Navigating a performance improvement plan

December 14, 2024

Employment Law

A Quitter’s Guide to Employment Law: What Are My Legal Rights if I Resign?

How an employee separates from employment can profoundly impact his or her legal rights. Both the employer and the employee have rights and responsibilities in the context of resignation. 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.”

Understanding Your Employment Contract

An employment contract is a legally binding agreement between an employer and employee that outlines the terms and conditions of employment. Understanding your employment contract is crucial to knowing your rights and responsibilities as an employee. Typically, an employment contract includes details such as job description, salary, benefits, notice period, and termination clauses.

When reviewing your employment contract, pay attention to the following key elements:

  • Job Description and Duties: Ensure you have a clear understanding of your role and responsibilities within the organization. This helps avoid any confusion about what is expected of you.

  • Salary and Benefits: Know your compensation package, including your employee’s salary and any additional benefits such as health insurance coverage. This ensures you are fully aware of what you are entitled to.

  • Notice Period: Understand the notice period required for resignation or termination. This is the time frame you or the employer must provide before ending the employment relationship.

  • Termination Clauses: Be aware of the circumstances under which your employment can be terminated. This includes any conditions that might lead to immediate dismissal.

  • Confidentiality Agreements: Understand any confidentiality obligations you may have. These clauses protect the employer’s sensitive information and may continue to apply even after you leave the company.

  • Noncompete Agreements: Know if there are any restrictions on working for competitors after leaving the company. These agreements can limit your employment opportunities post-resignation.

It is crucial to carefully review your employment contract before signing it. If you have any questions or concerns, do not hesitate to ask your employer or seek legal advice. Understanding your employment contract can help you avoid potential legal issues and ensure you are fully aware of your rights and obligations.

Resignation and Notice Period

Resignation is a formal declaration of an employee’s intention to leave their job. The notice period is the time between submitting your resignation and your last day of work. The notice period varies depending on the employment contract, company policies, or federal laws.

In the United States, most employees are considered at-will employees, meaning they can resign at any time without notice. However, it is common practice to provide two weeks’ notice to allow for a smooth transition of responsibilities.

When resigning, consider the following steps:

  • Provide a Formal Resignation Letter: Submit a written resignation letter to your employer, stating your intention to leave and the effective date of your resignation. This formalizes your decision and provides a clear record.

  • Offer a Notice Period: Provide a reasonable notice period, usually two weeks, to allow for a smooth transition. This gives your employer time to find a replacement and ensures a professional departure.

  • Tie Up Loose Ends: Ensure you complete any outstanding tasks and transfer your responsibilities to other employees. This helps maintain workflow and shows professionalism.

  • Participate in an Exit Interview: Many companies conduct exit interviews to gather feedback from departing employees. This is an opportunity to provide constructive feedback and leave on good terms.

By following these steps, you can resign professionally and maintain positive relationships with your former employer and colleagues. Understanding the notice period and adhering to it can help ensure a smooth transition for both you and your employer.

What should I do if I’m asked to resign from an employment contract?

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 resigns in anticipation of disciplinary actions and 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 and need unemployment benefits?

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. Federal law protects employees from harassment and discrimination, ensuring that employers adhere to regulations that prevent such conduct. 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.

Unemployment Benefits After Resignation

If you resign from your job, you may still be eligible for unemployment benefits, although the eligibility criteria can vary depending on state and federal laws.

To qualify for unemployment benefits, you typically need to meet the following criteria:

  • Have Worked for a Certain Period: You must have worked for a minimum period, usually six months to a year, to be eligible for unemployment benefits. This ensures you have contributed to the unemployment insurance system.

  • Be Unemployed Through No Fault of Your Own: You must have resigned due to circumstances beyond your control, such as layoffs or company closures. Voluntary resignation without good cause may disqualify you from receiving benefits.

  • Be Actively Seeking Employment: You must be actively looking for a new job to be eligible for unemployment benefits. This demonstrates your willingness to return to the workforce.

When applying for unemployment benefits, consider the following steps:

  • File a Claim: Submit a claim for unemployment benefits with your state’s unemployment office. This initiates the process of determining your eligibility.

  • Provide Required Documentation: Submit required documents, such as your employment contract, pay stubs, and identification. This helps verify your employment history and eligibility.

  • Participate in an Interview: You may be required to participate in an interview to discuss your eligibility for unemployment benefits. Be prepared to explain the circumstances of your resignation.

Understanding the eligibility criteria and application process for unemployment benefits can help you navigate this challenging time and secure the financial support you need while seeking new employment.

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. Employment contracts play a crucial role in defining the terms of non-compete agreements, specifying the conditions under which these agreements are enforceable. 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.

Post-Employment Considerations

After leaving your job, there are several post-employment considerations to keep in mind to ensure a smooth transition and protect your future career prospects.

  • Severance Agreement: If you receive a severance package, understand the terms and conditions, including any confidentiality or noncompete agreements. A severance agreement may include severance pay and other benefits, but it may also impose certain restrictions on your future employment.

  • Health Insurance Coverage: If you had health insurance coverage through your employer, understand your options for continuing coverage after leaving the company. This may include COBRA continuation coverage or finding a new health insurance plan.

  • References: Ensure you have a professional reference from your former employer, which can be helpful when applying for new jobs. A positive reference can significantly impact your job search.

  • Networking: Maintain professional relationships with former colleagues and supervisors, which can be beneficial for future job opportunities. Networking can provide valuable connections and support in your career development.

When navigating post-employment considerations, consider the following steps:

  • Review Your Severance Agreement: Understand the terms and conditions of your severance package. Seek legal advice if necessary to ensure you fully comprehend your rights and obligations.

  • Explore Health Insurance Options: Research options for continuing health insurance coverage after leaving your job. This ensures you maintain essential health benefits during your transition.

  • Request a Reference: Ask your former employer for a professional reference. A strong reference can enhance your job applications and increase your chances of securing new employment.

  • Stay Connected: Maintain professional relationships with former colleagues and supervisors. Networking can open doors to new opportunities and provide valuable support in your career journey.

By considering these post-employment factors, you can better navigate the transition after leaving your job and set yourself up for future success.

Contact Our Minnesota Employment Lawyers for a severance agreement

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.