Opinion ID: 2365217
Heading Depth: 1
Heading Rank: 4

Heading: Employee Officer Eligibility

Text: Both fact-finders, the Appeals Referee and the Board, found that the claimants voluntarily terminated their employment, but for good cause in connection with their work because their temporary cessation of employment was necessitated by external, economic forces beyond their control. In reversing the decision of the Board, the Superior Court focused on the claimants' role as decision-making corporate officers. The Superior Court held that their exercise of control as corporate officers precluded the claimants from demonstrating a voluntary termination of their own employment for good cause. There is no dispute that any non-officer employees who were terminated, when the restaurant closed for the winter, were eligible to receive unemployment benefits if they met all of the statutory requirements. The claimants, as wage-earning employees of the corporation, reported their wages and paid unemployment taxes on their own wages into the Unemployment Compensation Fund since 1997. The applicable Delaware statute specifically provides for corporate officer employees to be eligible for unemployment compensation by including their work within the definition of covered employment: Employment means: (A) ... service performed after December 31, 1977, including service in interstate commerce, by (i) Any officer of a corporation after December 31, 1995. [5] The same statute had previously excluded certain corporate officers (those with greater than one-fourth ownership interest) from the definition of employment and, therefore, from eligibility for benefits. [6] Effective with services performed after December 31, 1995, however, all corporate officer employees, including those with a significant ownership interest (such as the claimants) who were previously excluded from the statutory scheme were included with the change in the definition to [a]ny officer of a corporation. [7] The Superior Court held that the claimants, as officers, controlled their own employment status and were, therefore, disqualified from unemployment benefits. The Superior Court's holding, that an exercise of control by a corporate officer precludes a termination of their own employment for good cause, is inconsistent with the General Assembly's amendment of the Delaware Unemployment Compensation Act to specifically include corporate officers within the statutory definition of employment. The current statutory scheme provides that, despite their role as decision-makers who can control aspects of the business, unemployment claims by corporate officers are to be assessed in the same objective manner as claims made by other employees who are not corporate officers. [8] The Department is validly concerned that corporate officer employees who make layoff decisions could attempt to abuse the unemployment insurance system. The General Assembly's statutory protection against the potential for systematic abuse by corporate officer employees is found in title 19, section 3315(1) of the Delaware Code. The section provides that an individual who relinquishes his or her employment will be disqualified from receiving unemployment compensation unless he or she does so for good cause attributable to such work. [9] The causative factor for terminating employment must be objectively reasonable. The burden of proving compliance with section 3315(1) is on the claimant. [10]