
    CIRCUIT COURT OF LANCASTER COUNTY
    Grace P. Lewis v. Virginia Employment Comm’n and Hudson-Blunt Insurance Agency, Inc.
    July 30, 1997
   By Judge Joseph E. Spruill, Jr.

This petition, filed by Grace P. Lewis pursuant to Va. Code § 60.2-622, seeks judicial review of a decision rendered by die Virginia Employment Commission disqualifying her from unemployment benefits.

Mrs. Lewis formerly owned jointly with her sister, Margaret P. Saunders, an insurance agency in Lively, Virginia. La June, 1995, they sold the agency to Hudson-Blunt Insurance Agency, Inc. Thereafter, Mrs. Lewis became employed by Hudson-Blunt as office manager, walking three days at a salary of $200.00 per week, plus a health benefit of $333.00 per month. Upon the commencement of her employment, the claimant and the employer agreed that the conditions and terms of her employment would be re-examined after about three months.

Pursuant to the agreement to renegotiate claimant’s employment, the employer offered to increase claimant’s work schedule to five days per week and increase her work hours from 9:00 a.m. until 5:00 p.m. (instead of from 9:00 a.m. to 4:30 pun.) and to increase her salary to $300.00 per week. La addition, the employer proposed to reduce the reimbursement for die claimant’s health to $206.00 per month. The claimant rejected the employer’s offer and made a counter-proposal, which employer rejected. After continued negotiations, die claimant and the employer reached an impasse. The claimant was then informed that unless she agreed to die employer’s proposal, she would be terminated December 31, 1995. After an acrimonious exchange between claimant and the employer on December 20, claimant ended her employment and left die premises.

After a series of hearings, (he Commission’s final conclusion was that claimant left work voluntarily without good cause and is therefore disqualified from receiving unemployment compensation.

Mm. Lewis asserts that her employer’s action in increasing her hours of employment while reducing her hourly rate of compensation and her benefits and the subsequent inability of the parties to reach an accord constitute “good cause” for her departure.

An individual is disqualified from unemployment compensation benefits if he leaves work voluntarily without good cause. Va. Code § 60.2-618(1).

The facts as found by the Commission if supported by the evidence in the absence of fraud are conclusive. Va. Code § 60.2-625(a). There appear to he no factual disputes here, and die facts as recited above are those adopted by (he Commission. The sole issue is whether Mrs. Lewis quit her employment for good cause.

The claimant did not object to extending her work week from three days to five days but did object to the reduction in her hourly wage rate and the medical benefit. It is established that die claimant left work voluntarily. Therefore, the burden is upon her to demonstrate good cause for leaving work.

The Commission, in finding that claimant lacked good cause to voluntarily quit her employment, relied upon the interpretation of "good cause” set forth in Umbarger v. V.E.C., 12 Va. App. 431 (1991):

[Wjhen determining whether good cause exists for a claimant to voluntarily leave employment, the Commission and the reviewing courts must first apply an objective standard to (he reasonableness of the employment dispute and then to the reasonableness of the employee’s efforts to resolve that dispute before leaving the employment. In making this two-part analysis, die claimant’s claim must be viewed from the standpoint of a reasonable employee.

In Umbarger, die employee quit when she discovered a recently-hired male employee was making forty cents more per hour than she. The court determined that Ms. Umbarger reasonably believed she was a victim of sexual discrimination and concluded that she had left her employment for good cause. We note that Umbarger did not involve a reduction in pay; rather her complaint was that a co-worker was paid more.

There is no claim of discrimination in the instant case. However, the factual findings establish that the claimant was asked to accept a reduction in her hourly pay from $8.88 to $7.50. Further, she was asked to accept a reduction in her health benefit from $333.00 to $206.00 per month. This is, in the court's view, a significant reduction in pay and benefits. A reasonable employee would be likely to dispute foe imposition of such a reduction. Applying an objective standard to foe first prong of foe two-part analysis set forth in Umbarger, foe court concludes that this employment dispute was not unreasonable. Indeed it was foreseeable that an employee reasonably would object to a pay reduction of this magnitude.

Further, we find that foe employee made a reasonable effort to resolve foe dispute before leaving employment. After receiving foe employer's offer, foe employee made a counter-proposal, offering to work four days per week for foe same compensation. The employer rejected foe proposal. Lewis made another proposal, offering to work five days a week for $350.00, with reduced health benefits. Again her proposal was rejected. Negotiations continued “over a period of time.” Finally, reaching an impasse, Lewis was told her employment would terminate on December 31, 1995. Thereafter she gave a two-week notice intending to work until December 20, 1995, which turned out to be her last day of employment. It seems from the record that although foe employee was willing to negotiate a resolution of foe dispute, foe employer was adamant and refused to alter foe terms of its initial proposal.

The Commission argues font Lewis had foe burden to show that foe proposed pay was less than foe prevailing rate in foe locality, and that burden was not met This argument overlooks foe fact that Lewis had been paid more than foe was now being offered. Further, experience and common sense suggest that $7.50 per hour for an office manager of an insurance agency is at foe lower end of foe scale.

The Commission also argues that to adopt foe employee’s position in this matter would mean that an employee would have “good cause” to voluntarily quit whenever foe employer refused to accede to foe pay demands of foe employee. However, foe pay demand of foe employee here was to continue to receive foe same rate of pay foe had been receiving.

We find that foe circumstances here show that Mrs, Lewis left her employment voluntarily, but with good cause. Therefore, foe decision of foe Commission is reversed, and foe claimant is awarded unemployment benefits commencing January 1,1996.  