California Court of Appeal Rules that Employee Discharged for a Rule Violation Qualifies for Unemployment Insurance Benefits Because the Violation was a “Good Faith Error in Judgment”
Unemployment Insurance (“UI”) is a federal-state program meant to ensure that those who lose their jobs – through no fault of their own – have resources to pay for some of life’s necessities while looking for a new job. Accordingly, to qualify for UI individuals must, among other things, be out of work due to no fault of their own.
When an employee is terminated for “misconduct” – such as a violation of a company rule – employers commonly question whether the employee qualifies for UI benefits. (This can be an important question for employers whose payroll-tax rate may increase when their former employees collect UI benefits.) According to a recent California Appellate Court decision – Robles v. Employment Development Department (2012) 12 C.D.O.S. 8071 – the answer turns on whether the employer can establish that the employee engaged in “deliberate, willful, and intentional” misconduct.
In Robles, the employee, Jose Robles, was terminated when – in violation of company policy – he tried to purchase work shoes for a friend using the $150 yearly allowance his employer provided to its employees for this purpose. After Robles was terminated, he filed for UI benefits. Robles’ employer did not object to Robles’ claim. The Employment Development Department (“EDD”), however, found that Robles was terminated for “misconduct” and, as such, found that he was not eligible for UI benefits.
On appeal, the Court disagreed that Robles’ conduct amounted to the type of “misconduct” that would disqualify him from UI benefits. In short, the Court found no evidence that Robles’ violation of his employer’s policy was “deliberate, willful, and intentional.” Robles had only been trying to help a friend in need, and did not realize that he could not use the shoe allowance to buy his friend new work shoes. The Court found that Robles’s violation of his employer’s policy was, at worst, a “good faith error in judgment” that did not amount to “misconduct.”
Although each situation is unique, the Robles decision offers employer’s general guidance on what type of conduct amounts to “misconduct” under the UI regulations. Here are some of the guiding principles:
• An individual is presumed to have been discharged for reasons other than misconduct in connection with his or her work.
• An employee’s unequivocal refusal to comply with the employer’s rule, without more, is not misconduct within the meaning of the UI regulations.
• An employee who is terminated for violating his or her employer’s rules may be entitled to UI benefits if the employee’s rule violation is a “good faith error in judgment.”
• To disqualify an employee from UI benefits, the employer must show “substantial evidence” of the employee’s “deliberate, willful, and intentional disobedience” of the employer’s rules or policies.
In sum, an employee will not be disqualified from receiving UI benefits because he or she was terminated due to “mere inefficiency, unsatisfactory conduct, failure in good performance as the result of inability or incapacity, inadvertencies or ordinary negligence in isolated instances, or good faith errors in judgment or discretion . . . .” Robles, supra. Rather, “the employee’s conduct must demonstrate culpability or bad faith.” Id. An employee’s “conduct may be harmful to the employer’s interests and justify the employee’s discharge; nevertheless, it evokes the disqualification for [UI] benefits only if it is willful, wanton or equally culpable.” Id.
The EDD’s website offers employers further guidance on the types of “misconduct” that may disqualify an employee from receiving UI benefits. Employers with questions about this topic can visit the website at http://www.edd.ca.gov/UIBDG/Misconduct_-_Table_of_Contents.htm.
Employers confronting this issue should keep in mind that there are strict time limits and procedures that must be followed if the employer wishes to object to an individual’s claim for UI benefits. Further, while the Robles case offers some general principles, determining whether an employee who is terminated for “misconduct” may be disqualified from receiving UI benefits involves a careful legal analysis of the facts surrounding the termination under the EDD regulations. If you have any questions about a former employee’s right to UI benefits, please do not hesitate to contact us.