Massachusetts Supreme Judicial Court Rules That Employees Who Accept An Employer's Severance Package Are Not Automatically Entitled To Unemployment Benefits

Originally published on the Employer's Law Blog

Day Pitney LLP recently represented Verizon New England Inc. (Verizon) before the Massachusetts Supreme Judicial Court in connection with an appeal filed by former employee Kristen Connolly. In 2008, Ms. Connolly had accepted Verizon's voluntary separation package, which contained financial incentives for choosing to terminate her employment. After she accepted the separation package and terminated her employment with Verizon, Ms. Connolly applied for unemployment benefits. The Division of Unemployment Assistance initially awarded unemployment benefits to Ms. Connolly, but Verizon objected and sought a hearing before the agency. The Division of Unemployment Assistance conducted a hearing and denied unemployment benefits to Ms. Connolly on the basis that she could not show that she had a reasonable belief that her job was in jeopardy due to pending layoffs or poor work performance. Ms. Connolly appealed and, ultimately, had her case heard by the highest court in Massachusetts, the Supreme Judicial Court.

Ms. Connolly sought to have the Court expand the unemployment benefits statute to apply to any employee who accepts an employer's voluntary separation package on the theory that the employee accepts the package from fear of a potential layoff. The Court rejected Ms. Connolly's argument, noting that Ms. Connolly "was not compelled to apply [for the severance package], did not believe her job was in jeopardy, and left in part for personal reasons." Connolly v. Director of the Division of Unemployment Assistance, 460 Mass. 24, 29 (2011). Prior to the Connolly appeal, the Court had issued two decisions on unemployment benefits that were arguably in conflict with one another. In Connolly, the Court resolved this conflict and opined that Massachusetts law requires that employees who choose to accept a voluntary incentive package, like Ms. Connolly, must prove they had reason to believe they were in imminent danger of losing their jobs before they can be entitled to unemployment benefits

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