Constructive Discharge Claim

DEFINITION of 'Constructive Discharge Claim'

An insurance claim made by an employee who has quit his or her position, and which indicates that the employee made this decision because conditions at the office had become intolerable. Constructive discharge claims are said to begin accruing on the date of the last adverse action of the employer.

BREAKING DOWN 'Constructive Discharge Claim'

In order for a constructive discharge claim to be considered, the claim must demonstrate that the employer’s action allowed it to indirectly punish (such as through hour reductions) the employee when it could not directly punish (such as by verbally accosting the employee) the employee, until he or she quit.

During the course of a claims investigation, the focus is on the conduct of the employer more so than it is on the conduct of the employee. Because the employer may not be able to remedy problems surrounding a claim after an extended time period, constructive discharge claims must be filed within a certain time period after an employer’s actions occur. The time period typically begins on the date that the employer is said to have acted improperly, though in some cases the employee may have until the date that he or she quits before the time period begins. The employee may be required to try to resolve the issue before a claim is made.

For example, an employee indicates that he or she has been passed over for a promotion for a reason other than performance, such as gender or race. The employee’s manager, after hearing of the employee’s complaint, places the employee on leave because of nonperformance despite the employee recently receiving a positive performance review. The employee may file a constructive discharge claim indicating that conditions at the office deteriorated after he or she was passed over for the promotion, and that the employer retaliated. In this case, the employer may be determined to have acted improperly.