For employers and employees alike it is becoming apparent that there is a trend of employees leaving their workplaces. In Texas, the at-will doctrine allows an employee to leave for any reason or no reason, but sometimes resignations can be a bit more complicated. For employees it is complicated because resignations can be and should be used strategically rather than a simple decision to leave a job. To use a resignation strategically, there are a few things to consider and think about before pulling the plug.
First and foremost, leaving a job can evoke questions about eligibility for unemployment benefits. In Texas, resignations, except for narrow exceptions related to “good cause connected with the work,” can be fatal to an application for unemployment benefits. While every case is different, resignations likely spell the end for unemployment benefit eligibility. Yet, it ultimately comes down to the Texas Workforce Commission’s decision. Therefore, if unemployment benefits are part of the financial planning underpinning a resignation, it is important to keep this in mind.
If unemployment benefits are not a concern or can be overlooked, then resignation becomes a good option to leave an employer on amicable terms. Outside of a contractual obligation, there is generally no notice period requirement on resigning. Nonetheless, there are practical steps to take before submitting a notice of resignation to protect your best interest. By way of example, medical procedures that can be done while health insurance coverage is still fully paid by your employer, figuring out finances in case you cannot find a different job, how a resignation might look at your next employer, and finally, contractual obligations. The contractual obligations can be tricky and are typically governed by an employment contract that an employee signed at the beginning of employment. Contracts that govern resignations or leaving a job without cause sometimes have requirements like a notice period, a method of giving that notice like certified mail to a specific address, or even set out specific information that needs to be in a notice. Some contracts even have promises of severance.
To highlight the above, I would like to provide a hypothetical to illustrate how an employee might go about weighing and considering resigning. Alice is an employee of Walmazon. Under her employment contract, she is entitled to one month of severance if Walmazon terminates her without good cause, but she is entitled to only one week of severance if she resigns. With that information, Alice can then decide whether or not she wants to resign knowing the contract gives her one week of a financial cushion. However, Alice’s decision becomes a bit more complicated because she has unvested shares in Walmazon. If she resigns or if she is terminated before the shares vest, then she would lose those shares. This is true for most employees since most shares granted under an employee contract are subject to a vesting period. In Alice’s case her shares vest after four years of working for Walmazon. If she is planning to resign and there are only six days left till her four-year anniversary at Walmazon, then Alice can strategically resign on day seven after her shares vest. Alice’s examples show how understanding contracts before you resign can have a big impact. Though simplistic, the most important aspect of Alice’s resignation is that she was able to make informed and strategic decisions because she knew how her contract would impact any potential resignation.
Many employees have an employment contract that lays out how resignations are handled with severance, notice, and methods of delivery. Moreover, several employee contracts have provisions that can have a severe impact upon leaving an employer such as stock agreements, confidentiality obligations, non-competes, and non-solicitation clauses. That is why it is important to review these documents with a Dallas employment lawyer, so you can make sure your resignation is strategic and puts you in the best position to take your next career step.