Misconduct MC 45
Attitude Toward Employer
This section discusses eligibility issues arising when the claimant was discharged for acts or statements which displays an attitude of disregard of the employer's interests or disloyalty to the employer.
Attitude is subjective. What one person might consider a "bad" attitude may be relatively satisfactory to another individual. When a claimant is discharged for what the employer terms "poor attitude," it is necessary to find out what acts or statements the claimant did or made, and to determine whether those acts or statements constitute misconduct.
Likewise if the claimant was discharged for being "disloyal," it is also necessary to find out what acts or statements the claimant did or made to be considered by the employer to be disloyal.
Underlying the claimant's "poor attitude" may well be a dislike for the employer, the immediate supervisor, the claimant's work or work environment. However, this dislike, even though it may lead to the claimant's discharge, would not be misconduct unless it manifested itself in actions or statements detrimental to the employer's interest.
While remaining on an employer's payroll, it is unquestionably an employee's obligation to so conduct himself or herself in a manner that the employer's interests are well served. If the employee cannot give that degree of loyalty, he or she would be under an obligation, at least, to seek employment elsewhere.
The California District Court of Appeals and the Supreme Court of the United States have commented on the matter of an employee's loyalty to his employer:
One of the foundation stones of private business is that the employee must be loyal to his employer. Loyalty is implicit in the contract of hiring. No private business can long succeed without the conscientious, undivided support of its employees . . . (P-B-10)
The Supreme Court of the United States has also declared that "There is no more elemental cause for discharge of an employee than disloyalty to his employer." (NLRB v. IBEW )
Title 22, Section 1256-32 (b) also provides:
An employee owes an implicit duty to support and serve the employer's interests and not to willfully or wantonly engage in acts or statements which evince an attitude of disregard of the employer's interests . . .
Common examples of actions or statements which display a poor attitude or disloyalty include:
- Aiding the Competitor
- Competing with the Employer
- Disparaging remarks
- Failure to report theft or other dishonest acts
- Incitement or agitation
- Unauthorized work for other employers (noncompetitor)
- Unjustified complaint or improperly channeled complaint
If the claimant is discharged for union activities, see Relations With Co-workers and Customers, MC 390.
When a claimant is discharged for one or several of these actions or statements, the determination of his or her eligibility will follow the general principles provided in Section 1256-32 (b) of Title 22. It provides:
. . . Except in aggravated circumstances, ordinarily the first instance of an employee's isolated willful or wanton act or statement showing disregard of the employer's interest would not be sufficiently substantial to constitute misconduct. If the employee continues the acts or statements after warning or reprimand, his or her conduct viewed as a whole may constitute a willful and substantial breach and justify a discharge for misconduct, particularly if the repeated acts or statements occur within a relatively short span of time.
Consideration should be given to whether the act or statement is done or made under aggravated circumstances, whether it is an isolated instance, whether there are prior warnings or reprimands, and whether the repeated acts or statements occur in a short span of time. In aggravated circumstances, such as giving the employer's competitor confidential business information or diverting customers to the employee's own business, a single instance would justify discharge for misconduct.
A. Aiding Competitor
An employee may be discharged for aiding his or her employer's competitor.
Section 1256-32 (d) of Title 22 provides in part:
An employee who deliberately aids the employer's competitor, for example, by sending customers to the competitor, except as an accommodation allowed by the employer, or giving the competitor confidential business information, lists of customers or trade secrets, has engaged in misconduct. If an employee, without the knowledge and approval of his or her employer, accepts work for a competitor, the employee has engaged in misconduct.
If an employee directs customers from the employer’s establishment to a competitor for the purpose of aiding the competitor and/or harming the employer, he or she is showing a substantial disregard of his or her obligation to the employer. If discharged for such activity, the discharge would be for misconduct.
Likewise, willfully furnishing confidential information, lists of customers or trade secrets gained in the course of employment to the employer's competitor would be an act of misconduct. Such actions would strongly imply collusion and the claimant's desire to do real and substantial harm to the employer's interests. This could seldom, if ever, be considered anything except misconduct. In these types of cases, it rarely would be necessary to establish a pattern of conduct, prior warnings or an established employer policy against this type of activity for a finding of misconduct.
Misconduct may also exist if the employee worked for a competitor without the knowledge and approval of the employer.
Example - Working for Competitor:
The claimant was a marketing service coordinator. When she was on vacation, the employer inadvertently found out that she had been preparing slide shows for a competitor of the company. After the claimant returned to work, her supervisor warned her that she should not be working on any other slide shows other than for the company and that if there was any violation of the rule, she would be discharged. On the day before her discharge, another supervisor saw the claimant return after her normal working hours to use the employer's computer to generate slides for selling to the competitor. She was discharged for this reason.
In this case, the discharge was for misconduct. The claimant was warned and continued to work for a competitor of the employer.
Example - Working for Competitor and Employer at the Same Time:
The claimant was employed on a full-time basis as a loss control representative for an insurance company. His job involved consulting with policy holders regarding safety measures. When the claimant was hired, he did not inform the employer that he was working full-time for another insurance company, also as a loss control representative. In fact he continued to work for the other company after starting work for the employer.
The duties for the two employers were performed at the same time, that is, normally during working hours. The claimant could work later in the afternoon or evening if appropriate, but most of the work was performed during the regular working hours. Although not requiring the claimant to account for each and every hour, the employer did require some accounting of hours from the claimant.
When the claimant was hired by the employer, he was given a conflict of interest statement to fill out. This conflict of interest statement emphasized that there should be no appearance of impropriety nor any participation in any impropriety where the interests of the individual person were put above that of the corporation.
The claimant contended that there was nothing wrong with working two full-time jobs without informing the employer. When the employer learned that the claimant had been working for a competitor at the same time, the claimant was discharged.
The discharge was for misconduct. Every employee owes his or her employer an obligation of good faith and fair dealing. By working full-time on two jobs at the same time, the claimant breached the duty of good faith required of him. In effect, the employer was required to subsidize the claimant's working at another company during the working hours expected of the claimant.
What about salesmen discharged for merchandising another "line" of goods from another employer while working for the employer? Whether the discharge is for misconduct depends on two things:
- Did the employer know of and approve of the fact that the employee was representing another "line" of products, and
- Was the claimant selling goods which were in direct competition with the employer's product and "pushing" those goods to the detriment of the employer's products?
As a general rule, the original agreement of hire will establish whether representing another employer is permissible or not. In the absence of some specific agreement at the time of hire, the claimant would be obliged to secure the employer's approval before he or she commenced representing another employer at the same time. If the claimant has not secured the employer's approval and starts to represent a competing employer, there would be damage done to the employer's interests and a finding of misconduct.
Example - Selling Products of Competitors:
The claimant worked for the employer approximately ten months as a wine salesperson. He worked full-time and was paid a salary plus commission. When the claimant was hired, he signed an agreement which stated that his employment with the employer would be full-time and "exclusive." The claimant and the employer understood that to mean that his sales efforts would be devoted exclusively to the employer's products.
The claimant was discharged after the employer learned from its clients that the claimant had been selling wines for at least two other wineries. The claimant had been doing that throughout the period of his employment.
When the employer first questioned the claimant about his allegedly selling other wines, he first denied the allegation but later acknowledged that he had been selling the other wines.
The claimant felt that there was nothing wrong with his selling other firm's wines because he had begun those relationships before starting work for the employer. Moreover, both his commission and salary were reduced after he started working for the employer because of business slowdowns. He had complained about the reductions. However, he had never advised the employer that he was or intended to start selling wines of another firm to supplement his income.
The discharge was for misconduct. At the time of hire each party clearly understood and expected that the claimant would work full-time for the employer and exclusively sell and promote its products. The claimant breached that commitment by selling other wines during his employment. The claimant's actions were not justified merely because the employer reduced his compensation for business reasons. He should have re-negotiated the original agreement when his compensation was reduced.
What if the claimant is discharged for seeking employment with a competitor? An employer may feel that since the employee is seeking employment with a competitor, he or she will no longer be reliable, and discharges the employee. Such a discharge would not be for misconduct. Looking for another job, even with the employer's competitor, is not a willful or wanton disregard of the employer's interests. Any employer may expect that an employee might, at some point, decide to make a job change. Disloyalty is not shown to an employer simply because an employee contemplates a job change.
B. Competing With Employer
An employee may be discharged for competing with the employer. An employee's principal obligation to the employer is unquestionably broken when he or she engages in the same business independently of his or her employer and in so doing lures or diverts the employer's customers to his or her own place of business.
Title 22, Section 1256-32(d), provides in part:
An employee who, while working for the employer diverts customers to the employee's own independent business, has engaged in misconduct.
It should be noted that an employee’s obligation to the employer would not be violated solely because the employee has his or her own business while working for the employer. There would be no misconduct if the employee did not use the employer's equipment to conduct his or her own business; did not devote work time or otherwise intentionally injure the employers interests.
What if the employee is actively engaged in a business similar to the employer's? It is possible for an employee to engage in the similar business as his employer and still not be in direct competition with the employer. For instance, an auto mechanic in the new car department of an auto dealer, might, on weekends, repair friends' or neighbors' automobiles in his or her own workshop. Provided that the mechanic did not use the job to steer the employer's customers to his or her place of business, his or her independent business would not form the basis for a finding of misconduct. If, however, the mechanic attempted to steer customers from the employer to his and her business, the discharge would be for misconduct.
Example - Steering Customers to Own Business:
The claimant worked as an assistant manager for a jeweler. At the time she was hired, she and the employer agreed that she was not to do any goldsmith work which was in conflict with the employer's business. This was a normal condition of employment. At the very end of the claimant's employment, the employer learned that the claimant had done a goldsmithing job for one of its regular customers. The claimant asked a goldsmith whom the employer used to do the work and told the goldsmith not to tell the employer of the situation and to bill her separately rather than through the employer's place of business. The goldsmith indicated that the claimant had done this on several occasions. The employer also learned that the claimant suggested to a customer of the employer, that the employer was having trouble getting some stones in a ring set and that the customer would be better off by transferring the job to the claimant. The employer was not having the problems that the claimant related to the customer. The claimant was subsequently discharged.
The discharge was for misconduct. Not only did the claimant start her own business in violation of the hiring agreement, but she also steered customers from the employer to her own business.
What if the claimant solicits co-workers to work for his or her own business in direct competition with the employer?
Example - Recruiting Co-workers to Own Business:
The claimant was employed as a disc drive repair technician. He was scheduled to work from 6:30 a.m. to 3:00 p.m. Without the employer's knowledge, the claimant also repaired disc drives at home. It was the same type of work he did for the employer during the day. The claimant was discharged when the employer learned that he had solicited two of its technicians to quit employment with the employer and work for him at night.
The discharge was for misconduct. The claimant solicited the employer's technicians to work for him, in direct competition with the employer. This is an act of disloyalty to the employer.
If the claimant used parts belonging to the employer in his or her business in competition with the employer's, a discharge for this reason would be for misconduct.
Example - Using Employer's Property in Own Business:
The claimant worked as a service technician for an appliance company. The employer had a policy of seeking to have 100 percent production from its employees and not allowing employees to have moonlighting or a second job. Violation of this policy would result in termination. The claimant contended that he was not aware of the policy. While working for the employer, he received referrals from his father, friends and relatives and acted upon those referrals, using his own transportation and performing the work on his own time. However, on several occasions he used parts from the company's truck which was in his possession. He did this because he did not have access to parts he needed immediately. On one occasion, it took him two days to replace the part into the employer's truck. The claimant was discharged when the employer learned about his other job.
The discharge was for misconduct, not because the claimant violated the policy, which was not reasonable. An employer cannot compel the claimant not to work at a second job in order to insure that the employee will work at 100 percent productivity. The discharge was for misconduct because the claimant took company parts for performing services which were competitive with the employer. The claimant breached his duty of loyalty to the employer by using parts which the employer had a right to expect would remain on the employer's truck, and not for any competitive purposes.
What if the claimant is discharged for discussing going into business for himself or herself? The discharge would not be for misconduct if the discussions do not negatively interfere with the employer's business.
Example - Discussions of Establishing Own Business:
In P-B-183, the claimant was an office manager. He was interested in entering into the construction business on his own behalf, and tentatively discussed with three other employees the possibility of organizing a new company. Such discussions were concerned with general qualifications of the claimant, the other employees and the possibility of securing financing. The claimant's activities had not caused any dissatisfaction with other employees or disrupted the employer's business. One of the employer's partners learned of the claimant's desire and instructed him to cease the discussions. When the claimant refused, he was asked to resign.
The Board found the claimant eligible and stated:
[W]e believe that, in this case, the claimant's conduct was not such that it had interfered with the orderly conduct of the employer's business or that the employer's order was in any way necessary to protect or preserve its business. The evidence before us merely shows that, whatever may have been the claimant's intentions with respect to starting his own firm, he and the other employees involved had always performed their duties for the employer in a satisfactory manner.
What if the claimant’s activities are not restricted to discussions? What if the claimant is actually planning and preparing to establish his or her own business while working for the employer, and the business will compete with the employer’s?
Example - Definite Preparation for Own Business:
The claimant worked as a graphic artist for a graphics company. Prior to the last day of work, she had engaged in negotiations with one of the employer's customers to establish a new business in direct competition with the services offered by the employer. The business would be operated by the claimant and the customer, as partners. The claimant had not disclosed to the employer her intention of going into business with one of the employer's customers. When the employer inadvertently discovered evidence that the claimant had engaged in such negotiations, the claimant was discharged.
The discharge was for misconduct. The claimant's conduct in this case demonstrates a willful breach of her duty of loyalty to her employer. While working for the employer, she took steps to start her business without informing her employer and particularly without informing her employer she intended to do so with one of the employer's customers. At the very least, this would surely mean the loss of business from the former customer and possible diversion of other business of the employer to a new business.
C. Disparaging Remarks
This subsection discusses situations where a worker makes statements that discredit or are disrespectful to the employer or the employer's business, either on or off the job.
Title 22, Section 1256-32(c), provides in part:
An employee who makes disparaging statements concerning his or her supervisor, the employer, or the employer's product, service or business . . . has engaged in acts which may be misconduct.
According to the regulation, making disparaging remarks about the supervisor, the employer, or the employer's product, service or business may be misconduct. It is misconduct if the claimant's action results from an intentional disregard of the employer's interests. It is not misconduct if it results from a lack of good judgment.
Example - Lack of Good Judgment:
The claimant and another counter waitress were responsible for keeping up the side work in the restaurant (i.e., filling creamers, etc.). On one occasion the claimant refused to allow the other counter waitress to take the creamers she had filled because the other waitress was not busy and could have filled those allotted to her. The other waitress reported the incident to the manager and the manager in turn reported it to the owner. About two weeks later, the employer reprimanded the claimant for her actions and advised her to cooperate with the other employees or she would be discharged. The claimant commented to the employer that, "If he would stay around there wouldn't be any trouble." The claimant was discharged immediately. Prior to the incident, the claimant had no difficulties with the employer or other employees and had not received complaints about her work.
The discharge was not for misconduct. The claimant was discharged because of her attitude towards the employer when she was reprimanded for not cooperating with another employee. Prior to the final incident, the claimant had not had any difficulties with the employer or other employees. The claimant’s actions in this case reflect a lack of good judgment in making the comment rather than an intentional disregard for the employer’s interests.
Generally, making disparaging remarks is also not misconduct if it is the first instance.
It is necessary to distinguish between disparaging remarks and griping. Griping is defined as complaining, normally about some aspect of the work. A disparaging remark goes beyond a mere complaint in that it attempts to depreciate something or someone by speaking slightingly of that subject. Griping or complaining is discussed in G. Unjustified Complaint or Improperly Channeled Complaint.
D. Failure to Report Theft or Other Dishonest Acts
A common example of "disloyalty" displayed by an employee is failure to report to the employer theft committed by other employees or individuals. An employee owes an obligation to the employer to report pilfering by a fellow employee, falsification of records by another, thefts of property, etc. Whether the discharge is for misconduct depends on whether the claimant has a duty to inform his employer of acts of dishonesty committed by others.
All employees have an obligation to be faithful to the best interests of the employers. Such an obligation is implicit in the contract of hire. Consequently, if any employee sees another commit substantial acts of dishonesty (such as embezzlement and/or theft), against the employer, he or she would be under an obligation either to try to prevent them or inform the employer. Failure to do so would breach this obligation and would be misconduct.
Example - Failure to Report Theft:
In P-B-10, the claimant, an inspector for an electrical firm, was observed by a guard on the swing shift in the presence of two other persons who were removing food from a cafeteria freezer. The guard became suspicious when he noticed that one man was carrying food and walked towards the parking lot. He stopped the man and called the man to return the merchandise consisting of ten cartons of milk and four salads to the refrigerator. After reporting the matter to his supervisor, the guard made a positive identification of the claimant and the man who was carrying the merchandise but was unable to identify the third man.
In response to the employer's questioning about the incident the claimant admitted only that he was involved and refused to identify the third party. He was discharged when he refused to give a satisfactory explanation of his involvement in the incident. At the hearing the claimant admitted that he was present when the theft took place but stated he had no part in the planning or actual theft. In holding the claimant ineligible, the Board said:
[T]here is insufficient evidence to sustain a finding that the claimant did conspire or did participate in the theft. Thus, the determination point in this case is whether the claimant had a duty to inform his employer of the dishonest act committed by the fellow employee and the duty to disassociate himself from the illegal act when given an opportunity to do so. If misconduct is to be found, it must stem from a breach of duty owed to the employer.
There is no dispute in the record that the claimant was present at the time the fellow employee removed the food from the freezer. He made no attempt to dissuade his companion from converting the employer's property, nor did he report the incident to the guard or to any of his supervisors. Although given the opportunity to explain the events of the night. . . . he did not avail himself of the chance to disassociate himself from the theft. When asked if he would be willing to reveal the name of the third party allegedly involved, he indicated that he would not be willing to identify the suspect.
. . . Was the conduct of the claimant herein that of a loyal employee? We think not. . . The claimant has not shown or even asserted that his failure to speak, when there was an obvious duty to speak, was merely an instance of poor judgment. Rather, the claimant's behavior appears to have been the studied and calculated choice of a person who deliberately resolved to disregard the standards which the employer had the right to expect. . . . we conclude that the claimant's discharge was for misconduct.
When minor and petty acts, such as another employee taking a pencil or some scotch tape home, are involved, usually there will be no obligation for the claimant to report unless he is specifically asked by the employer to report such dishonest acts.
It will be different if an employee is a supervisor responsible for other employees' actions or a guard with custodial and observational duties. The obligation of such employees goes further than reporting cases of substantial dishonesty such as embezzlement and theft. They are obligated to try to prevent any acts of dishonesty against their employer, or failing in this, to report the facts, since such prevention or reporting of dishonesty would normally be included in their duties.
Example - Failure to Report Dishonest Acts:
The claimant was employed as a routing supervisor. The individuals whom the claimant supervised had on occasion falsified their reports in order to increase their bonus. The claimant admitted that he was aware of this practice but stated that he had made no formal report of it to his supervisor because his supervisor was also aware of the condition. The claimant was accused by his supervisor of allowing his men to falsify their reports in order to gain for himself. The supervisor discharged the claimant.
The discharge was for misconduct. The fact that the claimant was aware of the condition that his workers were falsifying their reports and yet failed to report the matter to his superiors is sufficient to justify the discharge. The claimant failed to report dishonest acts of employees under his supervision.
E. Incitement or Agitation
This section refers to situations in which a worker stirs up resentment and dissatisfaction among other employees.
Title 22, Section 1256-32(c), provides in part:
An employee who . . . deliberately incites or agitates co-employees to damage the employer's premises, equipment or materials, has engaged in acts which may be misconduct.
When an employee incites or attempts to incite fellow employees to commit acts which result or could result in damage to the employer's premises, equipment, or materials, the resulting discharge would be for misconduct. There is no dispute that such action will substantially injure the employer's interests.
Apart from urging other employees to damage the employer's equipment or materials, an employee may urge other employees to "take it easy and slow down." Certainly, this kind of agitation would also injure the employer's interests. However, in the absence of prior warnings or reprimands and other acts of unsatisfactory conduct (such as unexcused absences and tardiness), it would not be considered an act of misconduct.
F. Unauthorized Work for Other Employer(s) (Noncompetitor)
What if the employee, without the permission of the employer, works for another employer, who is not a competitor with the employer?
If an employee works for another employer during the hours he or she is supposed to work for the employer, and does so without the employer's permission, the resultant discharge would be for misconduct, even though the other employer is not a competitor.
Example - Working for a Noncompeting Employer
The claimant worked as a press operator for a county office of education. On his last date of work, he was found using the employer's equipment and materials to do a job preparing instruction stickers for a game produced by a toy company. He was discharged for performing the unauthorized personal work.
The discharge was for misconduct. The claimant performed work which was not authorized and which was outside the scope of his employment. He not only used the employer's equipment, but also materials of the employer. His actions demonstrated a willful breach of duty owed to the employer.
G. Unjustified or Improperly Channeled Complaint
Occasionally a claimant may register a complaint about working conditions, hours, wages, co-workers, supervision, or any one of a variety of things and the employer will discharge the employee because of the expressed dissatisfaction.
Griping or complaining is engaged in by many employees with no resultant injury to the employer. An employee may be discharged occasionally for what the employer considers excessive griping. This would not be misconduct unless it is shown that the employee's work suffered, or if the employer’s interests were otherwise damaged as a direct result (for example, if he or she persistently left their work station for the purpose of griping to co-workers).
Section 1256-32(c) of Title 22 provides in part:
Mere griping or normal complaints through proper channels, or in a customary manner about some aspect of the work, however, does not injure or tend to injure the employer's interest, and may even be desirable or encouraged by the employer as a method to improve work conditions and employer morale. Proper channels for complaints ordinarily would be through an employee's immediate supervisor, or a grievance committee if one exists, or in accordance with any applicable collective bargaining agreement procedure.
There are three things to consider when a claimant was discharged for filing complaints:
- Were the complaints justified?
- Were the complaints registered through proper channels?
- Were the complaints affecting the claimant's work or that of other employees?
There is no misconduct if the claimant's complaints were justified, and registered through proper channels.
Example - Complaints Justified:
The claimant was a fry cook. His hours of work were from 1:00 p.m. to 10:00 p.m. but he was actually required to work an hour or two in addition in the morning and until 11:00 p.m. in the evening. The claimant complained to his supervisor about the inefficiency of the dish-up man, as a result of which the latter was discharged. The employer hired a dishwasher who turned out to be a slow worker and was not able to cook. When this assistant proved unsatisfactory, he was likewise discharged and replaced by a dish-up man who was addicted to drinking on the job. On the last day of work, the claimant again complained to his supervisor concerning the most recent assistant but the supervisor took the part of the assistant. That evening, the employer discharged the claimant.
The discharge was not for misconduct. The claimant’s complaints were justified as to the extra hours he was required to work and the type of assistance he was furnished by the employer. Additionally, he registered his complaints through the proper chain of command, his immediate supervisor.
However, if the complaint is justified, but the claimant did not follow proper channels, the resulting discharge may be for misconduct.
Example - Complaint Not Through Proper Channel:
The claimant worked as a wrapper in a grocery store. He was requested by his immediate supervisor to work a few minutes overtime on numerous occasions. The claimant consistently refused to do so because he would not be compensated. This resulted in disagreements and arguments between the claimant and his supervisor on several occasions, sometimes in the presence of customers. On the last day of work, the claimant again engaged in a heated argument with his supervisor in the presence of customers. He never complained to the manager or his union regarding his supervisor's demands that he work overtime without compensation.
The discharge was for misconduct. The request that the claimant work a few minutes overtime did not warrant the claimant engaging in heated arguments with his supervisor in the presence of customers. If the claimant felt aggrieved by his supervisor's demands he should have complained to the manager of the store or sought redress with his union. This he failed to do.
There is no misconduct if the claimant's complaints have no adverse effect on the morale of co-workers or if the employers interests are not otherwise injured.
Example - Complaints Having No Effect on Co-workers:
The claimant was a laborer. He was a chronic complainer who persisted in his complaints about the company and about the management. The employer felt that his complaints were having an adverse effect on the other workers. The claimant was warned about his attitude and was told to "cease and desist." A final warning was given about a week before the claimant was discharged for continuing complaints. The claimant agreed that he did complain about the operation, but an employer witness testified that although the claimant did complain on occasions when all the employees were at lunch, such complaints had no effect on him and did not seem to affect the morale of the crew.
The discharge was not for misconduct. The claimant's complaints did not injure the employer's interests.