In Willful Disregard of the Employment Security Act: Culpability and the Determination of Disqualifying Misconduct by the Courts

• Publication year: 1998

SEATTLE UNIVERSITY LAW REVIEWVolume 22, No. 2FALL 1998

COMMENTS

In Willful Disregard of the Employment Security Act: Culpability and the Determination of Disqualifying Misconduct by the Courts

James Levy(fn*)

In Washington, a claimant for unemployment compensation benefits is disqualified from receiving those benefits if he or she has been "discharged or suspended for misconduct connected with his or her work."(fn1) Before 1993, no statutory definition of misconduct existed. The Washington courts generated their own definitions of and tests for misconduct. The Washington State Legislature, in 1993, created a statutory definition of misconduct that disqualifies a claimant from receiving unemployment compensation benefits.(fn2) Unlike some judicial definitions,(fn3) the legislative definition is concise: "'Misconduct' means an employee's act or failure to act in willful disregard of his or her employer's interest, where the effect of the employee's act or failure to act is to harm the employer's business."(fn4)

Washington courts have not uniformly interpreted the statutory definition. There are three elements to this definition: (1) an employee's act or failure to act (conduct); (2) the act or omission is done in willful disregard of her employer's interest (culpability); and (3) the effect of the act or omission is harm to the employer's business (harm).(fn5) Courts have not dealt directly with the legal issue of what constitutes conduct under the definition, i.e., an act or failure to act,(fn6) though they have been clear that the determination of the particular conduct for which the claimant was terminated is a question of fact.(fn7) The harm element has been briefly addressed by some courts.(fn8) The elements of conduct and harm, however, are beyond the scope of this Comment, and will not be discussed in any detail.

In applying the statutory definition of misconduct, Washington appellate courts have differed significantly on the second element, the level of culpability required. On this issue, a split has developed between Divisions One and Three of the Washington Courts of Appeal. Division One has generated a broad test for misconduct based on several principles.(fn9) Division Three has developed a narrower test, including in the definition of misconduct only intentional behavior.(fn10) Division Two has not yet decided a case involving the statutory definition.(fn11)

This Comment argues that the most appropriate test for applying the statutory definition is an objective test based on knowing disregard of the employer's interests by the employee, rather than any current interpretation of the definition by the courts of Washington. In Section One of this Comment, the policies behind the Employment Security Act and the ramifications of different culpability elements are discussed. Section Two details the different tests for misconduct generated by the courts. Part A of Section Two discusses the common law tests and their culpability elements prior to the 1993 statutory definition of misconduct. Part B discusses the more recent tests and culpability elements generated by the courts to interpret the statutory definition of misconduct. Section Three argues that the policy of the Employment Security Act and the legislative history of the 1993 statutory definition best support an objective test with a knowing disregard culpability element as the appropriate interpretation of the statutory definition.

I. The Employment Security Act and the Ramifications of a Culpability Element

The Employment Security Act (Act) was enacted in 1937 to help alleviate the financial burden on individuals due to unemployment resulting from the Depression, and the subsequent drain on the state and national economy.(fn12) The Preamble states that the purpose of the Act is to set aside funds for an unemployment reserve to be used "for the benefit of persons unemployed through no fault of their own."(fn13) It goes on to state that in interpreting the Act, "this title shall be liberally construed for the purpose of reducing involuntary unemployment and the suffering caused thereby to the minimum."(fn14) Employment Security collects funds from employers and distributes them to the unemployed, creating a form of risk sharing.(fn15)

The exclusion of an individual from unemployment compensation for misconduct(fn16) may be viewed in light of the preamble to the Act, relating to the statutory purpose of reducing the suffering caused by involuntary unemployment.(fn17) Because of the statutory mandate to liberally construe the Act, Washington courts have generally viewed with caution any statutory construction that limits coverage.(fn18)

A narrow culpability test will result in fewer determinations of disqualifying misconduct, providing benefits to more claimants who might not receive them under a different test. A narrow test will, however, also result in increased cost to both the State and employers, and potentially undermine employers' efforts to reduce misconduct in the workplace. A broader culpability test, on the other hand, will result in denial of benefits to many more individuals, resulting in a reduced cost to both employers and the State.

A culpability test with predictable results will also be beneficial, as it may reduce the social costs involved, through the ability of businesses to plan, decreased litigation, efficient litigation, and the possibility of deterrence. Determination of the appropriate interpretation of the culpability element for disqualifying misconduct is therefore very important, with ramifications for every worker and employer.

II. Judicial Standards of Culpability

Prior to the 1993 statutory definition, codified at Washington Revised Code 50.04.293, the boundaries of disqualifying misconduct and culpability elements and tests were based on policies and principles adopted and developed from case law.(fn19) After the statutory definition took effect, the courts needed to interpret specific language in that definition: "in willful disregard of his or her employer's interests."(fn20)

In determining whether a worker's behavior or omission is misconduct, a court must reference the appropriate definition of misconduct, then apply a test to determine whether the facts of that particular case meet that definition.(fn21) Occasionally, the behavior or omission is so clearly misconduct that the court may apply the statutory definition directly as a test.(fn22) Many times, however, in cases with less straightforward facts, the court must move away from the statutory definition and adopt or develop a test with different language as a proxy for that definition.(fn23) The focus of this Comment is on the culpability element of each test for misconduct adopted by the courts, whether that test comes from the statutory definition of misconduct or from a definition developed by the courts to fit specific situations.

For analysis purposes, the culpability elements of the misconduct tests developed by Washington's courts and legislature can be divided into two types: the standard-based elements and the principle-based elements. The standard-based elements include a single criterion that the claimant's conduct must satisfy in order to be classified as misconduct. For example, a culpability element which requires negligent behavior is standard-based. A worker must have acted at least negligently in order to be disqualified from receiving benefits for misconduct. A worker fired for intentional misconduct would also be disqualified, since her behavior or omission would be beyond the culpability criterion of negligent behavior.

In contrast, some culpability elements are made up of multiple principles which together define a boundary of misconduct. This principle-based culpability element is not based on a solitary criterion as discussed above. An example of a principle-based culpability element would be one stating that (1) inefficiency and poor performance do not constitute misconduct, but (2) misbehavior within the employee's control, which is repeated after warnings, does constitute misconduct. This example is principle-based because it relies on multiple situations to establish a rough boundary for behavior which can be defined as misconduct. In using this type of principle-based culpability element, a court would determine whether the claimant's behavior was mere inefficiency and poor performance, or whether it was in her control and continued after warnings to stop.

A. Definitions Prior to the Adoption of the Disqualifying Misconduct Statute

There were four different tests for misconduct generated by Washington courts prior to the promulgation of the statutory definition. The first of these tests contained a culpability element which was a combination of standard-based and principle-based elements. Two other tests contained standard-based culpability elements, and the most recent test contained a principle-based culpability element.

1. Willful or Wanton Disregard

The first test of culpability for misconduct cases in Washington provided a general standard-based culpability element with more precise illustrations. It also contained a complementary principle-based aspect. In Willard v. Employment Sec. Dept.,(fn24) Division One of the Court of Appeals adopted the leading national test for disqualifying misconduct:the intended meaning of the term...