Title: Indiana State University v. William LaFief, et al

State: indiana

Issuer: Indiana Supreme Court

Document:

ATTORNEYS FOR APPELLANT 
 
 
 
 
ATTORNEYS FOR APPELLEES 
John R. Maley 
Steve Carter 
Kristin S. Shedlock 
Attorney General of Indiana 
Indianapolis, Indiana 
 
 
Thomas M. Fisher 
 
Solicitor General  
 
 
Elizabeth Rogers 
 
Heather L. Hagan 
 
Deputy Attorneys General 
 
Indianapolis, Indiana 
 
 
In the 
Indiana Supreme Court  
_________________________________ 
 
No. 93S02-0801-EX-17 
 
INDIANA STATE UNIVERSITY, 
Appellant (Respondent Below), 
 
v. 
 
WILLIAM C. LAFIEF AND 
INDIANA DEPARTMENT OF WORKFORCE  
DEVELOPMENT [REVIEW BOARD],  
 
 
 
Appellees (Claimants Below). 
_________________________________ 
 
Appeal from the Review Board of the Indiana Department of Workforce Development,  
No. 06-R-2956 
Steven F. Bier, Chairperson 
_________________________________ 
 
On Petition To Transfer from the Indiana Court of Appeals, No. 93A02-0611-EX-1012 
_________________________________ 
 
June 17, 2008 
Shepard, Chief Justice. 
 
The issue is whether a university professor who agreed to a fixed-term employment 
contract was entitled to unemployment benefits upon the non-renewal of his contract.  We hold 
that the professor was not voluntarily unemployed and is entitled to benefits. 
FILED
CLERK
of the supreme court,
court of appeals and
tax court
Jun 17 2008, 2:54 pm
Facts and Procedural History 
 
Indiana State University appointed William LaFief to a position as an assistant professor 
in accordance with the University’s practice of employing assistant professors for one-year 
probationary terms with annual reviews that result in reappointment or non-reappointment for 
subsequent terms.  LaFief was initially appointed for the 2004-05 academic year and was 
reappointed for 2005-06.  Thereafter, ISU notified LaFief that he would not be reappointed.       
 
LaFief filed for unemployment.  An administrative law judge held that he was not entitled 
to unemployment benefits, reasoning that LaFief was not “discharged” because his employment 
ended at the expiration of his contract term.  The Review Board of the Indiana Department of 
Workforce Development reversed, finding that ISU’s decision not to reappoint LaFief equated to 
a “discharge.”  (App. at 14-16.)   
 
The Court of Appeals reversed the board, holding that LaFief was not entitled to 
unemployment benefits because he had voluntarily agreed to a one-year appointment that expired 
by its own terms and that he was not “discharged” from his employment when he was not 
reappointed.  Ind. State Univ. v. Review Bd. of the Ind. Dep’t of Workforce Dev., 868 N.E.2d 
839 (Ind. Ct. App. 2007).  We granted transfer.     
 
 
LaFief Was Not Voluntarily Unemployed 
 
 
The Unemployment Compensation Act (UCA), Ind. Code art. 22-4, was enacted to 
“provide for payment of benefits to persons unemployed through no fault of their own.”  Ind. 
Code Ann. § 22-4-1-1 (West 2007).  To be eligible for unemployment benefits, an individual 
must meet the requirements set forth in Ind. Code ch. 22-4-14 and must not be disqualified by 
any of the various exceptions provided in ch. 22-4-15.   
 
 
 
2
The eligibility requirements for unemployment benefits include that an individual must 
be unemployed, have sufficient wage credits in his base period, be able, available, and actively 
seeking work, and meet certain registration and reporting requirements.  Ind. Code Ann.  
§§ 22-4-14-2, -3, -5(d)-(e).  An otherwise eligible individual can be disqualified from receiving 
benefits if he voluntarily left his employment without good cause, was discharged from 
employment for just cause, or failed to accept suitable work.  Id. §§ 22-4-15-1, -2.   
 
This appeal involves only questions of law.  We review conclusions of law made by the 
Review Board of the Indiana Department of Workforce Development under a de novo standard.  
Penny v. Review Bd. of the Ind. Dep’t of Workforce Dev., 852 N.E.2d 954, 957 (Ind. Ct. App. 
2006).      
 
The Act does not contain a requirement that the employee be “discharged” from 
employment to be eligible for benefits, although “discharge for just cause” is a disqualification 
from benefits.  For example, employees can be eligible for benefits if they leave their 
employment with good cause.  See Ind. Code Ann. § 22-4-15-1; Quillen v. Review Bd. of the 
Ind. Employment Sec. Div., 468 N.E.2d 238 (Ind. Ct. App. 1984) (evaluating whether an 
employee’s reason for quitting employment constituted good cause).  Accordingly, in evaluating 
whether an individual is eligible for unemployment benefits, the question is not whether he was 
“discharged” from employment but whether he met the eligibility requirements set forth in Ind. 
Code ch. 22-4-14 and was not otherwise disqualified under Ind. Code ch. 22-4-15.    
 
 
In this case, the parties’ dispute centers on whether LaFief was disqualified under Ind. 
Code ch. 22-4-15.  Indiana State contends that because LaFief agreed to a fixed-term 
employment contract, he became voluntarily unemployed at the expiration of that contract term.  
We hold otherwise.   
 
Employment contracts operate to obligate the parties to continue the employment 
relationship during the contract’s term, not to waive the employee’s right to receive 
unemployment benefits.  A contractual provision that attempted to waive an employee’s right to 
receive unemployment benefits would be void because the Act expressly disallows such waivers.  
 
 
3
Ind. Code Ann. § 22-4-33-1 (“any agreement by an individual to waive, release or commute his 
rights to benefits or any other rights under [the UCA] is void”).  To hold otherwise could 
encourage employers to require fixed-term employment contracts for the express purpose of 
avoiding unemployment compensation liability.   
 
LaFief was employed by Indiana State during the 2005-06 academic year.  He was not 
permitted to continue this employment during the next academic year.  The fact that LaFief had 
warning that his employment could terminate upon the contract’s expiration does not change the 
fact that at the end of the year he became unemployed.  The termination of his employment was 
no more voluntary than the termination of employment of an employee at will, who is 
presumably on notice that his employment could terminate at any time.     
 
This holding does not alter the general rule that employees who contractually agree to 
mandatory vacation periods or temporary shut downs are not eligible for unemployment benefits 
so long as they have reasonable assurance that they will continue to be employed after the 
mandatory vacation period or temporary shut down ends.  See Ind. Code Ann. § 22-4-14-7(a) 
(individuals employed by educational institutions are not entitled to unemployment benefits 
during the period between two successive academic years if they were employed during one 
period and there is a reasonable assurance that they will be employed during the successive 
term); Ind. Code Ann. § 22-4-14-8 (individuals whose employment consists of participating in 
sports are not entitled to unemployment benefits between seasons if they were employed during 
one season and there is a reasonable assurance that they will be employed during the successive 
season); Pope v. Wabash Valley Human Serv., Inc., 500 N.E.2d 209, 211 (Ind. Ct. App. 1986) 
(“Where the employment contract or collective bargaining agreement provides for a shutdown or 
vacation period, the employees who signed or assented to the contract are not ‘unemployed’ 
within the meaning contemplated by the [Unemployment Compensation Act]”).            
 
 
 
 
4
Conclusion 
 
For the above reasons, we affirm the Review Board’s decision.     
 
Sullivan and Boehm, JJ., concur. 
Dickson, J., dissents with separate opinion, in which Rucker, J., concurs. 
 
 
 
5
 
 
6
Dickson, Justice, dissenting. 
 
 
Unemployment benefits are contingent upon a person being terminated from or leaving 
employment.  In expressly entering into a fixed-term employment contract, Professor LaFief 
voluntarily agreed that his employment would terminate at the conclusion of the 2005-2006 
academic year.  His employment with Indiana State University thus ended when the contract 
expired.  After the end of the 2005-06 academic year, there was no employment to leave.  Before 
the contract ended, that is, during the time he was employed, LaFief was not discharged, nor did 
he leave his employment, and thus he did not become eligible for unemployment benefits.   
 
 
The majority notes that the Act was enacted to "provide for payment of benefits to 
persons unemployed through no fault of their own."  Ind. Code § 22-4-1-1.  The majority further 
finds that a party voluntarily entering a contract calling for a fixed term of employment is not "at 
fault" upon the expiration of the contract.  I disagree.  The professor expressly contracted that his 
employment would expire at the end of its fixed term.  He is thus responsible and accountable for 
his subsequent unemployment.      
      
 
At one point in its rationale, the majority states that the expiration of this employment 
contract "was no more voluntary than the termination of the employment of an employee at 
will."  Slip opin. at 4.  I believe it is mistaken to thus suggest that the discharge from at will 
employment is volitionally equivalent to the foreseeable unemployment that follows the 
conclusion of a consensual fixed-term employment contract.  
 
 
Because I conclude that Professor LaFief had no employment to leave or from which to 
be discharged, and further that he is personally accountable and responsible for the natural 
consequences of his agreement to the fixed-term contract, I would reverse the decision of the 
Review Board.   
 
 
Rucker, J., concurs.