Mental health days are obviously no joke, but if it's at all possible to convey to the boss in question that it's going to be a taking of the day off situation, that could be a good idea. Especially, when in the position of being promoted and tasked with exciting new responsibilities, like opening the store on time. It sounds like there were some communication troubles occurring between these two. Folks in the comments section seemed to be in agreement that the boss wasn't in the wrong for their decision to ask Peggy whether she wanted the demotion or straight up termination. But you be the judge.
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