News & Information

CCH® UNEMPLOYMENT INSURANCE — 7/23/14

Refusal to sign disciplinary notice did not disqualify claimant from receiving unemployment benefits

A claimant’s refusal to sign a disciplinary notice was not misconduct that disqualified him from receiving unemployment benefits, but was, at most, a good faith error in judgment, ruled a unanimous California Supreme Court. In this case, the court found that the claimant acted out of a genuine belief that signing the notice would be an admission of allegations he disputed. Thus, even though the employer was within its rights to fire him for insubordination, his single act of disobedience did not constitute misconduct disqualifying him from receiving benefits.

Background

The claimant was a vehicle operator for approximately six years. As a condition of his employment, he was required to join a union. The union and employer were parties to a collective bargaining agreement governing the conditions of employment, including that all disciplinary notices must be signed and that the signature only acknowledged receipt of the notice, not an admission of fault.

In February 2008, a passenger filed a complaint with the employer alleging that the claimant had unlawfully harassed her. The employer investigated and concluded that the alleged misconduct had occurred. Thereafter, the claimant was advised that he was disciplined for the incident. However, he disagreed that the incident had occurred as alleged. During a meeting, he was presented with a memorandum documenting that he was being assessed discipline for the incident, including a two-day suspension. The employer explained the disciplinary notice and asked the claimant to sign it. He refused, stating his belief that signing would constitute an admission of guilt.

When the claimant requested that a union representative be present at the meeting, he was told that he was not entitled to one. Additionally, the claimant was warned that his refusal to sign the notice would be viewed as insubordination and grounds for termination. Subsequently, he was discharged for insubordination due to his failure to sign the disciplinary notice. The claimant had no prior disciplinary actions.

On these facts, an Administrative Law Judge (ALJ) affirmed the decision of the Department, which had denied the claimant’s application for benefits. The ALJ determined that the claimant was disqualified from receiving benefits because he was discharged for misconduct connected with work. However, the Unemployment Insurance Appeals Board reversed the ALJ’s decision, finding that the claimant did not commit misconduct and that his failure to sign the disciplinary notice “was, at most, a simple mistake or an instance of poor judgment” that did not disqualify him from receiving benefits.

The employer filed a petition for a writ of administrative mandamus. The trial court concluded that the claimant deliberately disobeyed the employer’s order to sign the disciplinary notice, and directed the Board to set aside its decision and issue a new decision finding that the claimant was disqualified from receiving benefits. After the court of appeal affirmed the trial court decision, the state high court granted the claimant’s petition for review.

Disqualifying misconduct

Section 1256 of California’s Unemployment Insurance Code renders an individual ineligible for benefits upon a finding that “he or she has been discharged for misconduct connected with his or her most recent work.” The court observed that it is settled that “an employee’s unequivocal refusal to comply with the employer’s rule, without more, is not misconduct within the meaning of section 1256.” The employee’s insubordination must be marked by fault. Hence, violating an employer’s reasonable order because of a good faith error in judgment does not disqualify an employee from receiving benefits. To establish misconduct, there must be “substantial evidence of deliberate, willful, and intentional disobedience” on the part of the employee.

Analysis

Section 1256 creates a rebuttable presumption that, absent evidence from the employer, the employee was not discharged for misconduct. The employer bears the overall burden of proving misconduct. However, once it is established that the employee has violated a reasonable order, the burden shifts to the employee to show good cause.

Here, the trial court concluded that the claimant committed misconduct within the meaning of Sec. 1256 by deliberately disobeying the employer’s lawful and reasonable order to sign the disciplinary notice. However, there was no evidence that the claimant refused to sign the notice simply to frustrate his employer’s objectives or for the sake of being difficult. The notice itself did not contain an explicit admissions disclaimer and did not specify that a signature was solely for receipt purposes. Given these omissions, the disciplinary notice was not so clear on the point that the claimant’s excuse for not signing it smacked of wrongful intent or evil design. Under the circumstances, it would be unreasonable to attribute fault to the claimant for declining to accept the employer’s verbal assurances as to the legal effect of his signature on the written document.

Conclusion

Thus, the high court concluded that the undisputed facts pointed to only one reasonable conclusion: that the claimant acted out of a genuine belief that signing the notice would be an admission of allegations he disputed, and that belief was not so unreasonable under the circumstances as to constitute misconduct within the meaning of Sec. 1256. As a result, even assuming the employer’s order to sign the disciplinary notice was reasonable and lawful, and even assuming the claimant’s refusal to do so may have justified his termination from employment, the court concluded that the facts did not establish that he committed disqualifying misconduct within the meaning of Sec. 1256 (Paratransit, Inc. v. UIAB, Cal. Sup. Ct., No. S204221, July 3, 2014).