California Supreme Court to Decide If Insubordination is Misconduct

Remember when the Court of Appeal decided that "refusing to sign" a document was insubordination, disqualifying a terminated employee from unemployment insurance benefits?  See this post.  That was awesome.

Anyway, the California Supreme Court granted review of the decision, so it's off the books for now.

Stay tuned!

Greg

Court of Appeal: Employee's Attempt to Buy Shoes for Friend with Employer's Money Not Misconduct

Here's another Court of Appeal decision regarding an unemployment insurance benefits determination by the Employment Development Department.  A few weeks ago, the Court decided that refusing to sign a document was insubordination, disqualifying an employee from benefits.  See here.  Not this time.

In this case, Robles was employed by Liquid Environmental Solutions. He received an annual allowance for safety shoes.  He took a friend to the Red Wing store to buy the friend a pair of boots with his shoe allowance.  The store clerk would not permit the purchase.  Robles did not complete the transaction.  He was later suspended and then fired.

Robles applied for unemployment benefits.  The company did not appear or contest.  Robles admitted he attempted to use the Company's shoe allowance to buy shoes for a non-employee friend.  EDD denied the claim for unemployment on the basis of misconduct, as did the superior court.  Here is what the EDD's ALJ said, which pretty much sums it up:

Robles started to explain his objection to the characterization in the investigator・s report to the effect that claimant stated he was aware ―that the purchase had to be for employees only.‖The ALJ said he would have a chance later to ―tell me more about it.

The ALJ found that Robles was discharged for misconduct connected with work. In particular, Robles understood that the employer intended that its employees use the
annual shoe allowance to purchase shoes. Robles breached ―a duty of good faith and fair dealing when he attempted to obtain shoes for a friend who was not an employee rather than using the allowance for himself. [¶] The claimant may have had good intentions toward his friend, but in his actions he breached a serious obligation he had to the employer.

But the court of appeal disagreed with the EDD and superior court.  The court of appeal apparently did not accept that an employee who knowingly attempts to use company money to buy something for a third party is stealing, or at least attempting to do so:

In the case at hand, Robles knew that the employer intended its employees to use the shoe allowance to purchase safety shoes for work, but the element of culpable intent has not been established. First, Robles did not try to hide anything when he went to the shoe store. Next, it is undisputed that he wanted to help his friend who had a recent home accident. Further, Robles had decent safety shoes and did not feel he would jeopardize the safety purpose of the allowance or otherwise injure his employer‘s interests. When his supervisor indicated the employer did not approve of the intended use, Robles registered his regret and assured the supervisor he would comply. And finally, Robles did not use the shoe allowance for his friend. At most Robles was guilty of a good faith error in judgment. At the least Robles misunderstood the limits of what he could do with the safety shoe allowance, which he was entitled to as a benefit of employment.

Well, you be the judge.  Is the court of appeal indulging bad behavior.  Do you need a written policy saying don't use company money to buy friends shoes intended for employee safety?  Is this misconduct or just a "good faith error in judgment?"  These are rhetorical questions; don't write :)

The case is Robles v. EDD and the decision is here.

Court of Appeal: "Refusing to Sign" Is Insubordination(!)

When you present an employee a warning (or a review, etc.), and you ask the employee to sign the document to acknowledge receipt of a copy, and the employee refuses to do so, that is called "insubordination" and is a legitimate reason to fire an employee.  Better, still:  it's "misconduct" and the employee may be disqualified from unemployment benefits.

The employer does not have to discharge the employee, but it could.  I have no idea where this "refuse to sign" notation came from, or when employees gained the power to tell employers what they will and will not sign. Perhaps this decision will change things a bit.

In Paratransit v. UIAB, the employee was in a union. The union contract required employer to obtain the signature of the employee on disciplinary action notices, but the notices had to have a disclaimer that says the employee is only acknowledging receipt of the document.  So, employee Craig Medeiros was rude to a customer, the employer tried to give him a disciplinary notice. Employee refused because he feared it would be deemed an admission of guilt, despite the clear disclaimer.  He was told he would be fired if he did not sign the document, and he refused.  Paratransit fired him.

So, the employee then applied for unemployment, which Paratransit contested.  The Unemployment Ins. Appeals Board granted benefits, overturning the decision of an Administrative Law Judge.  Paratransit then sought relief in court.  The Superior Court agreed with Paratransit, and the employee appealed to the Court of Appeal.

If you're fired for "misconduct" you are disqualified from receiving unemployment.  What is misconduct?  Unemployment Ins. Code Section 1256 has the answer, as explained by the court:

Section 1256 provides in relevant part: ?An individual is disqualified for unemployment compensation benefits if . . . he or she has been discharged for misconduct connected with his or her most recent work.? Misconduct within the meaning of section 1256 is limited to "conduct evincing such willful 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 the employee‟s duties and obligations to his employer. On the other hand 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 are not to be deemed "misconduct" within the meaning of the statute . . .

The Court of Appeal held that refusing to sign an acknowledgment, in violation of a direct order to do so, was insubordination and, therefore, misconduct:

Under the circumstances presented, we conclude Claimant‟s failure to sign the disciplinary memo violated his obligations to Employer under Labor Code section 2856. (See Lacy v. California Unemployment Ins. Appeals Bd., supra, 17 Cal.App.3d at p. 1133 [employee must comply unless the employer‟s directive imposes a duty that is both new and unreasonable].) The remaining question is whether such insubordination was misconduct under section 1256 or a good faith error in judgment. ***

As described above, an intentional refusal to obey an employer‟s lawful and reasonable directive qualifies as misconduct. But where an employee, in good faith, fails to recognize the employer‟s directive is reasonable and lawful or otherwise reasonably believes he is not required to comply, one might conclude his refusal to obey is no more than a good faith error in judgment. ***

***Claimant was told to sign the disciplinary memo and that, if he did not, he would be subject to termination. Instead, Claimant requested union representation. He was then told he had no right to union representation at the meeting. Claimant was then instructed to sign the memorandum without union representation. By refusing to do so, Claimant was not seeking redress by other means. He was directly disobeying the employer‟s command.

So, employers have the right to obtain an employee acknowledgment of a disciplinary action. Why is this a big deal?  Because employees may later claim that the action notice was "inserted" in the file, or that the employee did not have prior notice that his or her performance was unsatisfactory, or that the employee did not get a chance to see a disciplinary warning.  That "refused to sign" language that employers write on unsigned notices is worth nothing in court.  The employee's signed acknowledgment is worth a lot. That's why.

To be sure, an employer is not required to fire someone who does not follow directions, or who does not want to sign a disciplinary notice.  But then again, there are employers who may wish to impose consequences for employees' who refuse to follow directions.  Even in 2012, it's nice to know the employer still has a fundamental management right to ask an employee to obey a legal instruction.  Important caveat:  it's a good idea for the warning notice to include an express disclaimer, such as: "Signature is only an acknowlegement that the employee received a copy of this notice and does not signify agreement with the contents."  Or somethjing like that.  Remember: Nothing in this blog is legal advice. 

This case is Paratransit Inc. v. Unemployment Ins. Appeals Bd. and the opinion is here.