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Injured worker who resigned eligible for unemployment

unemployment benefits

A worker who resigned after settling a workers compensation claim is entitled to unemployment benefits, the Court of Appeals of Minnesota held Monday.

In Interplastic Corp. v. Rausch, a three-judge appellate court panel affirmed an unemployment law judge’s decision that a substantial pay reduction, the lack of future earnings potential and the claim settlement allowed the worker to fall under the state’s statutory exception for unemployment eligibility.

Kevin Rausch was a longtime employee of St. Paul, Minnesota-based Interplastic Corp. Until 2013, he worked as a pilot plan operator, but after he injured his back on the job he transitioned to the position of laboratory technician and received the same wage and accompanying pay raises over the next three years.

In 2018, the legal department notified Mr. Rausch that his hourly wage was being reduced by about $5 to align it with the median wage for laboratory technicians nationally and he was informed that he would be receiving no future pay raises. At this time, he also had a pending workers compensation claim arising from his back injury. In April 2018, Mr. Rausch and the company agreed to settle the claim, whereby Mr. Rausch would receive a $25,000 payout and “voluntarily terminate his employment.” In June 2018, he applied for unemployment benefits, but the state determined that he was ineligible because he voluntarily quit. He filed an administrative appeal arguing that he satisfied the state’s statutory exception to eligibility because of the drastic reduction in his wage.

An unemployment law judge determined that Mr. Rausch was eligible for unemployment because he quit his job for good reason caused by the employer as a result of the 18% reduction in his pay, lack of future raises and his agreement to quit as part of a settlement.

Interplastic filed a writ of certiorari, which was accepted by the appellate court, but the court affirmed the unemployment judge’s ruling.

Although Interplastic argued that the unemployment judge erred in holding that the pay reduction led to the employee’s resignation because it occurred more than 30 days after the company had reduced his wages, the appellate court held that this argument was “illogical” and that Mr. Rausch’s argument that he quit due to pay fit into the unemployment exception of quitting “because of a good reason caused by the employer.”

The court also dismissed Interplastic’s argument that there was no evidence to support the unemployment judge’s finding that Mr. Rausch would not receive any future pay raises since the employee handbook says any communication concerning compensation must be in writing. The appellate court held that the record supported Mr. Rausch’s testimony, noting that the company’s sole witness did not contradict his assertions that he was told he would never receive another pay raise, and noted that contrary evidence was not introduced into the record by Interplastic during the hearing, but only during its request for reconsideration, which is “too late to be considered.”

Attorney Ivan Levy, who represented Interplastic in the case, said that the decision in favor of Mr. Rausch “could change the way workers compensation settlements are analyzed in the future.”

The attorney for Mr. Rausch did not immediately respond to a request for comment.




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