Claimant was employed as a paralegal from October 2002 to August 2022. In August 2022, Claimant and his law firm employer executed an agreement where Claimant would be paid one year’s salary in the amount of $94,450.00 in consideration for the separation agreement from his employer. In September 2022, Claimant filed for Delaware unemployment insurance benefits and was denied as the lump sum Claimant received was deemed severance pay by a claims deputy.
Claimant appealed the deputy’s decision, and a telephone hearing was held. Claimant argued that the agreement with his employer was not to sever an employment relationship but was to resolve an ethics claim that Claimant filed concerning another firm employee. The hearing referee affirmed the claims deputy’s determination.
On appeal to the Unemployment Insurance Appeals Board, the Board found that Claimant’s primary argument was whether the lump sum was a severance payment, as if it was not, it may not affect his receipt of unemployment insurance benefits.
The Board held that the one-year salary payment coupled with the termination of the employment relationship operated as a severance. Moreover, the Board held that the payment is classifiable as a “dismissal payment” pursuant to 19 Del. C. §3302(18). The Board reasoned further that even if the payment was to resolve an unrelated dispute, the payment’s classification is still wages. The Board argued that classifying the lump sum as wages was in the spirit of public policy as Claimant was not left in “economic instability” because of his separation from the Employer. The Board affirmed the appeals referee’s decision to the Delaware Superior Court.
Claimant executed a kitchen-sink approach in his appeal to the Delaware Superior Court, as he brought multiple arguments arising from, among other things, the separation agreement and his due process rights. While the Superior Court reviews questions of law de novo, it does not make its own factual findings and must uphold Board decisions unless the Court finds that the Board “‘acted arbitrary or capriciously’ or that its decision ‘exceeded the bounds of reason.’”
The Court affirmed the Board’s decision as it was based on “substantial evidence and free from legal error.” The Court found the separation agreement to be binding and the complete understanding between the parties. The Court found that Claimant suffered no prejudice during the telephone hearing. The Court found further that the Board’s “buttressing its decision with public policy considerations” was not erroneous.
Should you have any questions regarding this decision, especially the navigation of severance agreements, or any employment law concerns, please contact any attorney in our liability department.
William W. Weller v. Morris James, LLP and Unemployment Insurance Appeal Board, C.A. No.: N23A-03-007 FWW (Del. Super. Ct. November 30, 2023).
|