Key to predicting how an unemployment claim or other type of employment action might turn out is the ability to understand the circumstances under which an employee leaves the company. The nature of the work separation determines to a large extent how a claim or lawsuit will be handled. The purpose of this brief article is to summarize the most important ways in which TWC analyzes work separations, but other laws will be mentioned where appropriate. Additional information on this topic can be found in the next section of this book, "Post-Employment Problems", in the articles dealing specifically with unemployment claims.
Voluntary Work Separations
Involuntary Work Separations
Effect of Voluntary or Involuntary Work Separations
Quit or Discharge - Close Cases
Two-Week Notice Rule
Resignation Without Notice
Voluntary or Involuntary?
The first thing to do is determine whether a work separation is voluntary or involuntary. This is important not only because TWC applies different standards to voluntary and involuntary work separations, but because many companies' benefit plans provide different outcomes depending upon the circumstances in which an employee leaves employment.
Voluntary Work Separations Top of Page
A work separation is voluntary if initiated by the employee. An employee initiates the work separation if he or she basically sets the ball rolling toward a work separation. In a true voluntary work separation, the employee has more control than the employer over the fact and the timing of leaving the work. That can happen several different ways:
Resignation with advance notice - the employee gives the employer oral or written notice of leaving in advance.
Retirement - a special form of resignation with advance notice that involves satisfying some kind of condition for leaving the company with one form or another of continued benefits.
Resignation without advance notice, but with notice given at the time of the work separation - the employee does let the employer know somehow that he or she will not be returning to work.
Resignation without notice at all - this can include walking off the job, job abandonment, and failure to return to work after a period of leave.
"Constructive discharge" - for purposes of discrimination, wrongful discharge, anti-retaliation, and other laws, an employee may be considered to have been constructively discharged if working conditions were so intolerable that a reasonable employee would feel forced to resign. However, under the law of unemployment compensation, such a work separation is generally considered to be voluntary.
Failing to return following an unpaid suspension of three days or less - see "Unpaid Suspensions" in the article "Unemployment Insurance Law - Qualification Issues" for details.
As long as the employer did not pressure the employee into resigning, work separations that occur under those circumstances may be considered voluntary.
Focus: Job Abandonment
There is no official definition of job abandonment in the statute or the TWC regulations. It is mentioned in the following TWC precedent cases: Appeal No. 97-004610-10-042497, VL 135.05(6); Appeal No. 1197-CA-71, VL 450.02(2); Appeal No. MR 86-2479-10-020687, MC 90.00; and Appeal No. 764254-2, MC 135.05 (cross-listed at VL 135.05). The concept of job abandonment is generally defined by each company in its employee handbook. The basic idea is to set a limit for the number of days an employee can be completely out of contact with the company, beyond which the company will presume that the employee has decided not to return to work at all. Most companies define job abandonment as absence without notice for three or more days in a row. Such work separations are generally considered voluntary, although TWC may view certain job abandonment-caused work separations as involuntary, depending upon how the claimant and employer explain their respective positions and on what the facts show.
Involuntary Work Separations Top of Page
A work separation is involuntary if initiated by the employer. An employer initiates a work separation by taking some kind of action that makes it clear to the employee that continued employment will not be an option past a certain date. In such a situation, the employer has more control than the employee over the fact and the timing of leaving the work. There are many ways in which a work separation can be involuntary:
Layoff, reduction in force, or downsizing - work separation due to economic inability to keep the employee on the payroll.
Temporary job comes to an end - work separation due to work no longer being available because the job is simply finished. This includes successful completion of PRN or on-call, as-needed assignments, if no further work is available the next workday.
Discharge or termination for misconduct or "cause" - work separation that the employer views as somehow being the claimant's fault.
Resignation in lieu of discharge - same as discharge, but the employer gives the employee the option of resigning as a face-saving option.
Forced retirement - may be akin to an economic layoff or a discharge for cause, but in this situation, the employee is allowed to qualify under a retirement plan.
"Mutual agreement" - in most cases, this form of work separation is viewed as involuntary, since it is usually initiated or encouraged by the employer.
Unpaid suspension of four days or longer - see "Unpaid Suspensions" in the article "Unemployment Insurance Law - Qualification Issues" for details.
Focus: PRN Status / On-Call, As-Needed Employees Top of Page
Status as a PRN or on-call, as-needed employee would not have anything to do with unemployment claim eligibility, since on-call, as-needed employees are regarded as having been laid off, i.e., involuntarily separated from employment, upon the completion of each assignment if no further work is available the next workday. For unemployment claim purposes, a PRN employee's work separation date would be the last day of an assignment, if no further work was available on the next workday immediately following that day. Such a work separation could lead to a chargeback if the claimant draws unemployment benefits, and the company paid wages to the claimant during the base period of the unemployment claim (the chargeback decision depends upon the reason why the last period of work during the base period came to an end). It does not matter if a company leaves a PRN employee on the active payroll system for a particular length of time. What matters is that the employee stopped working for pay at some point. Under the law of unemployment compensation, that is the relevant work separation that the agency takes into account.
Effect of Voluntary or Involuntary Work Separations Top of Page
The nature of a work separation may determine several important things following the decision to sever the employment relationship:
Voluntary work separation:
Under the Texas Payday Law, an employee who leaves voluntarily must receive the final pay no later than the next regularly scheduled payday following the work separation.
In an unemployment claim, the claimant who voluntarily left employment faces the burden of proving good cause connected with the work for leaving the job.
In many companies, employees who leave voluntarily receive different benefits than those who are involuntarily separated, depending upon the terms of the company's benefit plan.
Involuntary work separation:
Under the Texas Payday Law, an employee who leaves involuntarily must be given the final pay no later than six calendar days following the last day of work.
In an unemployment claim, the employer that initiated the work separation has the burden of proving misconduct connected with the work as the reason for discharge.
Post-termination benefits eligibility under company benefit plans is often affected by involuntary work separations. If the discharge was for "cause" or misconduct, such benefits are often reduced or denied. Under COBRA, an employee who was terminated for "gross misconduct" is ineligible for continuation coverage under the company's health plan.
Quit or Discharge - Close Cases Top of Page
The question of whether a claimant quit or was fired is very important. It determines who has the burden of proof in the case. The burden of proof in an unemployment claim falls on the party that initiated the work separation. If a claimant quit, he has the burden of proving that he had good cause connected with the work to resign when he did. If the claimant was fired, the employer has the burden of proving 1) that the discharge resulted from a specific act of misconduct connected with the work that happened close in time to the discharge and 2) that the claimant either knew or should have known she could be fired for such a reason.
Sometimes the circumstances are murky, and it is unclear exactly what happened. Here are some hints as to how TWC will rule:
Whoever first brought up the subject of a work separation might be held to be the one who initiated the separation.
"Mutual agreement" work separations are usually held to be discharges. See # 1.
A resignation under pressure is a form of discharge. If the employee had no effective choice but to leave when they did, it was an involuntary work separation, and the employer's chances in the case will depend upon its ability to prove misconduct.
If an employee expresses a vague desire to look for other work, and the employer tells the employee to go ahead and consider that day to be his final workday, that will usually not be considered a resignation, since no definite date has been given for the final day of work.
If the encounter starts out as a counseling session or a reprimand, and the employee gets discouraged and offers to quit, watch out. If you immediately "accept the resignation", it might be considered a discharge. It would be better to remind the employee that all you wanted to do was talk about a problem, not let him go, and ask the employee whether resignation is really what he wants. If he then confirms that he wants to resign, ask him how much notice he is giving. If he gives two weeks' notice or less, and you accept the notice early within the two weeks, it will still be a quit, not a discharge. (An employer does not have to pay an employee for the portion of a notice period that is not worked, unless company policy promises such a payment.)
If you have an employee sign a prepared, fill-in-the-blank resignation form, that will look suspicious. The employee might claim that he was forced to sign it or else was tricked into signing it, which will only hurt your case. Have the employee fill out a resignation letter in his own words, preferably in his own handwriting, if you can persuade the employee to cooperate to that extent.
If an employee offers to resign, but you instead convince the employee to stay, and later change your mind and "accept the resignation", you have just discharged the employee! Persuading an employee to stay after they have tendered their resignation amounts to a rejection of the resignation, which means that the offer to resign expires, and the employee's acceptance of your pleas to stay amounts to a rescission of the resignation.
If an employee asks to be laid off, be careful - that can be a trap. Do not react like some employers have and fire the employee. Remember, if the employee resigns, they have the burden of proving good work-related cause to quit. It would probably be best to answer any layoff requests with a response to the effect that the request is denied and a reminder that the employee is still needed, thus placing the ball back in the employee's court. If the employee persists, follow that up with a statement to the effect that if the employee no longer wishes to work there, they need to submit a resignation request in writing, and remind them that in the meantime, they still have a job to do. Do not prepare a resignation letter for the employee to sign -- have the employee prepare their own statement of resignation, and then respond to that statement in writing, attaching a copy of the employee's resignation notice to the response. Be sure that any exit paperwork reflects that the employee resigned.
If you are merely counseling an employee about a matter of concern, and the employee starts badgering you with questions and comments like "Are you telling me I'm fired?", "So you're firing me for this?", or "I can't believe you're firing me for this!", watch out. Things like that are often seen in situations where the employee is trying to maneuver the employer into a premature discharge in the hopes that an unemployment claim might turn out favorably for the claimant. The best response is something like this: "No, I am telling you that you need to start paying attention to instructions and following the rules." Make it clear to the employee that you are focused on improving their performance or on getting them to comply with policies. Once again, place the ball back in their court, effectively letting them know, without saying it out loud, that if they want out of the company, they will have to take the initiative themselves.
Two-Week Notice Rule Top of Page
The amount of notice can be important in a TWC case. The rule followed by the Commission recognizes that two weeks' notice is standard in most industries. If the employee gives notice of intent to resign by a definite date two weeks or less in the future and you accept the notice early at your convenience, it will be regarded as a resignation, not a discharge. If more than two weeks' notice is given, but you wait until two weeks or less before the effective date of resignation to accept the notice early, then you would have a good chance of having TWC regard the work separation as a resignation, although not all claim examiners and hearing officers agree. Also, if the employee gives more than two weeks' notice, and you accept it more than two weeks in advance, but you pay wages in lieu of notice for the rest of the notice period, then the situation will still be judged a quit, not a discharge. However, if more than two weeks' notice is given, and you accept the notice more than two weeks in advance without paying wages in lieu of notice (payment for a notice period not worked is not required unless such a payment is promised in writing), the situation is likely to be considered a discharge, with the burden of proof falling squarely on you to prove misconduct connected with the work if you feel that the claimant should be disqualified from UI benefits. Much would depend upon the individual facts in the case.
The same rule works in reverse when an employer gives advance notice of a layoff or termination. If the notice is two weeks or less, and the employee accepts the notice by leaving within the two-week period, the work separation will still be considered involuntary, and the employer will have to prove misconduct if the claimant is to be disqualified from unemployment benefits. However, if the notice is longer than two weeks, and the employee leaves ahead of the final two-week period, the work separation would presumably be voluntary in nature, and the employee would have the burden of proving good cause connected with the work for resigning. For more details on how TWC applies the two-week notice rule, see section 125.25 in both the Misconduct and the Voluntary Leaving chapters of the agency's Appeals Policy and Precedent Manual.
Ambiguous Notice Top of Page
Sometimes employees give murky resignation notices (open-ended, or giving employers multiple options). If the company has the luxury of needing the employee to actually stay, it can try the following to minimize the risk of a "layoff at the employer's convenience" ruling:
respond with a memo rejecting the resignation notice - let the employee know it is not convenient for the company that the employee resign at that time, so the employer really needs for the employee to stay, with no change in the employment agreement.
completely ignore it - if they resubmit the same letter, admonish them that it does not look like a resignation letter, since there is no definite date given for the last day of work, and ask the employee to take it back and not submit it again until they actually want to stop working.
All of this would be aimed at getting a real resignation letter with a definite date of resignation two weeks or less in the future. Adopt a policy informing employees that no open-ended notices of resignation will be accepted - any notice of resignation must contain a definite date of last work. The policy should remind employees to use caution in submitting a letter of resignation, because once the employer takes action on it, it may be too late to rescind the notice.
Resignation Without Notice Top of Page
It can be difficult for a company to protect itself in a resignation case and "prove" that an employee quit, if the employee refuses to give a written notice of resignation, or else leaves under circumstances that make it unlikely that the employee will cooperate and give the company a letter of resignation after the fact. In many such cases, the ex-employee later alleges the company fired them. The most common situation involves a resigning employee quitting without notice, informing only a coworker of that fact, and leaving the employer with no resignation letter to prove it was a resignation. Invariably, the sudden resignation causes one or more coworkers to have to work extra hours. To document that the employee resigned, have the coworker write a memo to the employer explaining the call or contact with the ex-employee and why the coworker worked the extra time: "Dear [Boss], This is just to let you know that the reason I [came into work] [came to work earlier than usual] [worked past my usual end time] today was because ________ called me and said she was quitting and that I needed to cover for her. I worked from ____ to ____, a total of __ hours. I didn't want you to think that I was trying to work outside my schedule. Just let me know if you need me to continue covering for ______." Such a memo serves two purposes: 1) it explains why the coworker worked outside the schedule; and 2) more importantly, it increases the credibility of the assertion that the employee quit, in case the employee disputes that fact in an unemployment claim. Ideally, the coworker would be available later to give firsthand testimony confirming what he or she wrote in the memo. Of course, such a memo will not cover every possible resignation-without-notice situation, but it is an example of how an employer can think outside the box to give itself a little more protection in resignation cases.
In close cases, most administrative agencies such as TWC decide that the work separation was involuntary. Employers should be prepared with both documentation and witnesses to prove their cases either way in the event of a dispute over the nature of the work separation.
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