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Potts v. Gaia Children, LLC.

2024 COA 58. No. 23CA1008. Employment Law—Wrongful Discharge Contrary to Public Policy—Actual Discharge—Constructive Discharge.

May 23, 2024

According to Potts’s amended complaint, Potts was hired by Gaia Children, LLC, d/b/a The Learning Experience (Gaia), to work as a compliance specialist at Gaia’s Learning Experience Center, a childcare facility. In her position, Potts was a mandatory child abuse reporter. Potts subsequently reported Gaia and the Learning Experience Center to the Colorado Department of Licensing and Larimer County Child Protection Services, and investigators from both agencies interviewed Potts at the Learning Experience Center. Following the interviews, Wright, the Learning Experience Center director, asked Potts what the interviews were about. Potts responded that she could not speak about what was discussed. Wright then told Potts to leave and go home, though Potts’s shift had not ended, and she had never been sent home early before. The next morning, Wright texted Potts that Potts did not need to go to work that day. Believing that her employment had been terminated, Potts picked up her paycheck from the Learning Experience Center and returned her work-related items. No one at the Learning Experience Center questioned the return of the items, asked Potts if she was quitting, or discussed Potts’s return date. Potts interpreted this situation as confirming her belief that she had been fired. Shortly thereafter, Wright emailed the entire staff of the Learning Experience Center to announce that Potts was no longer part of the Learning Experience team. Potts sued Gaia for wrongful discharge against public policy, and the district court granted Gaia’s motion to dismiss the case.

On appeal, Potts argued that the district court erred by dismissing her complaint. To survive a CRCP 12(b)(5) motion to dismiss, a complaint must state a claim that is plausible on its face. The court of appeals noted that no published Colorado decision articulates a test for when an employee has been actually discharged. The court therefore adopted a test for “actual discharge” applied by federal courts, which is objective and requires consideration of whether the circumstances would lead a reasonable employee to understand that they have been discharged from employment. Applying this test, the court considered the facts in totality, viewing them in the light most favorable to Potts, and concluded that Potts’s well-pleaded allegations in her complaint were sufficient to support a conclusion that Gaia terminated Potts’s employment when Wright told her not to return that week and gave her a final paycheck, and no one at Gaia said anything about her employment situation when Potts returned her employer-owned equipment. Accordingly, the district court erred by granting Gaia’s motion to dismiss Potts’s claim to the extent that Potts’s complaint asserted that she was actually discharged.

Alternatively, Potts contended that if she was not actually discharged, she was constructively discharged. To prove constructive discharge, a plaintiff must establish that their employer took deliberate action to make or allow the employee’s working conditions to become difficult or intolerable to the extent that the employee had no choice but to resign. Constructive discharge typically occurs over a period of time and through a series of incidents. Here, Potts’s allegations fail to support a conclusion that her working conditions were so difficult or intolerable that she had no option but resignation. Accordingly, the district court properly rejected this claim after concluding that it failed as a matter of law.

The judgment was affirmed in part and reversed in part, and the case was remanded with directions to reinstate the amended complaint and allow the action to continue under the actual discharge theory.

Official Colorado Court of Appeals proceedings can be found at the Colorado Court of Appeals website.

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