Constructively Quit or Fired?—California Court Holds Employer Must Exhaust All Reasonable Alternatives

Kelley v. California Unemployment Ins. Appeals Board, B244098 (February 10, 2014): A California Court of Appeals recently upheld a trial court’s decision that an employee, who was fired for making what the employer considered unreasonable requests, is entitled to unemployment benefits. The court found that the employee did not “constructively quit” her job by making these requests.

Stephanie Kelley worked as a marketing director for Merle Norman Cosmetics, Inc. In May 2010, she was placed on a medical leave by her physician due to stress. According to Kelley, the company had engaged in unlawful retaliation against her for filing a sexual harassment claim with the California Department of Fair Employment and Housing. While Kelley was still on leave, her attorney emailed Merle Norman’s counsel on more than one occasion, requesting the following: (1) a written job description of Kelley’s position; (2) a written statement of goals and objectives; (3) confirmation of Kelley’s job title, duties, pay, and benefits; (4) the status of Kelley’s earlier request for vacation during the upcoming holiday period; and (5) written confirmation that Kelley would not be subject to retaliation for her earlier complaints. In these communications, Kelley and her attorney also mentioned that she had heard that Merle Norman planned to dismiss her after she returned to work and that it had already found a replacement for her.

Merle Norman’s counsel expressed the company’s willingness to provide a supportive environment to Kelley upon her return but stated that the conditions for her return were “unreasonable under the circumstances.” Kelley’s attorney continued to insist on their conditions, and Merle Norman eventually responded that it “considers Ms. Kelley’s employment to be terminated.”

Kelley’s subsequent claim for unemployment benefits was denied by the state Employment Development Department (EDD) on the basis that she set conditions on her return to work that her employer could not meet—effectively quitting her job. On appeal, the administrative law judge (ALJ) disagreed, finding that Merle Norman fired Kelley for reasons that would not disqualify Kelley from receiving unemployment benefits. The state Unemployment Insurance Appeals Board overturned the ALJ’s decision, noting that “Kelley had been more interested in pursuing a lawsuit against Merle Norman, and chose not to return” to work unless the company met her demands. At trial, the court found that Merle Norman “should have waited to see whether Kelley showed up to work” on the day her leave ended before firing her. The Court of Appeal agreed with the trial court and noted that “Merle Norman could have asked whether Kelley would report for work despite the company’s refusal to supply the information.”

According to Spencer Skeen, the managing shareholder in the San Diego office of Ogletree Deakins: “Employees who voluntarily quit are not entitled to unemployment benefits. Sometimes an employee engages in a voluntary act or conduct which leaves the employer no reasonable alternative but to discharge the employee. In those instances, the employee is deemed to have quit even if the employer fired the employee.”

Skeen added: “In this case, the employer considered the employee’s requests to be unreasonable ‘conditions,’ which were being placed on the employer and fired her instead of allowing her to return to work. The Court of Appeal said that the employer could not treat this as a constructive quit. There was a reasonable alternative available to the employer, other than firing the employee. The employer could and should have waited to see whether she reported for work after it declined to provide the requested information.”

“The take home from this case,” Skeen continued, “is that courts are reluctant to find a resignation under the constructive quit doctrine. If an employer wants to avoid triggering employee rights to unemployment benefits, the employer must exhaust all reasonable alternatives for allowing the employee to remain with the company before firing the employee.”