Falsifying Timesheets, Misconduct and Unemployment Benefits

By lfsuser on September 22, 2014

In California, an employee terminated for “misconduct” is disqualified from receiving unemployment benefits. Under California Labor Code section 1256, “an individual is disqualified for unemployment compensation benefits if the director finds that he or she left his or her most recent work voluntarily without good cause or that he or she has been discharged for misconduct connected with his or her most recent work.” The California Supreme Court has found such misconduct to include action showing willful or wanton disregard of an employer’s interests “as is found in deliberate violations or disregard of standards of behavior which the employer has the right to expect of his employee … “On the other hand” mere inefficiency, unsatisfactory conduct, failure in good performance as the result of inability or incapacity, inadvertencies or ordinary negligence in isolated instances, or good faith errors in judgment or discretion are not to be deemed ‘misconduct’ within the meaning of the statute.” Amador v. Unemployment Ins. Appeals Bd. (1984) 35 Cal.3d. 671, 678.

In the recent decision of Jim L. Irving v. California Uninsurance Appeals Board, 2014 DJDAR 12687 (September 15, 2014), the California Court of Appeal found that a driver commits “misconduct” by repeatedly taking excessive breaks and falsifying timesheets, thereby disqualifying him from receiving unemployment compensation benefits. Jim Irving held a probationary driver position with the Los Angeles Unified School District (LAUSD). LAUSD issued a notice of unsatisfactory service to Mr. Irving for, among other reasons, repeatedly exceeding his break times and falsifying his timesheets. Consequently, LAUSD suspended and ultimately discharged Mr. Irving from his duties.

Mr. Irving then filed a claim for unemployment benefits. The Employment Development Department (EDD) concluded that Mr. Irving’s discharge did not meet the definition of “misconduct,” and awarded him unemployment benefits. Mr. Irving admitted to falsifying his timesheets, but explained that he took excessive breaks because others did as well. An administrative law judge did not find Mr. Irving’s explanation credible, and concluded that he was discharged for “misconduct.” Mr. Irving then petitioned the trial court for a writ of mandate, which was ultimately granted. The trial court found that Mr. Irving had testified credibly, establishing that his “false timekeeping” was the result of good faith misunderstanding of his job duties and responsibilities.

The Court of Appeal reversed the trial court’s granting of the writ of mandate. The Court noted that “misconduct” is limited to conduct evidencing wrongful or wanton disregard of an employer’s interests, which includes dishonest actions. Here, the record reflected that Mr. Irving repeatedly took excessive breaks, yet failed to reflect those breaks on his written time records. Moreover, by his own admission, he falsified his timesheets. The fact that other employees took excessive breaks was irrelevant.

Importantly, the Court found that Mr. Irving’s conduct did not arise from a “good faith misunderstanding” with his employer. The good faith misunderstanding is viewed from a “reasonable” person’s perspective; not from an employee or employer’s standpoint. If a reasonable person could conclude that the employee’s conduct was dishonest, then there has been dishonesty for purpose of denying recovery of unemployment insurance benefits. Here, the Court of Appeal found a reasonable person would not have interpreted Mr. Irving’s actions in taking four excessively long breaks and repeatedly falsifying his time records as honest.

This case provides some clarity as to conduct that amounts to “misconduct.” Conduct that amounts to “misconduct” must be shown to have been willful, intentional, and harmful to employer’s interest. A good faith error in judgment will not suffice. However, repeatedly falsifying time records amounts to “misconduct,” and will disqualify an employee from receiving unemployment compensation benefits.

This document is intended to provide you with general information about legal developments. The contents of this document are not intended to provide specific legal advice. If you have questions about the contents of this alert, please contact Steven Werth at 415-697-3462 or at swerth@aghwlaw.com. This communication may be considered advertising in some jurisdictions.