California Employee Constructively Discharged When Employer Refused to Reimburse Mileage Expenses

California’s Second Appellate District reversed a judgment in favor of Franklin Management Real Estate Fund, Inc. concluding that an employee could state a cause of action for wrongful constructive discharge when an employer refuses to reimburse a low-wage earner for mileage expenses.

Jorge Vasquez worked as a maintenance technician, earning $10.00 per hour.  His job required him to travel to various locations including the hardware store.  According to Vasquez, he drove about 30 miles a day incurring over $300.00 per day in fuel and maintenance costs.  When Franklin Management Real Estate Fund refused to reimburse Vasquez for the mileage expenses he quit and sued his employer for constructive discharge in violation of public policy.

The trial court originally dismissed the complaint after concluding that an employer’s failure to pay mileage expenses of $15 per day was not conduct “so intolerable or aggravated that a reasonable person in the employee’s position would have felt no choice but to resign.”  On appeal, Vasquez argued that the employer, in effect, required Vasquez to use his own wages to pay for the employer’s costs of doing business.  Since Vasquez only earned $10.00 per hour, the mileage expenses allegedly represented a significant portion of his take-home pay.

The appellate court found that under Turner v. Anheuser-Busch, Inc. (1994) 7 Cal.4th 1238, a jury could find that the employer “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.”  The court also concluded that California’s minimum wage law represents a fundamental policy for purposes of a claim for wrongful termination or constructive discharge in violation of public policy.