What is 'Constructive Discharge Claim'

A constructive discharge claim is 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, consider if 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.

Example Scenarios in which a Constructive Discharge Claim May Apply

  1. Employee was the victim of sexual harassment by a supervisor or boss
  2. Employee was the victim of sexual harassment by a co-worker and complained to management, but management failed to address the problem, which then continued
  3. Employee was treated badly at work because of their of age, sex, race, national origin, religious beliefs or disability
  4. Employee made a reasonable complaint that they believed they were being treated badly because of your age, sex, race, etc., and management responded ineffectively and the environment became even more hostile. This is known as an unlawful retaliation claim.
  5. Employee took leave under FMLA, sought overtime to which they believed they were entitled, sought a reasonable accommodation under ADA or filed a workers' compensation claim, and thereafter were retaliated against by employer
  6. Employee made a whistleblower complaint, and was thereafter subjected to a hostile work atmosphere
RELATED TERMS
  1. Key Employee

    A key employee is a staffer who is a stakeholder with a decision-making ...
  2. Discharge In Bankruptcy

    Discharge in bankruptcy is an order that releases the debtor ...
  3. Special Employer

    A special employer is an employer who receives an employee on ...
  4. Employee Contribution Plan

    An employee contribution plan is an employer-sponsored savings ...
  5. Accrued Benefits

    Accrued benefits are those benefits earned or accumulated by ...
  6. Performance Management

    Performance management is the supervision of employees and departments ...
Related Articles
  1. Personal Finance

    Financial Wellness Programs: How Employees Benefit

    More and more employees, regardless of age, career or income, are turning to their employers for help with their personal financial plans.
  2. Small Business

    How to Conduct an Effective Performance Review

    A proper performance review can be a very useful tool for both managers and employees.
  3. Personal Finance

    8 Reasons Why Valued Employees Quit

    Salaries are important, but retaining top employees requires more than just competitive pay. Keep your best employees happy so they stay with you.
  4. Small Business

    3 Reasons to Develop an Employee Handbook for Your Small Business

    Learn how a small business can benefit from an employee handbook covering labor laws, codes of conduct, leave policies and media relations.
  5. Retirement

    Is a SIMPLE IRA Right for Your Small Business?

    Here's how small businesses can benefit from offering a SIMPLE IRA to their employees.
  6. Managing Wealth

    Top Job Perks You May Not Have Heard Of

    Companies are becoming increasingly creative with their benefits packages, in order to attract younger employees.
  7. Insurance

    Take Advantage Of Employer-Sponsored LTC Insurance

    Find out why 98% of employees are missing out on some great benefits.
  8. Insurance

    Defined Contribution Health Plans: A Primer

    A look at defined contribution health plans and how they work for both employees and employers.
  9. Taxes

    Tax Credit For Plan Expenses Incurred By Small Businesses

    Determine whether your business is eligible to claim a tax credit for establishing a retirement plan.
  10. Taxes

    Have Household Help? Don't Get In Tax Trouble

    Hiring household workers can be a complicated process. Know what the government requires so you can prevent penalties and problems down the road.
RELATED FAQS
  1. What does a merger or acquisition mean for the target company's employees?

    Learn about the likely impact of a merger-and-acquisition deal on the target company's employees, including their benefits ... Read Answer >>
Trading Center