Sunday, September 21, 2008

Can you quit your job and still get unemployment compensation benefits?

If an employee is facing certain discharge from employment, can s/he quit, instead of being fired and still receive unemployment compensation benefits? 

The quick answer is yes:

"[A] claimant [for unemployment insurance compensation] who voluntarily leaves his or her position in the face of disciplinary charges may qualify for unemployment benefits if the actions did not amount to misconduct."  (Claim of De Benedetto (NYAD 3rd Dept. 1997)).

But, it's not that simple.

There are two provisions in New York State's Unemployment Insurance Law which speak to this question.  One provision states that employees are not entitled to unemployment compensation benefits after an employee's "voluntary separation without good cause from employment."  (Unemployment Insurance Law § 593(1)(a)).  This means that a worker cannot quit his/her job and receive unemployment compensation benefits unless he/she quit for "good cause." 

Further down in the same section of the Unemployment Insurance Law, it states that an employee is not entitled to unemployment compensation benefits if they lose unemployment "through misconduct in connection with his or her employment."  (Unemployment Insurance Law § 593(3)).

In many cases where an employee quit his/her job instead of being terminated for misconduct the New York courts have held the employee ineligible for unemployment compensation benefits -- because they engaged in misconduct and were, therefore, not eligible under § 593(3).  For example, where an administrative coordinator for a college quit her job after being warned repeatedly about tardiness and absences, and after she is given a final warning and is facing almost certain termination, the court held that she was ineligible for benefits.

"Inasmuch as a resignation in anticipation of discharge does not constitute good cause for leaving one's employment, the Board's decision that claimant left her employment under disqualifying circumstances will not be disturbed."  (In re Seiglar (NYAD 3 Dept. 2008).

Similarly, where a toll collector quit after being advised that his supervisor wished to terminate his employment, the court found him ineligible for benefits.

"Substantial evidence supports the Board's decision disqualifying claimant from receiving unemployment insurance benefits because he voluntarily left his employment without good cause. The evidence is undisputed that claimant left his position as a toll collector after he was informed that his manager wished to terminate him, but prior to receiving an official notice of termination. In view of this, we find no reason to disturb the Board's decision."  (Claim of Wilson (NYAD 3 Dept. 1996).

However, New York Courts allow employees to resign in lieu of termination provided that the underlying offense which formed the basis of the likely discharge is not "misconduct" under the Unemployment Compensation Law.  One example is the case In re Straw (NYAD 3rd Dept. 2006) where a guidance counselor employed by a public school was suspended following several complaints about her work performance, including allegations that she had engaged in inappropriate physical contact with various students.  Soon after the District's superintendent advised claimant that he intended to recommend to the Board of Education at its next meeting that she be terminated, claimant entered into a written agreement whereby she withdrew her grievance and resigned and the District expunged from her record the proposed discharge and its basis.  The court in this case set out the important legal proposition that:

"[A] claimant 'who voluntarily leaves his or her position in the face of disciplinary charges may qualify for unemployment benefits if the actions did not amount to misconduct.'  Here, the Board concluded that claimant agreed to surrender her right to continue the grievance process and resign pursuant to a negotiated settlement as a means of accepting the penalty of dismissal in order to protect her employment record.  The Board further determined that the District failed to demonstrate that claimant's actions rose to the level of misconduct."

As a result, the court upheld the employee's entitlement to unemployment benefits.

Similarly, in the case Claim of Bateman (NYAD 3rd Dept. 1989), which was relied upon by the court in In re Strawthe claimant was employed as a correction officer in a county jail when one of the prisoners escaped from the tier to which claimant had been assigned. As a result, claimant was served with a notice of discipline alleging certain infractions and stating that claimant would be dismissed from her employment effective at the end of the work day January 10, 1986. The notice also advised claimant that she had the right to file a grievance. At the time claimant was served with the notice of discipline, the county sheriff advised claimant that instead of pursuing a grievance, she could resign for "personal reasons" to protect her employment record and that, if she resigned, he would help her find other employment within the County. Claimant elected to resign, effective January 10, 1986, and, with the Sheriff's permission, stayed out of work on January 8, 9 and 10, charging those days to her accrued leave time.

The court upheld the employee's right to unemployment benefits. 

"[The] claimant . . . resign[ed] as an acceptance of the penalty of dismissal to protect her employment record. [A]lthough claimant may have been careless or negligent in the performance of her duties, she was not guilty of misconduct within the meaning of the Labor Law and, therefore, she lost her employment under nondisqualifying conditions."

It is worth noting that it is not uncommon for severance/separation agreements in the employment context to include provisions that convert a discharge to a resignation (to protect the employee's personnel record) while also stating that the employer will not challenge the employee's claim for unemployment insurance benefits.  As you can see from the cases discussed above, although this may seem contradictory, it is actually consistent with New York's Unemployment Insurance Law.  Once such an agreement is executed, the employer will make not challenge or submission to the unemployment insurance compensation board and, as a result, the question of "misconduct," which might otherwise have created a problem for the employee, will not be raised -- and the employee will receive unemployment compensation benefits.

If you would like assistance or counsel on negotiating such a deal, contact me by email or call my office at 845-802-3247.

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