In Indiana State University v. William C. LaFief, et al., No. 93S02-0801-EX-17, William LaFief was hired by Indiana State University as an assistant professor for one academic year and was reappointed for the following year. After his second academic year at the university, LaFief was told by the school he would not be reappointed for a third year.
LaFief applied for unemployment benefits. An administrative law judge ruled he wasn't entitled to benefits because he wasn't "discharged" because his employment ended at the end of his contract term. The Indiana Department of Workforce Development Review Board reversed the ALJ's decision; the Indiana Court of Appeals reversed the Review Board and agreed with the ALJ that LaFief wasn't discharged and didn't qualify for unemployment.
A split Supreme Court agreed with the Review Board, ruling LaFief didn't become voluntarily unemployed at the expiration of his contract term. The point of an employment contract is to require the parties continue the employment during the contract's term, and being a contract employee doesn't waive the right to receive unemployment benefits. To hold otherwise would encourage employers to require these fixed-term employment contracts as a way to avoid unemployment compensation liability, wrote Chief Justice Randall T. Shepard.
"The fact that LaFief had warning that his employment could terminate upon the contract's expiration does not change the fact that at the end of the year he became unemployed. The termination of his employment was no more voluntary than the termination of employment of an employee at will, who is presumably on notice that his employment could terminate at any time," he wrote.
Writing for the majority, Chief Justice Shepard made a note that the ruling in this case doesn't alter the general rule that employees who contractually agree to mandatory vacation periods or temporary shutdowns - such as teachers - aren't eligible for unemployment benefits as long as they have reasonable assurance they will continue to be employed after the mandatory vacation or temporary shutdown period ends.
In a dissent - with which Justice Robert Rucker concurred - Justice Brent Dickson wrote he would reverse the Review Board's decision because LaFief had no employment or leave from which to be discharged. In entering a fixed-term contract, he voluntarily agreed that his employment would end at the conclusion of the academic year. LaFief wasn't discharged nor did he leave his job during the contract-term, so he wasn't eligible for unemployment benefits.
"The professor expressly contracted that his employment would expire at the end of its fixed term. He is thus responsible and accountable for his subsequent unemployment," Justice Dickson wrote.