How an employee separates from employment can profoundly impact his or her legal rights. This article will provide a general overview of the law and help guide employees facing any of three decisions: (1) whether, given the option, to quit or be fired, (2) whether to suffer an intolerable workplace situation or stay put, and (3) whether to compete with an employer under a non-competition agreement triggered by “voluntary resignation.”
What should I do if I’m asked to resign?
Scenario: Like any other day, you arrive at the office, grab a cup of coffee and power on your computer. A half hour later a message arrives in your email box summoning you to Conference Room A. Seated at the table are your supervisor and the head of HR. You hear the dreaded words, “Unfortunately, things aren’t working out. We are going to ask for your resignation, effective today. If you do so, we will pay you for the next two weeks, which you may consider severance.” What should I do?
In general, employees who quit are disqualified from receiving unemployment insurance benefits. Minn. Stat. § 268.95 (“An applicant who quit employment is ineligible for all unemployment benefits.”). Statutory exceptions include quitting (1) for a “good reason” (discussed in greater detail below), (2) within 30 days of hiring because the job is “unsuitable,” and (3) on account of a serious illness. Whether a resignation is voluntary, and therefore disqualifying for unemployment insurance benefits, or involuntary, boils down to whether the employee’s decision to quit was a “free-will-choice.” Posey v. Securitas Sec. Servs. USA, Inc., 879 N.W.2d 662 (Minn. Ct. App. 2016). See Minn. Stat. § 268.095, subd. 5(a) (“A discharge from employment occurs when any words or actions by an employer would lead a reasonable employee to believe that the employer will no longer allow the employee to work for the employer in any capacity.”). Such determinations are not always clear on their face. See Dingmann v. Travelers Country Club, 420 N.W.2d 231 (Minn. Ct. App. 1988) (reversing Unemployment Commissioner’s ruling that employee quit; employee and wife split job of country club manager, she quit, and he requested reassignment, following which he was terminated).
A genuine “quit or be fired” situation, as described in the scenario above, is obviously not a disqualifying voluntary resignation. But what if recollections differ as to the discussions leading up to separation? Then it becomes a “he-said-she-said” matter, with an unemployment judge making credibility determinations over the telephone. What if an employee asked to resign signs a severance agreement in which he indicates that the separation was voluntary on his part? The agreement is not determinative but may be considered as evidence by the judge if the parties dispute whether the employee resigned or voluntarily. The takeaway is twofold. To protect your right to benefits, you can refuse to quit and get fired. Many employees will prefer the alternative of agreeing to resign, because it looks better on a resume. In that case, make sure you obtain a written acknowledgement from your employer that the resignation was not voluntary, for potential use in filing for unemployment insurance. An exchange of emails should suffice. (You can’t protect yourself by a handshake agreement with the employer not to contest unemployment; such agreements are prohibited by law. Minn. Stat. §268.192). And if you sign a severance agreement, make sure it contains language under which the employer agrees to provide prospective employers only your job title and dates of employment.
What happens if I resign because I’m subject to an intolerable workplace?
Scenario: Your co-workers are harassing you relentlessly on account of your race. They call you the “N” word and place a hangman’s noose in your locker. You complain to HR but to no avail. They say they’ll conduct an investigation, but nothing is ever done. The conduct continues unabated. If you quit, what are the potential consequences?
An employee who resigns to escape objectively intolerable work conditions (which may include unsafe as well as unwelcome environments) does not do so voluntarily. Eligibility for unemployment benefits depends on whether the circumstances “would compel an average, reasonable worker to quit and become unemployed rather than remaining in the employment.” Minn. Stat. § 268.095, subd. 3(a)(3). But only if the employee first makes a complaint and gives the employer a “reasonable opportunity to correct the adverse working conditions.” Naturally, what is “reasonable” can vary from person to person and judge to judge, so every case will stand or fall on its particular facts.
Federal and state anti-discrimination laws prohibit harassment on account of an employee’s race, gender, disability, religion, sexual orientation or another protected category. An employee who quits in the face of such harassment is said to be “constructively terminated” where the harassment is “severe or pervasive.” The standard, as applied by many courts in Minnesota, is surprisingly high. See Singletary v. Mo. Dep’t of Corrs., 423 F.3d 886, 893 (8th Cir.2005) (“racial slurs alone do not render a work environment hostile as a matter of law”; fact that plaintiff learned second-hand that co-workers and supervisors had referred to him using the N-word several times insufficient to support hostile-environment claim). But see Kenneh v. Homeward Bound, Inc., 944 N.W.2d 222 (Minn. 2020) (reversing lower court’s dismissal of sexual harassment case, involving male co-worker who repeatedly gestured to a female colleague with his tongue, simulating oral sex and called her “sexy,” “pretty,” or “beautiful” every time he saw her). To show constructive discharge, a plaintiff employee must prove a defendant-employer’s unlawful discrimination “created intolerable working conditions and that the employer either intended to force the employee to quit or could have reasonably foreseen that its conduct would force the employee to quit.” Coursolle v. EMC Ins. Grp., Inc., 794 N.W.2d 652, 660 (Minn. Ct. App. 2011).
Miscalculating whether harassment rises to the level of “constructive discharge” matters because to state a claim under Title VII of the Civil Rights Act and the Minnesota Human Rights Act, an employee must prove he or she suffered an adverse employment action, which can include a termination, demotion, suspension or other “material change in the term or conditions of employment.” These determinations are seldom black and white, but painted in many shades of gray, requiring sophisticated legal analysis.
What is a voluntary resignation for purposes of interpreting a non-compete?
Scenario: You have a job offer from your employer’s largest competitor, but you signed a non-compete applicable only in the case of “voluntary resignation.” What in the blazes does this mean?
Non-competition agreements are special kinds of contracts, which must be interpreted under the law of contracts rather than a standard borrowed from a different area of the law. That is the takeaway from Valspar Corp. v. Mueller, No. A16-1113, 2017 WL 1210132 (Minn. Ct. App. Apr. 3, 2017), in which the Minnesota Court of Appeals affirmed a lower court decision declining to enforce a former employer’s request for a temporary injunction to enforce a non-compete. The agreement at issue in that case only applied to employees who voluntarily resign or are fired for cause. After being demoted from manager to “individual contributor,” Defendant Mueller, a long time Valspar employee, went to work for a direct competitor of the company. In the ensuing lawsuit, Mr. Mueller argued that the non-compete did not apply because his changed status and duties amounted to an “involuntary resignation.” In deciding this issue, the District Court declined Valspar’s invitation to apply of the stringent “constructive discharge” standard, discussed above. The court concluded that a trial was needed to determine the parameters of “voluntariness” under the non-competition agreement at issue. Although not emphasized in the court’s written opinion, the ruling reinforces Minnesota’s longstanding policy that non-competes are disfavored under the law.
Contact Our Minnesota Employment Lawyers
If you are facing termination in a “quit or be fired” scenario, are unsure whether to leave an intolerable job, or want to know your rights and obligations under a non-compete, the experienced employment lawyers at Wanta Thome Jozwiak & Wanta are here to help you navigate the legal minefield of constructive terminations and involuntary resignations. Contact us for a free initial consultation.