How Badly Does My Employee Have to Mess Up to be Denied UI Benefits?
An employee messed up. You need to fire him or her. Will he or she receive unemployment insurance (“UI” also sometimes referred to as unemployment compensation) benefits? Well, the UI division, and the courts, look at just how bad the conduct was. In a recent decision, the Wisconsin Court of Appeals provides employers with additional guidance on what type of conduct is bad enough to justify a denial of UI benefits. (If you like reading court decisions, you can find the Court of Appeals’ full decision in Easterling v. LIRC here.)
Was there Misconduct?
The standard for decades was “misconduct.” If an employee was terminated for misconduct connected to employment, the employee was ineligible to receive UI benefits. If the conduct did not rise to the level of misconduct, benefits were, generally speaking, allowed. Then, the law changed in 2013. Misconduct remains relevant. However, since 2013, an employee can be found ineligible for UI benefits for conduct that involves the “substantial fault” of the employee, despite whether that conduct amounts to misconduct.
Is there Substantial Fault?
“Substantial fault” is defined by statute to include acts or omissions of an employee which the employee controls and which violate the employer’s reasonable requirements. However, this definition of “substantial fault” exempts the following conduct: (1) one or more minor rules infractions unless the employee repeats it after warning from the employer; (2) one or more inadvertent errors made by the employee; (3) any failure of the employee to perform work because of insufficient skill, ability, or equipment. See, section 108.04(5g) of the Wisconsin Statutes.
The issue in the Easterling case focused on the definition of an inadvertent error that does not amount to substantial fault under the statute. In that case the employee, who was employed as a driver for a transportation service, failed to properly secure a passenger’s wheelchair before transport, resulting in the wheelchair tipping over. The employer had a clear policy requiring that driver secure wheelchairs. The employee violated the policy, and was consequently terminated.
The court found that the employee’s error, in failing to secure the wheelchair, was inadvertent. Why? The circumstances matter, the court said. Not every failure to follow an employer’s policy would be inadvertent error. In fact, not every failure to properly secure a wheelchair would be inadvertent error. In this case, however, there were several facts that led the court to find the employee’s error was inadvertent. First, the employee usually had an experienced volunteer along to assist passengers, but did not that day. Second, the employee was trying to secure three other passengers at the same time. Third, the employee was rushing because she was parked in a busy crosswalk. Finally, she completed the first two steps of securing the wheelchair – she positioned the wheelchair properly and applied the brakes – but she forgot to complete the final step of securing the floor straps. As a result of these circumstances, her error was found to be inadvertent. Thus, she was allowed UI benefits.
What should employers know about termination and unemployment benefits?
What does this mean for employers? It drives home the message that each situation is unique. Each termination must be viewed on a case-by-case basis to determine whether the employee will likely be entitled to UI benefits. The bottom line: violation of a clear policy of the employer does not automatically mean an employee would be ineligible for UI benefits.
So why should an employer care whether a terminated employee is eligible for UI or not? Because UI claims directly impacts the UI tax rate each employer pays. Thus, knowing whether an employee either is or is not eligible for UI benefits is helpful in lowering the employer’s UI tax rate. Knowing of these potential costs should inform an employer’s decision-making and planning in three respects: (1) whether to fire an employee in the first place, as opposed to just disciplining the employee; (2) whether to fight a claim for UI benefits, or to appeal an initial determination allowing benefits; and (3) how to write, revise, and enforce policies to minimize room for inadvertent errors.
This area of the law is evolving. Another case is currently pending before the Wisconsin Supreme Court (you can read he Court of Appeals decision in that case, Operton v. LIRC, here), wherein a key issue is whether a series of failures constituted substantial fault. Stay tuned for developments.
Questions about Unemployment Insurance?
If you would like to discuss this area of the law further or how you can minimize UI liability for your business, contact Attorneys Jessica Kramer, Leslie Elkins, or Nick Watt at KEW.