KENTUCKY UNEMPLOYMENT INSURANCE COMMISSION V. JUDITH A. NEEL; MINIT MART NO. 80 AND MINIT MART NO. 80 v. JUDITH A. NEEL
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RENDERED:
March 12, 1999; 10:00 a.m.
NOT TO BE PUBLISHED
C ommonwealth O f K entucky
C ourt O f A ppeals
NO. 1998-CA-000057-MR
KENTUCKY UNEMPLOYMENT
INSURANCE COMMISSION
APPELLANT
APPEAL FROM LOGAN CIRCUIT COURT
HONORABLE TYLER L. GILL, JUDGE
ACTION NO. 97-CI-00212
V.
JUDITH A. NEEL;
MINIT MART NO. 80
APPELLEES
AND
NO. 1998-CA-000070-MR
MINIT MART NO. 80
v.
APPELLANT
APPEAL FROM LOAN CIRCUIT COURT
HONORABLE TYLER L. GILL, JUDGE
ACTION NO. 97-CI-00212
JUDITH A. NEEL
APPELLEE
OPINION
REVERSING AND REMANDING
** ** ** ** ** ** **
BEFORE:
HUDDLESTON, KNOX and MILLER, Judges.
HUDDLESTON, Judge.
Kentucky Unemployment Insurance Commission
(KUIC) and Minit Mart No. 80 appeal from a judgment of the Logan
Circuit Court reversing a KUIC decision which had found Judith A.
Neel
to
be
ineligible
for
unemployment
compensation
due
misconduct pursuant to Ky. Rev. Stat. (KRS) 341.370(1)(b).
to
We
agree with the decision of KUIC and reverse the decision of the
circuit
court,
remanding
with
directions
to
reinstate
KUIC’s
decision.
Neel was employed at Minit Mart No.80 for slightly over
four years until January 14, 1997.
She worked as an assistant
manager for a Minit Mart store in Lewisburg for three years before
her transfer to a store in Russellville.
Neel performed mostly
cashier’s duties three days a week and on the weekends completed
the paperwork assigned to management. Part of her job responsibility was to deposit cash receipts and deposit slips in a bank night
deposit.
On January 11, 1998, Neel left a money bag unattended in
an unlocked office in order to correct a problem with the store’s
money machine.1
Neel testified that she left the money in the
office unattended for only two or three minutes. Neel was notified
by her immediate supervisor, Gina Utley, that her January 11, 1998,
deposit was missing approximately $1,100.00.
The police conducted
an investigation, but no charges were filed. Soon thereafter, Neel
was suspended and her employment was terminated as a result of
1
Neel testified that she hid the moneybag between a file
cabinet and the bottom of her desk.
2
violation of Minit Mart’s cash/deposit policy.2
The employee
manual, which Neel admits she received, states in pertinent part:
Cash/deposit policy
Other than the small amounts of cash allowed in the cash
register, there are only three acceptableplaces for cash
or deposits to be:
a.
Locked in the safe
b.
In the bank
c.
In the store manager’s hands (while either counting
the money or taking it directly from the store to
the bank)
Note: This policy applies to all employees, including the
person designated by the store manager or the supervisor
to do the banking on those days that the store manager is
not on duty at the store.
Any violation of this policy
may be considered grounds for immediate dismissal.
Neel applied for unemployment insurance benefits.
Minit
Mart argued that Neel was not entitled to benefits because she was
discharged for misconduct related to her work.
The referee held:
In this case, the competent evidence of record indicates
that claimant violated the company’s policy regarding the
handling of cash/deposits, by leaving the shift cash
2
Neel had received no prior warnings or reprimands under this
policy.
3
receipts in a money bag unattended in an unlocked office
on January 11, 1997.
The policy is a reasonable one and
claimant was made aware of the policy when hired.
Neel appealed this decision to the KUIC which affirmed.
In ruling that Neel was not entitled to benefits, the KUIC stated:
The referee decision is affirmed.
The claimant remains
disqualified from receiving benefits. The Commission has
reviewed the records, including the evidence previously
submitted and the referee decision which was mailed to
each of the interested parties.
Since the referee has
adequately set forth the salient facts and correctly
applied the pertinent law, the Commission adopts the
referee’s findings and conclusions of law as its own, the
same as if fully set forth herein.
The employer’s
reserve account is relieved of charges on the claim.
Counsel for the claimant, in his brief, contends the
employer’s
policy
was
not
uniformly
enforced
claimant cannot be found guilty of misconduct.
thus
Contrary
to counsel’s contention, the evidence established that
the employer’s policy was strictly enforced at the store
location
where
claimant
was
employed.
Claimant’s
testimony and that of her witness, a former employee,
dealt with money being counted at the opening of the
store for placement into cash registers, a much smaller
amount than the bank deposit which contained the proceeds
4
for an entire day.
Claimant’s acknowledgment of leaving
the money unattended constitutes a knowing violation of
the employer’s policy and amounts to misconduct connected
with the work.
Neel appealed to Logan Circuit Court.
The court found
the same facts as cited by the referee and KUIC, but reversed,
stating:
The
Commission’s
factual
finding
that
Judith
Neel
violated her employers policy is not questioned; but this
Court believes the legal conclusion that the isolated act
constitutes
misconduct
unemployment
benefits
disqualifying
is
erroneous.
Mrs.
Neel
from
To
permit
any
violation of policy - no matter how rare or inadvertent
to disqualify the employee from employment benefits would
lead to absurd and unjust results.
The fact that a
reasonable policy existed, that Judith Neel knew it
existed when she was hired and that she later on one
occasion violated it, does not- in and of itself- require
a finding that she is guilty of misconduct.
KUIC and Minit Mart then appealed the trial court’s
decision to this Court.
The standard of review of a decision of
KUIC is as follows:
Judicial review of an award of the unemployment Insurance
Commission is governed by the general rule applicable to
administrative actions.
5
If the findings of fact are
supported by substantial evidence of probative value,
then they must be accepted as binding and it must then be
determined whether or not the administrative agency has
applied the correct rule of law to the facts so found.
Cobb v. King Kwick Minit Market, Inc., Ky., 675 S.W.2d 386, 388
(1984) (quoting Southern Bell T & T Co.
v. Unemployment
Commission, Ky., 437 S.W.2d 775, 778 (1969)).
Ins.
However, where the
question is one of law rather than fact, “courts are not bound to
accept the legal conclusion of [the] administrative body.” Revenue
Cabinet v. Joy Technologies, Inc., Ky. App., 838 S.W.2d 406, 408
(1992).
The circuit court held that there is no testimony in the
record to support a finding that the employer’s cash/deposit policy
was uniformly strictly enforced.
The court acknowledged the
testimony of Utley, who stated that she was not aware of anyone
violating the policy and not being discharged.
However, the court
concluded that Utley’s testimony was not of sufficient probative
value to support the referee’s and KUIC’s decision since she also
stated that to her knowledge “no one else had ever violated the
policy.”
The issue before this Court is whether an employer can
establish the uniform enforcement of a rule which the record shows
has never been violated.
Although
this
is
a case of first
impression in Kentucky, other states have addressed the same issue.
6
In McClain v. Review Bd. of the Ind. Dep’t of Workforce Dev., 693
N.E.2d 1314 (1998), the Indiana Supreme Court held that:
A policy that has not been the basis for termination of
an employee in the past may nonetheless be “uniformly
enforced” even if only one person is the subject of an
enforcement action, so long as the purposes underlying
uniform enforcement are met.
notice
to
employees
about
Uniform enforcement gives
what
punishment
they
can
reasonably anticipate if they violate the rule and it
protects employees against arbitrary enforcement.
McClain, 693 N.E.2d at 1319.
Here, KUIC found that Minit Mart had a written policy
which dealt with the handling of cash and deposits which, if
violated, was grounds for termination.
had knowledge of this policy.
It is undisputed that Neel
The KUIC’s factual determination on
this issue is supported by substantial evidence. Thus, the circuit
court
did
not
apply
the
appropriate
standard
of
review
and
substituted its judgment for that of KUIC.
The circuit court also held that Neel’s actions did not
constitute misconduct within the meaning of the statute.
KRS
341.370(1)(b) provides that a worker is not entitled to unemployment benefits if termination resulted from misconduct connected
with her work.
KRS 341.370 further provides that “discharge for
misconduct” includes a “knowing violation of a reasonable and
uniformly enforced rule of an employer.”
The issue for review is
whether Neel’s conduct constituted a “knowing violation” so as to
7
justify her termination.
The circuit court ruled that Neel’s
conduct was merely negligent.
The court emphasized that Neel did
not act with malice or consciously consider the policy and the
“risk to her employer of violating it and then intentionally or
recklessly set about to violate it.”
We disagree.
Volitional conduct which stems from wanton or wilful
disregard of the employer’s interest or deliberate violation of the
of the employer’s policies disqualifies a worker from receiving
benefits.
See Kentucky Unemployment Ins. Comm. v. Gooslin, Ky.,
756 S.W.2d 464 (1988); and see City of Lancaster v. Trumbo, Ky.
App., 660 S.W.2d 954 (1983)(denial of benefits is proper where
employee’s discharge resulted from intent to disobey reasonable
instructions of employer); Kentucky Unemployment Ins. Comm. v.
King, Ky. App., 657 S.W.2d 250 (1983)(holding that employee’s
wilful
disregard
misconduct
of
connected
reasonable
with
work
employer
for
policy
purposes
of
constitutes
disqualifying
employee from receiving benefits).
Here, the referee found that Neel left the shift cash
receipts in a money bag unattended in an unlocked office.
The
referee further found that such action was in wanton disregard of
Neel’s employer’s business interest.
While we might have reached
a different conclusion, we cannot say that the referee erred by
finding
that
her
conduct
warranted
disqualification from receiving benefits.
not be disturbed.
8
her
discharge
and
Hence, that finding may
The decision of Logan Circuit Court is reversed and this
case is remanded to that court with directions to reinstate KUIC’s
decision.
MILLER, JUDGE, CONCURS.
KNOX, JUDGE, DISSENTS AND FILES SEPARATE OPINION.
KNOX, JUDGE, DISSENTING.
I respectfully dissent.
I agree with the trial court that Neel’s single act of
carelessness does not amount to misconduct sufficient to disqualify
her from receiving benefits. I believe the trial court was correct
when it said:
The Commission found that Ms. Neel was
disqualified from receiving benefits because
she
was
meaning
guilty
of
committing
KRS
a
of
misconduct
341.370(1)(b)
“knowing
within
the
and
(6)
by
violation
of
a
reasonable and uniformly enforced rule of her
employment.”
This Court believes that the
Commission erred in its factual finding that
the policy violated was uniformly or strictly
enforced; however, even if this finding were
correct, this Court [does] not concur in the
legal conclusion that the acts of Ms. Neel
constitute misconduct within the meaning of
the statute.
The Commission’s factual finding that
Judith Neel violated her employer[’]s policy
9
is not questioned; but this Court believes the
legal
conclusion
constitutes
that
misconduct
this
isolated
disqualifying
act
Mrs[.]
Neel from unemployment benefits is erroneous.
To permit any violation of policy - no matter
how
rare
or
inadvertent
to
disqualify
the
employee from unemployment benefits would lead
to absurd and unjust results.
The fact that a
reasonable policy existed, that Judith Neel
knew it existed when she was hired and that
she later on one occasion violated it, does
not - in and of itself - require a finding
that she is guilty of misconduct.
Counsel for
the
cited
Commission
following
quote
has
correctly
from
Boynton
Cab
Co.
the
[v.]
Neubeck, 237 Wis. 249, 269 N.W. 636 (1941):
[T]he
term
limited
to
misconduct
conduct
.
.
.
evincing
is
such
willful or wanton disregard of an
employer’s
interest
as
found
in
deliberate violations or disregard
of standards of behavior which the
employer has the right to expect of
his employee, or in carelessness of
[sic] negligence of such degree or
recurrence
as
to
10
manifest
equal
culpability, wrongful intent or evil
design, or to show an intentional
and
substantial
employer’s
disregard
interest
of
or
of
the
the
employee’s duties and obligations to
his employer . . . .
The principles of Boynton have been
followed
in
this
state.
Douthitt
v[.]
Kentucky
Unemployment
Com[m]’n,
[Ky.
App.,] 676 S.W.2d 472[,] 474 [1984].
The
Ins.
facts as found by the referee and adopted by
the Commission show no more than a single
instance
of
negligence
exemplary
employee.
by
There
an
is
no
otherwise
evidence
indicating that the employee bore her employer
any malice or that she, on January 11, 1997,
consciously considered the policy, the risk to
her
employer
intentionally
of
or
violating
it
and
then
recklessly
set
about
to
violate it.
The negligence exhibited is not
of
degree
such
a
as
to
“manifest
equal
culpability” (presumably equal to a deliberate
act), wrongful intent or evil design, or to
show an intentional and substantial disregard
11
of the employer’s interests or the employee’s
duties.
BRIEF FOR APPELLANT MINIT MART
#80:
BRIEF FOR APPELLEE JUDITH A.
NEEL:
Linda B. Thomas
REYNOLDS, JOHNSTON, HINTON,
THOMAS & PEPPER
Bowling Green, Kentucky
Terrance J. Janes
FLETCHER, COTTHOFF & WILLEN
Hopkinsville, Kentucky
BRIEF FOR APPELLANT KUIC:
Randall K. Justice
Workforce Development Cab.
Frankfort, Kentucky
12
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