Lafferty v. Review Board of the Indiana Department of Employment & Training Services

600 N.E.2d 1378, 1992 Ind. App. LEXIS 1581, 1992 WL 296916

• Court: Indiana Court of Appeals
• Decided: October 22, 1992
• Docket: 93A02-9011-EX-664
• Status: Published

Opinions

CASE SUMMARY

BUCHANAN, Judge.

Patrick C. Lafferty (Lafferty) appeals the denial of unemployment compensation benefits, claiming the Review Board of the Indiana Department of Employment and Training Services (Board) erred in its determination that he was not entitled to unemployment benefits because he left his position at Wal-Mart without good cause and that the application of the ten week statutory requirement to a claimant who is fired without just cause, violates the equal protection clauses of the United States and Indiana Constitutions.¹

We affirm.

FACTS

The facts which support the Board's decision show that in 1987, Wal-Mart hired Lafferty to take care of the floors of its store. In this position Lafferty worked forty hour weeks at $4.55 an hour; his lunch hour was unpaid.

Searching for a new job, Lafferty contacted the Job Service Division of the Indiana Department of Employment and Training Services (IDETS). On May 8, 1990, Mrs. Nally, an employee of IDETS, informed Lafferty of a job opening with ABA Building Management (ABA) and assisted Lafferty by calling ABA on his behalf. ABA offered Lafferty a floor maintenance position similar to the one he held with Wal-Mart. However, the ABA position offered several advantages: the starting wage was $5.00 an hour with the likelihood it would increase to $6.00 an hour within six months, he would have a paid, one half hour lunch break, and the equipment and supplies provided by ABA would make his work easier and increase his efficiency. Lafferty accepted the ABA position. His last day at Wal-Mart was May 9, 1990; the next day he began his new job.

On June 8, 1990, Lafferty was discharged from ABA over an incident involving his having pushed a grocery cart into a customer's cart causing minor damage and a dispute between Lafferty and his supervisor over the adjustment of Lafferty's working hours. Lafferty filed for unemployment benefits, and following a hearing on whether he had been properly discharged by ABA, a claims deputy ruled that ABA did not have "just cause" to dismiss him and there would be no disqualification on that basis. Approximately a week later, another claims deputy heard Lafferty's underlying claim for unemployment and ruled that he was not entitled to benefits because he voluntarily left employment with Wal-Mart without good cause in connection with work and had failed to work at ABA for the ten week period required by Ind.Code 22-4-15-1(c) (1990), which decision was affirmed by an administrative law judge (ALJ). On appeal, the Board on September 21, 1990 affirmed the decision of the ALJ:

"The claimant ... left the employment in order to take a higher paying job with better working conditions. This is a perfectly understandable and rational reason for leaving the employment, however, it is an entirely personal reason for leaving the employment, as it is done to improve the claimant's financial condition. Therefore, the administrative law judge must conclude that the claimant did not have good cause in connection with the work for leaving the employment."

Record at 20.

ISSUES

On appeal, Lafferty raises two issues which we reorder and restate as:

1. Did the Board err in not finding that Lafferty's leaving employment to accept a better paying job constituted "good cause in connection with work" so as to not disqualify Lafferty from receiving benefits under IC 22-4-15-1(a)?

2. Does the application of the ten week requirement to an employee who leaves employment to accept a better paying job and then is fired by the second employer without just cause, violate the equal protection clauses of the United States and Indiana Constitutions?

DECISION

ISSUE ONE -Did the Board err in not finding that Lafferty's leaving employment to accept a better paying job constituted "good cause in connection with work" so as to not disqualify Lafferty from receiving benefits under IC 22-4-15-1(a)?

PARTIES' - CONTENTIONS -Lafferty claims that changes in the unemployment statute indicates that "good cause in connection with work" should include leaving employment to take a better paying job. In addition, Lafferty claims that IDETS' role in helping him find employment with ABA also provides the necessary "good cause" to qualify for benefits. The Board responds that Lafferty was properly denied unemployment benefits because his reasons for quitting his job with Wal-Mart were personal rather than objectively related to his work conditions and thus he did not have "good cause in connection with work" for leaving so as to entitle him to unemployment benefits.

CONCLUSION -The Board did not err in concluding that Lafferty left his employment with Wal-Mart "without good cause in connection with work."

The general disqualification provision of IC 22-4-15-1(a) (1990) provides:

"With respect to benefit periods established on and after July 6, 1980, an individual who has voluntarily left his employment without good cause in connection with the work or who was discharged from his employment for just cause is ineligible for waiting period or benefit rights for the week in which the disqualifying separation occurred and until he has earned remuneration in employment equal to or exceeding the weekly benefit amount of his claim in each of eight (8) weeks. If the qualification amount has not been earned at the expiration of an individual's benefit period, the unearned amount shall be carried forward to an extended benefit period or to the benefit period of a subsequent claim."

This disqualification provision is modified by IC 22-4-15-1(c):

"(c) The disqualifications provided in this section shall be subject to the following modifications:

(1) an individual shall not be subject to disqualification because of separation from his prior employment if ke left to accept with another employer previously secured permanent full-time work which offered reasonable expectation of betterment of wages or working conditions and thereafter was employed on said job for not less than ten (10) weeks...."

(Emphasis supplied).

It is undisputed that Lafferty left employment to take a permanent, full-time position with another employer who offered better wages and working conditions, a situation explicitly covered under the modification provision of (c). Although Lafferty contends that leaving for a better paying job should be interpreted as "good cause in connection with work" so as to not disqualify him from receiving benefits under (a), his interpretation is not supported by the statute's construction. The "modifi-eation'" provision in (c) clearly provides an exception to the general disqualification provision in (a). When an exception is used in a statute it "carves something out of the general provision which, in the opinion of the law-giver, would be within the general provision if the exception had not been made." Taylor v. Phelan (1946), 117 Ind.App. 40, 47, 69 N.E.2d 145, 148 (emphasis supplied).

Applying that principle it is reasonable to conclude that the legislature intended the modification to carve out of the general disqualification provision an exception for an individual who leaves employment to accept a better paying job. Indeed should the legislature have intended for that reason to constitute "good cause in connection with work" so that individual would not be disqualified from receiving benefits under (a), then there would have been no need for the legislature to explicitly include a modification in (c) so that individual would not be disqualified.

Thus, it is unnecessary to examine whether an individual's leaving employment to accept a better paying job is leaving employment "without good cause in connection with work" under (a). By virtue of the statute's construction that reason for leaving employment is without good cause and the individual is disquali fied from receiving benefits unless it can be shown that, in addition to having left employment to accept a better paying job, the individual also worked at least ten weeks at the second job. Lafferty concedes that he did not work ten weeks at the new job, but argues that application of the ten week provision to an employee who, like himself, was discharged by the second employer without just cause, is a violation of equal protection. We now address that contention.

ISSUE TWO -Does the application of the ten week requirement to an employee who leaves employment to accept a better paying job and then is fired by the second employer without just cause, violate the equal protection clauses of the United States and Indiana Constitutions?

PARTIES' - CONTENTIONS -Lafferty concedes, and we agree, that an employee who leaves employment to take a better paying job and then is dismissed without just cause before working ten weeks for the second employer, is not entitled to receive unemployment benefits,² but argues that the distinction between employees who are discharged without just cause based solely on the length of time worked for the second employer violates the constitutional guarantee of equal protection of the laws. The Board responds that different treatment of the classifications of employees is supported by the state's interest in promoting employment stability and not unfairly penalizing the first employer who was not responsible for the employee's dismissal.

CONCLUSION -Denial of benefits to Lafferty due to his failure to work at least ten weeks with his new employer is not a violation of equal protection.

Lafferty theorizes that the application of the ten week rule, without regard to whether an employee was discharged from the second employer for just cause, creates two classifications of employees:

"One class (the statutorily favored class) consists of persons who meet the earnings requirements for drawing benefits, who leave one job to accept previously. secured permanent full-time work and work ten or more weeks in the second job before losing it through no fault of their own. That class receives unemployment compensation. The other class (the statutorily disfavored class) consists of persons who meet the earnings requirements for drawing benefits, who leave one job to accept previously secured permanent full-time work, but work less than ten weeks in the second job before losing it through no fault of their own. That class, which includes Patrick Lafferty, is denied unemployment compensation."

Appellant's Brief at 9-10.

Lafferty concedes that the distinction between these classifications involves neither a fundamental right nor a suspect classification. Appellant's Brief at 11. Thus, the legislature's statutory scheme is to be upheld if it is rationally related to furthering a legitimate state interest. Vance v. Bradley (1979), 440 U.S. 93, 99 S.Ct. 939, 59 L.Ed.2d 171; Winder v. Review Bd. (1988), Ind.App., 528 N.E.2d 854.

One of the stated goals of the Indiana Employment Security Act is "to encourage stabilization in employment." IC 22-4-1-1. Seizing upon that policy goal, the Board argues that the state interest in the ten week requirement is that it "encourages individuals to keep their present job, rather than quit their job to begin work with a second employer.... [and] ... this requirement discourages job-hopping and promotes continuity of employment." Appel-lee's Brief at 10.

The Board advocates another state interest in support of the distinction: "the ten (10) week requirement prevents unnecessary tax rate increases of the past employer who in no way contributed to the job separation of the worker." Appellee's Brief at 10-11.

In Vicari v. Review Bd. (1991), Ind.App., 568 N.E.2d 1061, trans. denied, this court considered an equal protection challenge to the ten week requirement as applied to employees who leave employment to take a better paying job and then are dismissed, with just cause, prior to completing ten weeks on the new job. In upholding the different treatment of those who stay on the new job for ten weeks as opposed to those who do not satisfy the requirement, this court declared:

"One of the goals of the Indiana Employment Security Act is to encourage employment stability ... The ten-week requirement prevents excessive job-hopping and is rationally related to the goal of encouraging employment stability."

Vicari, supra at 1063; see also Wade v. Review Bd. (1992), Ind.App., 599 N.E.2d 630.

The goal of employment stability provides a legitimate state interest for application of the ten week rule to deny Lafferty benefits. See Wade, supra; Vicari, supra. Job-hopping, for whatever reason, is always a risky venture entailing the establishment of a new employer-employee relationship which may well prove unsuceessful. Given that Indiana is an employment at-will state, a new employer has great latitude to discharge an employee no matter how "permanent" that employee thought the work would be upon entering employment. Thus, it seems entirely legitimate for the State to seek to discourage job-hopping by the application of the ten week rule to employees who are discharged by their second employer for whatever reason.

Also, the State has a legitimate interest in protecting the first employer who would have to bear a greater financial and eviden-tiary burden if an employee who is discharged before meeting the ten week requirement with the second employer is deemed eligible for benefits because he was dismissed "without just cause." The first employer would have to pay more in unemployment benefits due to former employees being eligible for benefits despite failing to complete ten weeks at the second job. More significantly, to avoid the responsibility of paying benefits, the first employer may be placed in the awkward position of having the burden of proving the second employer did have "just cause" to dismiss the employee. See Potts v. Review Bd. (1985), Ind.App., 475 N.E.2d 708, trans. denied; Moore v. Review Bd. (1984), Ind.App., 461 N.E.2d 737.

Employment stabilization and protection of the first employer's interest are legitimate state interests supporting the application of the ten week rule to employees who are discharged, with or without just cause, by the second employer.

Judgment affirmed.

SHARPNACK, C.J., concurs. SHIELDS, J., dissents with separate opinion.

1 . See U.S. Const. amend. XIV, Section 1; Ind. Const. art. 1, Section 23.

2 . In his brief, Lafferty concedes:

"In Indiana, when a worker leaves one job in order to take a better, permanent job, that worker will not be eligible for unemployment compensation benefits if he loses the better job, even though it was through no fault of his own, unless he worked at least ten weeks in the better job."

Appellant's Brief at 4 (emphasis supplied).

"When a worker leaves one job in order to take a better job, there is a special statutory provision that applies to disqualify the worker for unemployment benefits, even if ke loses the better job through no fault of his own, unless the worker was able to work at least ten weeks in the new, better job."

Appellant's Brief at 9 (emphasis supplied).