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North Carolina Supreme Court Reverses Binney Decision on Employee Misconduct and Unemployment Benefits

    Client Alerts
  • July 11, 2008

Last month, the North Carolina Supreme Court reversed the Court of Appeals’ decision in Binney v. Banner Therapy Products, Inc. The lower court decision had been criticized as unnecessarily restricting the definition of misconduct for purposes of disqualifying an employee from receiving unemployment benefits. In Binney, the employee was terminated after she (1) asserted a personal copyright interest in the employer’s catalogs and Web site; and (2) removed the hard drive from her computer without authorization.

The Employment Security Commission determined that the employee was disqualified from receiving unemployment benefits due to serious misconduct. However, the Court of Appeals reversed this decision, concluding that her behavior did not necessarily constitute unreasonable or bad faith conduct on her part. The Court of Appeals found that the employee had simply misunderstood copyright law, and also determined that there was no policy prohibiting the employee from removing her work computer’s hard drive (she claimed that she was taking it home to work over the weekend).

The North Carolina Supreme Court had little difficulty unanimously reversing this decision. It concluded that the ESC had made adequate findings of fact to support the disqualification decision. The fact that the employer did not have a specific policy prohibiting employees from removing computer hard drives did not mean that the employer authorized this practice. Similarly, the employee was never authorized to assert a personal copyright on the employer’s intellectual property.

In the end, the Supreme Court recognized that the employee’s behavior was the deliberate result of tension and mistrust between her and the company. Had the lower court decision been allowed to stand, employers would have a difficult time asserting that any conduct that has even an implausible legitimate explanation would be sufficient to disqualify an employee from receiving unemployment benefits. The Binney reversal stands as a common sense reading of the meaning of misconduct under the unemployment compensation statutes.