CIRCUIT COURT ORDER/OPINION Stephine Gwin, Circuit Court CLERK

Please enter and distribute along with Board of Review Decisions/Orders and Referee Decision/Orders .

0 Board Merrber and assigned attorney to case

D other:

Potential Digest case

d-~ ( 1) ~) Section of the Act

Date : _ ___ )--L-#-j-L} _6 __ , 2007

PC REP _ _ _

R. Douglas Daligga, Director MES - Board of Review

Prepared by Stephine Gwin

STATE OF MICHI~

THIRTIETH JUDICIAL CIRCUIT COURT FOR INGHAM COUNTY

SHAWONNA WASHINGTON,

Claimant-Appellant,

MICHIGAN TRAINING UNIT, DEPARTMENT OF CORRECTIONS;

Employer.-Appellee,

and

UNEMPLOYMENT INSURANCE AGENCY, DEPARTMENT OF LABOR AND ECONOMIC GROWTH ,

Agency-Appellee. _____________________________ !

DOCKET NO. 06-869-AE

OPIN ION

This is an appeal from the Department of Labor and

Economic Growth and a final decision of the Unemployment Insurance

Agency's Board of Review in a benefits case. The Unemployment

Insurance Agency {UIA) initially determined that Shawonna Washington

(Claimant) was disqualified for unemployment compensation benefits

because of work-related misconduct while in the employ of the

Michigan Training Unit (MTU) of the Department of Corrections . The

agency's redetermination was to the same effect. After an

aQminis t rative hearing, the hearing referee affirmed the agency's

redetermination. The referee determined that there was no basis

for granting benefits because of misconduct that led to Claimant's

i"nvoluntary discharge from employment with the M1'0. 'l'he Board of

Review {Board) affirmed the referee in a split decision . Claimant

now challenges the Board's decision as contnu:y to L:1w and as

Mil f ·v l · t.uu J u·\lvn llt

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unsupported by the evidence, praying that the Court reverse the

Board and order payment of unemployment benefits.

Claimant was employed by the MTU from July 27, 1997,

until she was fired on September 9, 2005 . She had been required by

her employer to subscribe to a "last chance agreementu on February

7, 2005. (Record, 57) After that, there were three events t hat

the MTU apparently thought to have violated the agreement: absence

for illness that was supported by a physician's note, preauthorized

absence to attend an out-of-state funeral, and absence for

inability to drive 31 miles to work due to lack of money for gas.

Claimant asserts that none of these, whether taken individually or

as a whole, constitutes disqualifying misconduct . The Court

agrees.

A reviewing court may reverse the UIA only if its

decision is not authorized by law or is not supported by competent,

material and substantial evidence on t he whole record. Tomei v

General Motors Corp, 194 Mich App 180, 183-184; 486 NW2d 100

(1992). Similarly, the hearing referee's de.cision will not be

disturbed on appeal unless it is contrary to law or unsupported by

substantial evidence. Selig1nan & Associates, Inc v Michigan

Employment Security Comm, 164 Mich App 507, 512; 417 NW2d 480

(1987)' Identical principles apply, of course, to appellate

review of Board decisions. Korzowski v Pollack Industries, 213

Mich App 223, 228; 539 NW2d 741 (1995). Those standards are

mandated by Const 1963, art 6, § 28 . In addition, section 38(1) of

the· Employment Security Act (the Act), MCL 421.38 (l), codifies the

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constitutional standards for the specific purpose of judicial

review of the Board's decisions.

Disqualifications for benefits are delineated in

section 29 of the Act, MCL 421.29, which provides in part :

"(1) An individual is disqualified from receiving benefits if he or she:

* ·);

"(b) Was suspended or discharged for misconduct connected with the individual 's work or for intoxication while at work." (Emphasis added .)

This section requires the UIA to disqualify from receiving benefits

anyone whose discharge was due to "misconduct connected with the

individual's work. ' 1 See Korzowski, supra at 229. The agency' s ..

determination of that issue hinges on the meaning given to work-

rel ated misconduct, which is not defined in the Act.

The term has, however., been defined in a number of

Michigan cases, foremost of which is Carter v Employment Security

Comm, 364 Mich 538, 541; 111 NW2d 817 (1961). Quoting a leading

Wisconsin decision with approval, the Michigan Supreme Court

recited and expressly adopted " the classic definition of mis-

conduct":

"'The term "rnisconduct 11 * * * is limited to conduct evincing such wilful or wanton disregard of an employer's inter­ests as is found in deliberate violations or disregard of standards of behavior which the employer has the right to expect of his employee,. or in carelessness or negligence of such degree or recurrence as to manifest equal culpability, wrongful intent or evil design, or to show an intentional and substantial disregard of the employer's interests or of the employ-

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ee's duties and obligations to his employ­er • f II

See, e.g., Vander La.an v Mulder, 178 Mich App 17.2, 175; 443 NW2d

491 (1989), and Broyles v Aer:oquip Corp, 176 Mich App 17S, 177-178;

438 NW2d 888 (1989).

As discussed further below, the Board, like the hearing

referee, erred by failing to apply Carter's "carelessness or.

negligence" principle to Claimant 's conduct . Carter requires, as

noted above, "carelessness or negligence of such degree or recur-

renee as to manifest equal culpability, wrongful intent or evil

design, or to show an intentional and substantial disregard of the

employer's interests." The words "equal culpability" presumably

must be read in light of the prior language in Carter, such as

"wilful or wanton disregard" and "deliberate violations or

disregard of standards." The Carter opinion is clear that a

measure o·f culpability going beyond mere negligent or inadvertent

behavior is required.

Indeed, the Carter Court, at 54 1 , specifically e~cepted

ordinary negligence along with some other ~ndesirable behavior :

"'[M)ere inefficiency, unsat isfactory conduct, failure in good performance as the r esult of inab i lity or incapacity, inadvertencies or ordinary negligence in isolated instances, or good-faith er~ors in judgment or discretion are not to be deemed "misconduct" within the meaning of the statute.'"

See. aJ.so Hagenbuch v Plainwell Paper Co; Inc, 153 Mich App 834,

837-838i 396 NW2d 556 (1986 ) ; Razmus v Kirkhof Transfonner, 137

Mich App 311 , 315-317; 357 NW2d 683 (1984); Washington v Amw~y

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Grand Plaza, 135 Mich App 652, 659; 354 NW2d 299 (1984). It

follows that the UIA cannot reasonably find work- related miscon-

duct where there is no record evidence that the claimant was guil t y

of a~ything more than inadvertence or ordinary negligence.

In l ight of the above quotations from Carter, the Court

reviews the findings of the Board at page 2 (Record, 64) of its

June 28, 2006, decision:

»the competent, credible and material evidence introduced by the employer dur i ng the January 5, 200 6 [, ] Referee hearing established that (,) d.espite having been repeatedly counseled and placed under a last chance agreement[,] the claimant continued to exhibit a pattern of un­excused absence. When questioned about the matter, the. claimant acknow.ledged having been absent on the dates at issue . However, the claimant asserted one of the absences, to attend a funeral, had been preauthorized. While that may have been t he case, · we ·note claimant failed to pro­vide the employer with timely documenta­tion upon her return. Clearly, the claimant ' s failure to comply with the employer's attendance policy deviated from the standard of behavior that (the] employer had a reasonable right to expect and evidenced a willful disregard for the employer ' s interest . Accordingly, the Ref-eree's decision should be affirmed . " (Braketed material added.)

Now, no t hing in the agency record supports the Board's

conclusion that Claimant's neglect to provide the MTU with "timely

documentation" (an obi tuary) upon her retur n from a funeral in

upstate New York constituted a "failure to comply with the

employer's attendance policy. " And it surely did not violate the

"last chance agreement." Further, it is clear from the Board's

decision and the record that Claimant was discharged from employ-

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ment not for any violation of the "last chance agreementu but for

a supposed "pattern of unexcused absence." Indeed, the employer's

witness at the hearing below testified that Claimant had been

discharged "[f)or tim~ and attendance." (Record, 11) The record

reveals, however, that the MTU utterly failed to prove any

"pattern" of time and attendance problems; it succeeded in proving,

r ather, only one "unexcused absence,u for the workday that Claimant

missed when. she· discovered she had no money with which to buy fuel

for her car so that she could drive to work in Ionia from her home

in Lansing. That , without more, is plainly not evidence of

statutory misconduct.

It may be true that .such behavior can .justify discharge.

from employment. However, as explained below, it surely cannot

constitute statutory misconduct under section 29 (1) (b) of the Act .

Even if it could be seen as misconduct wi thin the meaning of that·

provision, Carter, supra, requires that the violation be signifi-

cantly more than negligent or inadvertent.

In examining the events that led to Claimant's

termination, however, this Court can find no instance that falls

within the carter definition of "misconduct." Appellees' argument

in support of such a finding presumes elements lacking in t his

case. Even when considered as a grave lapse from expected

behavior, this conduct does not manifest the required undertaking,

design or "scienter . " Nor does it evidence an intentional and

substantial disregard of the employer's interests or the employee's

duties .

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Mar.31. 2007 8:~bAM

For instance, according to Claimant's uncontradicted

testimony at the hearing, she knew her job was in jeopardy and made

her best effort to comply with attendance requirements. Although

she had read the last chance agreement, she had some difficulty

understanding it and did not want to sign something she did not

understand. (Record, 29-30) She signed the agreement anyway,

despite feeling pressured to do so. (Record, 30-31) Of the three

post-agreement attendance infractions alleged by the MTU, o~ly one

could possibly qualify as a technical violation. How., then, can

the agency conclude that she committed statutory misconduct?

Nothing i n the hearing transcript or the rest of the agency record

supports the .determination that Claimant had acted with "wilful

disregard of [her] employer ' s interestn by deliber ately and

intentionally failing on one isolated occasion to have enough money

or gas to drive her car to work.

That is why this Court must agree with the dissent from

the Board's final decision of June 28, 2006 (Record, 65) :

"In the instant matter, the employer asserts that despite having been repeat­edly counseled and placed on last chance claimant continued to exhibit a pattern of poor attendance . If that were the case, the cla i mant might be disqualified for benefits under the misconduct provisio.n. However, the employer failed to introduce evidence regarding the alleged attendance violations that prompted the last.chance agreement. The only competent evidence concerned the cl aimant ' s final absence . That incident was caused by a circumstance beyond the claimant ' s control . Therefore, it cannot form the basis for a finding of misconduct."

Most important, though , the dissent should have stressed that there

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was no evidence that Claimant wilfully or intentionally failed to

comply or avoided compliance with the terms of . th~ employer's

attendance policy. Rather, Claimant's uncontradicted testimony

asserted that she mad~ a good faith effort to comply in order to

maintain her employment.

Counsel for the agency relies on Giddens v Employment

Security Comm, 4 Mich App 52 6, 53 5; 14 5 NW2d 2 94 ( 1966) , for the·

proposition that a finding of statutory misconduct m?y be derived

from a series of infractions, no one of which alone rises to the

level of disqualifying misconduct. The Giddens court termed this

"a ' last straw' doctrine in which the final infraction, though

unrelated to previous infractions, is of such a. nature that -it

demonstrates conclusively the employee's utter disregard for the

employer's interests." Such principle cannot apply here, however,

since Claimant's last infraction does not p.rov ide conclusive

demonstration of any disregard for the MTU' .s interests. Cf

Christophersen v City of Menominee, 1.37 Mich App 776, 780-781; 359

NW2d 563 (1984). Moreover, the claimant in Giddens had accumu­

lated a lengthy record of absences without reasonable cause,

whereas no such history is established here. In short, the Board's

decision is not supported by competent, mat~rial and substantial

evidence on the whole record.

Appellees apparently fail to see that in benefits cases

where employee misconduct is alleged, the burden of proof is on the

employer to show that the claimant was 1n fact dj.scha r.ged for

statutory misconduct. Korzowski, supra; Tuck v Ashcraft's Market/

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Mar.31. 2007 8:56AM

Inc, ~5~ Mich App 579, 588; 394 NW2d 426 (1986) ; Bowns v Port

Huron, 146 Mich App 69, 75; 379 NW2d 469 (1985), lv den 424 Mich

899 (1986). Thus, it was incumbent upon the MTU to establish b~ . .

. a prepond~rance of the evidence that Claimant deliberately broke

some important aspect of the employer's attendance policy by

failing to reserve enough funds to refuel her car. Cf D.iepenhoEst

v General Electr.ic. Co, 29 Mich App 651, 653; 185 NW2d 637 (1971) .

The most ·that wa.s established is that Claimant was unable to

understand what was expected of her, committed a good-faith error

in judgment or was inadvertently remiss, and thus was to that

extent negligent. Under Cartel', supra, this is not misconduct

within the purview of section 29 (1) (b). The Board' s decision is

not authorized by law.

This conclusion is consistent with a reviewing court's

duty to construe the disqualifying provisions of section 29 (1)

narrowly so as to promote the remedial policy of the Act.

l<orzowski, supra at 228-229; Washington, supra at 658. That

policy, as stated in section 2 of the Act, MCL 421.2, is to provide

income to discharged employees in ·order t o ameliorate the

disastrous effects of involuntary unemployment on workers and their

families. Thus, conduct that may justify discharge from employment·

does not necessarily constitute statut.ory misconduct sufficient to

disqualify a claimant for unemployment benefits . Washington, supr.a

at 659 .

Quoting this proposition from the Washington opinion,

the Court of Appeals recently ruled that in denying benefits for

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Mar .3 1. 2007 8: 56AM

excessive absences, the lower tribunals "failed to appreciate that

absences for good cause, however persistent, c·annot cons t itute

misconduct for purposes of denying unemployment benefits." Carol

Ann Riccardi v Oakland General Health Systems, et al., unpublished

opinion per curiam of the C9urt of Appeals, doc"ket 256164, issued

January 10, 2006, slip op, p 3 . The Riccardi court held, "Because

appellant has put forward good reasons for the great majority of

her absences, and because no tribunal below issued any findings to

the contrary, the administrative law judge, the Board of Review,

and the circuit court ~rred in concluding that appellant's absences

constituted misconduct for purposes of disqualifying her for

unemployment -benefits." This -holding is drawn -direct.ly from the .

principle expressed in Washington, supra at 658: "As a matter of

law, tardiness or absences resulting from events beyond the

employee's control or which are otherwise with good cause cannot be

considered conduct in wilful or wanton disregard of the employer's

interests . Carter, supra." That is patently the case here . The

Board must be reversed and ordered to provide the benefits to which

Claimant is entitled.

Furthermore, even if Claimant's technical failure to

live up to the terms of the last chance agreement could be shown

wilful, wanton and deliberate, which it was not, that too would not

necessarily constitute statutory misconduct . According to Razmus,

supra at 316, "The violation of an employer's rules or a provision

of the collective-bargaining agreement is not, per se, misconduct

within the meaning of the statute. Linski v E'mployment Security

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Conun, 358 Mich 239i 99 NW2d 582 (1959); Jones v Employment Security

Conun, 4 Mich App 300; 144 NW2d 795 (1966} ." As pointed out in

HageJJbuch, supra, "wrongdoings which may justify termination o£

employment under a contract do not necessarily qualify as

'misconduct' for purposes of t he act,~ and that is so for cogent

policy reasons:

"The MESC and [the) circuit court should not be put in the position of evaluating and construing specific terms of collective bargaining agreements and other employment contracts ·to determine misconduct for the purposes of e ligibility for unemployment compensation. Just as terms of labor agreements may provide .for discharge for misbehavior less severe than that required under the law of misconduct, other agreements might be more lenient than the act. Accordingly, a c l aimant's behavior must be evaluated independently from the terms of his employment contract. Failure to review claims in such an objec­tive manner woul d lead to · the· inevitable result that claimants dismissed from (sic] different employers for similar wrong­doings would be accorded different treat­ment under the act." (Emphasis added . }

Based on this rationale, the Court must conclude that counsel for

t .he agency errs by arguing that Claimant is disqualified for

benefits solely because she breached the last chance agreement .

Mc;>.reover, even if Claimant's failure to comply strictly

with the last chance agreement did constitute misconduct in some

sense, it still would not be statutory misconduct because, as a

matter of law, it was not "connected with" her work . As in Jones,

supra at 305 , so too here, the agency should have applied the

distinction between "a rule of selection and one of conduct," which

was spelled out by the Michigan Supreme Court in Reed v Employment

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Security Comm, 364 Mich 395, 398i 110 NW2d 907 (1961) . A rul e of

selection does not govern an employee's work-related conduct but,

ra ther, sets fotth a condition of continued employment. Id.

Discharge of an offending employee for breach of such a rule would

not implicate "misconduct connected with the individual's work" as

contemplated by the statute . Id.

The analysis in Lin ski, sup:ra at 2 4 5 , applies with

equal force here. Counsel for the agency contends that Claimant's

conduct was wrong because it was not in accordance with an

agreement or contract. There, as here, "The record discloses this

to be true. And the record also shows tha.'t the contract penalty of

discharge has been applied.~~ Id. Thus, l ike t he Linski Court,

this Court "can find no warrant f or adding to the contract penalty

for breach still another penalty [denia l of unemployment benefits]

not squarely spelled out in the statute." Id.

Indeed, the Board's decision and the agency's position

here run afoul of longstanding precedent, as expressed by Justice

Talbot Smith concurring in Reed, supra at 398:

"Once again we are confronted with an attempt to use the employment security act as a little labor relations act. The effort here, as in previous cases, is to use unemployment compensation as a disci­plinary . tool, to penalize an employee who breaks a company ru le not only by firing him from ~i~ job, but by pursuing him to his home and removtng both him and his family from the benefits of unemployment compensation. The t heory involves the idea that it is not enough that the employee be discharged for breaking a company rule. It goes further: It seeks to impose a penalty over and beyond the firing . We hold here, as we have held

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he~etofore, that such was not the legisla­tive intent . "

In Reed, the claimant's failure to pay debts led to four writs of

garnishment, for which he was discharged from employment. The lElad

opinion authored by Chief Justice Dethmers held: "If plaj.nt .i.ff' s

going into debt and faiJ.[ing) to pay were to be deemed misconduct,

i t was in no wise connected with his work, even though the conse-

quences might in some manner affect his employer ." I d. at 397.

Similarly, Claimant ' s alleged failure to abide by the l ast chance

agreement was not work-related but, rather , was only a condition of

continued employment and thus could not constitute statutory

misconduct. Once again the Board_' s decision is contrary to law .

In sum, the agency record cto·es not reveal a rationa l

basis for the agency's conclusions . The Court det~rmines that the

Board's decision is not authorized by law and is not supported by

competent, material and substantial evidence on t he whole record .

The Board could not reasonably decide on these facts that Claimant

had committed statutory misconduct either by fail i ng to document

attendance at a funeral or by breaching a condit ion of the last

chance agreement . Thus, the Board could not properly deny

Claimant's application for unemployment compensation benefits.

An order consistent with ~~~pinio~~may enter upon

presentation. · / .~;"/'/ i ts proper

REVERSED .

. ..

DATED :

J~MES.R. GIDDINGS

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