Unemployment Benefits and Allegations of Misconduct

Unemployment benefits have been in the news a lot lately. When an extension to long-term benefits funding was omitted from the latest federal budget, Democrats in the U.S. Congress had to begin a separate push for money that has so far been opposed by all but a few Republicans. It's an important battle as unemployment remains high across the country.

But this post isn't about politics. It's about what happens when regular working people lose their jobs, apply for unemployment benefits, and then are denied when their former employers file protests.

In Kentucky, KRS 341.370 provides several reasons why a former employee can be disqualified from receiving unemployment benefits. The most commonly known reason is voluntarily quitting "without good cause attributable to the employment." In other words, if you quit your job just because you felt like it, you are disqualified from receiving unemployment benefits.

The justification for benefits denial that I see most often in my practice is misconduct. Employers will protest an employee's benefits claim on the basis that he/she did something especially bad at work. KRS 341.370(b) states that a worker is disqualified from benefits if he/she has been discharged for misconduct connected with the work he/she was performing for the employer.

But what does "misconduct" mean? Is simply breaking a rule or violating a policy enough? KRS 341.370(6) explains:

'Discharge for misconduct' as used in this section shall include but not be limited to, separation initiated by an employer for falsification of an employment application to obtain employment through subterfuge; knowing violation of a reasonable and uniformly enforced rule of an employer; unsatisfactory attendance if the worker cannot show good cause for absences or tardiness; damaging the employer's property through gross negligence; refusing to obey reasonable instructions; reporting to work under the influence of alcohol or drugs or consuming alcohol or drugs on employer's premises during working hours; conduct endangering safety of self or co-workers; and incarceration in jail following conviction of a misdemeanor or felony by a court of competent jurisdiction, which results in missing at least five (5) days of work.

That's a lot of words to say a worker can't get unemployment benefits if he or she really screws up at work and gets fired for it.

It's important to note that KRS 341.370(6) doesn't list reasons an employee can be fired; being fired has a much lower standard. Kentucky is an "at-will" state, which means that a worker can be fired for most any reason or no reason at all (with a few exceptions for discrimination and protected activities).

But what KRS 341.370 does say is that even though employees can be fired for no reason at all, employers need a good reason to protest their unemployment benefits. A worker must have done something pretty bad to have their benefits denied.

"Misconduct" is the most common reason given by employers for the clients I represent in unemployment appeals. It's a convenient excuse that companies frequently rely upon to spare the expense of providing unemployment benefits to terminated workers.

Unfortunately for employers, though, when workers appeal the denial of benefits, the employers bear the burden of proving there was actual misconduct. Burch v. Taylor Drug Store, 965 S.W.2d 830, 835 (Ky. Ct. App. 1998). And like I said above, misconduct is more than just breaking a rule or being tough to work with. Misconduct is "a wilful and wanton disregard of the employer's interests." Masonic Homes of Ky., Inc. v. Ky. Unemployment Ins. Comm'n, 382 S.W.3d 884, 886-87 (Ky. Ct. App. 2012).

For example, if the employer alleges that a uniformly enforced rule was violated by the former employee, they have to produce evidence to show that the rule was reasonable and that it applied to all employees all the time. The employee then gets the opportunity to rebut this claim, usually by testifying personally that others often or sometimes broke the same rule but suffered no consequences. Or the employee can show that the rule was arbitrary and had no reasonable basis connected with the work. Witness testimony from fellow employees can be invaluable in such cases.

Ultimately, it's the employer's burden to prove misconduct. This is why appealing a denial of benefits can be crucial for an employee --- it puts the onus on the employer to actually prove their allegation, and they often cannot do so. Employers have a lot of leeway when it comes to firing their employees, but they don't, and shouldn't enjoy as much freedom to deny unemployment benefits. After all, the purpose of unemployment benefits is to relieve "the stress of economic insecurity due to unemployment through little or no fault of the worker." Shamrock Coal Co. v. Taylor, 697 S.W.2d 952, 954 (Ky. Ct. App. 1985).