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Unemployment Benefits: The Greased Pig

Houston, Indiana Greased Pig Contest, October, 2004

2004 Greased Pig Contest, Photo by Ken Ratcliff, Wikipedia Commons

Sometimes being an employer is like being in a greased pig contest: you just can’t get your arms around it. An employee does something that amply justifies firing him. He admits what he did, but seeks and (eventually) is awarded unemployment, thereby costing the employer’s account. What gives?

A recent court decision, Robles v. EDD  here in Alameda County shows how slippery this problem is. Liquid Environmental Solutions employed Jose Robles as a food grease collector, and provided him with a shoe allowance that allowed him to buy work shoes> Instead, Mr. Robles tried to used the allowance to buy shoes for a needy friend. He knew this was not allowed, and he lost his job. The Employment Development Department determined that he broke a “reasonable employer rule” and because of that, Mr. Robles was denied unemployment benefits. Mr. Robles appealed the EDD determination, lost twice, failed to get a the Alameda County Superior Court to overturn, and won in the First District Court of Appeal.

The Court of Appeal noted that Cal. Unemp. Ins. Code § 1256 states that an “individual is disqualified for unemployment compensation benefits if the director finds that he or she . . . has been discharged for misconduct connected with his or her most recent work.” However, the same statute creates a presumption that reasons other than misconduct caused the discharge. This means that it is up to the employer to prove that the discharge was because of misconduct.

Relying on the case of Amador v. Unemployment Ins. Appeals Bd, 35 Cal. 3d 671 (1985), the court found that “misconduct” is something more than good faith errors or “ordinary negligence”: it is
“conduct evincing such wilful or wanton disregard of an employer’s interests as is found in deliberate violations or disregard of standards of behavior which the employer has the right to expect of his employee, or in carelessness or negligence of such degree or recurrence as to manifest equal culpability, wrongful intent or evil design, or to show an intentional and substantial disregard of the employer’s interests or of the employee’s duties and obligations to his employer.

The basic test is: what was the employee’s intent? Sloppiness does not meet the standard. It has to be willful and wanton. The court found that “an employee’s unequivocal refusal to comply with the employer’s rule, without more, is not misconduct within the meaning of section 1256.” Instead, there has to be evidence of deliberate disobedience, such as prior warnings after similar incidents. Mr. Robles violated a reasonable rule, but it was “a good faith error in judgment rather than [] misconduct.”

Mr. Robles’ saving grace was that his former employer never contested his application for unemployment benefits. It never responded to a request for information; in fact, the EDD and the trial court only used information that Mr. Robles presented to deny him benefits. By remaining silent, the employer did not meet its burden of proving misconduct under section 1256 – something that even the EDD seemed willing to find without the help of the employer.

Takeaway for Employers.

First, do as Mr. Robles’ employer did – establish a clear policy – in this case, a shoe allowance for the employee. That makes it easier to decide what is a policy violation. Second, if you think someone might lose his job because of misconduct, you have to document that it was deliberate misconduct. That usually means giving written warnings not to repeat conduct, although if the conduct is sufficiently deliberate and bad, you can establish misconduct the first time it happens. Third, if sacking someone for misconduct, be prepared to meet your burden at an EDD hearing. The employee wins if you do not provide evidence, because the law presumes that no misconduct was involved.

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