Friday, May 9, 2008, 3:02 PM

"Constructive" Discharge Isn't a Good Thing

While constructive criticism has at least some positive connotations, constructive discharge does not. Simply put, the fact that an employee has resigned may not close the book on the right to sue. If the employer has rendered the situation so intolerable that a reasonable, similarly-situated person would feel there was no alternative to quitting, the separation can be deemed involuntary - the equivalent of being fired. Use of the word "reasonable" means that factual analysis is necessary, which also means the court may want a jury to decide the case rather than resolving it on summary judgment.

That's the lesson reinforced in the April 28 decision in Ellis v. Yum! Brands Inc. Yum!, the parent company of KFC, Taco Bell, Pizza Hut, Long John Silver's and A&W, is "the world's largest restaurant company in terms of system units, with more than 33,000 restaurants in more than 100 countries and territories." Kevin Ellis, who was an aviation mechanic for Yum! for almost 22 months, was paid a salary and classified as exempt. When his assigned duties required him to work more than 40 hours in a week, he complained and asked about entitlement to overtime compensation; the company's Director of Aviation reminded Ellis that, as "Aviation Program Manager," he was exempt from overtime entitlement. Undeterred, Ellis continued voicing complaints to his managers, his co-workers , and Yum's Human Resources Manager; the HR Manager told the Director of Aviation that Ellis was "a very negative person."

When his colleagues also began to complain, Ellis "began collecting data to justify adding a position to the aviation department." Not surprisingly, this pursuit of information had a detrimental impact on his job performance: his Individual Development Plan was overdue and logs required by both FAA regulations and company policy were not updated, shortcomings Ellis attributed to both irritation and lack of available time.

Ten days prior to the end of his employment, Ellis met with a US Department of Labor investigator who stated his position that the job was not exempt; Ellis declined to file a formal complaint and decided to take the issue up with his employer. At this time, whether prompted by Ellis' actions or a review of compensation practices accompanying revision of the DOL "white collar" regulations, Yum! was computing backpay exposure if its classification of mechanics were improper. A week after the investigator met with Ellis, the Director of Aviation cancelled a three-week training session Ellis had been scheduled to attend. Two days later, Ellis was summoned to meet with the Director and the Aviation Maintenance Manager. Upon being accused of a "bad attitude," Ellis agreed with the characterization "because of the overtime issues," challenging the company to fix the problem. According to Ellis, he was presented with four options: change his attitude, quit, be fired, or take a severance package. The next day, Ellis resigned. [Note: Yum! disputes many of these "facts," but the court accepted the version Ellis presented for purposes of deciding the motion for summary judgment.]

Ellis filed a complaint with DOL and he, along with seven others, received a back pay settlement payment for the unpaid overtime. Next, he brought suit for retaliatory discharge.

Rejecting the employer's arguments, Judge Charles Simpson of the Western District of Kentucky concluded that Ellis had shown his working conditions to be "objectively intolerable to a reasonable person." Interestingly, it was not the hours worked or the lack of premium pay that created the intolerable conditions; it was the alleged ultimatum -- get over it, get out, or be fired -- preceded by the cancellation of the training session, that tipped the scales. One conversation, and a sparse record including a total absence of investigation of the complaints Ellis made, leave Yum! facing a trial.

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