Published on December 14th, 2009 by Alan L Sklover
“Crises refine life. In them, you discover what you are.”
- Allan Knight Chalmers
ACTUAL CASE HISTORY: Jeanne enjoyed her job as Managing Director for Compliance for one of San Francisco’s largest hedge funds. She’d been in that job since the firm’s founding, some 14 years earlier. As a former SEC auditor, she surely knew her subject matter. As a former Division One lacrosse player, she was not easily intimidated.
During August and September 2008, Jeanne was called upon to sign off on certain large trades of equities in the personal accounts of senior firm executives weeks after the trades had been executed, though good governance and company policies clearly required pre-approvals, not post-approvals. Worse, Jeanne noticed what securities regulators commonly viewed to be telltale indicators of illegal trading on “insider information.” Jeanne went straight to the firm’s Head of Trading with her concerns, and need for more information.
No doubt because of the extreme volatility of world financial markets at that time, her firm’s Head of Trading was in a state of perpetual near-panic. Previously thought to be cool, calm and collected in every situation, lately he appeared preoccupied, distracted and distant. For eight days Jeanne tried to get an appointment with him, to no avail. He didn’t even return her repeated telephone calls or email messages. Finally, the Head of Trading agreed to meet with Jeanne in her office. His response to her inquiries was short and simple: “Your job is to sign off; just sign off, or look for another job.” His tone was quite serious, almost menacing: “I don’t need to answer your questions, and it would be in your interests to stop asking me to do so.” Jeanne was aghast.
The next day Jeanne went straight to her boss, the firm’s General Counsel, who Jeanne considered a close friend. The General Counsel was a member of the firm’s Board of Directors, and a close confidante of the Board Chairman. The General Counsel listened to Jeanne, and was just as brief and menacing as the Head of Trading had been: “You need to be a team player if you want to stay on the team.” Jeanne felt like she was caught in a trap: on the one hand, she had no definitive proof of improper or illegal conduct; she could not make allegations at this time. On the other hand, she was being denied the information she needed to do her job; if she approved trades that were later found to be improper, her name, reputation and career could all be in jeopardy. To compound matters, Jeanne’s diabetes became acute and unresponsive to medication, no doubt a result of her terrible stress. Then a serious complication ensued: Jeanne’s eyesight started to deteriorate.
Jeanne consulted us, seeking advice on how to resign from her job before either she was fired, or she jeopardized her career. If she stayed, she could become a criminal; if she resigned, she would lose a vast majority of her net worth: (a) almost $280,000 in unvested stock; (b) her annual bonus of $100,000; (c) three years of profit-sharing totaling $175,000; (d) deferred income of $75,000; and (e) even her right to collect unemployment insurance. This was 98% of her lifetime financial savings.
Staying in her job – and thus risking her career – did not seem like a viable option. Resigning from her job did not seem much better. We suggested to Jeanne a third option, one she had not considered: involuntary resignation. When we mentioned it to her, she seemed puzzled and perplexed. She thought that all resignations were “voluntary.” She had never heard of an “involuntary resignation.” In fact, she thought the phrase was oxymoronic. In the end, though, “involuntary resignation” turned out to be the perfect option for Jeanne, permitting her to hold intact both her own personal integrity, and her personal finances.
LESSON TO LEARN: (a) Stand Up; Don’t Give Up: Words and their meanings can be very interesting, and very revealing. My dictionary has two definitions for the word “resignation.” The first definition is “an act or statement removing oneself from an office or position.” The second definition of “resignation” is a “state of being submissive, weak, unresisting, acquiescent.” Unfortunately, most people believe the two definitions of “resignation” go hand-in-hand. That is, most people think “removing oneself from a position” is also being “submissive, weak, unresisting or acquiescent.”
However, increasingly and fortunately, “resignation” from work, and especially significantly difficult situations at work, is being undertaken not as an act of “giving up,” but rather as an action of “standing up,” and it is essential you understand the difference.
“Involuntary resignation” is not an act of saying “I voluntarily give up my position.” Rather, it is an act of saying, “I will be departing because my employer has taken my functions, and hence my job, from me.” Or, “I will be departing because my employer is forcing me to leave by telling me if I stay I must engage in criminality.” Or, “I will be departing because my employer’s actions are directly causing serious health problems for me, and so my remaining is simply not an option.” “Involuntary resignation” is not giving up, but rather standing up, in the process of departing. Or, “I am leaving, but I am being forced to leave by what is being done to me. Therefore, I should not suffer any negative consequences as a result of my resignation. Rather, I should be treated at least as favorably as an employee who is being laid off due to no fault of my own.“
The purpose of an “involuntary resignation” is to depart a bad working environment without giving up potentially valuable legal rights and negotiating leverage.
(b) When is a Resignation “Involuntary?”: A resignation may be reasonably characterized as “involuntary” due to such things as severe harassment, having your primary job functions taken from you, extreme hostility, being urged to engage in (or overlook) impropriety or criminality, deleterious health effects of certain activities, and many other circumstances. The question is this: would an average, reasonable person feel it is impossible or next to impossible to remain at the employer under such circumstances? If yes, the resignation is not voluntary.
(c) The Many Benefits of “Involuntary Resignation”: The differences in how “voluntary” and “involuntary” resignation may affect you are striking:
1. Severance is generally not given to those who resign; however, to those whose resignation is “involuntary,” it may be available.
2. Employer savings and investment plans often deny the return of savings or invested monies – particularly if the employer contributed to those who “resign” before certain dates. Citing “involuntariness” in your resignation may result in full payment made to you when you depart.
3. In many company equity (stock and stock option) plans, if you resign, you forfeit unvested shares and options. However, submitting an “involuntary” resignation can sometimes prevent such losses.
4. Many non-competition agreements are triggered by “voluntary” resignation; “involuntary” resignation may be a way to avoid such a restriction.
5. In most states, “voluntary” resignation will deny you unemployment insurance benefits. However, if you had a good reason for leaving – what we refer to as an “involuntary” resignation – you can often still receive unemployment benefits.
6. Sometimes employers give or loan employees monies – for such purpose as education, moving, buying company stock, or as “sign-on” bonuses, but require immediate repayment by employees who “resign” before a specified period of time. However, an “involuntary” resignation may obviate such repayment obligations.
7. When an employee “resigns” it is generally presumed that he or she left on his or her own volition. However, “involuntary resignation” is more in the nature of a “termination by the employer without the employee having caused it,” and may preserve important firing-related claims, including harassment, hostility, and contract breach.
(d) You Have Nothing to Lose: Don’t let HR or Senior Management tell you there is no such thing as “involuntary resignation.” They know full well that the concept is a valid one. “Involuntary resignation” is the exact same concept as “Resignation for Good Reason” found in a majority of “C-suite” (chief executive officer, chief financial officer, etc.) employment contracts. Senior executives who resign for “Good Reasons,” which include loss of authority, diminution of compensation, or other “involuntary” losses, are generally entitled to departure on a preferential basis, including better severance terms, accelerated vesting of equity, and cancellation of non-competition restrictions.
The lesson is this: If you find yourself in difficult circumstances such as the ones noted above, and are contemplating departing your job essentially “involuntarily” as a result, give thought and consideration to an “involuntary” resignation instead of the other submissive, weak, unresisting or acquiescent kind.
WHAT YOU CAN DO: If you think you have a good basis for an “involuntary resignation,” bear these points in mind:
1. Understand that “involuntariness” may arise from many different circumstances. There are many circumstances that may make a resignation essentially “involuntary.” The most common include: (a) being told by your superior(s) you must violate company policy or the law; (b) having your job functions, responsibilities, resources and/or authorities reduced to such an extent that you have essentially lost your job already; (c) your compensation (or opportunity for earning compensation) reduced so dramatically that you can’t earn a living; (d) loss or material reduction of a “necessary” benefit such as health care, especially if you or a family member is ill; and (e) harassment, hostility or discrimination so intense and unnerving that you are being made ill from it and/or you are reasonably frightened it will worsen.
2. The real “test” of “involuntariness” is whether a reasonable person would find your work situation utterly intolerable. Work is not supposed to be “fun,” and having your feelings hurt is not a crime. Don’t try to elevate relatively petty things such as a single, brief raising of voices, or one stray remark that offends you, into “unbearable hostility.” Though every person experiences things a bit differently, understand that the circumstances that constitute an “involuntary resignation” must be seen as truly “intolerable” by the average person. “Involuntariness” is difficult to define, but easily detected by the feeling of “impossible to remain” you may experience.
3. Before resigning, first consider making an email record of what happened and/or an email request that the “bad circumstance” be halted. If your boss’s boss has three times insisted you forge a signature, before submitting an involuntary resignation consider sending her an email describing the requests, and your inability to comply with them. If your company has eliminated all health insurance without notice, and your 5-year-old daughter needs a kidney transplant, using an email you might first ask the CEO to have the company foot the bill for her surgery. Such pre-resignation steps serve to establish that you tried first to solve the problem yourself, to no avail, and thus had no choice but to “involuntarily” resign. Otherwise, it may look like your resignation was so premature as to be unnecessary and thus entirely “voluntary.”
4. An “involuntary” resignation must be in writing, and use the word “involuntary.” Involuntary resignations must be in writing, so there is a clear record of what you did, when you did it, why you did it, and all other pertinent facts; delivery by email and/or FedEx is best. Involuntary resignation letters must use the word “involuntary” at least once, preferably more often. It’s the best word for this purpose. For added emphasis you might give thought to also using the words “no other choice, without feasible alternative, unable to remain, intolerable, illegal, unbearable, in violation of company policies, forced, coerced, pressured, under threat or under duress” in your letter.
5. An “Involuntary” resignation must cite the facts and reasons that make it “involuntary.” Specific facts, events and circumstances must be cited. Vague phrases like “involuntary” and “intolerable” will not – on their own – suffice. It is important to convey the sense that “I had to resign, and if you were faced with the same facts, events, and circumstances, you would have done so, as well.” To be compelling, an “involuntary resignation” must contain graphic descriptions, and detailed facts, events, and circumstances with specificity.
6. It can only help to refer to one or more witnesses, documents and/or other evidence of what transpired. While you don’t have to “prove” anything in a resignation letter, increased credibility emanates from reference being made to available “evidence” of what transpired.
7. Though “involuntary resignations” deliver “unwelcome news,” they need to be relatively dispassionate. Calm, moderated, thoughtful expressions are listened to, respected, and believed. Angry, frantic and turbulent expressions tend not to be. That applies to resignation letters, as well, and even to “involuntary” ones describing very sensitive, difficult, sometimes even evil treatment.
8. Keep your goal in mind: Departure without losing Legal Rights or Negotiating Leverage. As in everything we do, we need to maintain a focus on our ultimate goal. In every aspect of an “involuntary” resignation, keep in mind that you seek to depart the employment relation without unnecessarily giving up potential legal rights and/or negotiating leverage. Do not let yourself get misdirected. Every step should be a step in that direction.
9. Potential for Catharsis. One additional positive aspect of “involuntary” resignation is its potential for making you feel better about leaving, and allowing you to “air” your disapproval of what happened to you. Keeping respectful helps you keep your dignity, while “speaking out” on your way out may also help you maintain your self-esteem. It is, as the subtitle to this Newsletter calls it, “Standing Up, Not Giving Up.”
10. We offer a Model “Involuntary Resignation” Letter for your use. In the “Private Library” section of our Blogsite, we offer for purchase at a nominal charge a Model “Involuntary Resignation” Letter for your adaptation and use in more effectively acting on your own behalf.
To help you with your own Involuntary Resignation, in our Model Letter blog section, we offer four items:
1. Our “Involuntary Resignation Model Letter,” you can adapt by inserting your own facts, events and circumstances. To obtain a copy, just [click here.]
2. Our “Follow-Up Letter to Involuntary Resignation” to use if your initial Involuntary Resignation Letter does not get you the treatment you request. To obtain a copy, just [click here.]
3. A “118-Point Checklist for Involuntary Resignation” to assist you in making sure you think of all there is to think of, and do all there is to do. To obtain a copy, just [click here.]
4. All three of the above items, in our “Ultimate Involuntary Resignation Package.” To obtain yours, just [click here.]
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SkloverWorkingWisdom™ emphasizes smart negotiating – and navigating – for yourself at work. The more you understand how to enter into, thrive in, and depart from employment relations, the more successful you will be. You always need to act proactively, carefully, and effectively. That takes foresight and forethought. The purpose of our newsletters is to give those to you. The rest is up to you.
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A note about our Actual Case Histories: In order to preserve client confidences, and protect client identities, we alter certain facts, including the name, age, gender, position, date, geographical location, and industry of our clients. The essential facts, the point illustrated and the lesson to be learned, remain actual.
Please Note: This Newsletter is not legal advice, but only an effort to provide generalized information about important topics related to employment and the law. Legal advice can only be rendered after formal retention of counsel, and must take into account the facts and circumstances of a particular case. Those in need of legal advice, counsel or representation should retain competent legal counsel licensed to practice law in their locale.
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