Court of Appeal: Lying on Timesheets re Break Time is Misconduct: No Unemployment for You

The Court of Appeal in Irving v. California Unemployment Insurance Appeals Board reversed a trial court ruling awarding an ex-employee unemployment benefits.

The Unemployment Ins. Appeals Board had ruled against the employee.

The administrative law judge found plaintiff exceeded the break times permitted by the district and made false entries on the time records. Plaintiff’s conduct constitutes dishonesty within the meaning of California Code of Regulations, title 22, section 1256-34, subdivision (a) which states in part, ‘“Dishonesty’ includes such acts and statements as lying, theft, making false entries on records, and other actions showing a lack of truthfulness and integrity. . . .” Here, plaintiff on four occasions took excessive breaks. And then he, by his own admission and the documentary evidence, failed to correctly state on his written timesheets how long the excessive breaks lasted. Based upon the foregoing, plaintiff committed misconduct within the meaning of section 1256.

If you read the opinion, you will see that the employee made a variety of excuses why he falsified time records to show that he took compliant breaks, while in reality he had taken overly long ones.  If you sift through it, you'll see the trial court's and employee's argument was that he had a "good faith" misunderstanding about whether he was doing something wrong.

The court of appeal rejected these arguments and the trial court's conclusions, relying on the EDD's regulations:

There is no basis for a finding that a reasonable person would have thought plaintiff’s conduct was not dishonest under the circumstances. As noted, one sentence in California Code of Regulations, title 22, section 1256-34, subdivision (b) mirrors the good faith misunderstanding language in section 1256, “Dishonesty does not exist if the employee’s act or statements arise from a good-faith misunderstanding between the employer and employee where a reasonable person would not have interpreted the acts or statements as dishonest under the circumstances.”

This rule, with its multiple uses of negatives, incorporates the following elements. For purposes of finding misconduct based upon dishonest actions, dishonesty does not exist under specified circumstances set forth in California Code of Regulations, title 22, section 1256-34, subdivision (b). For purposes of California Code of Regulations, title 22, section 1256-34, subdivision (b), the necessary circumstances must involve a dispute between the employer and the employee concerning whether conduct is dishonest. However, the dispute must arise from a good-faith misunderstanding between the employer and the employee. The good-faith misunderstanding is viewed from a reasonable person’s perspective; not from the employee or employer’s standpoint. Once the good faith dispute concerning whether the conduct is dishonest is viewed in that context, there are generally two possible outcomes. The first potential outcome is that if a reasonable person would not have interpreted the employee’s conduct as dishonest, then there has been no dishonesty. Under this first potential outcome, the employee is entitled to recover unemployment compensation benefits. By contrast, the second possible outcome arises if a reasonable person would have interpreted the employee’s conduct as dishonest. If a reasonable person concludes the employee’s conduct is dishonest, then there has been dishonesty for purposes of denying recovery of unemployment insurance benefits. Here, a reasonable person would not have interpreted plaintiff’s actions in taking four excessively long breaks and repeatedly falsifying his time records as honest. There is no evidence that a good-faith misunderstanding existed or could exist concerning plaintiff’s admitted taking of excessive breaks on four occasions and falsifying his time records.

But the court noted that this was a public employer, and that its conclusion might not apply automatically in a private sector setting.  Editorial comment: $%^&*

It bears emphasis that unlike other disputes that arise in the workplace, making false entries in a public document can be, depending on the circumstances, a crime. (Gov. Code, §§ 6200-6201; Pen. Code, § 115, subd. (a); see People v. Garfield (1985) 40 Cal.3d 192, 196.)

The court also rejected the "everybody does it" gambit:

The fact that other employees took excessive breaks is legally irrelevant. California Code of Regulations, title 22, section 1256-34, subdivision (b) addresses the situation when other employees engage in dishonest acts. When an employee engages in dishonest acts or statements and is thereby discharge, it is not an excuse that other employees engaged in an equally culpable act. (Ibid.) This rule applies even though the employer has no specific rule forbidding dishonesty. (Ibid.) 

The case is Irving v. California Unemployment Insurance Appeals Board and the opinion is here.

California Supreme Court Confirms: "Refusing to Sign" Is Insubordination. But it's not "Misconduct."

Somewhere along the line, employees got the idea that they can "refuse to sign" personnel documents.  Our advice is always to clearly indicate on a form that "signing" simply means acknowledgement of receipt.  Yet, employees still refuse to sign, even with that disclaimer.  Some then claim they did not receive them, usually during depositions.

Can the employer fire a worker for refusing to sign?  One of this blog's most popular posts addressed the court of appeal's decision in Paratransit v. Unemployment Insurance Appeals Board.  (Here)  The court there held that an employee's "refusing to sign" a disciplinary notice was insubordination, warranting discharge. But the court also held that the employee's refusing to sign was also "misconduct" within the meaning of  unemployment insurance law, disqualifying the fired worker from benefits.

The California Supreme Court has now weighed in on the case. As stated by the Court:

Craig Medeiros (Claimant) worked for Paratransit, Inc. (Employer) as a vehicle operator for approximately six years. As a condition of his employment, Claimant was required to join a union. The union and Employer were parties to a collective bargaining agreement (CBA) containing the following provision: “The Employer shall provide a Vehicle Operator with copies of complimentary letters received regarding his or her job performance and with copies of disciplinary notices, including verbal warnings that have been put in writing. All disciplinary notices must be signed by a Vehicle Operator when presented to him or her provided that the notice states that by signing, the Vehicle Operator is only acknowledging receipt of said notice and is not admitting to any fault or to the truth of any statement in the notice.”

Yet, when Paratransit attempted to discipline Medeiros, he refused to sign the document.  Later, he claimed he was tired and confused, and believed he did not have to sign because of advice he had received from his union.  

Paratransit contested Medeiros's claim for unemployment benefits.  Ultimately, the Court of Appeal decided, 2-1, that Medeiros was disqualified, because his refusal to sign amounted to "misconduct" within the meaing of California's Unemploymet Insurance Code section 1256.

The Supreme Court previously ruled in Amador v. Unemployment Ins. Appeals Bd. (1984) 35 Cal.3d 671, that misconduct means the following:

“conduct evincing such wilful or wanton disregard of an employer‟s interests as is found in deliberate violations or disregard of standards of behavior which the employer has the right to expect of his employee, or in carelessness or negligence of such degree or recurrence as to manifest equal culpability, wrongful intent or evil design, or to show an intentional and substantial disregard of the employer‟s interests or of the employee‟s duties and obligations to his employer. On the other hand mere inefficiency, unsatisfactory conduct, failure in good performance as the result of inability or incapacity, inadvertencies or ordinary negligence in isolated instances, or good faith errors in judgment or discretion are not to be deemed "misconduct" within the meaning of the statute.” 

With respect to insubordination, the Court noted prior rulings established that

“an employee‟s unequivocal refusal to comply with the employer‟s rule, without more, is not misconduct within the meaning of section 1256.” (Robles v. Employment Development Dept. (2012) 207 Cal.App.4th 1029, 1035 (Robles).) As in all cases of misconduct, the employee‟s insubordination must be marked by fault. (See Amador, supra, 35 Cal.3d at p. 678; Robles, at p. 1035.) Hence, violating an employer‟s reasonable order because of a good faith error in judgment does not disqualify an employee from receiving benefits. (See Amador, at p. 680; Moore v. Unemployment Ins. Appeals Bd. (1985) 169 Cal.App.3d 235, 243 (Moore).)

The Supreme Court acknowledged that refusing to sign the paper was insubordinate and justified discharge.  But the Court also unanimously held that Medeiros's refusing to sign one disciplinary notice was insufficient evidence of "misconduct" under the above definitions.

So, the Court found the disciplinary notice's disclaimer ambiguous, because it did not say that signing was "only" for acknowledging receipt of the document.  So, it pays to include a clear statement on documents requiring an employee's signature.  Additionally, the Court was concerned that Medeiros merely made a "good faith error in judgment" rather than misconduct.  The Court may have been persuaded otherwise had Medeiros engaged in a pattern of insubordination, or if his action had been detrimental to the employer.

This case is Paratransit v. CUIAB and the opinion is here.