Utah Supreme Court Clarifies "Good Cause" to Quit Standard for Receipt of Unemployment Benefits in Utah

In an opinion issued today the Utah Supreme Court settled the appropriate standard of review for an appellate court's review of a denial of unemployment benefits, holding that in a case of a worker quitting for good cause, the determination is a fact-like mixed question, and appellate courts should apply a deferential standard of review to a lower tribunal’s resolution of this issue, but must be vigilant to ensure that they are based on correct legal principles. Sawyer v. Dept. of Workforce Services, 2015 UT 33, ¶ 47. The Court further held, in a victory for employees, that the relevant inquiry in a good case quit case is whether a reasonably prudent person would be justified in quitting under the circumstances, and that quitting in order to avoid a discharge does not automatically bar an employee from receiving unemployment benefits. Id. at ¶ 30.

In Sawyer, the Dept. of Workforce Services denied Sawyer’s application for unemployment benefits based upon its finding that she quit her job without good cause.  Sawyer was a special education teacher for Jordan District who had received two bad performance evaluations. She was informed if she had another bad evaluation she would be terminated in accordance with the District's policy (or given the option to resign).  The record indicated that "Sawyer had little confidence that she could perform at a level that would allow her to pass a third evaluation" and that she was "concerned that if she were terminated that she would not find future employment as a teacher." Accordingly, Sawyer elected to resign rather than submit to a third evaluation.  Id.at ¶ 5. She subsequently filed for unemployment benefits.  Her benefits were denied on the basis that she had quit without good cause. On appeal the Department's ALJ affirmed the decision, and Sawyer appealed again to the Workforce Appeals Board. The Board held that “[q]uitting in order to avoid a discharge . . . does not establish good cause.”  Id. Ms. Sawyer appealed the Board's determination to the Utah Supreme Court. The Supreme Court reversed and remanded the case for further proceedings consistent with its opinion.

Under Utah law, an individual who is involuntarily terminated by their employer can apply for unemployment benefits and receive those benefits unless the employer proves the employee was terminated for "just cause." Just cause requires that the employer establish the employee had the requisite knowledge, culpability and control with respect to the issue that led to the employee's termination. In contrast, an individual is ineligible for unemployment benefits if he or she quits “without good cause.” U.C.A. § 35A-4-405(1)(a).  Under Utah Law, “[g]ood cause is established where the unemployment is caused by pressures so compelling that a reasonably prudent person would be justified in quitting under similar circumstances.” Hurst v. Indus. Comm’n, 723 P.2d 416, 419 (Utah 1986). At issue in Sawyer was whether quitting to avoid imminent discharge can ever be justified for purposes of establishing "good cause" for quitting.

Relying on the persuasiveness of a Supreme Court decision from Oregon, the Court held "that the administrative judge and appeals board erred by concluding that the possibility that Ms. Sawyer could have retained her job was sufficient to defeat her employment benefits claim. Good cause to quit is measured by the objective standard of whether “a reasonably prudent person would be justified in quitting under similar circumstances.” Sawyer, at¶ 30 (citing Hurst v. Indus. Comm’n, 723 P.2d 416, 419 (Utah 1986)).  The Court went on to explain:

This assessment should be based on the information that the worker knew or should have known at the time of the resignation . . .Reasonably prudent persons, of course, must often make decisions based upon an assessment of potential consequences rather than in the context of certain outcomes. Little in life is guaranteed. In evaluating whether a reasonably prudent employee would quit in order to avoid a potential termination, administrative law judges and courts should consider (1) the likelihood of termination, in spite of the employee’s reasonable efforts to remain employed, and (2) the degree to which termination will negatively affect future employment.




In other words, in some case, quitting to avoid a discharge may constitute good cause, and DWS and
Courts should look to the likelihood of termination and the degree to which termination will negatively affect future employment.  Because the administrative law judge and appeals board did not assess whether a reasonable person in Ms. Sawyer’s shoes would have quit, but rather whether there was some possibility that she could have retained her job, the Court concluded that an incorrect legal standard was applied to the facts of the case.

The situation in Sawyer is a situation often confronted by employees who see the writing on the wall, but are fearful that quitting will disqualify the employee from receiving unemployment benefits. The fact that an employee can realistically determine the "negative affect" a termination while have on future employment in determining whether to quit should alleviate this problem, and at least give an employee options where termination is imminent and the impact of termination will make finding another job very difficult.

The Department of Workforce Services has issued regulations that set forth the standard for proving good cause. To establish good cause under the regulations, an employee seeking unemployment benefits must show continuing the employment would have caused an adverse effect which the claimant could not control or prevent. R994-405-102. Further, the employee must show that  an immediate severance of the employment relationship was necessary. Moreover, even though there is evidence of an adverse effect on an employee, good cause does not exist where the employee reasonably could have continued to work while looking for other employment, or had alternatives that would have made it possible to preserve the job, or failed to provide the employer with notice of the hardship.

Sawyer makes clear that employees who are faced with termination need not hold out for the employer's decision to terminate in order to be eligible for the receipt of unemployment benefits.

For more information about the Court's decision in Sawyer, or Utah unemployment benefits, please contact Stavros Law P.C. at 801-758-7604 or visit stavroslaw.com.