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US Department of Labor
In general, the term "constructive discharge" is when a worker's resignation or retirement may be found not to be voluntary because the employer has created a hostile or intolerable work environment or has applied other forms of pressure or coercion which forced the employee to quit or resign. This often arises when an employer makes significant and severe changes in the terms and conditions of a worker's employment. What constitutes a constructive discharge is usually defined in state law and varies from state to state.
In employment law, constructive dismissal, also called constructive discharge or constructive termination, occurs when an employee resigns as a result of the employer creating a hostile work environment. Since the resignation was not truly voluntary, it is, in effect, a termination.
When can you claim constructive dismissal?
Employees can claim that they have been constructively fired when their employer has given them little option other than to quit. Employees who think they have been constructively dismissed – and that their termination was a wrongful one – have a limited amount of time to raise their legal rights. They have to file a wrongful termination claim before the applicable statute of limitations has expired. Which statute of limitations applies to a case will depend on why the constructive dismissal amounted to a wrongful dismissal.
Employer Actions that Constitute Constructive Dismissal
For a constructive dismissal to occur, the employer must act in a way that changes the fundamental terms of the employment relationship are changed. Such actions might include:
The employer demoting an employee or reducing the employee’s remuneration;
The employer refusing, by words or conduct, to allow the employee to fulfill the conditions of employment (such as locking an employee out of a building or removing support staff);
The employer harassing or abusing an employee; or
The employer giving the employee the choice of accepting the fundamental change or being fired.
By such types of action, employers essentially cease to meet their obligations and are therefore terminating the employment contract. Employees can therefore treat the contract as fundamentally breached and consider themselves as being dismissed through the employer’s actions.