Loophole Created in Unemployment Law for Big Business to Save State Money
Verizon Nw., Inc. v. Employment Sec. Dep’t, 164 Wn.2d 909, 194 P.3d 255, 2008 Wash. LEXIS 1040, 28 I.E.R. Cas. (BNA) 516, Unemployment Ins. Rep. (CCH) P9044 (Wash. 2008), (Wash. Oct 23, 2008) (NO. 81024-9)
If a small business downsizes and lays-off employees, it generally has no choice but to terminate specified employees. Big business can tell employees that they are within the class of employees being considered for lay-off and ask for voluntary participation in a force reduction program. The employment security commissioner has provide rules governing whether these “voluntary” participants qualify for unemployment benefits or have been separated for a disqualifying reason:
You will not be considered to have been separated from employment for a disqualifying reason when:
(a) Your employer takes the first action in the separation process by announcing in writing to its employees that:
(i) The employer plans to reduce its work force through a layoff or reduction in force, and
(ii) That employees can offer to be among those included in the layoff or reduction in force;
(b) You offer to be one of the employees included in the layoff or reduction in force; and
(c) Your employer takes the final action in the separation process by accepting your offer to be one of the employees included in the layoff or reduction in force, thereby ending your employment relationship. WAC 192-150-100(1).
In this case, Verizon argued that it did not take the final step because it gave the employees the right to rescind their acceptance of the force reduction program. No employee exercise the right to rescind.
Justice J. Chambers, joined by Barbara A. Madsen, offered this dissent:
[We] fear the majority is ignoring the widely accepted realities of large company layoffs. The agreement to participate in a voluntary reduction in force program is not, meaningfully, a voluntary decision to leave a job without good cause. Our administrative rules recognize this. An employee is placed between the proverbial rock and a hard spot when her employer announces that the company is going to lay off a substantial number of employees and the employee is one of those at risk. She can close her eyes, hold her breath, and hope that she is not one of the employees fired. But if she is one of the unfortunate ones laid off, she risks losing the income stream necessary to pay her bills. Alternatively, she can choose to participate in a force reduction program. Reduction in force programs can be a comparatively humane and sensible way to mitigate some of the worst pain and uncertainty of a layoff. But rarely are either of these choices, the rock or the hard spot, nearly as desirous as continued employment with a company for whom the employee has established a work history and gained some seniority.
The dissent believed that Verizon had taken the “final action” under WAC 192-150-100(1) by accepting the offer to resign.
The Supreme Court had a choice – save the State of Washington money on unemployment costs or allow laid off workers to collect unemployment. It chose the State over the workers through a creative interpretation of the rules. While it is true that Washington’s unemployment laws need amending and that the legislature does not have the political courage to make the changes, the court does not have the constitutional mandate to usurp the legislative power.