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Unwarranted Unemployment Benefits: Why employers should fight for their rights in the face of employee misconduct

Unemployment is an often frustrating aspect of doing business, with the cards seemingly stacked against employers who must justify their discharge decisions under what amounts to a “good cause” standard in order to avoid paying unemployment benefits. These claims – which every employer has faced, or will face – have traditionally been difficult for employers to defend, as they bear the burden of proving that an employee was discharged for misconduct connected to the work. But a recent opinion from the Kentucky Supreme Court offers a glimmer of hope to employers that common sense can prevail in the face of proven employee misconduct.

Taking it to the mat as many times as necessary

Although unemployment claims are not nearly as costly or burdensome as employment litigation, over time these claims will eventually lead to higher unemployment rates. That is why the Supreme Court’s recent opinion adopting an approach highly favorable to employers in discharge cases is so welcome. In that opinion, Western Kentucky Coca-Cola Bottling Co. v. Runyon, the court considered Trevor Runyon’s unemployment claim arising from his termination for unexcused absences, chronic tardiness and leaving work without providing a reason. Inexplicably, the Division of Unemployment Insurance initially determined that Runyon had not been discharged for misconduct, making him eligible to receive unemployment benefits. The employer appealed, and an appeals referee set aside the determination, concluding that Runyon had been discharged for misconduct, making him ineligible for unemployment benefits. Runyon appealed to the Kentucky Unemployment Insurance Commission, which reversed the referee, reinstating Runyon’s unemployment benefits. The company appealed to the circuit court and the Court of Appeals, both of which affirmed the commission’s order finding Runyon eligible to receive unemployment benefits. In doing so, both courts deferred to the commission’s factual conclusion that Runyon had not been terminated for misconduct.

Persistence pays off

The Supreme Court accepted discretionary review of the Court of Appeals opinion. Review is rarely granted in any case, and it is extremely rare for unemployment decisions. But the court, obviously troubled by these facts – in which an employee was awarded benefits despite a clear record of having engaged in misconduct – accepted review. In doing so, the court reiterated that “even a single day’s absence in the face of a warning to be present at work on a particular day may be sufficient” to establish unsatisfactory attendance. Here, the employer met its burden, as Runyon: (1) had been suspended within the past year and warned that any further issues would result in his dismissal, and (2) left work only two hours into his shift, despite his supervisor’s warning that he could not “come and go as he pleased.” The court added that Runyon then failed to meet his burden of proving his absences were for good cause, as Runyon’s “exceedingly vague reason” – that he needed to “take care of business” – was “inadequate under any circumstances.”

This opinion proves that persistence can pay off, as the employer’s four appeals ultimately vindicated its decision to terminate Runyon’s employment. The opinion also suggests that Kentucky courts may give greater scrutiny to decisions awarding unemployment benefits where evidence of misconduct is clear. But in order to produce such evidence, employers would be wise to follow the lead of the employer in this case, which clearly communicated its displeasure at employee misconduct, issuing a written suspension warning that termination would result from further occurrences.

If you need assistance or advice regarding this topic or other employment policies or practices, please contact one of the attorneys in the Labor and Employment Practice Group at Bingham Greenebaum Doll LLP.

DISCLOSURE REQUIRED BY CIRCULAR 230. This Disclosure may be required by Circular 230 issued by the Department of Treasury and the Internal Revenue Service. If this article, including any attachments, contains any federal tax advice, such advice is not intended or written by the practitioner to be used, and it may not be used by any taxpayer, for the purpose of avoiding penalties that may be imposed on the taxpayer. Furthermore, any federal tax advice herein (including any attachment hereto) may not be used or referred to in promoting, marketing or recommending a transaction or arrangement to another party. Further information concerning this disclosure, and the reasons for such disclosure, may be obtained upon request from the author of this article. Thank you.

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