Iowa Court of Appeals Holds Accelerating Effective Resignation Date Does Not Amount to ‘Involuntary Termination’ Under Employment Contract

Posted on: September 21st, 2017


Opinion Summary

In Bradshaw v. Cedar Rapids Airport Comm’n, No. 16-1639, Plaintiff Bradshaw sued his former employer, the Cedar Rapid Airport Commission, arguing the Commission owed him severance pay pursuant to his employment contract.  The contract provided for twelve months’ severance if the Commission involuntarily terminated Bradshaw.  Conversely, Bradshaw would receive no severance if he voluntarily resigned.

On September 3, 2014, Plaintiff Bradshaw emailed his voluntary resignation to the Commission, and indicated that his “last date of employment will be November 3, 2014.”  On September 5, 2014, the Commission passed a resolution accepting Bradshaw’s resignation “effective 30 days from the date of this Resolution,” i.e. October 5, 2014.

In February 2015, Bradshaw demanded the severance outlined in the contract.  The Commission refused.  Bradshaw then brought a breach of contract action suit against the Commission. Both parties filed motions for summary judgment.  Bradshaw argued that his effective date of resignation was November 3, 2014, and that the Commission’s unilateral acceleration of that date was an “involuntary termination” under the contract.  The Commission argued that the accelerated date did not change the nature of the voluntary resignation.  The district court ruled that Bradshaw was not entitled to severance, but also that Bradshaw was entitled to additional compensation from October 5, 2014, through November 3, 2014.  Both parties appealed.

The Iowa Court of Appeals affirmed and reversed in part.  The Court agreed that Bradshaw was not entitled to severance payment, but also that Bradshaw was not entitled to the additional compensation.  The Court noted that the parties did not dispute that Bradshaw intended to voluntarily resign, or that the Commission accepted the resignation.  However, as it related to interpreting the employment contract’s severance provision, it was “immaterial the parties disagreed on the effective date of the resignation.  As a matter of law, Bradshaw was not ‘involuntarily terminated’ within the meaning of the employment agreement.”

While Bradshaw conceded in his reply brief that he was not entitled to additional compensation, the Court briefly elaborated on this issue.  The Court noted that concluding Bradshaw was entitled to additional compensation would be an “untenable result” and “[i]t would allow for an employee to change his or her status from employed-at-will to employed-for-a-definite-term by simply including an effective date in a notice of resignation.”

In conclusion, the Iowa Court of Appeals ruled in favor of an employer who unilaterally advanced a resigning employee’s effective termination date by thirty days.  The Court found that this acceleration did not amount to an “involuntary resignation,” nor was the employee entitled to compensation for that period.

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