Must an Employer Allow a Resigning Employee to “Work Out a Notice?”

by | Jun 9, 2017

Frantz, McConnell & Seymour | FMS

As an employment lawyer, I tend to focus a substantial part of my time on the consequences that may follow employee terminations that are involuntary. From time to time, however, questions do arise in the context of voluntary resignations. For instance, I am occasionally asked whether an employer must allow a resigning employee to continue her employment for a limited period of time following a notice of resignation. The common situation is when an employee says, “I am giving you my 2-week notice.” Similarly, an employee may inform her supervisor on May 1, “I am leaving for another opportunity. My last day of work will be May 15.”

More often than not, the resigning employee’s motivation for providing advance notice of a voluntary resignation is laudable. She may appreciate the fact that her departure will cause inconvenience to the employer and therefore desires to minimize that impact by continuing to work for a brief period of time to allow the employer to identify a replacement. In other instances, however, there may be a somewhat tumultuous history involving the resigning employee and the employer. Most employers recognize that when a voluntary resignation involves a disgruntled employee, immediate separation is usually the preferred alternative.

The question therefore arises whether a resigning employee can dictate to the employer a last day of work beyond the date she gives notice of her resignation. Stated somewhat differently, if the employer refuses to allow the employee to work through the last day proposed by the employee, does the resignation turn into an involuntary termination? While there is very little guidance in Tennessee on this precise question, authorities from other jurisdictions generally support the proposition that it is the employer’s prerogative to determine the last day of employment following a resignation. Consequently, an employee has no right to continue working once she resigns absent a contrary provision in an employment contract or collective bargaining agreement (which would not be the case for the vast majority of employees). Thus, an employee cannot announce she is quitting and then mandate a later date on which her resignation becomes effective. An excellent discussion of this point by the Supreme Court of Vermont can be found at MacDonald v. Dept. of Employment Security, 836 A.2d 1117 (Vt. 1978).

Does this general rule mean an employer can agree to allow a resigning employee to “work out a notice,” but conclude the arrangement early, without legal consequence? For example, can the employer agree that the employee may work 2 weeks following notice of resignation, but after 3 days announce her services are no longer needed and that her resignation is deemed effective on that day? The answer is not particularly uniform across all states. Once again, Tennessee has very little guidance on this question. Ultimately, resolution of this issue will depend in large measure on the particular facts of each case. There are, however, clear risks. Once again, a decision from the Vermont Supreme Court provides some guidance. In Kelley v. Dept. of Labor, 101 A.3d 895 (Vt. 2014), an employee announced her resignation on August 29, but stated that her last day of work would be September 19. Rather than treating her resignation as effective immediately, her employer agreed to allow her to continue working for the 3 week period she proposed. Four days later, however, the employer received a complaint regarding the employee and decided to treat the resignation as effective that day. The employee considered this an involuntary termination since the parties agreed to the 21 day “notice” period and the employer reneged. The Vermont Supreme Court sided with the employee, finding that the employee “did not leave her employment voluntarily even though she had tendered her resignation because the employer discharged her during her period of notice.” The Vermont court did point out that its prior decision in MacDonald was still good law and that the employer was not required to allow the employee to work out her proposed notice period. Once the employer did that, however, terminating her early due to unsatisfactory work performance was an involuntary termination for which the employee was entitled to some extent of unemployment compensation benefits.

In order to avoid situations such as the one addressed in Kelley, I suggest that employers specifically address employees working beyond the date they provide notice of their resignation either within their employee handbook/policy manual, or ideally via a stand-alone agreement between the employer and employee. Either should provide that the resigning employee will not be allowed to work beyond the notice date unless the employee agrees that (1) the employer in its sole discretion determines the length of time needed for the employee’s concluding services; and (2) concluding the employment relationship prior to the expiration of the notice period does not constitute an involuntary termination.

While addressing employee resignations and proposed notice periods is not “standard fare” in the employment law arena, failing to appropriate a plan for such instances in advance can have significant legal consequences. These include turning a resignation into an involuntary termination for purposes of unemployment compensation. In addition, turning a resigning employee into a fired one may enable the employee to subsequently assert claims for certain forms of retaliation that she may not have been able to assert in the event of a clear voluntary resignation.

If you would like to speak to John Lawhorn on this or any other matter, he may be reached at (865) 546-9321.

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