The Minnesota Court of Appeals has affirmed two unemployment law judges’ decisions to deny unemployment compensation to individuals terminated for clear policy violations.

In Nolan v. Great River Federal Credit Union, Ms. Nolan was terminated for violating the credit union’s policies which prohibit employees from performing transactions concerning family members’ accounts.  Ms. Nolan testified at the unemployment hearing, her mother called her at work and asked about transferring money from her account.  Ms. Nolan asked another teller to assist in transferring the money, but was advised a hold was on her mother’s account and a transfer couldn’t occur.  Ms. Nolan advised her mother of this.  Ms. Nolan then contacted a collections representative to discuss the hold and electronically accessed her mother’s account information.  Ms. Nolan acknowledged she was familiar with the credit union’s policies indicating, “we are not supposed to help family members in anyway” and are prohibited from doing anything regarding a relative’s account.  The Court of Appeals has stated, “As a general rule, refusing to abide by an employer’s reasonable policies and requests amounts to disqualifying misconduct.”  In this case, Ms. Nolan’s testimony established she violated the policies when she engaged the teller and collections representative on her mother’s behalf.  This knowing disregard for the reasonable policies constitutes employment misconduct and benefits are denied.

In Baker v. Minn. State Supreme Court, Ms. Baker worked as an assistant appellate clerk for the Minnesota Supreme Court and Court of Appeals.  She was hired by the Minnesota Judicial Branch in 1985.  In 1998, the Minnesota Judicial Branch enacted Policy 317 governing the use of internet and technology by employees.  Inappropriate use was defined as “…(1) wagering, betting, selling, (2) commercial activities, e.g. personal for-profit business activities,….”  Employees may access all policies on the employee intranet site, and they also receive e-mail notifications when policies are updated.

In 2014, Ms. Baker’s supervisor, Ms. O’Neill, became concerned with Ms. Baker’s productivity.  Ms. O’Neill has previously seen Ms. Baker using the internet when she was to be working and had warned Ms. Baker about excessive internet use.  Ms. O’Neill then asked the human resources department and IT division to review Ms. Baker’s internet use.  It was discovered Ms. Baker had used the internet during work to access numerous non-work related websites like eBay, Amazon, and PayPal.  Ms. Baker was then discharged for violation of the internet and technology use policy.

Ms. Baker argued she did not commit employment misconduct because she did not know of Policy 317.  During the hearing before the ULJ, Ms. Baker admitted to visiting websites for personal use.  Ms. Baker also acknowledged “I’m sure I probably have used it (intranet site) but I don’t know exactly what is on there or why I went to it.”  The ULJ denied unemployment compensation finding Ms. Baker used the Judicial Branch’s telecommunication system to engage in selling activity and personal business, and spent a significant amount of time on personal websites outside of authorized break times.  The Court of Appeals stated, misconduct need not be deliberate and that Ms. Baker’s argument she did not know of Policy 317 was unpersuasive given she had received approximately ten verbal warnings about excessive internet use.  The Court of Appeals affirmed the denial of unemployment benefits.

A couple of points to consider:

1)      Employers need to have clear policies;

2)      Employees need to know about the policies; and

3)      It is a good idea to be able to prove the employees have access to the policies or have received copies of the policies.    

Ms. Kern worked for the Minneapolis Institute of Arts (MIA) from August 2004 to July 1, 2014.  In 2012, Ms. Kern received a demotion.  Following the demotion she filed a sex-discrimination complaint with the Minnesota Department of Human Rights.  The parties reached a settlement and Ms. Kern was paid $6,000 “to extinguish any liability whatsoever that the MIA has or allegedly has for claimed lost wages.”  The Minnesota Department of Employment and Economic Development (DEED) determined the $6,000 was deductible from any unemployment benefits Ms. Kern was to receive.  Ms. Kern appealed and the Unemployment Law Judge (ULJ) agreed with DEED.  Ms. Kern appealed to the Minnesota Court of Appeals, for a de novo review.

Minnesota Statute § 268.085, Subd. 3 defines, “back pay” as a payment by an employer to an employee or former employee for lost wages.  The Court looked at the plain language of Minnesota Statute § 268.085 and determined the ULJ correctly determined the $6,000 was back pay and covered the period of time immediately following Ms. Kern’s termination of employment.

Most Employers and Employees don’t realize settlements may affect an employee’s unemployment compensation.  Clearly, Ms. Kern was expecting to receive unemployment compensation in addition to any settlement reached with MIA.  However, receipt of unemployment compensation is not automatic or guaranteed for employees.  Employers should know both settlements and severance packages can affect an employee’s unemployment compensation benefits.

Recently, the Minnesota Court of Appeals denied unemployment benefits in three separate cases where employees were terminated for misconduct.  In Blomker v. U.S. Federal Employees, Minn. Ct. App. # A15-0046 (Aug. 24, 2015 – unpublished), Ms. Blomker was discharged for insubordination for repeatedly failing to follow a supervisory directive to stop copying upper management on e-mails and for inappropriately grabbing a supervisor during an argument.  Ms. Blomker admitted to grabbing her supervisor’s finger, but testified she did so because she was afraid for her own physical well-being.  The Court of Appeals has previously held that, “An employee who intentionally physically contacts another in anger engages in employment misconduct.”  Ms. Blomker also acknowledged she has been told to not copy upper management on e-mails and had been previously disciplined for violating that directive.  The Court of Appeals determined there was substantial evidence to support the denial of unemployment benefits.

In Musa v. My Brothers’ Keeper, Minn. Ct. App. # A15-0092 (Aug. 24, 2015 – unpublished), the Court of Appeals affirmed the decision of the unemployment law judge (ULJ) denying unemployment benefits because Mr. Musa failed to attend a disciplinary meeting and engaged in disrespectful behavior.  Mr. Musa challenged the ULJ’s findings that he engaged in disrespectful behavior and was aware of the July 14 meeting he failed to attend.  The ULJ’s credited the testimony of the employer’s witnesses over the testimony of Mr. Musa, because it was detailed and specific.  The Court of Appeals defers to a ULJ’s determination on credibility.   The Court of Appeals upheld the ULJ’s findings.

In the third case, Montgomery v. AT&T Mobility Services, LLC, Minn. Ct. App. # A15-0173 (Oct. 5, 2015 – unpublished), Ms. Montgomery was discharged for using the store warranty policy to obtain goods for herself without paying for the merchandise, or following the procedures set forth in the warranty exchange policy. The ULJ found Ms. Montgomery’s failure to obtain a manager’s approval for the exchange as outlined in AT&T’s policy, was a serious violation of the standards of behavior an employer has the right to expect of an employee.  Additionally, the ULJ found Ms. Montgomery was dishonest during the investigation regarding the warranty exchange.  The Court of Appeals affirmed the ULJ decision.

The Minnesota Unemployment Compensation system is remedial by nature and favors awarding benefits to employees, except in cases of misconduct.  Given the statutory recognition favoring awarding benefits, it is unusual for three separate cases to be decided in favor of the employer.  The employers must have done an excellent job of documenting the employee misconduct in each case to persuade not only the ULJ, but the Court of Appeals as well.

MnUI-seal-header-sharpMore news on the Unemployment front:  In Fish v. YMCA, A14-728 (Minn. App. 12/15/2014), Mr. Fish was discharged for misconduct from employment with the YMCA.  Minn. Stat. § 268.095, Subd. 4 indicates an employee who is discharged for misconduct is ineligible for unemployment benefits.  Employment misconduct is defined as ‘intentional, negligent or indifferent conduct. . .that displays (1) a serious violation of the standards of behavior the employer has a right to reasonably expect of the employee or (2) a substantial lack of concern for the employment.’

In December 2013, Mr. Fish punched in for work and then proceeded to go lie down because he wasn’t feeling well.  He was found 30 minutes later by a coworker.  Going as far back as 2008, Mr. Fish had received other warnings for unsatisfactory performance.  The Minnesota Court of Appeals has previously held that employee’s behavior as a whole may be considered in determining the appropriateness of a discharge and qualification for unemployment benefits.

Recently, the Court of Appeals affirmed the decision of the ULJ who determined Mr. Fish’s past work record negatively impacted the YMCA, and he could not be trusted to perform his job duties in the future.  His misconduct could not be deemed a good-faith error in judgment.

Employers should consider an employee’s past work record and document it in a termination notice, in support of the decision to discharge the employee.  A sufficiently documented termination decision can support the denial of Unemployment benefits based on misconduct.   

It is fairly well-known that unemployment compensation in Minnesota favors employees, and employers have a high hurdle to reach in unemployment challenges.  There are times however when the Department of Employment and Economic Development and the Court of Appeals agree with the Employer and deny unemployment benefits to an employee.

In Bronstad v. House of Hope, Inc., A14-54 (Minn. App. 09/22/2014) the Court of Appeals upheld DEED’s determination that Ms. Bronstad was ineligible for unemployment benefits because she quit without good reason caused by her employer.  Ms. Bronstad was employed by House of Hope, Inc. as a full-time client manager from 2006-2013.  On September 23, 2013, she was notified she was being demoted from her supervisory position in the men’s program and transferred into a non-supervisory position in the women’s chemical dependency treatment program.  Ms. Bronstad’s demotion was due to past reprimands, client complaints, and medication errors.  As a result of performing more medication errors than other client managers, House of Hope, Inc. needed to try something different to address the issue, and avoid future problems.  House of Hope, Inc. wanted to keep her on staff and believed the best option was to transfer her to the women’s house which had fewer clients.  Ms. Bronstad refused the transfer to the women’s house, and she was instructed to turn in her company keys and credit card.

Minnesota Statute §268.095 states a quit “occurs when the decision to end the employment was, at the time the employment ended, the employee’s.”  In contrast, a discharge “occurs when any words or actions by an employer would lead a reasonable employee to believe that the employer will no longer allow the employee to work for the employer in any capacity.”

The ULJ found and the Court of Appeals agreed there was evidence that House of Hope, Inc. provided Ms. Bomstad continuing employment in the women’s program at the same pay rate, and therefore concluded the decision to quit employment was strictly Ms. Bronstad’s.  The Court next evaluated whether or not Ms. Bronstad’s decision to quit was based on a good reason caused by the employer.

The Court of Appeals has previously held a good cause to quit does not exist when an employer demotes an employee to a non-supervisory position when the employer has been dissatisfied with the employee’s job performance.  The Court of Appeals affirmed the ULJ’s denial of unemployment benefits.

It is helpful for employers to be familiar with the statutes surrounding unemployment compensation, because sometimes what appears to be a “discharge” is actually a “quit”. 

Earlier this week, the Minnesota Court of Appeals issued a decision in Dukowitz v. Hannon Security Services. In 2010, Ms. Dukowitz filed a lawsuit alleging she was terminated in retaliation for applying for unemployment benefits which is against public policy, and she had an implied right to bring a private cause of action against her former employer. Both the District Court and the Court of Appeals found in favor of Hannon Security Services.

Ms. Dukowitz was employed as a security officer from November 2005 until her termination on March 13, 2009. In 2008, she was offered and accepted a seasonal position with daytime hours. In December 2008, she learned the seasonal position would be ending. She told her supervisor she would have to apply for unemployment benefits. It was then agreed she would be allowed to work shifts as they became available. She was terminated from her position March 13, 2009.

The Court of Appeals determined the Minnesota Supreme Court has recognized a narrow exception to the general at-will employment rule, that exception being an employer may be liable for wrongful discharge if it terminates an employment relationship because of an employee’s refusal to violate the law. The Court of Appeals ruled Ms. Dukowitz’s claims did not fall within the exception set forth by the Supreme Court. The Court of Appeals also disregarded Ms. Dukowitz other claim she had an implied right to a private cause of action. The state unemployment statute includes a criminal remedy for conduct which occurs that is proscribed by the statute.

Hannon Security Services prevailed on all counts before the Court of Appeals including an award of costs and disbursements against Ms. Dukowitz. This is a unique and fact-specific case, which should have never been filed in the first place. It is nice to see the Employer prevailed in this matter.

Minnesota law provides, employees on an unpaid suspension for 30 calendar days or less, as a result of employment misconduct are not entitled to receive unemployment benefits.

However, in a recent unpublished Court of Appeals decision (pdf), the Minnesota Department of Employment and Economic Development conceded, if an employee who was placed on an unpaid suspension during an employment investigation was later exonerated or the conduct did not amount to misconduct, the employee would not be disqualified from receiving unemployment benefits during the unpaid suspension.

Minnesota employers should keep this in mind when deciding whether or not to place an employee on a paid or unpaid suspension pending an employment investigation. A wrong decision could increase your unemployment insurance rating and cost your business more money.

 We all know the words, "You’re Fired," but what does that mean for unemployment benefits.  Generally, employees who quit, are discharged for employment misconduct or are discharged because of aggravated employment misconduct are not entitled to receive unemployment benefits from the State of Minnesota. Of course, there are some exceptions to these rules.

One new change with respect to misconduct involves whether or not the employee was discharged due to a single incident, which did not have a significant impact on the employer. Previously, if an employee was fired for committing a single incident of misconduct which did not have a significant impact on the employer, the employee would have been entitled to receive unemployment benefits under Minnesota law. Single incidents used to be excluded from the definition of misconduct, however, that is no longer the case today.

In 2009, the Minnesota Legislature revised Minn. Stat. § 268.095, Subd. 6(d). A single incident of misconduct will now be considered an important factor in deciding whether or not the conduct rises to the level of misconduct, thereby excluding an employee from receiving benefits.

Now, employees are no longer guaranteed a free bite at the apple for an anomalous isolated incident which did not substantially harm their employer.

It is important for employers to keep these things in mind when responding to unemployment benefit claims filed by employees, because if you don’t raise the issue, the employee may be granted unemployment benefits they would not have otherwise been entitled to receive.