Employment Law: Constructive Discharge

Vasquez v. Franklin Management Real Estate Fund, Inc., (Second District, December 3, 2013) 222 Cal.App.4th 819, 166 Cal.Rptr.3d 242, 14 Cal. Daily Op. Serv. 84, 2014 Daily Journal D.A.R. 60

A maintenance technician filed an action against his former employer for wrongful termination, contending that the employer’s failure to reimburse him for employment related expenses had left him no choice but to resign. Asserting, inter alia, a cause of action for constructive wrongful discharge in violation of public policy, the plaintiff alleged that his employer required him to drive at least 30 miles per day but refused to reimburse him for mileage as required by Labor Code section 2802. The plaintiff also alleged that being forced to purchase gas and maintain his vehicle, combined with his already low wage, resulted in intolerable working conditions.       

 The trial court sustained the employer’s demurrer without leave to amend, finding that “failing to pay mileage expenses of $15/day is not conduct that is so intolerable or aggravated that a reasonable person in the employee’s position would have felt no choice but to resign.” However, the court of appeal disagreed, holding that the facts as alleged could permit a trier of fact to find that the plaintiff had been compelled to resign:

Accordingly, in the typical case, an employer’s failure to reimburse an employee for expenses that should have been borne by the employer would not create such intolerable working conditions that the employee would have no option but to resign.

Here, however, appellant alleged not only that respondent violated the Labor Code by failing to reimburse for mileage, but that the duties respondent assigned required such extensive driving that the reimbursement to which he was entitled represented a significant percentage of his already low salary. Appellant specifically alleged in the FAC that he drove a minimum of 30 miles per day. In his opposition to the demurrer, he asserted that he regularly drove as far as Santa Monica after checking in with his supervisor in Toluca Lake. As a result of paying for the gasoline and vehicle maintenance this schedule required, he was effectively being paid less than the minimum wage.⁸ This left appellant in an untenable position. Forced to divert so much of his salary to gasoline and vehicle maintenance, he was unable to pay basic living expenses. (See Hudgins v. Neiman Marcus Group, Inc. (1995) 34 Cal.App.4th 1109, 1119, 41 Cal.Rptr.2d 46 [section 1194 of the Labor Code reflects the Legislature’s recognition that employees in this state are dependent on receiving a certain minimum salary to purchase the necessities of life].)

Moreover, he was wearing out the very vehicle he needed to maintain his livelihood, either by retaining his employment with respondent or finding another job. Had he continued, he would soon have found himself with no job and no vehicle. According to his allegations, he repeatedly informed his supervisors of his dire situation, and implored them to reimburse him. But having effectively passed on a portion of its normal operating expenses to a low wage worker, respondent repeatedly refused. Should appellant present evidence establishing these facts at trial, a reasonable trier of fact could find that respondent “knowingly permitted working conditions that were so intolerable or aggravated at the time of the employee’s resignation that a reasonable employer would realize that a reasonable person in the employee’s position would be compelled to resign.” (citation) Accordingly, the trial court abused its discretion in sustaining the demurrer to this cause of action without leave to amend.