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Weighing whether to fight unemployment claims

Rich MeneghelloThere are a lot of misconceptions regarding unemployment claims filed by ex-employees, and this month I’ll try to shed some light on them to help answer the oft-repeated question: “Should we fight an unemployment claim?” A recent decision by the Oregon Court of Appeals shows just how difficult it is for employers to prevail in such claims.

Lisa Fox worked as a pharmacy technician for Kaiser Foundation Health for over 13 years until her termination in January 2013. On Jan. 17, 2013, Fox knew she was in for a bad day because she was perilously close to being late for work. Her company required her to clock in for her shift within four minutes of the start time of her shift, meaning she needed to clock in by 6:34 a.m. or face possible disciplinary action. She was already on notice of prior attendance violations, so she was frantic that morning and in a rush to get to work on time.

Fox drove her car into the parking lot, parked it in a loading zone near her building’s entrance, and dashed into the workplace to try to beat the clock. She breathed a sigh of relief as she punched in at 6:33 a.m., then returned to the parking lot to move her car into a regular parking space. She arrived back at her work station at 6:36 a.m. to begin her work day.

When Fox’s employer learned about this situation, it promptly terminated her employment for “time-card fraud,” concluding that she inappropriately got paid for several minutes while not actually performing any work, and had effectively lied about her true start time.

Fox filed a claim for unemployment benefits, which was initially denied by the Employment Department. She then appealed to an administrative law judge, who reversed the decision and granted her benefits. Kaiser then appealed that decision to the Employment Appeals Board, which overruled the judge and denied benefits. Fox then appealed to the Oregon Court of Appeals, which issued a ruling in March 2014 saying that she should be given one more chance to try to prove her case.

In order to understand this decision, it is important to take a step back and understand the rules at play.

The Oregon Employment Department, along with most employment departments around the country, allows individuals to receive partial compensation while in between jobs in order to help tide them over. However, not everyone qualifies for these benefits. An employee who quits isn’t entitled to unemployment because plans for compensation should have been secured before abandonment of a paying gig. And if an employee commits an act so reprehensible that she should have realized that anyone in her shoes would be fired, she also cannot enjoy the benefits because it’s her own fault she is without compensation.

I usually counsel employers that if an employee punches someone, steals something, does drugs, or drinks alcohol at work, it’s pretty safe that the person’s benefits claim will be denied. However, anything beyond that is tricky. The rules are fairly liberal in nature and allow employees to collect unemployment benefits even when they deserve to get fired, so long as their conduct wasn’t egregious in nature.

So an employee who screws up work, continually shows up late, blows a critical presentation, loses a big account, consistently gets poor evaluations, forgets basic company rules, or just plain proves to be too unskilled for the position probably will still get benefits. And if the employee commits an egregious action, but claims that it was “an isolated instance of bad judgment,” the state will give the employee a one-time pass and allow them benefits anyway (so long as the conduct wasn’t unlawful in nature). That’s just what Lisa Fox argued: Her “time-card fraud” was actually just a one-time screwup that should be forgiven.

The Court of Appeals didn’t go so far as to agree with her, but it did say that the lower agency didn’t properly examine her mental state when making its ruling. The appeals court said that whether a rule violation amounts to an isolated instance of bad judgment depends on not only the seriousness of the conduct but also the claimant’s mental state when committing the act.

Here, Fox said that she made a “snap decision” while in a rush that morning, that she didn’t realize what she was doing would be considered “fraud,” and that she has time-management issues due to diagnosed attention deficit disorder. All of these things, she said, should play into the decision in determining whether she should get benefits. The court agreed, noting that the lower agency should take testimony and evidence about these issues before rendering a decision, sending the case back to it for further proceedings.

So, should employers fight unemployment claims? Firstly, as described above, employers should understand that there is a very high hurdle at play to get an employee disqualified. More importantly, employers should understand that UI claims aren’t referendums on whether the termination was justified or lawful.

There might be a very good, nondiscriminatory, well-documented, and supportable reason to terminate an employee, but that doesn’t mean that an unemployment claim will be denied. So don’t feel the need to fight the claim in order to prove you were in the right.

If you do decide to fight a claim, however, be sure that you take it seriously and not try to wing the hearing without preparation. Employers’ statements during the UI process are made under oath, so even though the ultimate decision might not impact a later discrimination or wrongful discharge claim filed by the worker, the statements made during the process are going to lock you into a story. Do your homework and prepare as if you were in court.

The answer to whether you should fight an unemployment claim is “it depends.” But at least understand the risks and consequences should you decide to venture down that path.

Rich Meneghello is a partner in the Portland office of Fisher & Phillips LLP, which is dedicated to representing the interests of management. Contact him at or 503-205-8044, or follow him on Twitter – @pdxLaborLawyer.

About Rich Meneghello