Most who take early retirement can't get unemployment, Justices rule

By Steve Korris | Mar 28, 2008


CHARLESTON – Workers who accept early retirement offers can't apply for unemployment compensation except in narrow circumstances, the West Virginia Supreme Court of Appeals unanimously decided March 19.

The Justices reversed Kanawha Circuit Judge Paul Zakaib, who approved unemployment compensation for Arthur Boggs and Gary Childress after they left chemical manufacturer Clearon in South Charleston.

"The unemployment compensation program is an insurance program, and not an entitlement program," Justice Larry Starcher wrote.

He wrote, "…we believe the obligation of employees under the Act is to do whatever is reasonable and necessary to remain employed."

The Justices didn't send the case back to Zakaib. They flatly rejected benefits.

Clearon offered early retirement in 2003, to anyone 55 or older with 10 years service. Among 88 workers, 57 qualified.

Clearon dangled $16,000 bonuses and fashioned pension incentives to fit each retiree.

The qualifying group split almost evenly. Twenty-eight stayed. Boggs, Childress and 27 others retired.

Boggs, 55, gave up a job that paid $22.60 an hour. Childress, 61, gave up $21 an hour.

"Because of the large number of employees accepting the early retirement package, Clearon never faced having to lay off any employees," Starcher wrote.

Boggs and Childress applied for unemployment compensation at the Bureau of Employment Programs, where a deputy determined that they were eligible.

Clearon appealed to administrative law judge William Smith, who reversed the deputy.

"If the claimant had not accepted the voluntary separation program offered by the employer," Smith wrote, "the claimant could have remained working as an employee for the employer at a similar rate of pay, benefits and responsibilities…"

Boggs and Childress appealed to the bureau's board of review, which affirmed Smith and adopted his finding of voluntary separation.

Boggs and Childress separately sued in Kanawha County circuit court, where Zakaib consolidated them into a single case.

Although the first three decisions had spilled out in seven months, everyone waited more than two years for a decision from Zakaib.

In November 2006, he ruled that the bureau deputy made the right call in the first place.

Zakaib relied on an eligibility letter that circulated through the bureau in 2002, but according to Starcher he misread the letter.

Starcher blamed poor writing.

"We feel compelled to say that we find the language of Local Office Letter 2200 to be confusing and somewhat contradictory," he wrote. "Since a reduction in force is not an uncommon event in today's employment climate, the commissioner may find it helpful to address and, perhaps, update the language of Local Office Letter 2000."

Starcher scolded Zakaib, too, for ignoring Smith's finding of voluntary separation.

"This finding by the administrative law judge was adopted by the Board of Review, and was not addressed by the trial court but rather was left undisturbed," Starcher wrote.

Starcher stressed that the purpose of the law is "to provide reasonable and effective means for the promotion of social and economic security by reducing as far as practicable the hazards of unemployment."

Courts should construe the law liberally, he wrote, but he added that courts must also protect the unemployment compensation fund.

"Also, we believe that the basic policy and purpose of the Act is advanced both when benefits are denied to those for whom the Act is not intended to benefit, as well as when benefits are awarded in proper cases," he wrote.

"Additionally," he wrote, "we believe that the Act was clearly designed to serve not only the interest of qualifying unemployed persons, but also the general public."

Although the Justices generally banned unemployment compensation for early retirees, they allowed an exception if a worker meets two tests.

A worker must demonstrate fear of layoff due to fault on the employer's part and prove that he or she would suffer economic harm by turning down the retirement package.

Christopher Slaughter and Robert Bailey of Steptoe and Johnson in Charleston represented Clearon.

Bradley Pyles and Robert Smith of Pyles, Haviland, Turner and Smith in Charleston represented Boggs. Childress acted "pro se," without an attorney.

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