1977, February, Pg. 238. Unemployment Compensation and Labor Relations in Colorado.

• Author: by Raymond L. Hogler

6 Colo.Law. 238

Colorado Lawyer

1977.

1977, February, Pg. 238.

Unemployment Compensation and Labor Relations in Colorado

238Vol. 6, No. 2, Pg. 238Unemployment Compensation and Labor Relations in Coloradoby Raymond L. HoglerRaymond L. Hogler, Boulder, is a member of the Colorado Bar.239Judicial interpretations of unemployment compensation statutes can have a significant, even though indirect, bearing on the employer-employee relationship, particularly insofar as a decision tends to circumscribe the contractual freedom of the parties. In two recent opinions,(fn1) the state Court of Appeals has by virtue of its construction of the Colorado statute(fn2) placed certain restrictions on an employer's ability to create agreements ultimately resulting in the denial of benefits to an employee. The implications of these two cases with respect to labor relations in Colorado are the subject of this article.

Commencing the Employment RelationshipRichard Casias, an epileptic,(fn3) completed an employment application with Time, D.C., Inc. in May 1974. After working for approximately two months, Casias was involved in an accident occurring at the employer's loading dock.(fn4) He was hospitalized as a result of the accident, and the employer at this time learned of Casias's epileptic condition. The employer subsequently discharged Casias for falsifying his employment application, as Casias had specifically stated in the document that he did not suffer from epileptic attacks.

Casias, through his personal representative,(fn5) attempted to claim his unemployment benefits. The Referee found Casias was responsible for his separation from employment by reason of the false representations and therefore was not entitled to benefits.(fn6) The Industrial Commission affirmed the Referee's decision; the Court of Appeals reversed and remanded the case for further consideration.(fn7)

The basis of the Court of Appeals' decision was its conclusion that, prior to a denial of benefits predicated upon a discharge for falsification of an employment application, the falsification must be "material to the applicant's job performance."(fn8) Such a test is nowhere articulated in the statute,(fn9) nor is Colorado case law dispositive of the question.(fn10) The court accordingly relied on authority from other jurisdictions which have adopted similar rules in the context of the employment relationship.(fn11)

One consideration immediately evident from the Casias opinion is the potential difficulty of applying its standard. While courts have consistently undertaken to define "materiality" in other areas of the law,(fn12) there is no substantial

240body of precedent interpreting the concept as it pertains to employment. The length of a prospective employee's hair, for example, may not be sufficient to deny benefits on the ground the employee refused suitable employment by failing to conform to the employer's standards of appearance;(fn13) but an employee's misrepresentation of his educational background may or may not "go to his qualifications," and preclude him from benefits.(fn14) One factor in determining the materiality of a falsification appears to be the employee's state of mind at the time of the misrepresentation.(fn15) The few reported decisions treating the point, however, offer no definitive guides for determining a material falsehood.(fn16)

An even more problematic aspect of the Casias case is the extent to which an employer's prerogatives in the selection of employees have been eroded by the court. The employer's interest in expressing his "personal bias and sensitivities" must be balanced against the remedial purposes of the compensation statute,(fn17) and an employer's preferences will not ipso facto determine an award of benefits. The employer may, of course, insist on exercising his rights to discharge despite the corresponding increase in contributions to the unemployment fund, but this practice would prove costly in larger organizations. Probably, the average employer will now be reluctant to discharge an employee for relatively minor misrepresentations, and his control over the employee has accordingly diminished. At the same time, the employee is afforded greater protection against discharges actually motivated by caprice or prejudice,(fn18) but ostensibly prompted by the falsehoods.

The Casias opinion indicates that the issue of materiality will be a "factual determination," and the hearing officer's decision therefore will be conclusive if supported by the evidence.(fn19) Appellate review is thus of a limited nature.

Certain terms might be incorporated into employment contracts which would strengthen the employer's position from a factual viewpoint in disputed cases. For instance, the application form could include a provision to the effect that all information requested is both material and necessary to the proper performance of an employee's duties. The employer could then raise the argument that an employee is estopped to challenge the materiality of his representations since the fact of materiality was made obvious to the parties. Alternatively, a collective bargaining agreement might state that the employees concede the materiality of the information contained in their applications.(fn20) In light of the present development of case law in this jurisdiction, such terms might be afforded the intended legal consequence. However, another Court of Appeals' decision discussed below has special pertinence to agreements which could be interpreted as an attempted waiver of benefits.

The policy features underlying Casias are subject to criticism, primarily on the ground adopted by the dissenting Judge, who maintained that courts should not "condone deliberate falsehood, material or otherwise,"(fn21) But also in terms of policy, it is desirable to implement the express legislative purpose of alleviating economic hardship caused by unemployment.(fn22) Such competing factors are usually present in unemployment compensation decisions and are probably...