Unemployment Hearing Case: Early Retirement Package

Case Analysis: Employer Offered Claimant Early Retirement Package.

Background

A company made an offer of an early retirement package to certain eligible employees.  The claimant accepted the offer, but later applied for unemployment benefits.

At the Hearing

The Employer’s Evidence: The employer testified that it offered a number of employees an early retirement package. This offer provided additional severance payments and insurance coverage.  In an effort to ease budget restraints, the company gave the option to all eligible employees.  The claimant wasn't told that his job would be in jeopardy or that he would be part of a reduction in force.  The employer asserted that the program was necessary in order to avoid a future reduction in force.  The claimant qualified for the program and signed an agreement indicating that he would retire.  The employer asserted that continuing work was available to the claimant. They alleged that the acceptance of the program amounted to a voluntary resignation. The Claimant’s Evidence: The claimant testified that he decided to accept the early retirement package.  He had enough points to qualify and additionally, he wished to take advantage of the added monetary incentives.  He did not indicate that he had felt he was in danger of being laid off if he did not take the package.  However, the claimant testified that he had no plans to resign and would not have, had the employer not offered the incentives.

The Hearing Decision

The ALJ found that:

• The early retirement offer was the result of the employer’s attempt to reduce or eliminate the budgetary concerns and therefore avoid a reduction in force.
• The claimant accepted the offer of the early retirement package because he was concerned that by not accepting the offer he could potentially be laid off in the future, and he would have missed out on the added incentives.
• In conclusion, the ALJ found that the employer's acceptance of the claimant's resignation and signing of the voluntary retirement package constitutes a voluntary quit for good cause connected with the work.
• Benefits were awarded to the claimant.

The employer appealed. The employer argued that:

• It did not tell the claimant that his job was in jeopardy.
• The claimant’s acceptance of the package did not hinge on a reasonable belief that he would be part of a reduction in force.
• The employer testified that continuing work was available to the claimant.
• The participation in the early retirement program was strictly voluntary.
• The claimant based his decision to quit on the monetary incentives and not on any fear that he was going to be part of a reduction in force.

The Board of Review Decision

After reviewing details of the case, the Board of Review (Board) agreed with the ALJ’s decision and affirmed. It stated that:

• The claimant had agreed to a voluntary retirement package offered by their employer.
• This packages was the employers attempt to avoid or reduce the negative impact of a reduction in force.
• Furthermore, the circumstances for leaving did fall under the good cause provisions.
• Benefits were award to the claimant.

Takeaways

1. In general these decisions often hinge on whether or not the claimant believes in good faith that he will be laid off in the future.  And whether there is a financial benefit to the claimant to take the package.
2. States want to make certain that they know all of the details surrounding the offer. That includes why the employers is making the offer in order to properly classify these early retirement packages.
3. An ALJ is likely to ask for information on:
   • The number of offers
   • If any layoffs will take place
   • And how the company will decide who is part of a reduction in force

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  Please remember: Unemployment laws vary from state to state. The results in this case might be different from a case in your state. Also, always consult with your own legal counsel and advisors concerning your specific situation.