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Employee’s Voluntary Resignation Does Not Necessarily Result in Disqualification for Unemployment Benefits

On March 29, 2018, the Appellate Division in Cottman v. Board of Review ruled that an employee who voluntarily quits when faced with the imminent threat of termination may nevertheless be eligible for unemployment benefits.

Cottman, who worked the overnight shift (11:00 p.m. to 9:00 a.m.) as a residential counselor at a group home, has three special needs children.  Just before Cottman started her shift, her babysitter abruptly quit.  Cottman’s employer maintained a policy that required employees to find coverage for his or her shift if the employee was unable to report to work.  While Cottman tried to find coverage, she was unable to do so, so she contacted her supervisor.  The supervisor threatened that Cottman might be fired if she did not report for work.  The supervisor stated: “It’s either you can come in or you might be fired.  I wouldn’t play with your time.”  In response, Cottman chose to resign in order to avoid termination.  Cottman’s version of this discussion went undisputed by the employer.

Cottman’s application for unemployment benefits was denied based on a finding she “left work voluntarily without good cause attributable to her work.”  The Tribunal affirmed this disqualification from benefits “citing N.J.S.A. 43:21-5(a), as well as N.J.A.C. 12:17-9.1(e)(2), which expressly provides that voluntarily leaving work for the purpose of caring for children is not good cause.”  The Appellate Division reversed.  While observing that “[w]ith few exceptions, leaving work for personal reasons unrelated to work, no matter how reasonable, disqualifies an employee from receiving unemployment benefits,” the Court recognized that “when an employee knows that he or she is about to be fired, the employee may quit without becoming ineligible.”  Observing that Cottman would have been ineligible if she simply had not appeared for work, the Court explained that was not the case here.  Cottman had contacted her supervisor, explained the compelling circumstances necessitating her absence from work, and then interpreted her supervisor’s responsive statements to indicate that her termination would be a “near-certainty” if she did not report.  Thus, “[r]ather than simply not appear for work and be discharged – and suffer the harm to her employment prospects – she resigned.”  Furthermore, the Court cited the relevant regulation indicating that that “‘good cause for being absent from work’ does include ‘any compelling personal circumstance…which would normally prevent a reasonable person under the same conditions from reporting to work.’”  Relying on this, the Court reasoned that “[a]ssuming that caring for children based on the sudden loss of child care is such a compelling personal circumstance, Cottman apparently would have been eligible for benefits if she had been discharged after failing to report to work.”  Under the facts of this case, the Court determined that “an employee need not wait to be fired when discharge is imminent.  At that point, the employee may resign and still be eligible for benefits.”

Notably, the Court expressly stated it was not reaching the issue of whether an employee may be eligible for benefits when he or she resigned when faced with imminent discharge due to misconduct.  Under the circumstances presented by Cottman, when faced with a “near-certainty” of discharge, an employee who voluntarily quits can be eligible for unemployment benefits.  The take-away from this very recent decision is that employers must not assume that an employee who voluntarily quits necessarily will be ineligible for unemployment benefits. Compelling circumstances coupled with the employer’s threat of imminent termination can leave open the employee’s eligibility for unemployment benefits.

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