Wright v Great Atlantic & Pacific Tea Co. – 10.111

Wright v Great Atlantic & Pacific Tea Co., UIA

Digest No. 10.111

Section 29(1)(a)


Cite as: Wright v Great Atlantic & Pacific Tea Co, unpublished opinion of the Oakland County Circuit Court, issued August 18, 2005 (Docket No. 05-064329-AE).

Appeal pending: No
Claimant: Sherry Wright
Employer: Great Atlantic & Pacific Tea Co., Inc.
Date of decision: August 18, 2005

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HOLDING: When an employee resigns and takes a severance package, the separation is considered to be voluntary. “‘Voluntary’ connotes a choice between alternatives that ordinary persons find reasonable.” MacArthur v Borman’s Inc, 200 Mich App 686 (1993). An agreement between an employer and an employee that states the employer will not contest unemployment benefits is not binding on the Agency.

FACTS: Claimant worked for employer from August 19, 1986 until March 2004. In January 2004, in order to reduce its workforce, the employer offered a severance package in exchange for resignation. Part of this agreement was that the employer would not contest Claimant’s eligibility for UI benefits. Claimant was not told what would happen if she refused the offer, however she did know that she had less seniority than many other employees. Her future at the company was therefore uncertain if she did not take the severance package.

The Agency found Claimant disqualified under the voluntary leaving provision. The ALJ found that Claimant had voluntarily quit, but due to the agreement restitution was to be charged to the employer not Claimant. Board of Review and Circuit Court upheld the decision.

DECISION: The Circuit Court found that Claimant chose to take the severance package instead of continuing to work with an uncertain future. She was therefore disqualified.

RATIONALE: Claimant relied on the dissent in the Board of Review decision for her appeal. That dissent relied on unpublished opinions of the Michigan Court of Appeals and circuit court opinions. Claimant did not attach these decisions to her appeal, so the Circuit Court found them unpersuasive. Relying on MacArthur v Borman’s Inc, the Circuit Court found that Claimant could have chosen to continue to work at the employer with an uncertain future. Since Claimant, instead, chose to leave and take the severance package, she voluntarily quit.

Digest author: Andrea M. Frailey, Michigan Law, Class of 2017
Digest updated: November 26, 2017

Ciaramitaro v Modern Hard Chrome Service – 4.26

Ciaramitaro v Modern Hard Chrome Service
Digest no. 4.26

Section 48

Cite as: Ciaramitaro v Modern Hard Chrome Service, unpublished opinion of the Macomb Circuit Court, issued November 1, 1996 (Docket No. 96-4644-AE).

Appeal pending: No
Claimant: Sam P. Ciaramitaro
Employer: Modern Hard Chrome Service
Docket no.: B91-12323RR-131804W
Date of decision: November 1, 1996

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CIRCUIT COURT HOLDING: Where claimant involuntarily retired and received a week’s pay for each year he worked for employer, such pay was severance pay and was not remuneration under Section 48.

FACTS: Claimant retired involuntarily on February 2, 1990. As part of the early retirement package claimant received a 34 week “salary continuation” from February 8, 1990 through September 27, 1990. He did not apply for benefits until after those payments ended. The MESC held that the claimant received severance pay which is not remuneration and cannot be used to establish credit weeks.

DECISION: Claimant is ineligible for benefits because he had insufficient credit weeks in the 52 week period preceding his application to establish a claim.

RATIONALE: Claimant failed to prove that he was legally entitled to receive a continuing weekly salary if involuntarily retired. Claimant performed no services in exchange for the monies he received.

Digest Author: Board of Review (original digest here)
Digest Updated:

Hamilton v W A Foote Memorial Hospital – 4.18

Hamilton v W A Foote Memorial Hospital
Digest no. 4.18

Section 4850

Cite as: Hamilton v W A Foote Memorial Hosp, unpublished opinion of the Jackson Circuit Court, issued October 3, 1984 (Docket No. 84-33223-AE).

Appeal pending: No
Claimant: Joseph W. Hamilton
Employer: W. A. Foote Memorial Hospital
Docket no.: B83 09754 93402W
Date of decision: October 3, 1984

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CIRCUIT COURT HOLDING: Payments made to claimant after his separation and after he stopped performing services were severance pay, in light of the fact both parties characterized them as such and claimant had no right to payment in lieu of notice.

FACTS: The claimant worked for the employer as a controller. The employer requested the claimant’s resignation. After the claimant resigned the employer continued to pay the claimant on a bi-weekly basis for a six month period. Notably, both parties referred to the payments as “severance pay”. Upon filing for benefits the claimant asserted the monies received were remuneration under the Act and could be used to establish credit weeks.

DECISION: No remuneration was earned and no credit weeks could be established based on the payments in question.

RATIONALE: It is necessary to determine the understanding of the parties at the time of the separation. Here, both parties referred to the payment as severance pay. Further, the claimant did not perform any services during the six month period.

The court quoted from Bolta Products v Director of Employment Security, 356 Mass 684 (1970), : “A payment in lieu of dismissal notice may be defined as a payment made under the circumstances where the employing unit, not having given an advance notice of separation to an employee, and irrespective of the length of service to the employee, makes a payment to the employee equivalent to the wages which he could have earned had he been permitted to work during the period of notice. Severance pay, on the other hand, may be defined as a payment to an employee at the time of his separation in recognition and consideration of the past service he has performed for the employer and the amount is usually based on the number of years of service.”

Digest Author: Board of Review (original digest here)
Digest Updated:

Jones v Gateway, Inc – 4.17

Jones v Gateway, Inc
Digest no. 4.17

Section 48

Cite as: Jones v Gateway, Inc, unpublished opinion of the Michigan Employment Security Board of Review, issued February 23, 1983 (Docket No. 1983 BR 86593W).

Appeal pending: No
Claimant: Robert H. Jones
Employer: Gateway, Inc.
Docket no.: B82 18088 86593W
Date of decision: February 23, 1983

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BOARD OF REVIEW HOLDING: Where the claimant has no contractual entitlement to notice, any money paid by the employer upon termination is in the nature of a gift and therefore severance pay, which cannot be considered remuneration for purposes of Section 48.

FACTS: The claimant was employed as an executive director. The claimant received a call from the president of the employer’s executive committee requesting that the claimant submit his resignation the following day. In the ensuing conversation, the claimant requested “severance pay” of 6 months, and the president said he did not anticipate that “severance” would be a problem. Thereafter an executive committee meeting was called and it was agreed to award the claimant a sum equal to three months wages even though the claimant’s employment contract had no provision for notice in advance of discharge, pay in lieu of such notice or any severance arrangement.

DECISION: Claimant is entitled to benefits.

RATIONALE: The claimant had no contractual agreement entitling him to notice or to pay in lieu thereof. Therefore, he had no enforceable right to the money which was paid to him. Consequently, it was in the nature of a gift or bonus and as a result must be considered severance pay.

Digest Author: Board of Review (original digest here)
Digest Updated:

Hayman v S & H Travel Awards – 4.13

Hayman v S & H Travel Awards
Digest no. 4.13

Section 48

Cite as: Hayman v S & H Travel Awards, unpublished opinion of the Oakland Circuit Court, issued May 4, 1976 (Docket No. 75 126038).

Appeal pending: No
Claimant: Judith Hayman
Employer: S & H Travel Awards
Docket no.: B74 11222 46917
Date of decision: May 4, 1976

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CIRCUIT COURT HOLDING: Where an employer customarily asks its employees to leave on their dates of termination, and pays them “severance pay” determined by each person’s salary and seniority, the additional money is not payment in lieu of notice.

FACTS: The Referee stated: “On the date of her dismissal, the claimant received three weeks of vacation and five weeks additional pay which has been considered by the employer to be payment in lieu of notice.”

DECISION: The additional pay is not remuneration under the Act.

RATIONALE: The Court adopted the decision of the Referee, who held: “The testimony indicated that, because of the risk of former employees providing the names of prospective customers to competitors, whenever an employee’s services were no longer needed, they were asked to leave employment on the same date that they were terminated. That is, employees were not given a certain time period as a notice of their termination during which they could seek other work. This being the case, the Referee does not find that the payment of five weeks of wages given to the claimant on her last day of employment could be considered payment in lieu of notice. The only time payment in lieu of notice could be given to an employee would be on occasions when it would be possible for notice to be given.” “In addition, it appears from the testimony that the claimant was advised that the payment she would be receiving would be in the nature of a severance payment.” “It also appears that the amount of the severance pay increased the longer an employee was employed by the company and the greater his or her, salary.”

Digest Author: Board of Review (original digest here)
Digest Updated:

Hickson v Chrysler Corp – 4.02

Hickson v Chrysler Corp
Digest no. 4.02

Section 48

Cite as: Hickson v Chrysler Corp, 394 Mich 724 (1975).

Appeal pending: No
Claimant: Joseph R. Hickson
Employer: Chrysler Corporation
Docket no.: B70 5047 RO 39184
Date of decision: September 8, 1975

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SUPREME COURT HOLDING: Where a labor agreement provides for the allocation of vacation pay to a portion of an indefinite layoff period, the payments are remuneration and not severance pay.

FACTS: “Soon after being laid off plaintiff received 28 days vacation pay from his employer in accordance with a Chrysler-UAW contract. The 28 days pay was comprised of:

1) 17-1/2 days vacation credit accrued in 1969 which prior to the layoff plaintiff and his employer had agreed the plaintiff would take between July 6 and July 29 and

2) 10-1/2 vacation days accrued in 1970 up to the time of the layoff which normally would not have been taken until 1971.”

DECISION: The claimant’s vacation pay constitutes remuneration under Section 48 of the Act.

RATIONALE: “In this case there can be no question that the Chrysler/UAW contract provided for the designation of the period for allocation of vacation pay.”

“Receipt of ‘termination, separation, severance, or dismissal allowances, and bonuses’ suggests payment independent of and perhaps in addition to vacation payments. The payments in question were clearly ‘for a vacation or a holiday.'”

Digest Author: Board of Review (original digest here)
Digest Updated: