Thursday, April 16, 2015

I Quit – But I Want Unemployment

Last Tuesday we wrote about the requirements necessary for a worker to collect unemployment benefits. We noted that the Illinois Department of Employment Security (IDES) will provide temporary payments to unemployed individuals who 1) are unemployed through no fault of their own; 2) are able and available to work and actively looking for work; and 3) have worked for four of the previous five quarters (i.e. three-month time period) and made at least $1,600 during these four quarters. 

Generally, an individual will not be eligible for benefits if that worker voluntarily quits their job unless their resignation was for a handful of reasons such as quitting in lieu of being fired, quitting because of being sexually harassed; quitting because of a health condition of the worker or his or her spouse; and quitting because the employer moved the workplace and it is no longer reasonable to travel to and from work. What if the employee quits because the employer demotes them or cuts their salary? That can be a tricky question.

Sometimes employers find that an employee just isn’t working out in a particular position. This might happen when an employer has promoted or hired someone to be a supervisor but it turns out that while they are a skilled worker, they are a poor supervisor. Unwilling to discharge the worker, the employer offers to reassign the employee to a more suitable job, but with less pay – a demotion in other words. The employee chooses instead to quit and files for unemployment.

The Unemployment Insurance Act provides that an individual is ineligible for benefits if they voluntary leave their employment. The Section 601 of the Act defines voluntary leaving as when an employee leaves work without good cause attributable to the employer. This leads to the question of whether changing the terms of an employee’s job or changing his job entirely is “good cause attributable to the employer”.

The Department of Employment Security describes good cause for leaving to include situations in which the employer has implemented a substantial change in the conditions of employment. The Department’s regulations give as an example of a substantial change when an employer cuts the worker’s wages by one-third for the same work. Courts though have found that changes in pay, hours and demotions do not generally constitute substantial change which would warrant an award of benefits if the worker voluntarily left their employment. 

In our example, an employee who quits in lieu of demotion is likely ineligible for benefits, as opposed to a worker whose pay is drastically cut simply because the employer’s revenues are down. Similarly, an employee who quits because they were switched from day shift to night shift, may also be ineligible, although a worker who quits in lieu of being transferred to a work location 100 miles away is probably eligible.

It doesn’t always make sense to contest an unemployment insurance application. The Department and the courts favor eligibility as unemployment benefits are viewed as an insurance policy for the employee. When your employee quits rather than accept a change in their job or pay, it may be an instance where it is worthwhile to contest their benefit eligibility.