04. Total or Partial Unemployment

Ford Motor Co v Schmidt – 4.34

Ford Motor Co v Schmidt
Digest no. 4.34

Sections 27(b), 27(c)(3), 48(2)

Cite as: Ford Motor Co v Schmidt, unpublished opinion of the Monroe  County Circuit Court, issued May 19, 2009 (Docket No. 08-26479-AE).

Appeal pending: No
Claimant: Mark A. Schmidt
Employer: Ford Motor Company
Docket no.: 08-26479-AE
Date of decision: May 7, 2009

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HOLDING: When a claimant receives payment from the employer under a separation agreement, the claimant shall not be entitled to unemployment benefits if said payment amount exceeds 1.5 times the claimant’s weekly benefit amount.

FACTS: After approximately ten years of employment, Claimant agreed to termination as part of a “special termination of employment” program (STEP). Under the STEP agreement, Employer provided the Claimant with $100,000, distributed over twenty-three months. As part of the program, Claimant also agreed to release any and all rights of claims against the Employer.

After being laid off by a subsequent employer, Claimant filed for benefits. UIA found the Claimant ineligible for benefits, but ALJ reversed. The Board of Review held that, because the Employer paid the Claimant only during the first week of each month, Claimant is entitled to unemployment benefits for the remaining weeks of each month.  Employer appealed the decision.

DECISION: Board of Review’s decision is reversed, and the redetermination of the UIA is affirmed. Claimant’s income by way of the STEP agreement payments exceeds the maximum weekly amount entitling Claimant to receive unemployment benefits.

RATIONALE: Section 27(c)(3) provides that (1) a claimant who receives partial remuneration may not receive total benefits and earnings exceeding 1.5 times of the claimant’s weekly benefit amount; and (2) claimant’s benefit shall be reduce by $1 for each dollar of total benefits and earnings that exceed 1.5 times the individual’s weekly benefit amount. Where a termination agreement does not provide for specific pay periods, Section 48(2) provides that the period designated by the employer shall control. The STEP program did not provide for a specific allocation period of payments; rather, the employer provided only a general overall allocation period of 23 months. The court divided the total of the severance package by the number of weeks in 23 months and calculated that claimant received $1004 per week. This was more than 2.5 times the maximum weekly unemployment benefit amount authorized under Section 27(b)(1). Therefore, during this period of time, Claimant is not entitled to unemployment benefits.

Digest Author:  Chris Kang
Digest Student-Editor: Nick Phillips
Digest Updated: 8/14