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Expiration of Contract Term Is Not Voluntary Exit from Employment

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11/15/07 3:53 PM

Virginia: Expiration of Contract Term Is Not Voluntary Exit from Employment

By Joanne Deschenaux

An individual who enters into an employment contract for a specific term does not leave employment “voluntarily” when that term expires and is therefore entitled to unemployment benefits, the Court of Appeals of Virginia ruled Nov. 6.

Charmine Key entered into a written contract of employment as a receptionist with Chauncey F. Hutter Inc., which did business as PRO-TAX, a preparer of state and federal tax returns. The letter employment agreement indicated that the employment was temporary, beginning Jan. 10, 2005, and ending at the conclusion of tax season on April 15, 2005.

Key successfully fulfilled the employment agreement and filed for unemployment benefits. In testimony before the Virginia Employment Commission (VEC), PRO-TAX agreed that no work was available for Key after April 15 but argued that Key had “effectively resigned because she knew the employment was temporary when she accepted it.”

The VEC awarded benefits, stating that “the fact that this claimant knew when she was hired that her job would only last until April 15, did not transform her separation at the end of the period agreed upon into a voluntary leaving from the layoff it actually was. The fact remains that the claimant became unemployed because the employer no longer needed her services. Such a layoff amounts to a no fault discharge.”

PRO-TAX appealed to the circuit court, which affirmed the award of benefits. The company then sought review in the court of appeals.

Virginia law, the appellate court noted, disqualifies an individual from unemployment benefits if the VEC finds that the individual was unemployed “because he left work voluntarily” (Code § 60.2-618(1)). In interpreting this statutory language, the court emphasized that the unemployment act “was intended to provide temporary financial assistance to workers who become unemployed without fault on their part” and “is to be liberally and remedially interpreted.”

The court then stated that the burden in the case was on the employer to prove that the claimant left work voluntarily and referred to a prior case ( Shuler v. Virginia Employment Commission, 9 Va. App. 147 (1989)), in which the court had defined the term “voluntary” to mean “unconstrained by interference; unimpelled by another's influence; spontaneous; acting of oneself; resulting from free choice.”

Taking into account that the act was to be liberally construed, referring to its previous definition of “voluntary” and granting appropriate deference to a decision of the VEC, the court concluded that “when an individual leaves work solely because that individual entered into a contract of employment for a defined term, that individual does not leave work ‘voluntarily,’ as that word is used in Code § 60.2-618(1). The involuntary unemployment, for which the act is designed to provide, presupposes a lack of available work.”

The appellate court therefore affirmed the award of benefits.

Chauncey F. Hutter Inc. v. Virginia Employment Commission, Va. Ct. App., No. 0537-07-2 (Nov. 6, 2007)

Professional Pointer: A number of other states, including Alabama, Illinois, Kansas, Kentucky, Minnesota, Nebraska and Vermont, have also interpreted “voluntarily” leaving employment, for unemployment compensation purposes, to exclude a departure when a contract term has expired and no more work is available.

Joanne Deschenaux, J.D., is SHRM’s senior legal editor.

Related Resource:

SHRM Unemployment Toolkit

Editor’s Note: This article should not be construed as legal advice.

For more Virginia news as well as recent developments in other states, visit State Workplace Law News on SHRM Online.

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SHRM Online Workplace Law Focus Area

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