Texas Appellate Court Clarifies Proof Required for Establishing Misconduct in Receipt of Unemployment Benefits Cases

Navigating the unemployment benefit administrative process under the Texas Unemployment Compensation Act can be difficult for employers. The act limits the type of conduct that may disqualify a claimant from receiving benefits, but it does provide for disqualification “if the individual was discharged for misconduct connected with the individual’s last work.” Employers’ notions of “misconduct” do not necessarily match the act’s definition of “misconduct.” A recent Texas appellate court decision, Texas Workforce Commission v. Dental Health for Arlington, Inc., provides guidance for employers regarding the factors required to establish misconduct that would disqualify a former employee from receiving unemployment benefits.

Background

The employer, Dental Health for Arlington, Inc. (DHA), had a rule requiring employees to arrive at work by 8:00 a.m., with a 15-minute grace period. On the occasion in question, it was reported to DHA that the claimant, Alma Castillo, had arrived at work after 8:15 a.m. However, the time clock reflected that she had arrived at 8:13 a.m. When management presented a warning notice to Castillo for being late, she refused to sign it, but she did mark that she disagreed and that she had clocked in at 8:13 a.m. Because she refused to sign the notice, DHA sent her home. When Castillo arrived at work the next day, DHA management told her that she could sign a notice acknowledging the policy violation or refuse to sign and receive a warning notice for insubordination. DHA discharged Castillo for insubordination after she refused to sign either of the notices.

After the termination of her employment, Castillo filed for unemployment benefits with the Texas Workforce Commission (TWC). The TWC awarded her benefits. The administrative appeal tribunal and the commission upheld the benefit award. DHA appealed the award to state district court. The district court granted summary judgment in favor of DHA and overturned the benefit award. The TWC appealed that decision.

The Court of Appeals’ Analysis

The court of appeals observed that the TWC’s administrative decision is “presumed to be valid” and cannot be overturned if there is some evidence to support the decision. The appellate court observed that the definition of “misconduct” under the Texas Unemployment Compensation Act includes the “mismanagement of a position of employment by action or inaction … or violation of a policy or rule adopted to ensure the orderly work and the safety of employees.” In this matter, the court determined that DHA lacked “a ‘clearly establish[ed]’ policy” that the refusal to sign a warning notice could result in discharge. As a result, the court of appeals upheld the TWC’s award because “misconduct” had not occurred since there had not been a violation of a policy authorizing discharge for failure to sign an employee warning notice. DHA has petitioned the Supreme Court of Texas for a review of the decision.

Key Takeaways

This decision provides insight for employers regarding the types of policies and evidence that the TWC may review in order to evaluate whether an employer has discharged an employee for “misconduct.” The TWC prefers to see documented evidence that a policy exists, that the discharged employee was aware of that policy, that the discharged employee was aware that a violation of the policy could lead to termination of employment, and that the employer in fact discharged the employee for violating that policy. In deciding to challenge an employee’s application for benefits, employers may want to ensure that they have this type of evidence ready to be presented to the TWC if they want to successfully establish disqualifying “misconduct.”