Compass Newsletter - Articles

Determining Unemployment Benefits Eligibility
Following a Discharge or Voluntary Leaving

By Daniel J. Rice
(Summer 2009)

With the percentage of unemployed persons reaching double digits in recent months, the law governing eligibility for unemployment benefits has taken on added importance for many local businesses and workers.

Eligibility determinations carry financial consequences not just for former employees, who often count on unemployment benefits as temporary income replacement, but also for employers. Private employers in Oregon pay an unemployment insurance tax, and the rate increases the greater the employer’s claims experience. Non-profit organizations can elect to either pay the tax or directly reimburse the state for the benefits paid to their former employees.

Unemployment insurance costs and eligibility rules are important to consider in any economic environment, but the current high local unemployment rate gives them even more significance. According to the Oregon Employment Department, the seasonally adjusted unemployment rate for April 2009 – the latest period analyzed – was 12 % for Marion and Polk counties, matching the highest local rate in more than 25 years.

Discharge or Voluntary Leaving?

The first step to determining eligibility is classifying whether the employee was discharged – meaning either fired or laid off – or voluntarily left. Benefit eligibility rules differ depending on which classification applies. This determination can often prove challenging, especially given the strong emotions involved when an employment relationship ends and the tendency for those involved to recall events and classify actions differently.

The applicable administrative rule helps shed some light on the distinction. It states that a discharge occurs if the employee is willing to continue working for the same employer for an additional period of time but is not allowed. A voluntary leaving, on the other hand, occurs when the employee could have continued working for the same employer for an additional period of time but leaves.

This basic distinction is important to keep in mind; it will control over any label that those involved place on the ending of an employment relationship.

Eligibility Following a Discharge

If a discharge occurred, eligibility for benefits turns on the reason for the discharge. An employee who is laid off – that is, discharged for no other reason than the employer’s economic situation – will generally qualify for unemployment benefits.

The law is more complicated when the employee is discharged for performance reasons, certain actions, substance abuse problems, or similar issues. In these situations, eligibility will usually depend on whether the reason qualifies as “misconduct connected with work.” If so, the employee is ineligible. The employer bears the burden of proving misconduct.

The statutory phrase “misconduct connected with work” leaves room for argument about what exactly qualifies. The phrase is defined by administrative rule as “the willfully or wantonly negligent violation of the standards of behavior which an employer has the right to expect of an employee” or “a willful or wantonly negligent disregard of an employer’s interest.”

If that definition does not prove particularly helpful, consider what does not qualify as misconduct. Expressly excluded from misconduct are “isolated instances of poor judgment, good faith errors, unavoidable accidents, absences due to illness or other physical or mental disabilities, or mere inefficiency resulting from lack of job skills or experience.” Thus, many reasons for a discharge will not qualify as misconduct and an individual will remain eligible for unemployment benefits.

A discharge based on substance abuse-related issues can also affect eligibility. An individual is ineligible if discharged for any absence or tardiness that resulted from unlawful drug use. Similarly, an individual is ineligible if discharged because of two or more absences or occurrences of tardiness that resulted from alcohol use in a 12-month period. However, the individual will not lose eligibility for these reasons if the individual was in treatment or begins treatment within 10 days of discharge.

Certain “prohibited acts” related to alcohol or drug use on the job or failure to comply with an employer’s reasonable written alcohol or drug testing policy can also disqualify an individual from unemployment benefits.

Eligibility after Voluntarily Leaving

An individual who voluntarily leaves a job will not qualify for benefits unless “good cause” for leaving exists. Like “misconduct connected with work” in the discharge context, “good cause” is a rather open-ended concept. The applicable administrative rule, however, makes clear that “good cause” is a difficult standard to prove.

The rule states that good cause is “such that a reasonable and prudent person of normal sensitivity, exercising ordinary common sense, would leave work.” Further, “the reason must be of such gravity that the individual has no reasonable alternative but to leave work.” The employee bears the burden of proving good cause.

In some cases, employers may choose to cut pay or reduce hours in lieu of layoffs. The administrative rules specifically address whether an individual’s leaving because of a pay cut or hours reduction qualifies as good cause.

Leaving because of a pay cut does not qualify as good cause unless the new pay rate is at least 10 percent less than the average rate for similar work in the individual’s region of the state. The Oregon Employment Department calculates the average rates of pay by type of work and region and posts the data at

Leaving because of a reduction in hours does not qualify as good cause unless continuing to work with the reduced schedule substantially interferes with a return to full-time work or the cost of working exceeds the total remuneration.

Discharge or Voluntarily Leaving after Notice

Situations may also arise in which an individual leaves or is discharged before the date given in a notice. Consider, for example, an employee who gives notice that he will leave in two weeks because of differences with management. The employer may decide to ask the employee to leave right away to avoid the disruption or awkwardness of having the employee work another two weeks.

The (now former) employee is clearly discharged, but is he still eligible for unemployment benefits even though he planned to voluntarily leave in two weeks? The answer would depend on whether the employee’s reason for the planned leaving would qualify as “good cause.” If the employee lacked good cause, the discharge would be treated as if the planned voluntary leaving had occurred instead. The employee, in other words, would be ineligible for benefits, except for during the period from the discharge date until the planned leaving date.

A similar rule applies if the employer notifies an employee of a pending discharge date and the employee voluntarily leaves before then. The voluntarily leaving would be treated as a discharge, and unless the employer proves misconduct, the employee will remain eligible for unemployment benefits, except for the period between the voluntary leaving and the discharge date.


This article covers some of the basic rules of unemployment benefits eligibility, but many other requirements and rules may apply in any given situation. While employers do not decide benefits eligibility – that determination rests with the Oregon Employment Department – the current economic environment gives reason for both employers and employees to understand the basic eligibility framework.