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Court of Appeals Division I
State of Washington
Opinion Information Sheet
Docket Number: 54772-1-I
Title of Case: EMPLOYEES OF INTALCO ALUMINUM CORP., RES./CR-APP.
VS ST./EMPLOYMENT SECURITY, APP./CR-RES.
File Date: 06/13/2005
SOURCE OF APPEAL
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Appeal from Superior Court of Whatcom County
Docket No: 02-2-01558-8
Judgment or order under review
Date filed: 07/21/2004
Judge signing: Hon. Michael F Moynihan
JUDGES
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Authored by Anne Ellington
Concurring: Marlin Appelwick
William Baker
COUNSEL OF RECORD
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Counsel for Appellant(s)
Erika G.S. Uhl
Washington Attorney General's Office
900 4th Ave Ste 2000
Seattle, WA 98164-1012
Counsel for Respondent(s)
Matthew John Bean
Attorney at Law
9750 3rd Ave NE Ste 303
Seattle, WA 98115-2022
Michael David Brandt
Brandt Law Group
2003 Western Ave Ste 203
Seattle, WA 98121-2161
Catherine M Cabalo
Brandt Law Group
2003 Western Ave Ste 203
Seattle, WA 98121-2161
William B. Knowles
Attorney at Law
PO Box 61252
Seattle, WA 98141-6252
Louis A. Falcone
Attorney at Law
999 3rd Ave Ste 3800
Seattle, WA 98104
IN THE COURT OF APPEALS FOR THE STATE OF WASHINGTON
DIVISION ONE
EMPLOYEES OF INTALCO ) No. 54772-1-I
ALUMINUM CORP., et al, ) (consolidated with
) No. 54870-1-I and
Respondents/Cross Appellants, ) No. 54871-9-I)
)
v. )
)
EMPLOYMENT SECURITY )
DEPARTMENT OF THE STATE )
OF WASHINGTON, ) PUBLISHED OPINION
)
Appellant/Cross Respondent. ) FILED: June 13, 2005
)
ELLINGTON, A.C.J. Employees who accepted voluntary severance packages were
denied unemployment benefits. Because there was no written layoff
announcement and the employer did not take the final action to grant the
severance, the employees do not qualify for benefits under the employer-
initiated layoff rule. The employees' acceptance of voluntary severance
did not constitute good cause to quit. The employees are therefore
disqualified from benefits. We reverse the superior court and reinstate
the commissioner's ruling denying benefits.
BACKGROUND
In response to power shortages and rapidly rising energy prices, the
Bonneville Power Administration reached an agreement with Intalco Aluminum
Corporation under which Intalco agreed to a temporary reduction in its
power allotment. This resulted in a plan to halt aluminum production at
Intalco's Ferndale smelter for two years, from October 1, 2001 through
September 30, 2003. The BPA in return agreed to pay Intalco for not using
the curtailed power.
To address the production halt, Intalco reached an agreement with the union
representing its production and maintenance workers whereby 24 employees
with less than two years' seniority would be laid off, the remaining
employees would be paid their base rate of pay during the shutdown, and
Intalco would offer voluntary severance programs to all hourly employees.
Intalco sent a memorandum to hourly employees announcing three voluntary
severance programs (voluntary severance, early retirement, and furlough),
advising that any employee could elect to participate in one of the
programs during a six-week sign-up period. An employee who elected one of
the programs had seven days thereafter to change his or her mind. Intalco
did not reserve the right to reject an employee's election. Of 930
employees, 280 elected to accept one of the programs and terminate their
employment with Intalco.
After accepting the voluntary severance program, 48 employees applied for
unemployment benefits. The Employment Security Department (the Department)
denied benefits on grounds that the employees voluntarily terminated their
employment. An administrative law judge (ALJ) from the Office of
Administrative Hearings affirmed the Department's decision, and that ruling
was affirmed by the commissioner.
One employee appealed to Thurston County Superior Court, and the other 47
appealed to Whatcom County Superior Court. Both superior courts reversed
the Department and granted benefits. Division Two reversed the Thurston
County Superior Court case and reinstated the commissioner's decision.1 We
now consider the appeal from Whatcom County.
ANALYSIS
Standard of Review. The findings of a commissioner are reviewed under
chapter 34.04 RCW, the Administrative Procedure Act.2 The appellate court
reviews the findings and decision of the commissioner, not the superior
court decision or the underlying ALJ order.3 This review is performed de
novo.4 The commissioner's decision is presumed prima facie correct and the
petitioner has the burden of proving otherwise.5
Employer Initiated Lay-Off Rule. Generally, unemployed workers are
eligible for benefits unless they are disqualified by statute.6 A worker
is disqualified if he or she voluntarily leaves work without good cause.7
One exception to this rule is the so-called employer initiated layoff rule,
which provides that after a layoff has been announced, an employee may
volunteer to be among those laid off, and still be eligible for benefits.
The question is whether this exception applies here.
The employer initiated layoff rule is found in WAC 192-150-100:
(1) You will not be considered to have been separated from employment for a
disqualifying reason when:
(a) Your employer takes the first action in the separation process by
announcing in writing to its employees that:
(i) The employer plans to reduce its work force through a layoff or
reduction in force, and
(ii) That employees can offer to be among those included in the layoff or
reduction in force;
(b) You offer to be one of the employees included in the layoff or
reduction in force; and
(c) Your employer takes the final action in the separation process by
accepting your offer to be one of the employees included in the layoff or
reduction in force, thereby ending your employment relationship.
(2) This section does not apply to situations where an employer modifies
benefits or otherwise encourages early retirement or early separation, but
the employer and the employee do not follow the steps in subsection (1)(a)
through (c).
Division Two held that Broschart failed to establish two of the necessary
requirements of WAC 192-150-100: written notice of layoffs (WAC 192-150-
100(1)(a)(i)), and the employer's final action ending the employment (WAC
192-150-100(1)(c)).8 We agree with Division Two's analysis and reach the
same conclusion.
Written Notice. For employees to be eligible for benefits under the
employer initiated layoff rule, the employer must take the first action in
the separation process by announcing in writing its plans to reduce its
work force through a layoff or reduction in force.9 The requirement of a
writing is recent. Former WAC 192-16-070 (1993) required only that the
employer announce a layoff.10 Conflicting interpretations of the former
rule11 led to an amendment in 2001, requiring that the layoff announcement
be made in writing 'to clarify that the regulation refers to formal offers
from an employer, not situations in which there is a potential for layoff
at some unknown time.'12
Nothing in the record constitutes a written layoff announcement from
Intalco. The employees contend the word 'reduction' in the 'voluntary
reduction options' documents and in internal memos amounts to a written
announcement, pointing out that Intalco's employee relations administrator
conceded it referred to a 'reduction of {Intalco's} workforce.'13 But the
documents and memos merely describe the three voluntary options, which were
not layoffs,14 and the phrase 'reduction of the work force' described a
'design{} to encourage people to take early severance or early retirement.'15
The voluntary severance options in fact achieved a reduction in the work
force, but not by means of layoff. The documents were not the equivalent
of a written layoff announcement.
The employees next argue that the commissioner added a new requirement that
layoffs be 'inevitable.'16 The commissioner took this language from the
Department's explanatory statement regarding WAC 192-150-100.17 An
adjudicator may consider administrative history and administrative
documentation explaining the intended purpose and effect of a rule when
determining its meaning.18 In context, 'inevitable' means nothing more than
that the employer has confirmed the layoffs will occur. As Division Two
noted in Broschart, '{t}he rule was only to apply when the layoffs or
reductions in force were inevitable not where there was a potential for a
layoff at some unknown future time.'19 Written announcements of layoffs
fulfill the inevitability requirement, whereas potential future layoffs do
not.
Final Action by Employer.20 The employees also contend that Intalco took
the final action required by WAC 192-150-100(1)(c)21 by processing the
paperwork terminating the employees who elected voluntary separation. This
is incorrect. The clerical paperwork is not the final action contemplated
by the regulation. As noted by Division Two, 'Intalco had no control over
who participated in the voluntary severance programs.'22 Under Washington
law, an offer is accepted and becomes contractually binding by the actions
of a person signing an agreement presented as an offer.23 Here, Intalco
offered the voluntary programs to every hourly employee, and retained no
control over who elected to participate. Once Intalco's offer was formally
accepted, the deal was binding on Intalco. Under these circumstances, the
employees who accepted the severance package took the final action in the
separation process.
Good Cause to Quit. An employee who quits voluntarily is eligible for
benefits if the separation was based upon good cause. The commissioner
found the employees' separations were due to concerns regarding the long
term prospects of employment with Intalco, which did not constitute good
cause. This too was correct.
To have good cause for severing employment so as to be eligible for
benefits, an employee must leave work primarily because of work-connected
factors of such compelling nature as to cause a reasonably prudent person
to leave, after exhausting all reasonable, non-futile alternatives.24 The
commissioner must consider only work-related factors brought about by the
employer.25 '{G}ood cause must be based upon existing facts as contrasted
to conjecture, and that reasons for leaving employment must be
significant.'26 This court has consistently held that the mere possibility
of a future layoff does not constitute good cause.27
The employees nonetheless assert that good cause existed because 'the
atmosphere created by Intalco made the claimants fear for their jobs and
their livelihoods.'28 They point to the power usage curtailment agreement
with the Bonneville Power Administration as creating a reasonable
apprehension of future layoffs. But the purpose of that agreement was to
preserve jobs: 'Alcoa will not involuntarily terminate employees due to
the curtailment, but may design and offer a voluntary program for employee
separation.'29 The fact that the agreement acknowledged that 'involuntary
termination may be necessary' does not, standing alone, create an
atmosphere of inevitable layoffs. Further, the agreement with the union
required Intalco to pay all remaining hourly employees (including all those
involved here) their base pay for full time work for the two-year
curtailment period.
The employees assert that a reduction in force 'was absolutely necessary'
and that 'wide-scale lay-offs . . . would most certainly have ensued.'30
These assertions are unsupported by the record. No layoffs occurred at
Intalco as a result of the two year curtailment except for the 24 least
senior employees originally announced. Whether this number might have been
different had fewer employees accepted voluntary separation packages is
simple conjecture, which is not enough to constitute good cause.31
CONCLUSION
The purpose of the Employment Security Act to lighten the burden on persons
unemployed through no fault of their own is not furthered by providing
unemployment benefits where an employee participates in a voluntary
severance program under no threat of involuntary termination. The decision
of the superior court is reversed, and the Department's denial of benefits
is reinstated.
WE CONCUR:
1 Broschart v. Employment Sec. Dep't of State, 123 Wn. App. 257, 95 P.3d
356 (2004), review denied, 153 Wn.2d 1024 (2005). The record in Broschart
is identical to the record here.
2 Rasmussen v. Dep't of Employment Sec., 98 Wn.2d 846, 849, 658 P.2d 1240
(1983).
3 Tapper v. Employment Sec. Dep't, 122 Wn.2d 397, 405-06, 858 P.2d 494
(1993).
4 Safeco Ins. Co. v. Meyering, 102 Wn.2d 385, 390, 687 P.2d 195 (1984).
5 Id. at 391.
6 Goewert v. Anheuser Busch, Inc., 82 Wn. App. 753, 756, 919 P.2d 106
(1996).
7 RCW 50.20.050(1). WAC 192-16-009(1) provides the general rule for good
cause determinations:
{I}n order for an individual to establish good cause within the meaning of
RCW 50.20.050(1) for leaving work voluntarily it must be satisfactorily
demonstrated that:
(a) That he or she left work primarily because of a work connected
factor(s); and
(b) That said work connected factor(s) was (were) of such a compelling
nature as to cause a reasonably prudent person to leave his or her
employment; and
(c) That he or she first exhausted all reasonable alternatives prior to
termination: Provided, that the individual asserting 'good cause' may
establish in certain circumstances that pursuit of the otherwise reasonable
alternatives would have been a futile act, thereby excusing the failure to
exhaust such reasonable alternatives.
8 Broschart, 123 Wn. App. at 270-71.
9 WAC 192-150-100 (emphasis added).
10 The regulation provided:
A layoff or reduction-in-force will not be considered to be a voluntary
quit pursuant to RCW 50.20.050, if:
(1) The employer announced a layoff or reduction-in-force; and
(2) The claimant volunteered to be one of the people included in the layoff
or reduction-in-force; and
(3) The employer determines which individuals are laid off or released
through a reduction-in-force; and
(4) The employer accordingly laid off or released the claimant due to a
reduction-in-force.
Former WAC 192-16-070 (1993), repealed by Wash. St. Reg. 01-12-009 (May 24,
2001).
11 See Ortega v. Employment Sec. Dep't, 90 Wn. App. 617, 625, 953 P.2d 827
(1998) (holding Westinghouse Hanford employees not eligible for benefits
because participation in voluntary separation program was voluntary and did
not take place during a mandatory phase of a layoff program); Nielsen v.
Employment Sec. Dep't, 93 Wn. App. 21, 24, 966 P.2d 399 (1998) (holding
employees in same voluntary program were eligible for benefits).
12 Commissioner's Record at 271 (testimony of Juanita Myers, the Department
official responsible for drafting the rule).
13 Respondent's Brief at 30.
14 'Layoff' is defined as 'the termination of employment at the employer's
instigation.' Black's Law Dictionary 906 (8th ed. 2004).
15 Commissioner's Record at 78.
16 The Commissioner's decision stated: '{I}t is apparent that there must be
a written announcement by the employer of an 'inevitable' layoff . . . for
which an employee can offer to be included.' Commissioner's Record at
1310.
17 The explanatory statement states in part: 'The regulation is designed to
deal with situations where the lay-off or reduction in force is inevitable.
It applies solely at the option of the employer, who must announce a layoff
(in writing) AND offer employees the opportunity to be included in that
layoff.' Commissioner's Record at 1213.
18 Broschart, 123 Wn. App. at 266.
19 123 Wn. App. at 267 (emphasis added).
20 The employees contend that because the commissioner did not adopt the
ALJ's conclusion of law 5 (that Intalco did not take the final step), we
should decline to defer to the commissioner's interpretation of the law.
We first note that the commissioner did adopt the ALJ's conclusion of law
6, that the job separations did not meet the requirements of WAC 192-50-100
because Intalco did not make a layoff announcement in writing or take the
final action. But any lingering inconsistency in these facts and theories
is irrelevant to the question of deference to the agency's legal
interpretations. To the extent we defer, we defer not to the
commissioner's factual findings, but rather to the Department's
interpretation of the statutes and rules, as expressed in its explanatory
documents and its official's testimony. Safeco Ins. Co. v. Meyering, 102
Wn.2d 385, 390, 687 P.2d 195 (1984).
21 'Your employer takes the final action in the separation process by
accepting your offer to be . . . included in the layoff or reduction in
force.'
22 Broschart, 123 Wn. App at 271. See also Neilsen, 93 Wn. App. at 39 (the
last step in the termination process was taken by the employer who retained
the authority to accept the application and release the employee or reject
it).
23 Yakima County (West Valley) Fire Protection Dist. No. 12 v. City of
Yakima, 122 Wn.2d 371, 388-89, 858 P.2d 245 (1993).
24 RCW 50.20.050(3); WAC 192-16-009 (1)(a)-(c).
25 Terry v. Employment Sec. Dep't, 82 Wn. App. 745, 749-51, 919 P.2d 111
(1996).
26 Korte v. Employment Sec. Dep't, 47 Wn. App. 296, 302, 734 P.2d 939 (1987)
(possible change in working conditions was conjecture only and did not
provide good cause to leave).
27 See Read v. Employment Sec. Dep't, 62 Wn. App. 227, 235, 813 P.2d 1262
(1991) (knowledge by claimants that layoffs might occur was insufficient to
show good cause); Goewert, 82 Wn. App. at 761 (uncertainty about future
employment is not a compelling work-connected factor but rather is a
personal reason); Broschart, 123 Wn. App. at 272 (employee did not have
good cause to leave under facts identical to those at issue here); Ortega,
90 Wn. App. at 625 (voluntary participation in severance programs does not
constitute good cause).
28 Respondent's Brief at 17.
29 Commissioner's Record at 1271.
30 Respondent's Brief at 23.
31 Ortega, 90 Wn. App. at 625.
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