Unemployment compensation claimants who were discharged for isolated incidents of misconduct have had mixed success before the courts over the years, not least because the controlling doctrine, alternately articulated in case law and in statute, continues to evolve.
No doctrine in unemployment compensation law, or employment law in general, has had as topsy-turvy a history as the “single incident” tenet.
Under the principle, which has appeared in different shapes and phrases over the years—and as quickly evaporated—an unemployment compensation claimant may be eligible for benefits if the misbehavior that caused discharge was isolated in nature. The concept was conceived in the common law, codified, canceled, came back as the “single incident” doctrine, and has now been changed, again.
The latest perturbation was the deconstruction of the doctrine by the legislature earlier this year, as part of a package of changes in the unemployment compensation law, most of which went into effect this August. The bulk of the provision, prompted by the federal stimulus package, generally makes more employees eligible for benefits. But the 2009 legislation eviscerates the “single incident” tenet as a stand-alone precept and restricts it to merely a “factor” for consideration in adjudicating unemployment compensation claims.
The conversion is the latest step in the rise and fall of this venerable doctrine. Those modifications are important to the many thousands of employees in Minnesota who annually seek unemployment compensation benefits, their employers, and the attorneys who represent all of them.
The history of the doctrine is traceable to a ruling of the Minnesota Supreme Court 36 years ago. In In re Tilseth’s Claim, 295 Minn. 372, 204 N.W.2d 644 (Minn. 1973), the court reversed a determination that a truck driver who repeatedly drank alcohol at work was eligible for unemployment compensation benefits.
Defining the statutory term “misconduct,” which bars benefits, the court adopted as its definition the same phrase coined by neighboring Wisconsin three decades earlier. (See Boynton Cab Co. v. Neubeck, 296 N.W. 636, 640 (1941).) The concept embraces conduct that constitutes “deliberate violation or disregard of standards of behavior which the employer has the right to expect of his [sic] employees …,” an articulation that later worked its way into legislation as Minn. Stat. §268.095, subd. 6. The court went on, in phraseology also subsequently codified, to declare that “mere inefficiency, unsatisfactory conduct … or good-faith errors in judgment or discretion are not disqualifying misconduct.” (204 N.W.2d 644, 646 (1974).)
This latter terminology subsequently was cited as creating an exception to disqualification from unemployment benefits for “misconduct” if the behavior giving rise to the discharge was aberrational and isolated, hence the “hot-headed” doctrine. The concept was borrowed from labor-management relations law in which disciplinary action due to spur-of-the-moment conduct may be set aside in a “just cause” grievance arbitration. (See, e.g., In re Star Tribune Co., 115 Lab. Arb. 517 (2001) (suspension of newspaper gossip columnist for throwing a glass of water at photographer overturned because scribe acted “impulsively.”)
The doctrine recognizes the frailties of human nature, coupled with the outlook that when an employee is fired, the discharged employee and any family members or relatives in need of support may well need some minimal benefits in order to persevere.
The hot-headed tenet, therefore, represents a measure of lenity for displaced employees. But it was only invoked sparingly and upheld rarely. For example, the doctrine has been successfully used to obtain unemployment benefits for fired workers. In McCoy v. Spicer Off-Highway Axle Div., 412 N.W.2d 24 (Minn. App. 1987), the doctrine was invoked to obtain benefits for an employee who was discharged after he tossed a crumpled piece of paper at a boss and walked away. Similarly, in Norman v. Rosemount, Inc., 383 N.W.2d 443 (Minn. App. 1986), rev. denied (Minn. 05/22/86), a discharged employee who had punched a coworker’s chair, pulled his hat, and threw a small plastic object at him succeeded in obtaining unemployment benefits. A similar result ensued for a worker who lost her temper and was discharged in Oman v. Daig Corp., 375 N.W.2d 533 (Minn. App. 1985).
The “hot head” doctrine, conceived in Tilseth and nurtured over the years, was terminated by legislation more than two decades later. In 1996, Minn. Stat §268.095, Subd. 6, previously codified as §268.095, subd. 12, defined disqualifying misconduct as “intentional conduct” showing a disregard for (a) the employer’s interests; (b) the standards of behavior that an employer has the right to expect of the employee; or (c) the employee’s duties and obligations to the employer.”
Despite the statute, Minnesota courts have tended to rely upon the Tilseth standard in adjudicating “misconduct” issues in unemployment compensation cases. But that practice came to an abrupt halt, as did the hot-headed doctrine, in Isse v. Alamo Rent-A-Car, 590 N.W.2d 137 (Minn. App. 1999). In Isse, the court of appeals ruled that an employee was ineligible for reemployment benefits after getting into a fracas with a coworker on the job. The fired employee, who had an exemplary work record, claimed that the altercation was simply an isolated occurrence that fell within the “hot-head” doctrine. The employee prevailed in a contested unemployment hearing, but the court of appeals reversed the unemployment law judge, rejecting the “hot-head” claim and decimating the doctrine.
The court reasoned that the absence from the statute of the term “isolated incident,” which was part of the Tilseth standard, evinced a legislative intent to abrogate the doctrine. The determination in Isse not only dismantled a long-established doctrine of unemployment law, but it also reflected a much more stringent outlook in unemployment compensation cases.
Employees and their advocates urged a resurrection of the concept, which came through a legislative solution. In 2004, a new measure was enacted that revived the “hot-head” doctrine, albeit under a new terminology.
The principle codified in Minn. Stat. §268.095 comprised two elements: (a) the notion that an incident must be solitary or isolated in nature, coupled with (b) a requirement that the incident not have a “significant adverse impact on the employer.” In effect, the focal point moved from the employee’s motivation under the “hot-head” doctrine to the impact on the employer under the “single-incident” rubric.
The cases decided under the “single-incident” rule were varied and the outcomes mixed.
An employee at a medical clinic who accessed her own medical record and changed incorrect information in it was entitled to unemployment compensation benefits under the “single-incident” doctrine in Hendren v. Allina Medical Group, 2007 WL 900450 (Minn. App. 2007) (unpublished).
When management learned about her behavior, she was fired on grounds that she had violated the clinic’s confidentiality policy prohibiting accessing “medical or salary” information for personal reasons.”
The Department of Employment and Economic Development (DEED), denied her claim for unemployment benefits on grounds of “misconduct,” but the court of appeals reversed. While recognizing “confidentiality of medical records is an important issue in the health care industry,” it viewed the claimant’s “single act of changing two items of background personnel information” as not so heinous to warrant disqualification for unemployment benefits. Because her action “did not have a significant adverse impact on her employer,” her behavior fell within the “single-incident” exception, allowing her to receive unemployment benefits.
An employee who repeatedly refused to take an ethics examination mandated annually by her employer was denied unemployment benefits in Storbeck v. ACS Enterprise Solutions, Inc., 2007 WL 92824 (Minn. App. 2007) (unpublished). After her termination, she was denied unemployment compensation benefits by DEED on grounds that her refusal to take the test constituted disqualifying “misconduct.”
The court of appeals affirmed, rejecting the employee’s claim that she was entitled to benefits under the “single-incident” exception. There was “substantial evidence” that she had “repeatedly” refused to take the exam, as reflected in a pair of letters she sent explaining her reason before the exam was given. Although she had taken the exam in previous years, she expressed her view that “someone had to draw a line in the sand and say [that] this type of treatment of our people has to stop.”
Perhaps the most high-profile, and most controversial application of the doctrine came in Skarhus v. Davanni’s, Inc., 721 N.W.2d 340 (Minn. App. 2006). A cashier at a fast-food facility near the University of Minnesota sought benefits after she was fired for failing to ring up a charge of less than four dollars for a portion of a meal she ate on the premises. The pro se claimant raised the “single-incident” exception, claiming she merely made an oversight because she was in a hurry.
The appellate court rejected her position in a ruling that some observers regarded as unduly harsh. The “minimal value of the stolen food … [sic] is not the dispositive factor,” said the court. Because of her duties as a cashier, the employer’s trust in her was “undermined.” Thus, the “single incident” had a “significant adverse impact” on the employer that barred application of the principle.
The type of impropriety that underlay the Skarhus case was reflected in a subsequent appellate court ruling rejecting a “single incident” claim. In Frank v. Heartland Automotive Services, Inc., 743 N.W.2d 626 (Minn. App. 2008), the court upheld denial of benefits for the manager of an automobile service shop in Monticello, who fraudulently charged a customer for services that were not performed. Relying on Skarhus, the court affirmed a determination of disqualifying “misconduct” on grounds that “this sort of integrity-measuring will always” repulse a “single incident” defense because it has a “significant adverse impact” on the employer’s ability to trust the employee.
Two of what may be the final examples of the single-incident doctrine this past summer revolved around the Skarhus case. Before the tenet was terminated under the new law, the Minnesota Court of Appeals, in Ozagur v. Walgreen, 2009 WL 2016404 (Minn. App. 2009) (unpublished), heard the case of the head photo specialist at a St. Paul drug store who was denied benefits for violating company policy by handling her own photo processing and underpaying the order by about $25.
The appellate court, agreeing with an unemployment law judge, reasoned that the employee committed disqualifying “misconduct,” rejecting her claim that she intended to pay the correct price before actually paying for it. Her handling of her own order transgressed company policy and the evidence refuted her claim that she intended to pay the correct price.
The single-incident exception “conceivably” was applicable because she did not “actually complete her purchase,” and the employer suffered no harm because of the “one-time policy violation.” But that argument was rejected because this case was “akin” to Skarhus. The photo development episode led the employer to “mistrust” the employee, which caused “significant adverse impact” on the employer’s willingness to “assign” duties to her. Thus, she was “ineligible for unemployment benefits” due to “misconduct.”
The result might have been the same under the new law because the diminution of the employer’s trust may trump the employee’s solitary malfeasance. Or, it could have been different because the new measure was deemed inapposite in Wood Chip of Princeton, Inc. v. Clarin, 2009 WL 2225842 (Minn. App. 2009) (unpublished), where the claimant lost his job after getting into a verbal altercation, including uttering profanity at a supervisor after being told he was not getting paid for several days of work because of a failure to fill out a required form.
The appellate court affirmed the unemployment law judge’s ruling that the claimant was eligible for benefits under the “single-incident” principle. The occurrence was a one-time event and “did not prevent [the employee] from functioning appropriately.” Therefore, the incident “did not have a significant impact” on the employer. The appellate court rejected the Skarhus analogy because there was no suggestion that the altercation impeded the employee’s “ability to do his job.”
The latest iteration of the principle came this spring when the legislature, prompted by requirements to receive federal funding under the American Recovery & Reinvestment Act, commonly known as the “stimulus legislation,” enacted a package of modifications to the unemployment compensation laws.
Most of the changes expand the eligibility of claimants for benefits. But not so with the “single-incident” doctrine.
The new codification eradicates the “single-incident” doctrine as an independent tenet. Now, under §268.095, subd. 6(d), if an applicant is discharged because of “only a single incident,” the isolated nature of the behavior is “an important factor that must be considered in deciding whether the conduct rises to the level of employee misconduct.” It is being applied by DEED to all cases heard after August 2, 2009, the effective date of the new law.
Removal of the “significant adverse impact” standard suggests that an employee may be disqualified from receiving benefits under the new standard even if the employer has not suffered serious harm or other adverse impact because of the misbehavior. On the other hand, as the test is now phrased, it could be argued that, even if the impact is serious, the misbehavior should not be disqualifying if it happened “only” once.
Now, instead of the employee’s motivation being the focus, as under the antiquated “hot-head” doctrine, or the impact upon the employer being the touchstone under the codified “single incident” principle, the new standard focuses upon the overall conduct of the unemployment claimant.
Standard to be Seen
The demise, after three dozen years, of the doctrine that allows employees to receive unemployment compensation benefits when their errant behavior is serious but isolated, ushers in a new era for unemployed workers and their ex-employers.
The common law “hot-head” doctrine has been buried. Its statutory successor, the “single-incident” provision has been converted into an “important factor.” How this new standard will play out for discharging employers and fired employees remains to be seen.
2009 Changes in Unemployment Laws
- Spouse may be eligible for benefits if quit due to a company-relocated spouse (Minn. Stat. §268.095, subd. 1(10);
- Students may be eligible for unemployment compensation benefits by altering scheduling without having to quit schooling (Minn. Stat. §268.085, subd. 15);
- Employees may be eligible for unemployment benefits after quitting to take care of medical condition of immediate family member (Minn. Stat. §268.095, subd. 6(8);
- Victim of domestic abuse may quit and be eligible for unemployment compensation benefits (Minn. Stat. §268.095, subd. 1(9);
- Misbehavior that is attributable to “mental illness or impairment” prevents disqualification from benefits (Minn. Stat. §268.095, subd. 6(b)(1).
MARSHALL H. TANICK is an attorney with the law firm of Mansfield, Tanick & Cohen, PA, in Minneapolis and St. Paul. He is certified as a Civil Trial Specialist by the Minnesota State Bar Association (MSBA) and represents employers and employees in a variety of workplace-related matters.