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North Carolina Appellate Decisions Reach Different Conclusions With Regard to Disqualification for Unemployment Benefits Due to Misconduct

    Client Alerts
  • September 13, 2019

Under N.C. Gen. Stat. § 96-14.6, individuals are disqualified from receiving unemployment benefits if they are discharged due to misconduct associated with the work. On September 3, the North Carolina Court of Appeals issued two opinions that reached different conclusions with regard to whether the employees in question engaged in sufficient misconduct to deny unemployment benefits.

In Burroughs v. Green Apple, LLC, an Applebee’s server complained to Human Resources that his manager pushed him in retaliation for an earlier wage payment complaint. After investigating the incident, the employer found no conclusive evidence that the employee had been retaliated against. The HR representative met with the employee and asked him to sign a statement acknowledging his adherence to company policy going forward, and that Applebee’s had conducted a full investigation and had taken measures to address the complaint. The employee agreed to sign the first part of the acknowledgement, but refused to sign the second part based on his belief that the employer had in fact not conducted a full investigation. Applebee’s terminated him for insubordination based on this refusal, and the Employment Security Commission denied his claim for unemployment benefits based on misconduct.

The Superior Court reversed this decision, finding the employee eligible for unemployment benefits. Applebee’s appealed, and the Court of Appeals affirmed the lower court decision. The court characterized the employee’s refusal to sign the acknowledgement as a reasonable response to a disagreement over the investigation, and not a wanton disregard of the employer’s policies. This refusal in no way affected the investigation or the employer’s ability to close the matter, nor was there any indication of the employee’s refusal to follow the employer’s expectations going forward. As such, this did not rise to the level of misconduct required to deny benefits.

In Woodard v. NC Dept. of Commerce, a county Chamber of Commerce discovered that an employee’s cash drawer was $495 short. It initially met with her along with local police to determine the source of the shortage. However, when the employer asked to again met with the employee, she refused, went on medical leave, and directed the employer to only communicate with her through her attorney. The employer suspended her, and tried to contact her and her attorney. After six weeks of unsuccessful attempts, the employer terminated her employment for refusal to cooperate with the investigation.

The NC Court of Appeals affirmed the lower court’s disqualification of the employee from receiving unemployment benefits due to misconduct. Despite her initial meeting with the employer and police, the employee’s subsequent refusal to cooperate and her attorney’s failure to respond to requests for her cooperation constituted willful disregard of the employer’s interests. The employee’s concern over possible personal legal exposure from cooperating with the investigation did not overcome the employer’s good cause for terminating her employment for insubordination.

Unemployment benefit denials are infrequently litigated to the appellate level due to the low financial stakes involved. The ultimate decision as to whether the employee engaged in misconduct will depend on the specific facts presented, and the court’s interpretation of the employee’s intent and effect on the employer’s business operations.