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Court rules on early retirement benefits case

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Employees who accept early retirement even in the worst economic times aren’t entitled to continued unemployment assistance, the Indiana Court of Appeals ruled today.

A 2-1 ruling came from the appellate court in C.G. LLC v. Review Board of the Indiana Dept. of Workforce Devel., et al., 93A02-1004-EX-441, involving an economically battered auto parts company that instituted an early retirement plan for both working and non-working employees at factories in Indiana and nationwide.

The company began reducing its workforce and laying off workers in 2008 and instituted the voluntary termination program to those who’d worked in late 2008 and early 2009. Those who accepted resigned from CG and relinquished their recall and seniority rights. Additionally, some received variations of a package including lump some payout amounts, a vehicle voucher, and six months of continuing health insurance coverage.

Some of those workers had been actively working while others were previously laid off, and some still received benefits at the time the program was offered. After taking the early retirement offer, some employees were denied unemployment benefits when they later applied, and previously laid-off workers who’d been receiving benefits found their benefits were cut off.

They appealed to an administrative law judge who determined that employees who’d been on indefinite layoff when joining the early retirement program were still entitled to unemployment benefits, but those who were on temporary layoff or were actively working at the time could not receive benefits. Both sides appealed.

The review board rejected the ALJ’s distinction between actively working employees and those laid off for purposes of eligibility for benefits, determining that all lacked good cause to voluntarily leave when they took the early retirement and resigned. The board concluded that all of the employees remained eligible for unemployment benefits pursuant to Indiana Code 22-4-14-1(c).

But the Court of Appeals majority disagreed, reversing and remanding the case saying that workers shouldn’t be able to receive continued benefits. Senior Judge John Sharpnack and Judge Elaine Brown specifically decided that the workers didn’t have good cause to voluntarily leave their employment because there weren’t specific threats or plans of future plant closings or layoffs, despite the overall economic climate and uncertainty facing the auto industry.

The majority relied heavily on York v. Rev. Bd. of Ind. Employment Sec. Div., 425 N.E. 2d 707 (Ind. Ct. App. 1981) as helpful guidance in constituting Indiana Code 22-3-14-1(c), which specifically applies to those who elect to retire in connection with a layoff or plant closure and receive compensation for that. That court held that employees who left due to risk of possible future changes but not direct threat of layoff were not entitled to benefits.

Judge James Kirsch dissented, writing that he believes the majority decision to deny unemployment compensation benefits to these workers goes against legislative directive and ignores what many face in these economic times.

“The Great Recession has had a catastrophic effect on this country and this state. Few, if any, industries were harder hit than automotive manufacturing, and the thousands of workers affected are unemployed through no fault of their own,” the judge wrote. “To say that the workers who accepted EVTEP retired for personal reasons is to ignore economic reality. This economic reality was marked by layoffs and plant closings … those layoffs and plant closings drove the decision of the claimants in this case to accept EVTEP.”

Judge Kirsch wrote that he would defer to the board’s judgment and expertise in employment matters and affirm its decision in all respects.
 

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