Collecting LTD Can Constitute Employment for Purposes of Qualifying for Unemployment

Last month, the Butler County Court of Appeals reversed the denial of unemployment compensation to a claimant who had not worked in more than 18 months while receiving long-term disability compensation.  Harmon v. ODJFS, 2022-Ohio-1142.  The ODJFS, UCBR and trial court had concluded that the plaintiff had not satisfied the 20-week qualifying work requirement since the employer had not reported wages in at least 18 months.   The Court of Appeals reversed, finding “it was unreasonable to conclude that [she] was not employed during her base period simply because she did not physically provide services during that time” when she was still considered an active employee and received LTD during the entire base period.   The Court did not address whether the claimant was available and able to work.

According to the Court’s opinion, the plaintiff was hired in 2010, was injured in February 2018 and was unable to return to work because of disabling depression.     After receiving LTD for more than 18 months from the employer’s insurance carrier, the employer informed her in August 2019 that she would be removed from “active employment” and terminated under its maximum leave policy unless she was able to return to work in the foreseeable future.    Because the plaintiff was unable to return to work, she was terminated in October 2019, continued to collect LTD until August 2020 and sought unemployment compensation after the LTD compensation ended.   Her claim was denied on the grounds that she had not worked or been paid qualifying wages for at least 20 weeks in the prior 15 months.   The employer had not reported any wages being earned since 2018.  

It is undisputed that Harmon was on Honeywell's long term disability benefit plan throughout her entire base period. Consequently, the dispositive issue in this case is whether Harmon's receipt of disability payments, resulting from an employer-approved medical leave and paid by an insurance company via her employer's policy, constitutes "employment" pursuant to R.C. 4141.01(R).

Employment is generally defined as "service performed by an individual for remuneration under any contract of hire, written or oral, express or implied." R.C. 4141.01(B)(1). Thus, the statute requires both remuneration and service in order to be eligible for unemployment compensation. . . . "'Remuneration' means all compensation for personal services, including commissions and bonuses and the cash value of all compensation in any medium other than cash[.]" R.C. 4141.01(H)(1).

The Court determined that the LTD compensation constituted renumeration for personal services rendered prior to the claimant’s medical leave:

classifying [her] disability income as remuneration is consistent with the broad language of R.C. 4141.01(H)(1), which encompasses "all compensation for personal services" in its definition for remuneration. (Emphasis added.)  . . . Additionally, such a broad interpretation of the definition of remuneration is supported by the Ohio Administrative Code, which defines the term "remuneration" to include "vacation pay or allowance, separation pay, holiday pay, paid absence allowance [and] downtime paid absence allowance[.]" Ohio Adm.Code 4141-9-04(B).  As such, it is evident that the term "remuneration" was intended to encompass private disability payments an employee  receives pursuant to her employer's disability policy.

The Court also concluded that the claimant could be considered to have served while she was still on active employment status even thought she did not personally work a single day while on medical leave:

Ohio law clearly recognizes that an applicant may be entitled to unemployment compensation and can establish "qualifying weeks" during her base period without providing actual service to an employer during that time. Such a proposition is consistent with the statutory language of R.C. Chapter 4141, which suggests an employee's service and remuneration for that service are not required to be contemporaneous to establish a qualifying week or constitute remuneration. See R.C. 4141.01(O)(1) (defining qualifying week to include weeks the individual "earns or is paid remuneration in employment"). . . .

Based upon this language, we find that an employee's past "service" can be used to establish a "qualifying week" for unemployment compensation purposes. This is because R.C. 4141.01(O)(1) clearly indicates a qualifying week may be based upon remuneration that is earned before it is ultimately paid to the employee. As such, we conclude that an applicant, like Harmon, can establish a "qualifying week" based upon her receipt of disability benefits paid by her employer as remuneration in exchange for services she previously provided during her employment.

Indeed, the Court found the UCBR to be unreasonable in denying unemployment compensation:

it was unreasonable to conclude that [she] was not employed during her base period simply because she did not physically provide services during that time.   This is because, and as explained above, [she] was an active status employee receiving remuneration in the form of disability payments while on an employer-approved disability leave during her entire base period. [She] received this remuneration in consideration of the services she had previously provided to Honeywell before becoming injured and totally disabled in 2018.

                . . . we conclude that the weeks during which Harmon received disability benefits during her base period are "qualifying weeks," and the UCRC erred in disallowing Harmon's application on the basis that she did not have 20 weeks of employment during her base period.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

DOL Expands Self-Certification Pandemic Unemployment Assistance Eligibility for Employees Avoiding Unsafe Workplaces

 

Last week, the federal Department of Labor issued written guidance to state unemployment offices expanding eligibility of employees and independent contractors to self-certify and qualify for Pandemic Unemployment Assistance (PUA) and requiring the states to notify each individual whose prior PUA claim had previously been rejected of the new criteria (unless that individual filed a fraudulent claim based on identity theft). Of importance to employers is that employees will be able to apply for benefits for refusing to report for work based on the current or prospective employer’s failure to comply with COVID safety standards and these benefits will be retroactive to either December 6 or to when they filed an earlier claim for PUA prior to December 27, 2020.  The employees are able to self-certify their eligibility.   The DOL also expanded the eligibility of employees who were otherwise disqualified from PUA due to, among other things, insufficient qualifying wages, prior disqualifications or exhaustion of benefits when “their hours have been reduced or the individual was laid off as a direct result of the COVID-19 public health emergency.” The new guidance does not change the requirements that such employees not be able to telework with pay.   The DOL expects that states will need until the end of this month to modify their application systems.  As stated by the DOL:

Individuals who refuse to return to work that is unsafe or accept an offer of new work that is unsafe. The Department approves the following COVID-19 related reason for an individual to self-certify for PUA eligibility: “The individual has been denied continued unemployment benefits because the individual refused to return to work or accept an offer of work at a worksite that, in either instance, is not in compliance with local, state, or national health and safety standards directly related to COVID-19. This includes, but is not limited to, those related to facial mask wearing, physical distancing measures, or the provision of personal protective equipment consistent with public health guidelines.”

                 . . . .

An individual is generally denied unemployment benefits if the state determines that the work is suitable and the individual did not have good cause for refusing such work. This new COVID-19 related reason applies only to individuals who had already been receiving unemployment benefits but were determined to be ineligible or disqualified under state law because they refused an offer of work at a worksite that was not in compliance with local, state, or national health and safety standards directly related to COVID-19. This is a separate COVID-19 related reason from item (ii) of Section 2102(a)(3)(A)(ii)(I) of the CARES Act, which provides eligibility to an individual who quits their job as a direct result of COVID-19.

For example, an individual may self-certify under this new COVID-19 related reason who has previously been denied because the state law does not consider health and safety standards when assessing suitability or good cause, or who has previously been denied because the health and safety standards considered under state law are more restrictive than the local, state, or national COVID-19 health standards. Below are a few non-exhaustive scenarios. See Section 4.b.iv. of this UIPL for additional details regarding PUA effective dates.

o An individual was laid off in June 2020 and began receiving regular UC. The individual was recalled to work in October 2020. However, because the worksite was not in compliance with the local mask mandate, the individual refused to return to work. The individual was disqualified from continued receipt of regular UC under state law. The individual is now eligible to apply for PUA under this new COVID-19 related reason.

o An individual was laid off in October 2020 and began receiving regular UC. The individual received a new job offer in January 2021, however, the new worksite was unsafe due to non-compliance with physical distancing measures under state law. The individual was disqualified from continued receipt of regular UC under state law. The individual is now eligible to apply for PUA under this new COVID-19 related reason.

An individual is not eligible for PUA if they are otherwise eligible for regular UC (or PEUC or EB). Many states have provisions in their state UC law that consider work that unreasonably exposes an individual to health and safety risks to be unsuitable work. The state may determine, if it is consistent with the state’s law, that the work is not suitable. Or, the state may find the work is suitable but determine that the individual had good cause for refusing such work.1 In these circumstances, the individual must continue to receive unemployment benefits, provided they are otherwise eligible. The individual is not eligible for PUA using this new COVID-19 related reason if the individual was determined eligible for continued unemployment benefits for refusal of work under state law. Moreover, an individual who is allowed continued unemployment benefits and subsequently exhausts such benefits is not eligible for PUA using this new COVID-19 related reason.

 . . .

Existing PUA claims. For individuals with a PUA claim filed on or before December 27, 2020, the expanded COVID-19 related reasons provided in Section 4.a. of this UIPL are to be applied retroactively based on the effective date of an individual’s existing PUA claim. However, if the new COVID-19 related reason applied before the effective date of the individual’s existing PUA claim, the claim must be backdated to the date that the new COVID-19 related reason applied. For example, an individual may have filed a new PUA claim before December 27, 2020 with an effective date in April 2020 based on the previous COVID-19 related reasons available. With the addition of the new COVID-19 related reason, the individual actually may have first been eligible in February 2020. Because this existing PUA claim was filed on or before December 27, 2020, the state must backdate the PUA claim from April 2020 to February 2020 – when the individual first met the applicable COVID-19 related reason.

New PUA claims. For individuals filing an initial PUA claim after December 27, 2020, states must determine PUA effective dates for new PUA claims consistent with instructions provided in Section C.15. of Attachment I to UIPL No. 16-20, Change 4. For example, if an individual files a new PUA claim after the publication of this UIPL because of circumstances occurring in July 2020, absent a PUA claim already being on file and consistent with the Continued Assistance Act, the claim effective date may not be any earlier than December 1, 2020 (weeks of unemployment beginning on or after December 6, 2020), and retroactive benefits may not be awarded prior to that date.

Because of the rampant identity theft occurring with the self-certified PUA claims, the DOL recommends and is permitting certain security measures, including:

Cross match of state unemployment claim records with respect to individuals who self-certify that they refused work that is unsafe because of the COVID-19 public health emergency.

If the state identifies any discrepancies through this cross match (e.g., the individual does not have a previous unemployment claim or the individual was disqualified for a reason other than refusing work because of health and safety standards at the worksite), the state must review information already on file and take any action necessary to address the discrepancies.

 If the information on file with the state contradicts the individual’s PUA self certification (e.g., previous adjudication of the issue determined that the worksite was in compliance with health and safety standards or previous adjudication of the issue determined that the individual refused work due to a reason that was not because of unsafe working conditions), then the state has reasonable suspicion of fraud and must open an investigation to conduct fact finding to determine if the individual’s PUA eligibility is valid.

 Because the PUA self-certification may be different from the state’s provisions for suitable work and good cause (e.g., the new COVID-19 related reason accounts for local, state, and national health and safety standards directly related to COVID-19), it is possible for an individual to be denied unemployment benefits under state law for health and safety standards and be eligible for PUA.

 If the state does not identify any discrepancies through this cross match (e.g., the individual has a previous unemployment claim, the individual refused work because the worksite was not in compliance with health and safety standards, the individual was denied continued benefits, and the state record does not contain information which contradicts this self-certification), the state does not have reasonable suspicion of fraud to open an investigation.

 

 

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Recent Ohio Unemployment Decisions

Here’s a survey of a few recent unemployment compensation decisions.   Last week, the Ohio Court of Appeals reversed the denial of unemployment compensation to a claimant who claimed that he resigned after complaining repeatedly about not being paid promised production bonuses and discomfort with what he found to be unethical and discriminatory sales practices.  Barno v. Dir., Ohio Dept. of Job & Family Servs., 2018-Ohio-1196.  In January, the Court reversed the denial of unemployment compensation to a long-time employee who was fired for admittedly shoving a member because she had been provoked and the employer mostly ignored her concerns about that member.  Smoot v. Dir., Ohio Dept. of Job & Family Servs., 2018-Ohio-270.    The claimants in both of these cases were represented by the Cleveland Marshall Law School clinic.  In the final case, the Court last month upheld denial of unemployment compensation when the court staff attorney resigned because he speculated that he was about to be fired and had never raised his concerns. Kelly v. Stark Cty. Commrs., 2018-Ohio-950.

 In Barno, the claimant made notes during his job interview about the bonus structure and followed up several times about his employer’s failure to pay him pursuant to that structure.  He promoted water purification systems inside Home Depot stores for his employer.  He was supposed to be paid for every lead he generated which resulted in an in-home demonstration and which resulted in a sale.  However, the Company never informed him when his customers followed up with it.  Instead, he only found out when they returned to him to complain about service.  When he asked about the non-payment of his bonus, he was told that they were looking into it.  When he attempted to contact the Company president, his call was not returned.  When he wrote his manager about it, he received no response.  He also claimed to have been told to not service customers with foreign accents, in certain zip codes and the elderly.  He also claimed that customers complained to him that they never received promised discount cards and were ignored when they tried to cancel the service.  While the company admitted during the hearing that they did not want to sell to the elderly (because their children were likely to later complain), they denied in broad terms having any other restrictions.  The employer did not specifically deny the allegations of racial and national origin discrimination.   The employer also claimed during the hearing the bonus structure was much different than alleged by the claimant and claimed that he never seemed to understand it.  The hearing officer and Commission ruled in favor of the employer, but the Court reversed.

The Court found that the only real “evidence” of the bonus structure was the letter and notes provided by the claimant because the employer’s “evidence” had been created only for the hearing.   In other words, the only documentation of the bonus structure that existed prior to the hearing was the claimant’s documents.  If the employer had ever documented its bonus structure prior to the hearing (as every employer should do), it might have won the hearing.  Instead, the Court found that the employee was justified in resigning his employment when he was not being paid as promised when he was initially hired.  Further, the employer’s general denial that it had any other restrictions on sales (other than not selling to the elderly) was found by the Court to be insufficient evidence to rebut the employee’s allegations that he was specifically told to not sell to Russians, Asians, Indians, and others with foreign accents, etc.  The Court also found the employee’s testimony credible that his repeated complaints were ignored and that customers had complained to him about being ignored, etc.   Thus, the employee was justified in resigning his employment and  entitled to receive unemployment compensation.

In Smoot, the employee had worked as a housekeeper for 11 years for the YMCA.  After a spotless disciplinary record, she complained to her supervisor when a female member pushed her into a Christmas tree.  No action was taken to her knowledge.   A month later, the member screamed at her when she asked her to move her car from a no-parking zone so that a disabled member could park there.  Again, no action was taken to her knowledge after she reported the incident to her manager.  A month after that, the member screamed again at the claimant because a maintenance man was parked there while unloading supplies.  Later that same day, that same member elbowed her in the hallway and told her to get out of the way.   Again, the employee complained and this time put her concerns about the member in writing because no action had been taken on her prior complaints.   Her employer warned the member that her membership would be terminated if there were any further incidents.   Nonetheless, the member again shoved the claimant five months later and no action was taken after the employee complained.   Five months after that, the member again provoked the employee and shoved her.  This time, the employee shoved back and was terminated the following day.   The Commission denied unemployment compensation because the employee  engaged in willful misconduct by not removing herself from the situation  instead of following the employee and arguing with her prior to the physical altercation.   The Court reversed and upheld compensation for an employee who admittedly engaged in workplace violence:

[The claimant] gave the YMCA the opportunity to correct the problem with the member, and the YMCA neglected to do so.  The YMCA’s failure to act placed [the employee] in a position where she was subjected to abusive conduct while waiting for her employer to respond.  This isolated incident of [her] physical conduct with the member, when viewed with [her] good record of job performance, the circumstances prior to the altercation, and the lack of the employee handbook in the record, is insufficient evidence to support the Review Commission’s determination that [she] was terminated for just cause. 

In Kelly, the claimant staff attorney told his judge that he would need to be off work due to back surgery and claimed that the judge became very hostile.   Upon his return to work following his surgery, he was called into the judge’s chambers with the bailiff.  Convinced that he was about to be fired, he submitted his two-week notice of resignation before the judge said anything so that he would not have a termination on his work record.  Instead, he was told to go home because he had never produced a medical release to return to work.   Another staff attorney also testified that he similarly resigned because of the judge’s open hostility.  The Commission denied his claim for unemployment compensation because the employee did not give the judge the opportunity before his resignation to correct his concern with his working conditions.  The Court affirmed.  While it sympathized that employee are not always required to give prior notice of their concerns before resigning, in this case he was not subjected to physical abuse and had never received any disciplinary action.  Accordingly, his failure to complain about the judge’s conduct before submitting his resignation was unreasonable.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can be changed or amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Ohio Appeals Courts Rule in Favor of Unemployment Claims and Affirm Hearing Officers

Two unemployment decisions from September 30 illustrate the importance of convincing hearing officers in order to prevail or contest unemployment claims.  In one case, the hearing officer found that the employer’s witnesses and video evidence were not credible and awarded unemployment compensation where it appeared that the true reason that the claimant had been fired was because of his union activity instead of violating safety rules. Gen. Die Casters, Inc. v. Ohio Dept. of Jobs & Family Servs., 2015-Ohio-4033.   In the other case, a trucker was awarded unemployment compensation even though he resigned without advance notice and gave a completely different reason for his resignation in the uncontested hearing than he had in his questionnaire. Friedel v. Quota, 2015-Ohio-4060.  The trucker initially claimed that he quit because his employer left him stranded in the cold for several hours, but at the hearing produced evidence that he quit because his employer ordered him to violate federal hours of service regulations in order to make a delivery and the employer had not appeared at the hearing to dispute the new explanation.  The appeals court noted that the trial court erred in finding that the claimant had waived his right to assert at the hearing a different reason for his resignation by not raising it in his initial application for benefits.  Also, the court was required to affirm the hearing officer if there was any credible evidence in the record to support his decision.

In the first case, the claimant – who had worked there since 1979 --  was terminated for violating the employer’s safety rules by removing stuck objects from a machine without first locking it out. (Initially, I was impressed that the employer was enforcing its safety rules without first waiting for an injury – a practice upon which OSHA frowns).  The employer had no less than three witnesses to the safety violation.  However, the hearing officer did not find them credible.  First, the hearing officer found one witness to be inconsistent regarding his physical location and the series of events when he supposedly witnessed the claimant violate the lock-out procedures.  Second, he also found the shift manager to lack credibility because he asked a trainee about the lock-out procedures instead of the claimant and could not explain why he decided to inform management of the violation instead of confronting the claimant and stopping him from working in an allegedly unsafe manner.  Third, he found it more likely that management was motivated by the claimant’s prior NLRB complaints, history of union organizing at the plant and the recent decertification of the union.  Fourth, the hearing officer refused to give weight to the employer’s video evidence because the picture quality was so poor that he could not definitely identify the claimant and had doubts whether it captured the claimant on the day and machine in question.  Fifth, the claimant credibly testified that he had properly locked-out the machine before clearing it.  Finally, the claimant’s testimony was supported by another employee who worked on the machine immediately after him.  Once the hearing officer rules on credibility, that determination may not be reversed on appeal if there is any evidence in the record to support it.  The claimant and his co-worker provided credible testimony to support the hearing officer’s determination, so the employer’s appeal was rejected despite having video evidence.

In the second case, the claimant’s initial application for benefits was denied and he appealed, explaining that his employer refused to assist him when his truck broke down and left him sitting in freezing night-time temperatures for hours until his son-in-law came to help him.  In response, the employer contended that the claimant was responsible for minor repairs and had been given a debit card with a $500 limit in order to do so.   Again, unemployment compensation was denied. On appeal, the claimant testified to a new reason for his resignation at the unemployment hearing (in which the employer did not participate).  He contended that he had been driving since 9 a.m. when his truck broke down at 10:30 a.m. and he didn’t return home until 7 a.m.  Federal Motor Carrier Safety Administration regulations required that he not drive again for 34 hours, or that he at least get a 10 hour break.  49 C.F.R. § 395.3.  When he was called about a noon pick-up in Detroit, he explained that he was unavailable.  His employer arrived at his home and an argument ensured, during which he resigned.  He also produced his driver logs to support his position. Without contrary evidence in the record, benefits were awarded.  The UCBR denied the employer’s request for review and so the employer appealed to the common pleas court, which reversed the decision.

The trial court did not address the claimant’s hours of service explanation for his resignation, relying instead on his initial and unjustified explanation for his resignation.  ODJFS successfully argued that the trial court had improperly substituted his judgment for that of the hearing officer, which was in a better position to evaluate the claimant’s credibility.  By ignoring the claimant’s testimony about the federal hours of service rules, the court had also implicitly determined that this argument had been waived when it was no included in the claimant’s initial application for unemployment benefits and his initial administrative appeal.  However, there is no provision for waiver in the unemployment statute: “The unemployment compensation statutes do not provide that arguments not made prior to an administrative hearing are waived and, in fact, the court must consider the record transmitted by the UCRC.”    Moreover, prior court decisions have found employees to have just cause to resign when they are directed to violate the FMCSA hours of service rules.  

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can be changed or amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Ohio Appeals Court Denies Unemployment Compensation to Employee Who Smoked Tobacco Off Duty in Violation of Employer Policy

On Friday, the Montgomery County Court of Appeals upheld the denial of unemployment compensation to a claimant who had been terminated for violating his employer’s anti-tobacco policy.  Reidell v. The Reynolds & Reynolds Co., Inc., 2015-Ohio-1048.  In that case, the employer had adopted a policy in 2007 prohibiting employees from using tobacco products anywhere at any time (including off duty or off premises) and requiring them to remain tobacco and nicotine free.  Employees were given the opportunity to attend smoking cessation classes, which the claimant attended in 2008 when he initially quit smoking.  After he tested positive for nicotine in June 2013,  he was placed on a last chance agreement and was subjected to monthly testing at his own expense.  However, he was terminated after he tested positive again in October 2013.   The unemployment office found he had been terminated for just cause because he had notice of the  lawful policy and was adopted for legitimate reasons (in keeping down healthcare costs and promote the health of its employees).  The Court ultimately found it irrelevant that the claimant was terminated and denied unemployment compensation for engaging in lawful, off-duty conduct (i.e., smoking a cigar at home).

Under Ohio Revised Code §4141.29(D), an employee is not eligible for unemployment compensation if he or she was terminated for just cause in connection with the individual’s work. ““Just cause for discharge may be established by proof that the employee violated a specific company rule or policy, * * * so long as the policy was fair and fairly applied.”  As previously discussed by the Ohio Supreme Court:

“The [A]ct was intended to provide financial assistance to an individual who had worked, was able and willing to work, but was temporarily without employment through no fault or agreement of his own.” * * *

The Act does not exist to protect employees from themselves, but to protect them from economic forces over which they have no control. When an employee is at fault, he is no longer the victim of fortune’s whims, but is instead directly responsible for his own predicament. Fault on employee’s part separates him from the Act’s intent and the Act’s protection. Thus, fault is essential to the unique chemistry of a just cause termination.

Tzangas, Plakas & Mannos v. Ohio Bur. of Emp. Serv., 73 Ohio St.3d 694, 697-698, 653 N.E.2d 1207 (1995).

The Claimant’s primary argument was that even if the employer’s policy was lawful, he should not be denied unemployment compensation for violating it.   While the Court acknowledged that the policy was “arguably intrusive” in that it applied to off-duty conduct, a private company is free to enact its own lawful policies. 

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Buying Most Assets is Not the Same as Buying All of a Business for Purposes of Unemployment Tax Successor Liability

Last week, the Franklin County Court of Appeals held that an employer was not a successor in interest for purposes of establishing its unemployment tax rate when it purchased a manufacturing plant in Ohio, but did not purchase the seller’s other Ohio plant, customer list, inventory, accounts receivable, employee files, benefit plan assets or works in progress and did not hire all of its employees. Pennex Aluminum Co., L.L.C. v. Ohio Dept. of Job & Family Servs., 2014-Ohio-5308. “R.C. 4141.24(F) unambiguously provides that successor-in-interest status arises automatically if ‘an employer transfers all of its trade or business to another employer.’"  In that the seller did not transfer all of its trade or business, the Office of Job and Family Services erred in imposing  contribution rates of 4.3 percent for 2010 and 8.8 percent for 2011 on the buyer employer under R.C. 4141.24.

According to the Court’s opinion, the employer initially appealed the rate determination to the ODJFS Director and then appealed his affirmation to the Unemployment Compensation Review Commission, which affirmed the rate determination after holding a telephone hearing.   On appeal to the Franklin County Court of Common Pleas, “ODJFS argued that the excluded assets set forth in the Asset Purchase Agreement did not consist of real, personal, and tangible property relevant to the ongoing business but, rather, consisted of property generally retained by a seller.”   However, the trial court did not agree and concluded that there was not substantial reliable evidence that the employer purchased all of the seller’s trade or business by buying most of the assets at just one of the seller’s plants. On appeal, the Franklin County Court of Appeals unanimously found that the trial court did not abuse its discretion.  

 

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Ohio H.B. 37 Creates Consequences for Employers Which Ignore Unemployment Compensation Claims

A client shared with me this week that the Ohio Department of Job and Family Services sent a notice to employers about House Bill 37 which will become effective on October 21, 2013. Ohio law has long required employers to respond to requests for information concerning new applications for unemployment compensation.  However, it is not unusual for an employer to not contest a claim for unemployment compensation, at least during the initial application phase.  Sometimes, these same employers will then appeal a grant of unemployment compensation and raise good and valid reasons why unemployment compensation should be denied.  However, by that time, it can become difficult for ODJFS to recover the previously paid compensation after the initial determination is reversed.  Yet, for years, the employer has suffered no financial consequences for this turn of events even though it might have been able to prevent it by timely responding to the initial ODJFS request for information about the unemployed claimant.

The ODJFS letter says that H.B. 37 “encourage[s] employers to provide the separation information we need to accurately determine claimant eligibility.”  The notice continues to explain that employers “who repeatedly fail to respond promptly and adequately to requests for information regarding unemployment claims can be charged for any benefits that are ultimately found to be ineligible.  These charges can lead to an increase in your tax rate.”   For those of you who fear that you might miss the short deadline while you are on your annual vacation, be assured that no employer will suffer adverse consequences until failing to timely and adequately respond at least three prior times within the last twelve months.

Essentially, the new statute provides that an employer’s account will be not credited for amounts of previously paid benefits recovered by ODJFS if the following two conditions are met:

1)      The benefits were initially paid because the claimant’s employer (or any employee or agent of the employer) failed to respond timely or adequately to a request for information regarding the unemployment compensation claim;

·        A response is considered to be “timely” if received by ODJFS on time – which the ODJFS letter says is 10 working days from when the request was sent

·        A response is considered to be “adequate” if answers are provided to all of the questions raised by ODJFS on its form or the employer participates in a fact-finding interview if so requested.

2)      The claimant’s employer (or any employee or agent of the employer) previously established a pattern of failing to respond timely or adequately within the same calendar year.

·        A “pattern of failing” is established after the third instance of benefits being paid because the claimant’s employer (or employee or agent of that employer) failed to respond timely or adequately to a request for information regarding a determination of benefit rights or claims for benefits with a calendar year.  The ODJFS letter explains that a pattern will be found to exist if benefits are paid three times in error because of the failure of an employer to respond timely or adequately within a calendar year.  

 

Employers may appeal determinations that they failed to respond timely or adequately to requests for information.

In addition, the new statute also provides a 25% mandatory penalty when “any fraudulent misrepresentation has been made by an applicant for or a recipient of benefits with the object of obtaining benefits to which the applicant or recipient was not entitled.”

For legal junkies, H.B. 37 provides amends Ohio Revised Code §4141.24(D)(3)(d) in relevant part as follows:

(d)(i) An employer's account shall not be credited for amounts recovered by the director pursuant to division (D)(3)(c) of this section, and the mutualized account established in division (B) of section 4141.25 of the Revised Code shall not be charged pursuant to division (D)(3)(b) of this section, for benefits that have been paid to a claimant and are subsequently found not to be due to the claimant, if it is determined by the director, on or after October 21, 2013, that both of the following have occurred:

(I) The benefits were paid because the claimant's employer, or any employee, officer, or agent of that employer, failed to respond timely or adequately to a request for information regarding a determination of benefit rights or claims for benefits under section 4141.28 of the Revised Code.

(II) The claimant's employer, or any employee, officer, or agent of that employer, on behalf of the employer, previously established a pattern of failing to respond timely or adequately within the same calendar year period pursuant to division (D)(3)(d)(ii)(III) of this section.

(ii) For purposes of division (D)(3)(d) of this section:

(I) A response is considered "timely" if the response is received by the director within the time provided under section 4141.28 of the Revised Code.

(II) A response is considered "adequate" if the employer or employee, officer, or agent of that employer provided answers to all questions raised by the director pursuant to section 4141.28 of the Revised Code or participated in a fact-finding interview if requested by the director.

(III) A "pattern of failing" is established after the third instance of benefits being paid because the claimant's employer, or any employee, officer, or agent of that employer, on behalf of the employer, failed to respond timely or adequately to a request for information regarding a determination of benefit rights or claims for benefits under section 4141.28 of the Revised Code within a calendar year period.

(e) If the mutualized account established in division (B) of section 4141.25 of the Revised Code is not charged for benefits credited to a suspense account pursuant to division (D)(3)(d) of this section, a corresponding charge shall be made to the account of the employer whose failure to timely or adequately respond to a request for information caused the erroneous payment.

(f) The appeal provisions of sections 4141.281 and 4141.282 of the Revised Code shall apply to all determinations issued under division (D)(3)(d) of this section.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Appeals Court: Employee Had Just Cause to Resign to Avoid Jeopardy to Security Clearance and Is Entitled to Unemployment Compensation; But Claimant Who Declined Employment Offer Was Not

The Franklin County Court of Appeals issued an interesting unemployment decision this week in which it reversed the UCBR and common pleas court in order to award unemployment compensation to the employee of a military contractor who resigned over a difference of opinion with her boss about reviewing the Wikileaks materials.  Turner v. Mission Essential Personnel LLC, 2012-Ohio-5470.   In that case, the employer had prevailed at every level before reaching the Court of Appeals and had not even entered an appearance or produced evidence at the evidentiary hearing.  The hearing offer described the issue as whether the claimant had just cause to resign her employment from a military contractor doing business in Iraq and Afghanistan based on her disagreement over being asked to access and review the classified materials leaked through Wikileaks for the names of company employees and contractors (in an effort to warn them of their disclosure).   She had contended that her manager’s direction violated directions from the DOD and Secretary Gates (that a single task force would conduct the review) and would have jeopardized the security clearance of herself and the company.  When he directed her subordinates to disregard her objection and demoted her, she resigned.   The company subsequently changed its policy to comply with her interpretation of DOD directives. The Court found the company’s subsequent actions were not relevant to whether she had just cause to resign.  However, upon closer review, it contended that she had just cause to resign in order to preserve her own security clearance because she had been asked to not only access the information, but to scrub (i.e., alter) it and this clearly violated DOD directives as testified by a retired government employee witness who had so advised the claimant at the time at issue.  “[T]he perceived threat to appellant's own security clearance alone would have given her just cause to leave her employment rather than lose this credential, which would have necessarily curtailed her ability to work in her field of experience and expertise.”

 The claimant’s assignment of error reads as follows:

The trial court erred in upholding the Ohio Unemployment Compensation Review Commission's finding that Appellant did not have just cause to quit her employment with Mission Essential Personnel LLP given the uncontroverted evidence that she was pressured to access classified military documents on WikiLeaks.org in contravention of the National Industrial Security Program Operating Manual procedures and a directive by Secretary of Defense Robert Gates, and in refusing to cooperate, was told that she was being demoted from her position as Corporate Director for MEP's National Industrial Security Program.

As explained by the Court, employees who resign have a higher burden of proving their entitlement to unemployment compensation of proving that they had just cause to resign:

In order to collect unemployment benefits, an employee who resigns from employment bears the burden of proving that he or she resigned for just cause. R.C. 4141.29(D)(2)(a);  . . . The term "just cause," in this context, is defined as " 'that which, to an ordinarily intelligent person, is a justifiable reason for doing or not doing a particular act.' "  . . . . A significant factor in assessing whether an employee resigned with just cause is the employee's fault in creating the situation that led to the resignation.  . . .  In cases in which an employee encounters circumstances that might force resignation, the employee must first notify the employer of problems prior to resigning or risk a finding of resignation without just cause. The purpose of such notice is to provide the employer an opportunity to resolve the conflict before the employee is forced to resign.  . . .  Notice to the employer, however, is not alone enough to establish just cause; the employer must have a realistic opportunity to correct the problem.

To support her burden of just cause to resign, the claimant produce evidence of the DOD directive on Wikileaks, a newspaper article about the response of various military organizations to the directive, an extensive collection of emails between the claimant and her manager about the dispute, and a company memorandum reflecting its change in policy to confirm with the claimant’s interpretation of the DOD directive.  “This last memorandum announces that the company may take disciplinary action up to and including termination of employment for unauthorized access because of the risk to future security clearance eligibility for the company and its employees.”
 

At the time, the claimant conferred with a government employee about the issue and had been advised that the actions would jeopardize her security clearance and that of her employer.  Apparently, her manager had directed her to not only access the information, but also to scrub (i.e., alter it).   (Emails were produced with this terminology by one of her subordinates about what he had been asked to do).  That government employee subsequently retired, but testified during the unemployment hearing on behalf of the claimant.

 

The Court refused to consider the employer’s subsequent actions in conforming to the claimant’s interpretation because that information was not available to her at the time she resigned.  Instead, the Court focused on the uncontroverted evidence produced by the claimant about what her manager was asking her and her employees to do and the government employee’s testimony about how it violated the DOD directive to the extent that both the claimant and the company could have lost their security clearances.

The determination of just cause necessarily turns upon particular circumstances of employment. Here, appellant worked for an employer undertaking sensitive national security work under particularly stringent government guidelines designed to preserve and protect important confidential information. When told to access the WikiLeaks.org site, appellant made her case that this violated various  security protocols through numerous emails both to her immediate superior and other individuals in her organization. Steadfast in her belief that not only her own security clearance but that of her employer would be compromised, she explained her position in repeated exchanges of correspondence with responsible individuals, giving her superiors every opportunity to re-examine the implications of their actions. She then consulted with Ms. Dugger, an informed person in a responsible position with a relevant government agency, and received confirmation of her belief that access to the WikiLeaks.org documents was a potential, if not certain, breach of those security protocols expressed in the NISPOM.

 . . . . Beyond the ethical questions raised by Mr. Peltier's demands, the perceived threat to appellant's own security clearance alone would have given her just cause to leave her employment rather than lose this credential, which would have necessarily curtailed her ability to work in her field of experience and expertise. In light of the uncontroverted evidence presented in the record of the course of events leading to her resignation and the government regulatory context in which it occurred, we find that the commission erred in denying appellant's unemployment benefits on the basis that she did not have just cause for resignation.

 

This was not on the only interesting unemployment case this month.  Last week, the Court of Appeals affirmed the determination that the claimant was not entitled to unemployment compensation because he was an independent contractor, not an employee. Henderson v. Ohio Dept. of Job & Family Servs., 2012-Ohio-5382.  The issue focused on whether the claimant’s general labor services for the employer constituted “employment” under the applicable provision of the Ohio Revised Code.

R.C. 4141.01(B)(1) defines "employment" as "service performed by an individual for remuneration under any contract of hire, written or oral, express or implied, * * * unless it is shown to the satisfaction of the director that such individual has been and will continue to be free from direction or control over the performance of such service, both under a contract of service and in fact."

 

As relevant here, R.C. 4141.01(B)(2)(k) includes as employment "[c]onstruction services performed by any individual under a construction contract * * * if the director determines that the employer for whom services are performed has the right to direct or control the performance of the services and that the individuals who perform the services receive remuneration for the services performed." R.C. 4141.01(B)(2)(k) lists 20 factors to be considered in assessing direction or control, and provides that the commission must presume that the employer has the right of direction and control if ten or more of the factors apply. Those 20 factors are: (1) the employer directs or controls the manner or method by which instructions are given to the individual performing services, (2) the employer requires particular training for the individual performing services, (3) services performed by the individual are integrated into the regular functioning of the employer, (4) the employer requires that services be provided by a particular individual, (5) the employer hires, supervises or pays the wages of the individual performing services, (6) a continuing relationship exists between the employer and the individual performing services which contemplates continuing or recurring work, even if not full-time work, (7) the employer requires the individual to perform services during established hours, (8) the employer requires that the individual performing services be devoted on a fulltime basis to the business of the employer, (9) the employer requires the individual to perform services on the employer's premises, (10) the employer requires the individual performing services to follow the order of work established by the employer, (11) the employer requires the individual performing services to make oral or written reports of progress, (12) the employer makes payment to the individual for services on a regular basis, such as hourly, weekly or monthly, (13) the employer pays expenses for the individual performing services, (14) the employer furnishes the tools and materials for use by the individual to perform services, (15) the individual performing services has not  invested in the facilities used to perform services, (16) the individual performing services does not realize a profit or suffer a loss as a result of the performance of the service, (17) the individual performing services is not performing services for more than two employers simultaneously, (18) the individual performing services does not make the services available to the general public, (19) the employer has a right to discharge the individual performing services, and (20) the individual performing services has the right to end the individual's relationship with the employer without incurring liability pursuant to an employment contract or agreement.

The evidence, however, established that he was paid – at his request -- on a 1099, not W-2 basis.   He supplied most of his own tools and was not provided with any training.  The parties disagreed about his ability to set his own work schedule.  He worked for a few other companies on weekends and supplied proof of workers compensation coverage and liability insurance.   The company claimed that he even turned down an offer of full employment with employee benefits.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Franklin County Court of Appeals Denies Unemployment Compensation to Non-Profit Employee for Failing to Properly Supervise Client While on Cell Phone.

Last week, the Franklin County Court of Appeals affirmed the denial of unemployment compensation to the former employee of a non-profit organization after the employee disregarded the employer’s interests by taking a personal cell phone call while on duty and while a client youth sitting next to the employee then injected himself with an epipen. Brooks v. Ohio Dept. of Job & Family Servs., 2009-Ohio-817. The court rejected the employee’s arguments that other employees engaged in similar misconduct without being disciplined or terminated, that he had not violated any established policy and that he was treated more harshly than the new employee who was responsible for the epipen being unsecured.

According to the court’s decision, the employee had taken a number of youth clients to a camp when one of the youths returned to the van and sat in the front passenger seat. The employee joined him, chatted a while and then took a brief personal cell phone call. Another, new employee was responsible for the epipen being left out on the front seat console. The youth apparently opened the epipen and injected himself, requiring a trip to the hospital. Only the employee was fired. The ODJFS initially granted his application for benefits, but the hearing referee and, on appeal, the trial court, denied benefits:

“While claimant testified that he was not formally trained by UMCH [the employer] on the use of an EpiPen, he admitted that he knew that an EpiPen contains a spring-loaded needle to quickly deliver a dose of medication to someone who goes into shock as a result of severe allergies. He admitted that he knew that an EpiPen had been left resting on a console within the youth's reach. He admitted that he knew that he was not permitted to take personal cell phone calls while on duty, yet still turned his head for approximately thirty seconds to speak on his personal cell phone while he was supervising this youth. He admitted that the youth opened the EpiPen and injected it into finger while claimant was talking on his personal cell phone.”

The employee had argued that the Referee’s “just cause determination is unreasonable because the employer did not have a rule or policy prohibiting staff members from accepting or initiating personal calls while supervising youths.” However, the Court noted that the employee’s “own testimony belies his assertion, as he acknowledged that the employer had such a policy and that he knowingly violated it. Moreover, Ms. Roper testified that the employer ‘[has] a policy that the staff should not actively be supervising the kids while they're on their personal cell phone.’ Furthermore, ‘the critical issue is not whether the employee has technically violated some company policy or rule, but whether the employee by his actions [or inactions] demonstrated an unreasonable disregard for his employer's interests.' Here, the employer's best interests were served by appellant performing his duty to adequately supervise the youths in his charge and shield them from danger.” The employee “admitted that he was aware that an EpiPen containing potent and potentially harmful medication lay within reach of the youth; nonetheless, he did not confiscate the EpiPen and averted his attention from the youth to answer a personal telephone call. Appellant's actions and inactions potentially subjected the employer to liability had the youth suffered serious injury stemming from the injection of the medication. Thus, the [Referee] reasonably could view appellant's actions and inactions as detrimental to the employer's interests.”

The Court also rejected the claimant’s arguments that he was treated more harshly than the new employee who was responsible for the medications in the van and who was given only a written warning instead of being terminated. However, the Court agreed with the employer that he was treated differently because he had not received as much training as the claimaint and was not present to directly supervise the client youth at the time of the incident. As the most senior employee, the claimant also could have directed the newer employee to remove the epipen from the console, but he did not.

Finally, the court rejected the claimant’s testimony that other employees who had injured or placed client youths in danger were treated less harshly because he offered no evidence to support the other incidents aside from his own testimony.

Insomniacs may read the full court decision at http://www.sconet.state.oh.us/rod/docs/pdf/10/2009/2009-ohio-817.pdf.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with an attorney.

Cuyahoga Court Affirms Denial of Unemployment Compensation to Employee Who Was Fired for Excessive Absenteeism.

Last month, the Cuyahoga County Court of Appeals affirmed the denial of unemployment compensation to a phlebotomist who was fired in December 2004 after missing 10 days of work in 2003 and 10 days of work in 2004. Although the employee claimed that the employer was prohibited from firing him by federal and state statutes, he never returned (or produced) his FMLA certification forms to show that his unexcused absences were caused by his alleged migraine headaches and never produced a copy of the subpoena to show that he had been subpoenaed to testify in juvenile court (which was the justification he gave for his last unexcused absence). Therefore, he could not show that his absences were protected by the FMLA or state law. Because the employer followed its progressive disciplinary process in addressing the employee’s excessive absenteeism, he had been on warning that he could lose his job if his attendance did not improve or he failed to provide a legitimate reason (such as a doctor’s excuse or subpoena). Bemak v. Ohio Job & Family Servs., 2008-Ohio-906 (3/6/08).

Insomniacs can read the full decision at http://www.sconet.state.oh.us/rod/docs/pdf/8/2008/2008-ohio-906.pdf.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.