Vasquez v. Franklin Management: Court Explores Limits of Expense Reimbursement Liability

In Vasquez v. Franklin Management Real Estate Fund, Inc. (12/3/13, pub. 12/31/13) --- Cal.App.4th ---, the plaintiff, a $10-per-hour employee, alleged that his employer required him to use his own vehicle for work, but refused to reimburse him for gas and mileage. He filed suit, alleging constructive wrongful termination in violation of public policy (constructive discharge) and intentional infliction of emotional distress (IIED).

The trial court sustained demurrers without leave to amend, and the plaintiff appealed. The Court of Appeal reversed in part and affirmed in part, holding: 

To establish constructive discharge, an employee must plead and prove that 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." Whether conditions were so intolerable as to justify a reasonable employee’s decision to resign is normally a question of fact. 

Although deprivations of salary or other economic benefits generally do not support a constructive discharge claim, the plaintiff here could allege constructive discharge because the expenses incurred were such a large percentage of the plaintiff's earnings and caused him to earn less than the minimum wage. The plaintiff's wage claims implicated fundamental public policies, and the trial court abused its discretion in sustaining the demurrer without leave to amend. 

The trial court did not abuse its discretion in sustaining the demurrer to the IIED claim. Severe emotional distress arising from outrageous conduct in the workplace in the normal course of the employer-employee relationship is "the type of injury that falls within the exclusive province of workers’ compensation." 

The opinion is available here.