Expanding the Timer: Supreme Court Gives Employees More Time to File Claims

They say that timing is everything — or at least now it is for so-called “constructive discharge” claims. Last month, the United States Supreme Court, in a 7-1 decision, solidified the rule that the time within which an employee can file such a claim against his or her employer starts with the employee’s resignation from employment, not the employer’s last alleged bad act.

“Constructive discharge” is a legal theory whereby an employee claims that the work environment was so toxic and discriminatory that he or she felt forced to resign. Constructive discharge can happen in virtually any workplace, and can be based on an individual’s protected characteristic (such as race, sex, religion, etc.) or his or her participation in protected activity (for example, whistleblowing).

In the recent Supreme Court case, the employee complained of race discrimination after he was passed over for a promotion at the U.S. Postal Service. After the Postal Service determined there was no basis for his complaint, the employee’s supervisors allegedly confronted him with allegations of poor management and intentional delay of mail service (a federal crime, the complaint alleges), and reassigned him to off-duty status with no pay.

On December 16, 2009 — a date to keep in mind — the Postal Service and the employee agreed that, to avoid bringing potential criminal charges, the employee would either accept a demotion and move to Wyoming (hundreds of miles from his then-current work location) or retire. In February 2010, the employee opted to retire at the end of March.

Six months after retiring, the employee sued the Postmaster General, alleging that the Postal Service’s demote-or-retire option amounted to a constructive discharge in retaliation for his prior discrimination complaint. The trial and lower appellate courts both agreed that the constructive discharge claim was time-barred because the December 2009 agreement triggered the start of the applicable filing period.

The Supreme Court disagreed however, reasoning that because an employee cannot sue for constructive discharge until he or she actually quits, the resignation itself is part of the “complete and present cause of action” that starts the filing clock. Clarifying its holding, the court further held that the filing clock starts at the time the employee gives notice of resignation, not the actual last day worked. This essentially expands the time within which employers face liability for underlying discrimination because it allows employees to bootstrap older discriminatory actions to their resignation.

Importantly for employers, keeping accurate written records of the exact date an employee gives notice of his or her resignation is key to effectively managing the employer’s period of potential exposure. The Supreme Court’s decision is also a good reminder for employers to manage employee relations and to conduct prompt and thorough investigations into internal complaints of discrimination or harassment.