Should My Business in New York Offer an Employee the Opportunity to Quit Instead of Being Fired?

Should My Business in New York Offer an Employee the Opportunity to Quit Instead of Being Fired?

Suppose that an employer in New York State has decided (for a legitimate, nondiscriminatory reason) to end its working relationship with a particular worker.  Is the employer best off firing the worker outright or, instead, offering the worker the opportunity to quit rather than be fired?

In New York, it makes little or no difference whether an employer discharges an employee or, instead, gives the employee the choice of leaving or being discharged, upon which, in order to avoid discharge, the employee quits.

Further, in either circumstance, particularly if the worker has potentially meritorious claims against the the employer, the employer should offer the worker severance pay in exchange for signing a separation agreement.  That separation agreement should include a "general release," which release absolves the employer of any and all liability for claims arising from the working relationship or the termination of that relationship.

There are at least two reasons why, in New York, it makes scant or no difference whether an employer terminates a worker or, instead, gives the worker the choice of leaving or being terminated, upon which, in order to avoid termination, the employee resigns.

First, either way, unless the employee is discharged because of, or quits to avoid being discharged because of, "misconduct" in connection with his or her employment, the employee is eligible to receive unemployment insurance benefits in New York.  See N.Y. Labor Law § 593(3).

This is the case because " 'If an employer gives the claimant the choice of leaving or being discharged and the claimant resigns in order to avoid discharge, it is generally held that he does not leave voluntarily.' "  A.B. Case 8936-43 (N.Y. Unemployment Ins. Appeal Bd. Sept. 24, 1943) (citation omitted); see N.Y. Labor Law § 593(1); cf. Matter of Jiminez, 20 A.D.3d 843, 843, 798 N.Y.S.2d 803 (3d Dep't 2005) ("A claimant 'who voluntarily leaves his or her position in the face of disciplinary charges may qualify for unemployment benefits if the actions did not amount to misconduct' ") (citation omitted).

Second, if the employer fires the employee because of his or her race, color, religion, sex, or national origin, then, under both federal law and New York law, the employee has a viable cause of action against the employer for discriminatory discharge.  Likewise, if, because of the employee's race, color, religion, gender, or national origin, the employer tells the employee to quit or be fired, upon which threat the employee quits, then, under both federal law and New York law, the employee has a viable cause of action against the employer for constructive discharge.  See Lopez v. S.B. Thomas, Inc., 831 F.2d 1184, 1186, 1188-1189 (2d Cir. 1987) (where the plaintiff individual alleged that, shortly before he quit his job, his former employer "told [the plaintiff] he would be fired at the end of the 90-day probationary period no matter what he did to improve his allegedly deficient performance,"  a genuine issue of material fact, precluding entry of summary judgment for the ex-employer, existed as to whether, because of the plaintiff's national origin, he was constructively discharged).

To put it another way, an employer in New York cannot, by offering a worker the opportunity to resign his job rather than be fired, preclude that worker from maintaining a cause of action against the employer for discriminatory discharge.

Some human resources ("HR") professionals maintain that, when an employer has decided to end its employment relationship with an individual, it is in the employer's interest to offer the individual the opportunity to quit in lieu of being fired, rather than to fire the worker outright.  These HR professionals argue that when an individual is able to represent to interviewers that he or she resigned from, and was not terminated by, his or her former employer, he or she avoids shame and embarrassment, more readily obtains new employment, and less frequently sues the former employer on employment-related claims.  In my view, these arguments for 'allowing' an employee to quit his or her employment are, at best, overstated.

Because an employer's negative employment reference may cause the former employee to sue the employer for defamation or retaliation, many employers in New York provide, to companies which request a reference, only the ex-employee's dates of employment and most recent job title.  An employer with such a policy will refrain from stating, to businesses which ask for a reference, whether the ex-employee was terminated or, instead, voluntarily left his employment.

As a result, where it is an employer's policy merely to verify an ex-employee's dates of employment and most recent position, an employee who is given the choice of leaving or being discharged, and who thereupon quits, will no more readily find new employment than an employee who is fired outright.

If your company needs assistance or guidance on a labor or employment law issue and your company is located in the New York City area, call Attorney David S. Rich at (212) 209-3972.

Visit the New York Business Litigation and Employment Attorneys Blog for commentary regarding business litigation, employment, and securities related legal issues.

For more information about LexisNexis products and solutions connect with us through our corporate site.