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Employee Denied Reimbursement for Expenses May Pursue Constructive Discharge Claim, California Court Rules

  • January 23, 2014

Reversing the dismissal of an employee’s complaint for constructive discharge in violation of public policy under California law, the California Court of Appeal has ruled that the employee stated a claim where he alleged he was forced to resign because his employer required him to use his own vehicle extensively for work without reimbursement. Vasquez v. Franklin Management Real Estate Fund, Inc., No. B245735 (Cal. Ct. App. Dec. 31, 2013). Stating the employer “effectively passed on a portion of its normal operating expenses to a low wage worker,” the Court noted that the allegations, if proven, would establish the employer caused the employee to be paid less than the minimum wage and created intolerable working conditions in contravention of California public policy. However, the Court affirmed the dismissal of the employee’s intentional infliction of emotional distress claim.


Jorge L. Vasquez worked as a maintenance technician for Franklin Management Real Estate Fund, Inc., at a rate of $10 per hour for a 40-hour week. During Vasquez’s employment, his supervisors directed him to drive his own truck for work-related errands. Vasquez estimated that he drove a minimum of 30 miles each day to run employment-related errands; however, Franklin failed to reimburse him for gasoline or vehicle maintenance, although he repeatedly requested reimbursement. Vasquez eventually resigned and informed his supervisor that he could not “tolerate the work environment of only being paid $10.00 per hour, not being paid for gas and having to drive around town for work without being reimbursed for mileage.” 

Vasquez sued Franklin Management for constructive discharge in violation public policy and intentional infliction of emotional distress under California law. Franklin Management moved the trial court to dismiss the complaint. The court granted the motion and Vasquez appealed.

Applicable Law

To establish a constructive discharge under California law, an employee must prove the employer either “intentionally created or 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.” Moreover, “[t]he conditions giving rise to the resignation must be sufficiently extraordinary and egregious to overcome the normal motivation of a competent, diligent, and reasonable employee to remain on the job to earn a livelihood and to serve his or her employer.” Further, the public policy basis must be “firmly established,” “fundamental,” and “substantial.”

Public Policy Violation

Vasquez argued that Franklin Management’s failure to reimburse him for mileage and maintenance of his vehicle created intolerable working conditions and violated California’s well-established public policy embodied in its minimum wage law, Section 1194 of the California Labor Code. 

The appellate court noted that, in a “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.” However, Vasquez’s claim was not typical, the Court determined. Vasquez alleged not only that Franklin Management failed to reimburse him for mileage, but also that this failure caused him to be paid less than the required minimum wage. The Court explained that this violated California’s well-defined public policy favoring a minimum wage and forced Vasquez into an “untenable position,” unable to pay basic living expenses because he spent so much of his wages on gasoline and vehicle maintenance. It also noted that Vasquez was “wearing out the very vehicle he needed to maintain his livelihood . . . . Had he continued, he would soon have found himself with no job and no vehicle.” Based on these allegations, the Court concluded that Vasquez adequately pled a constructive discharge claim and reversed the dismissal of his complaint.

The Court, however, upheld the dismissal of Vasquez’s claim for intentional infliction of emotional distress because he failed to allege facts that were sufficiently extreme or outrageous.


Jackson Lewis attorneys are available to answer questions about this and other workplace developments. 

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