Employee Offered Work with New Employer Cannot Get Severance

January 6, 2006 (PLANSPONSOR.com) - The US District Court for the District of New Jersey has ruled in favor of Ohio Casualty Insurance Co., agreeing that an employee offered a new job with a company that purchased the division of Ohio Casualty in which she was employed was not entitled to severance benefits.

Anne Way was an insurance adjustor at Ohio Casualty’s Voorhees, New Jersey office when the company’s automobile insurance division was sold to Proformance Insurance Co., located in Freehold, New Jersey.   According to the court, the sales agreement required Proformance to offer employment to Ohio Casualty employees affected by the sale.

Ohio Casualty’s severance plan stated that benefits would only be paid, in the event of a corporate sale, if an employee was not offered a job with the purchasing company or if an employee was offered a job located more than 50 miles from the employee’s Ohio Casualty office, according to the opinion.

Way had received a letter from Proformance that requested she complete an employment application.   In the suit, Way claimed that it was unreasonable for Ohio Casualty to deny her benefits saying she was not offered the opportunity to work for the new company, but instead was only “invited” to apply for a position.   According to the court, Way did not fill out the application and instead filed a request for severance benefits from Ohio Casualty.

Way also argued with Ohio Casualty’s use of a “straight-line” mile standard in deciding the Proformance job was within the required 50 miles instead of relying on the actual driving miles between Voorhees and Freehold.

Noting that in her deposition Way stated that she “wasn’t interested in the job” at Proformance because it was “too far” away, the court granted summary judgment in favor of Ohio Casualty.   The court agreed with the company that Way was offered a position, and determined it was reasonable for the company to use “straight-line” miles, rejecting Way’s argument that the distance between the two offices should have been measured by the “ordinary usual and shortest route of public travel,” which was greater than 50 miles.

The case is Way v. Ohio Casualty Insurance Co., D.N.J., No. 04-4418 (JBS), unpublished 12/16/05.