examination of the specific facts in each case because “[t]he conditions giving rise to the resignation must be sufficiently extraordinary and egregious.”
In Vasquez, the maintenance technician alleged that he should have been reimbursed $330 per month based on driving 30 miles each workday at a standard mileage rate of 55 cents per mile. He argued that the amount he spent on mileage and vehicle maintenance was a significant percentage of his $1,600 monthly salary. Further, the technician argued that his employer’s failure to reimburse him for mileage resulted in his salary being effectively reduced to less than the minimum wage. As a result of not being reimbursed, having to spend a significant portion of his own money on gasoline and vehicle maintenance, and his salary being effectively reduced to less than minimum wage, the technician argued that his working conditions were intolerable, such that he was constructively discharged in violation of public policy.
On the other hand, the employer argued that failure to reimburse for mileage was not sufficiently intolerable or aggravated to support a claim of constructive discharge. The trial court sustained the employer’s demurrer without leave to amend because, “failing to pay mileage expenses… is not conduct that is so intolerable or aggravated that a reasonable person in the employee’s position would have felt no choice but to resign.” Thus, the trial court ruled that the technician was not constructively discharged.
However, on appeal, the California Court of Appeal reversed the trial court’s demurrer without leave to amend and held that the Plaintiff could have stated a cause of action for constructive discharge in violation of public policy based on the specific alleged facts.
Takeaway for Employers From the Case:
Although the Court of Appeal reversed the trial court’s demurrer as to the constructive discharge claim and held that the maintenance technician could have stated a cause of action based upon the pleaded facts, the result was a very narrow holding rather than a broad, sweeping decision that may lead to numerous copy-cat claims.
Most importantly for California employers, the Court of Appeal stated that, “in the typical case, an employer’s failure to reimburse an employee for expenses that should have been borne by the employer would not create such intolerable working conditions that the employee would have no option but to resign.” (Emphasis added). Thus, in order to successfully plead a constructive discharge claim based on failure to reimburse for Labor Code section 2802 expenses, a plaintiff will likely need “extraordinary and egregious,” sympathetic facts like those in Vasquez.
Accordingly, to the extent an employee tries to argue that any violation of the Labor Code from the employer triggers constructive discharge if the employee quits in response, this case is actually authority for the opposition proposition.