North Carolina Supreme Court Finds that Employee Who Accepts Voluntary Retirement Package is Ineligible for Unemployment Benefits

Carolina Power & Light Co. v. Employment Security Commission, __ N.C. __, 681 S.E.2d 776 (2009) – The North Carolina Supreme Court recently held that an employee who accepts a voluntary retirement package as part of a company’s downsizing efforts is ineligible for unemployment benefits because the employee did not leave work for “good cause” attributable to his employer.

Herman Roberts, a field representative employed by Carolina Power & Light (CP&L), was offered and accepted a voluntary early retirement package as part of CP&L’s downsizing program. He later applied for unemployment benefits with North Carolina’s Employment Security Commission (ESC). After an ESC adjudicator initially denied benefits to Roberts, an ESC appeals referee reversed the adjudicator and awarded him benefits, a decision that was upheld by the full ESC following an appeal by CP&L. The Wake County Superior Court and the North Carolina Court of Appeals affirmed the ESC’s decision, and CP&L appealed to the North Carolina Supreme Court. The Supreme Court reversed the award of benefits, finding that Roberts did not demonstrate that he was terminated for “good cause” attributable to CP&L, which is a factor necessary to establish entitlement to benefits. The court determined that none of three possible actions that could have been attributed to CP&L – its downsizing program, a supervisor’s failure to tell Roberts whether he would have a job after the downsizing program ended, and CP&L’s offer of the retirement package – constituted good cause for Roberts to accept the retirement package and leave his employment. The court found that, because North Carolina statutes disqualify individuals from benefits when they are told they will be terminated on a certain date but leave before the stated date, then permitting an employee who has not been told that he would be terminated to leave and obtain unemployment benefits on the basis that the employee accepted the offer of enhanced early retirement would create an inconsistency and inequity in the law.

Note: This article was published in the October 2009 issue of the North Carolina eAuthority.