Legal Aid in the Court of Appeals
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Jack Keeney, Director of the Barbara McDowell Appellate Advocay Project

What to do? Your employer, effective immediately, has just cut your hours (and thus your pay) by 25% from full time to part time, while also raising your employee contribution for health benefits to an additional $346 per month. You believe that you can no longer make ends meet for yourself and your two children. Let’s say you resign to engage in a full-time search for a new job rather than continue part-time at reduced pay and higher out-of-pocket costs. Having resigned due to the substantial reduction in wages, will you get unemployment benefits? Not necessarily was last month’s answer from the Court of Appeals, in a case where Legal Aid represented the former employee.

In Consumer Action Network v. Frances Tielman, the Court of Appeals construed the District’s unemployment compensation statute and regulations to hold for the first time (and correctly so) that a 25% wage cut was a substantial reduction in wages. But it further held that such a substantial reduction only “may”, and does not by itself, constitute good cause to resign and thus be eligible for unemployment compensation. The Court emphasized that the only statutory or regulatory mention of reduced compensation and eligibility for unemployment compensation stated that a “minor reduction in wages” is not good cause. But the Court found no inference from this exclusion that a non-minor reduction was good cause. The Court concluded instead that without greater legislative or regulatory specificity, exclusion of minor reduction in wages did not establish or necessarily intend eligibility for all instances of substantial reduction in wages, including the 25% cutback by this employer. Rather, it was a case by case determination of whether the resignation was what a reasonable and prudent person would do under those financial circumstances. It remanded for further financial details from the claimant.

While the rules of statutory interpretation are what they are, neither those rules nor the omission of parallel language of automatic inclusion is any sure indication that the District of Columbia Council actually intended that a case-by-case determination be required in every non-minor wage-cut case. The explicit exclusion of only the “minor reduction in wages” from good cause obviously permits coverage in some circumstances as the Court found. But does it really intend to exclude coverage in other circumstances of non-minor wage cuts?

Context sheds some light. In the unemployment benefits context, the District has enacted seven mandatory exclusions from good cause for eligibility and six automatic inclusions that satisfy good cause. The current six mandatory definitions of “reasons considered good cause” include racial and sexual discrimination and harassment and other workplace conditions. For none of the seven mandatory exclusions is there a parallel automatic inclusion relating to what is not covered by the topical exclusion. So, it is neither surprising nor inconsistent with the statutory structure chosen by the District of Columbia Council that there is no mandatory inclusion for the parallel situation of “substantial” reduction of wages   It would be unusual having excluded only “minor” reductions if the Council did not intend to include as good cause all instances of substantial reduction in wages because the purpose of the unemployment statute is to be a lifeline to those whose work conditions have changed through no fault of their own.

The District of Columbia Council could easily and definitively resolve this concern through an amendment that adds a new seventh automatic inclusion for “substantial reduction in wages”. The alternative, now required by the Court of Appeals, is a case-by-case inquiry into financial details of the impact on claimants, mostly pro se, who may or may not have financial records of household expenses to document how the 25% wage reduction and increased costs of benefits has impacted them so severely that they resigned to do a full-time search for a new job. While Court’s the opinion disclaims any judicial requirement of “detailed expenses”, it nevertheless lists particular expenses such as “student loans, rent, utilities, food, health insurance and child care.” Such searching inquiries raise barriers that are inconsistent with the broad humanitarian purposes of unemployment compensation.

Further legislative and regulatory attention to the broader problem of substantial wage cutbacks triggering resignations may also be justified to answer the Court of Appeals’ request in its decision for further information not only from claimants but from the District’s Department of Employment Services “to furnish information about the availability of partial unemployment compensation and share work programs in the District of Columbia. . . .” That the Court does not know this information makes it unlikely that an individual claimant, pro se or otherwise, would know this information before deciding whether or not to resign after a substantial wage cutback to pursue a full-time job search. Whether DOES can and should do more to implement Council intent is an appropriate inquiry.

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