Employers should understand the concepts of wrongful termination and the distinctions between actual and constructive discharge. A recent case, Potts v. Gaia Children, LLC, provides valuable insight into these issues within Colorado’s legal framework.

Case Overview

This claim focuses on wrongful discharge contrary to public policy, which provides legal protection for employees who are fired for reasons that violate fundamental public policies. These policies are often grounded in state laws, constitutional rights, or court rulings. In this case, the plaintiff utilized this principle by arguing they faced conditions that amounted to constructive discharge.  Constructive Discharge happens when an employee resigns due to unbearable working conditions, essentially being forced to leave. Even though the employee quits, the resignation is considered involuntary because it results from the employer’s actions. The other type of discharge is actual discharge, which occurs when an employer is clear and directly communicates the termination.

The case was initially heard at the district court, which granted the employer a motion to dismiss. The plaintiff filed an appeal. The Court of Appeals considered a variety of factors for the case including but not limited to:

• The severity and frequency of the employer’s conduct.
• Whether the employer’s actions were intended to force the employee to quit.
• The timing and context of the alleged misconduct.
• Identify two types of discharge: actual discharge and constructive discharge.
• Review precedents and case law to ensure consistency in applying these principles.

The Court also considered whether the constructive discharge claim was valid and applied two specific tests:

Reasonable Person Test: Would a reasonable person in the employee’s position find the working conditions unbearable?

Causation Test: Was the employer’s conduct the direct cause of the employee’s resignation?

The Court of Appeals judgment was partially affirmed and partially reversed. The case was sent back with instructions to reinstate the amended complaint and proceed under the actual discharge theory. The court’s decision sheds light on the legal standards that apply when employees claim they were wrongfully terminated.

What does this mean for employers?

This case highlights the differences between actual and constructive discharge and reinforces the legal standards for wrongful discharge claims. Colorado employers should ensure that all terminations are fair, well-documented, and legally sound. This means communicating performance expectations, providing regular feedback, and following company policies consistently. If termination becomes necessary, employers should document the reasons, ensure they are not violating public policies (like firing someone for refusing illegal activities or for whistleblowing), and consider offering severance or exit support to ease the transition. StaffScapes works with our clients to review employment situations and ensure clients have all their documents in order before terminating an employee. If you need help creating policies, documents, or even questions, please get in touch with a member of our team!

StaffScapes will continue to monitor this case and provide any updates to this blog as information becomes available.

For more details on the legal principles discussed in this case, you can refer to the full text of the claim [here].