WORKPLACE 2015
Best Practices For
Managing Employee Termination
© 2015 Bond, Schoeneck & King, PLLC
TABLE OF CONTENTS
Page
I.
II.
III.
IV.
V.
TERMINATION RISK ANALYSIS ......................................................................... 1
A.
Employment-At-Will Limitations ................................................................. 1
B.
Review Employee’s Personnel File............................................................ 2
C.
Consider the Timing of the Termination ..................................................... 3
D.
Review Applicable Company Policies and Procedures.............................. 3
E.
Identify Applicable State and Federal Law................................................. 3
IS TERMINATION LEGALLY DEFENSIBLE? ...................................................... 5
A.
The Seven Steps of Just Cause ................................................................ 5
B.
Progressive Discipline................................................................................ 9
ISSUES TO ADDRESS PRIOR TO TERMINATION MEETING ......................... 11
A.
The Last Paycheck .................................................................................. 11
B.
Vacation and Sick Time ........................................................................... 12
C.
Bonuses and Commissions ..................................................................... 13
D.
Stock Options .......................................................................................... 13
E.
Vested Retirement Benefits ..................................................................... 14
F.
COBRA .................................................................................................... 14
G.
Severance Agreements and Release of Claims ...................................... 17
H.
Future References ................................................................................... 21
TERMINATION MEETING.................................................................................. 21
A.
Who Should Attend the Meeting .............................................................. 21
B.
Where to Conduct the Meeting ................................................................ 22
C.
When to Hold the Meeting ....................................................................... 22
D.
What to Do at the Termination Meeting ................................................... 22
UNEMPLOYMENT INSURANCE BENEFITS..................................................... 24
A.
Eligibility for Unemployment Insurance Benefits ...................................... 24
B.
Determination of Benefits......................................................................... 27
C.
Disqualifying Circumstances.................................................................... 30
D.
The Unemployment Process.................................................................... 36
E.
Contesting an Employee’s Claim for Benefits .......................................... 39
© 2015 Bond, Schoeneck & King, PLLC
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I.
TERMINATION RISK ANALYSIS
Before terminating an employee, employers should analyze the potential for a lawsuit or
administrative claim. A common belief among many New York employers is that
because New York State is an at-will employment state, they can fire an employee
without justification. This, however, is a risky position to take. In many cases, if the
employer cannot articulate a good reason for the termination, the employer may face a
wrongful termination lawsuit or administrative claim. Thus, before firing an employee,
employers should take time to analyze whether a jury would agree that the termination
was justified. To limit the potential exposure, the employer should consider the
following factors:
A.
Employment-At-Will Limitations
New York State is an “employment-at-will” state, meaning that employment can be
terminated by either party, at any time, with or without cause. There are, however, a
few exceptions to the “employment-at-will” doctrine, including:
1.
Statutory Exceptions
a.
Anti-discrimination statutes
Federal and state discrimination statutes prohibit employers from basing employment
decisions on an employee’s race, color, religion, sex, sexual orientation, national origin,
age, disability, veteran status, and other protected characteristics.
b.
Protections for an employee’s off-duty activities
New York enacted legislation to protect employees from adverse employment actions
resulting from legal off-duty activities.
For example, Section 201-d of New York Labor Law prohibits an employer from firing an
employee for political or recreational activities outside of work, legal use of consumable
products outside of work, or for membership in a union.
c.
Retaliation
Retaliation is another statute-based exception to the at-will presumption. Federal and
state laws prohibit employers from firing employees in retaliation for engaging in legally
protected activities. Examples of protected activities include, engaging in union
activities, opposing unlawful discriminatory practices, filing for workers’ compensation,
and “whistleblowing.”
2.
Employment Contracts
The “employment-at-will” rule can be modified by contract. For example, a contract may
provide for a specific term of employment or allow termination for cause only. Typically,
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U.S. employers negotiate individual employment agreements only with high-level
employees. Collective bargaining agreements usually provide that represented
employees may only be terminated for cause.
Cause generally includes reasons such as poor employee performance, employee
misconduct, or economic necessity. An employment contract may specifically outline
the situations or employee actions that would lead to termination for cause.
3.
Implied Contracts
An implied contract may be created in several different ways. Oral assurances by a
supervisor or employer representative (e.g., “We need good people around here, you’ve
got a job for life!” or “We don’t dismiss employees without giving them a chance to
correct their behavior.”) may give rise to an implied contract. Likewise, the employer’s
handbooks, policies, practices or other written assurances may create an implied
contract.
Thus, even though there is no express written contract between the employer and an
individual employee, that employee may have an expectation of fixed term or even
indefinite employment based on a supervisor’s statement, or an assertion in the
employee handbook that specific termination procedures will be followed.
B.
Review Employee’s Personnel File
Properly preparing for terminating an employee starts with getting the paperwork in
order – look at performance evaluations, disciplinary action forms, attendance sheets,
etc., and make sure that the documentation shows that a case can be built that supports
a proper reason to fire the employee. Documentation is important in helping make the
decision in the first place but even more importantly, it serves to back up the decision
should the fired employee file a lawsuit.
Review personnel files for other employees who have similar problems. This
comparison can point out potential discrimination issues. For example, could an
African-American employee being terminated for attendance problems show that a
white employee had the same number of absences but was not terminated?
Finally, review the file to ensure it does not contain documents that could serve as
evidence of illegal discrimination. For example, a supervisor may have issued a written
discipline to the employee stating that his or her medical condition was causing him or
her to be absent too often. Legal counsel should be contacted if there are concerns.
Examining documentation before the termination meeting will position the employer to
better articulate and possibly adjust the termination reason.
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C.
Consider the Timing of the Termination
It may also be appropriate to consider the timing of a termination. For example, if an
employee files an internal complaint about the employer or a supervisor, and then
shortly after is disciplined for an unrelated event, it won’t be hard for a lawyer to connect
the dots in court between these two actions. Employees who file complaints can be
disciplined, but the supervisor’s documentation of misconduct must be impeccable
before proceeding with disciplining the employee.
Even where the underlying claim of discrimination or other employment violation lacks
merit, the employee may have a bona-fide retaliation claim if terminated or subjected to
other negative employment action soon after lodging a complaint. While such
employees are not necessarily insulated from termination, employers should be aware
that they may assume an additional burden to justify their decisions against a possible
retaliation claim, especially if taken close in time to an employee’s complaint.
D.
Review Applicable Company Policies and Procedures
If the employer has written employment policies, including termination procedures,
managers should follow them consistently. If management ignores company policy, the
courts may determine there was an improper motive for the termination. If an employer
does not follow its written policy or does not have a written policy, the way management
has handled similar situations with other employees may limit the company’s actions.
From a legal perspective, past terminations may set procedures as effectively as if the
policy had been codified in writing.
Particular attention should be paid to progressive discipline policies, termination policies
requiring “just cause,” and internal dispute resolution or arbitration policies.
E.
Identify Applicable State and Federal Law
Another very important consideration is whether an employee slated for possible
termination is a member of a protected class.
Below is a list of the major employment laws which create protected status for certain
employees:
1.
Federal Laws
a.
Americans with Disabilities Act (ADA) and the ADA Amendments
Act (prohibits discrimination because of a job applicant’s or
employee’s disability)
b.
Age Discrimination in Employment Act (ADEA) (prohibits
discrimination based on age)
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2.
c.
Title VII of the Civil Rights Act of 1964 (Title VII) (prohibits
discrimination based on race, sex, color, religion, and national
origin)
d.
Civil Rights Act of 1866, Section 1981 (prohibits discrimination
because of race in contracts)
e.
Employee Retirement Income Security Act (ERISA) (prohibits
discrimination in employee retirement plans)
f.
Fair Labor Standards Act (FLSA) (federal law regarding wage and
hour issues)
g.
Family and Medical Leave Act (FMLA) (federal law providing jobprotected family and medical leave)
h.
National Labor Relations Act (NLRA) (federal law governing labor
relations)
i.
Occupational Safety and Health Act (OSHA) (federal law regarding
workplace health and safety)
j.
Older Workers Benefit Protection Act (OWPBA) (protects older
worker’s benefits from age discrimination)
k.
Pregnancy Discrimination Act (PDA) (prohibits discrimination based
on pregnancy, childbirth or related conditions)
l.
Sarbanes-Oxley Act (protects workers who are whistleblowers)
m.
Uniformed Services Employment and Reemployment Rights Act
(USERRA) (prohibits discrimination against members of the armed
forces)
n.
Worker Adjustment and Retraining Notification Act (WARN Act)
(layoff notification law)
State Laws
In addition to the federal statutes, employees in New York State are
protected under:
a.
Executive Law §§ 290 - 301 (New York Human Rights Law)
(prohibits discriminatory discharge of employees based on various
protected characteristics)
b.
Judiciary Law § 519 (prohibits discharge based on jury service)
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3.
c.
Penal Law § 215.14 (prohibits discharge based on employee
appearing as witness in a criminal trial)
d.
Workers’ Compensation Law § 120 (prohibits retaliation based on
employee’s workers’ compensation claim)
e.
Labor Law § 201-d (prohibits discrimination based on lawful
recreational activities)
f.
Labor Law §§ 740-41 (prohibits retaliation against whistleblowers)
g.
Labor Law § 206-c (prohibits discrimination against breastfeeding
mothers)
h.
New York Worker Adjustment and Retraining Notification Act (NY
WARN Act) (layoff notification law)
Local Laws
Counties, cities, towns, and villages may also adopt their own hours
relating to the workplace. For example, New York City has adopted the
New York City Human Rights Law, which offers similar protections as New
York State Human Rights Law, but broader and even more employeefriendly.
II.
IS TERMINATION LEGALLY DEFENSIBLE?
In order to ensure consistency and maximize the effectiveness of discharge decisions,
employers should follow a standardized procedure that holds the organization to a “just
cause” standard. Essentially, the employer must remember to treat all employees in a
consistent and fair manner. Fairness is the ultimate measuring stick for most jurors, not
legal technicalities. The “just cause” standard requires both procedural and substantive
protections for employees, as well as training for frontline supervisors. Remember the
“Golden Rule” – at its core, the concept of just cause boils down to a lesson taught in
grade school, i.e., “treat others like you would want to be treated.” In some instances,
the just cause standard is imposed by contract, be it an individual employment contract
or a collective bargaining agreement. By following the concept of a just cause standard
in the regular course of business, an employer is less likely to run afoul of contractual
provisions.
A.
The Seven Steps of Just Cause
Over the years, the basic elements of just cause have been reduced to seven
tests. These tests, in the form of questions, represent the most specifically
articulated analysis of the just cause standard as an extremely practical
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approach. A “no” answer to one or more of the questions means that just cause
was either not satisfied or at least seriously weakened.
1.
Notice
Employers must provide employees with forewarning of the potential or
probable consequences of their conduct. Otherwise, an employee may
argue that he or she was unaware the conduct was a problem in the
workplace. Moreover, the employee may argue that the decision was not
fair and that he or she was treated differently than other employees.
a.
2.
Questions to ask:
(1)
Is the violated work rule or performance standard published?
Is it up to date and relevant to the business needs of the
employer?
(2)
How was the employee made aware of it (bulletin board,
prior oral or written communication, employee’s job
description, written standards)?
(3)
What evidence does the employer have that the employee is
aware of it, and understands it (new employee orientation,
signature on a routing slip, signoff page)?
(4)
Has this issue been raised in performance appraisals or
previous disciplinary actions? If so, how recently? (Prior
notice may not be necessary in cases of serious misconduct
such as theft, insubordination, or job abandonment).
Reasonable Rule or Order
The employer’s rule or order should be reasonably related to the orderly,
efficient, and safe operation of the employer’s business, and the
performance that the employer might properly expect of the employee.
a.
Questions to ask:
(1)
Is the rule or order reasonably related to the orderly,
efficient, and safe operation of the business?
(2)
Is the rule or order straightforward and stated in language
that is easy to understand?
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3.
Investigation
The employer must make an effort to discover whether the employee did
in fact violate or disobey a reasonable rule or order of management before
administering the discipline or discharge to the employee.
a.
4.
Questions to ask:
(1)
Did you conduct an investigation before making a decision
about taking disciplinary action?
(2)
Why do you suspect that a work rule violation or
performance deficiency occurred?
(3)
Is there a history of successful performance, or could the
employee need additional training?
(4)
Are there witnesses other than you? (List others who may
have knowledge of the issue through involvement or as
witnesses - supervisors, employees, clients. Interview them
and take notes).
(5)
Are there written records pertinent to the case?
(6)
Should in-house records be secured under lock and key
during the investigation?
(7)
Are there written processes or procedures which have a
bearing on the case?
Fair Investigation
The employer must ensure that its investigation was conducted fairly and
objectively.
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a.
5.
Questions to ask
(1)
Was your investigation fair and objective?
(2)
How long ago did the alleged infraction occur?
(Unnecessary delays may send a message that you don’t
consider the infraction to be serious).
(3)
If you think you already know what happened, have you
looked only for evidence to support your theory?
(4)
Should you conduct the investigation, or are you too close to
what happened to be objective?
(5)
Should the employee remain on the work site during the
investigation? (Do you fear sabotage, or is the employee a
threat to others?)
(6)
Have you made every effort to reconcile conflicting
statements or other conflicting evidence?
(7)
Are you prepared to discard what you cannot validate?
(8)
Have you given the employee a chance to appear (with a
representative if applicable), to tell his or her side of the story
and respond to the evidence you have gathered?
Proof
If the employee is to be disciplined or terminated, the investigation must
turn up sufficient evidence to establish misconduct.
a.
6.
Questions to ask:
(1)
During your investigation, did you find proof of misconduct or
of a performance deficiency?
(2)
What conclusions are clearly supported by the evidence you
gathered? Remember that evidence must be truly
substantial, not flimsy or slight, to form a basis for taking
disciplinary action.
Equal Treatment
The employer must ensure that it has applied its rules, orders, and
penalties to all employees evenhandedly and without discrimination.
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a.
7.
Questions to ask:
(1)
Have you dealt with your employees equally, without
discrimination?
(2)
Are work rules applied consistently?
(3)
Are all employees held accountable for the performance
standards established for their positions?
(4)
Have similarly situated employees (similar records and
infractions) received the same discipline?
(5)
What is your department’s record for taking disciplinary
action for this type of infraction?
Appropriate Discipline
The degree of discipline administered by the employer in a particular case
must be reasonably related to the seriousness of the employee’s proven
offense and the record of the employee in his or her service with the
employer.
a.
B.
Questions to ask:
(1)
Is the discipline you propose to take reasonably related to
the seriousness of the problem?
(2)
Did the violation pose serious safety problems or create
work flow disruptions?
(3)
Is it reasonably related to the employee’s record (length of
service and overall performance)?
(4)
Is this violation part of a pattern?
(5)
Do you have the authorization to take this action, or should
you have it reviewed by the next level of management?
Progressive Discipline
A progressive discipline policy is a useful performance improvement tool,
dictating that the severity of the discipline should be proportionate to the severity
of the rule violation or number of infractions. Progressive discipline policies offer
a graduated series of penalties against employees who engage in misconduct.
The “steps” of a progressive discipline policy can range from a verbal warning to
eventual termination. A progressive discipline policy is best left flexible enough to
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allow the employer wide discretion to skip “steps” and apply discipline at any time
and at a level deemed, by the employer, to be appropriate for the offense. To
this end, disclaimer language setting forth the employer’s wide discretion in
meting out discipline is an absolute must.
If the policy lists examples of misconduct, it should also state that the list is
neither exclusive nor exhaustive, and that, depending upon the circumstances,
discipline can be imposed for acts not included on the list, including termination
for a first-time offense such as theft, insubordination, fighting, falsification of time,
and drug or alcohol use on duty.
Setting out deadlines for disciplinary action is discouraged, as those can often
create administrative difficulty, compromising the uniform application of the policy
to all employees.
Notwithstanding the wide reservation of employer discretion, employers should
take caution to always keep the disciplinary action proportionate to the
seriousness of the rule infraction, and mete out similar discipline for similar
infractions to avoid discrimination suits. Of course, factors like employee history,
workplace safety and the number of previous offenses or warnings should be
taken into consideration, and the appropriateness of the disciplinary action
should be evaluated on a case-by-case basis.
Finally, all supervisory personnel should receive proper and regular training to
ensure the uniform application of the employer’s policies.
1.
Advantages of a progressive discipline policy
Progressive discipline policies offer the advantage of allowing an employer
to manage employees’ expectations with respect to workplace
performance and conduct. They also can help employees improve, and
enhance the credibility of supervisors. They also promote fairness by
ensuring that all employees are treated alike. Finally, progressive
discipline policies, when properly implemented and followed, can assist a
company in defending itself against accusations of discrimination.
2.
Disadvantages of a progressive discipline policy
However, progressive discipline policies may also be disadvantageous.
First, having a policy does not guarantee that discipline will be imposed
fairly. Second, progressive discipline policies may create the impression
among employees that they are entitled to a certain level of discipline prior
to termination. Third, failure to comply with a progressive discipline policy
serves as a basis for disparate treatment claims under anti-discrimination
statutes. In this regard, courts often ask if an employer followed its own
handbook’s disciplinary procedures in terminating employees. If the steps
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are not followed, the courts may deny motions to dismiss discrimination
claims due to triable issues of fact over whether the failure to follow the
policies was benign or the result of unlawful discriminatory intent harbored
against the terminated employee.
III.
ISSUES TO ADDRESS PRIOR TO TERMINATION MEETING
Under federal and state laws, employers have certain legal obligations to the employees
they terminate with respect to final paycheck, continuing health coverage,
unemployment insurance benefits, and vested retirement benefits. Discussed below
are the principal benefits to which fired employees may be entitled under federal and
state laws and employer responsibilities with respect to these benefits.
A.
The Last Paycheck
Under N. Y. Labor Law § 191, an employer must issue a final paycheck to a
terminated employee on or before the next regularly scheduled pay date.
Likewise, pursuant to N. Y. Labor Law § 191, an employee who quits his or her
job is entitled to receive his or her final paycheck on or before the next regularly
scheduled pay date. It is a good practice to have the final paycheck available at
the termination meeting to avoid claims of withholding pay.
1.
Final paycheck and release of claims
The employer shall not condition receipt of the final paycheck upon an
agreement by the employee to waive his or her right to bring a lawsuit.
The employee is already legally entitled to all wages earned as of the date
of termination and attempting to deprive him or her of such pay for any
reason may be construed as a violation of the law.
2.
Deductions from final paycheck
NYS Department of Labor regulations specifically prohibit deductions from
wages for:
a.
repayments of loans, advances and overpayments not in
accordance with the regulations;
b.
employee purchases of tools, equipment and attire for work;
c.
recoupment of unauthorized expenses;
d.
repayment of employer losses (including for spoilage or breakage,
cash shortages and fines, or penalties imposed due to an
employee’s conduct);
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e.
fines or penalties for tardiness, excessive leave, misconduct and
quitting without notice;
f.
political contributions; and
g.
the employer’s administrative fees, costs and interest.
Employers should consult with legal counsel regarding the lawful
alternative actions to recover overpayments and similar types of payments
from employees.
B.
Vacation and Sick Time
Generally - with the exception of New York City’s recently enacted Earned Sick
Time Act - New York law does not require payment for time not actually worked
(such as holidays, sick time, and vacations) unless the employer has established
a policy or agreed to make such payments.
Thus, New York employees generally have no inherent right to paid vacation and
sick days, or payment for unused vacation and sick days upon termination,
unless there is an express or implied agreement to provide such benefits. If
there is an agreement or policy that provides for vacation or sick pay upon
termination, New York law requires that employers adhere to it. An exception to
this requirement may exist for certain categories of highly paid employees.
1.
Payment for accrued unused vacation time upon resignation or discharge
Whether an employer must pay for unused time depends upon the terms
of the vacation and/or resignation policy. New York courts have held that
an agreement to give benefits or wage supplements, like vacation, can
specify that employees lose accrued benefits under certain conditions,
such as with a discharge for cause or a voluntary resignation without
giving advance notice. To be valid, the employer must have told
employees, in writing, of the conditions that nullify the benefit. Thus,
where there is no written forfeit policy and an employee has earned
vacation time, the employer must pay the employee for the accrued
vacation time.
2.
Employers may impose restrictive conditions on vacation pay
If an employer does decide to create a benefit/vacation policy, the
employer is free to impose conditions. For example, the employer may
condition payment for accrued vacation upon the employee providing the
employer with a two week advance notice of resignation.
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3.
Employers must provide notice
New York Labor Law § 195(5) requires New York employers to notify their
“employees in writing or by publicly posting the employer’s policy on sick
leave, vacation, personal leave, holidays and hours.” To comply with
Section 195(5) the employers are required to either (1) distribute in writing
to each employee, the employer’s policy on the above enumerated items;
or (2) post and keep posted in each establishment in a conspicuous place
where notices to employees are customarily posted, a notice which states
the employer’s policy on the above enumerated items or advises
employees where on the employer’s premises they may see such
information in writing. Such information may be contained in a union
contract, employee handbook, personnel manual, or in other written form.
C.
Bonuses and Commissions
In resignation/termination context, New York courts treat payment of bonuses
and commissions differently. Generally bonuses are not wages and therefore
may be forfeited if the language of the plan clearly establishes that they are to be
paid at the discretion of the employer. Sometimes, however, bonuses are
treated as earned compensation (a wage) instead of a form of incentive
compensation. Whether a bonus is incentive compensation or a wage will
depend on the terms and language of each individual bonus/compensation plan.
Accordingly employers should pay close attention to language used when
drafting bonus plans.
Also, if a bonus payment is contingent upon the financial success of the
employer, a court is more likely to conclude that the bonus does not constitute
“earned wages,” and, therefore, does not need to be paid upon
termination/resignation.
The payment of the bonus may also not be required where the employee fails to
satisfy the terms of the employer’s bonus plan. Thus, courts in New York have
regularly upheld forfeiture where employees left or were discharged from their
jobs before a bonus became payable under the employer’s bonus plan.
Under New York Labor Law, commissions, as earned wages, are not subject to
forfeiture.
D.
Stock Options
Unvested stock options are not considered wages under New York Labor Law.
Accordingly, employees need not be compensated for unvested stock options
upon termination/resignation from employment, unless the employer’s Stock
Option Plan provides otherwise.
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E.
Vested Retirement Benefits
Terminated employees remain eligible to receive any vested pension or profitsharing benefits consistent with the terms of the applicable pension or profit
sharing plan. Some plans may provide that an employee forfeits his or her right
to certain benefits if he or she is terminated for certain types of serious
misconduct, such as willful injury to others or proven dishonesty.
Be cautious whenever you are considering terminating an employee who is about
to vest with respect to benefits under company retirement plans. Federal law
prohibits an employer from terminating an employee solely to prevent the
employee from qualifying to receive benefits under pension, welfare, and
deferred compensation plans.
Accordingly, the employer should thoroughly document the reasons for the firing
to avoid any appearance that the firing was used to avoid having to pay the
employee benefits.
F.
COBRA
Under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”)
employers with 20 or more employees that provide health insurance to their
employees must give voluntary and involuntary terminated employees the
opportunity to remain on the policy for 18 months after their termination, provided
that the employee pays for the premiums themselves. COBRA, which is
sometimes called “continuation coverage,” is offered to covered employees, their
current and former spouses, and dependent children. COBRA does not apply to
plans sponsored by the federal government, churches, or some church-related
organizations. State and local governments, regardless of the number of
employees, must comply with COBRA.
The employer is not required to offer COBRA benefits to any of the following: an
employee who is not yet eligible for the employer’s group health plan; an eligible
employee who declined to participate in the employer group health plan; an
individual who is enrolled for benefits under Medicare. Also, employees who are
fired for gross misconduct are not eligible for continuation coverage under
COBRA. The law does not define the term “gross misconduct.” At a minimum,
the term likely encompasses felony offenses and other intentional acts of
misconduct that are committed in connection with an employee’s job.
1.
Notification Requirements
Under COBRA, group health plans must provide covered employees and
their spouses and dependent children with specific notices explaining their
COBRA rights. Plans must also have rules for how COBRA continuation
coverage is offered, how qualified beneficiaries may elect continuation
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coverage, and when it can be terminated. Providing notices in compliance
with the COBRA regulation is critical. In addition to providing the required
content in the notices, documenting the method and timing of such
delivery to the last known address is imperative in the event the employer
is challenged in its obligation to provide such notices.
a.
COBRA Qualifying Event Notice
The employer must notify the plan of the employee’s voluntary or
involuntary termination within 30 days of such termination.
b.
COBRA Election Notice
After receiving a notice of a qualifying event, the plan must provide
the qualified beneficiaries with an election notice, which describes
their rights to continuation coverage and how to make an election.
The election notice must be provided to the qualified beneficiaries
within 14 days after the plan administrator receives the notice of a
qualifying event. The election notice should include:
(1)
The name of the plan and the name, address, and telephone
number of the plan’s COBRA administrator;
(2)
Identification of the qualifying event;
(3)
Identification of the qualified beneficiaries (by name or by
status);
(4)
An explanation of the qualified beneficiaries’ right to elect
continuation coverage;
(5)
The date coverage will terminate (or has terminated) if
continuation coverage is not elected;
(6)
How to elect continuation coverage;
(7)
What will happen if continuation coverage is not elected or is
waived;
(8)
What continuation coverage is available, for how long, and (if
it is for less than 36 months), how it can be extended for
disability or second qualifying events;
(9)
How continuation coverage might terminate early;
(10)
Premium payment requirements, including due dates and
grace periods;
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(11)
A statement of the importance of keeping the plan
administrator informed of the addresses of qualified
beneficiaries; and
(12)
A statement that the election notice does not fully describe
COBRA or the plan and that more information is available
from the plan administrator and in the SPD.
The U.S. Department of Labor has developed a model election
notice that plans may use to satisfy their obligation to provide the
election notice. The model election notice is available on the U.S.
Department of Labor EBSA Website at
http://www.dol.gov/ebsa/modelgeneralnotice.doc.
c.
COBRA Notice of Unavailability of Continuation Coverage
Group health plans may sometimes deny a request for continuation
coverage or for an extension of continuation coverage, when the
plan determines the individual is not a qualified beneficiary. When
a group health plan makes the decision to deny a request for
continuation coverage or a request for an extension, the plan must
give the individual a notice of unavailability of continuation
coverage. The notice must be provided within 14 days after the
request is received, and the notice must explain the reason for
denying the request.
d.
COBRA Notice of Early Termination of Continuation Coverage
Continuation coverage must generally be made available for a
maximum period (18, 29, or 36 months). The group health plan
may terminate continuation coverage early, however, for any of a
number of specific reasons. When a group health plan decides to
terminate continuation coverage early due to, for example, failure to
pay premiums or a qualified beneficiary becomes covered by
another plan, the plan must give the qualified beneficiary a notice of
early termination. The notice must be given as soon as practicable
after the decision is made, and it must describe the date coverage
will terminate, the reason for termination, and any rights the
qualified beneficiary may have under the plan or applicable law to
elect alternative group or individual coverage.
2.
NY COBRA
New York State law requires small employers (less than 20 employees) to
provide the equivalent of COBRA benefits. Covered individuals are
entitled to 36 months of continued health coverage at a monthly rate of
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102% of the actual cost to the employer. NY COBRA applies only to
insured plans. It does not apply to self-insured plans.
G.
Severance Agreements and Release of Claims
The idea behind a severance agreement is that an employee agrees to take
something of value to which he or she is not otherwise entitled — additional
compensation, benefits, or other “in kind” consideration — in exchange for
agreeing not to sue his or her employer. Severance is often paid out as a lump
sum or over a period of time in specified increments, either on or off payroll.
Severance is sometimes used to foster good-will with the departing employee
and is generally subject to taxes and withholdings.
1.
When should an employer offer a severance package?
The risk factors of firing an employee need to be evaluated to determine
whether a severance agreement is worth the expense. Is the employee in
a protected category under a discrimination law (more significant, is he or
she likely to be replaced by someone not in the same protected
category)? Has the employee recently engaged in protected activity such
as making an internal complaint about discrimination and/or retaliation,
filing a workers’ compensation claim, organizing employees for a union, or
blowing the whistle on his or her employer? Is there an employment
contract in the picture? Is the employee likely to sue upon termination?
In addition, the reason for the employee’s termination should be taken into
account when considering severance. For example, it’s probably not
beneficial to offer a severance agreement to an employee who was caught
stealing, engaged in insubordination or workplace violence, or committed
some form of harassment, even if he or she is in a protected class or
seems like a high risk to sue.
Severance is also sometimes used to encourage an employee’s
departure, not necessarily because the employee did anything wrong, but
because the employer is looking to restructure a department or looking for
a workforce with a different skillset.
2.
EEOC Guidance on Severance Agreements
In 2009, the U.S. Equal Employment Opportunity Commission (EEOC)
released a publication entitled “Understanding Waivers of Discrimination
Claims in Employee Severance Agreements.” The EEOC publication
emphasizes the following requirements for severance agreements and
releases of discrimination claims:
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a.
The agreement must be supported by consideration
The EEOC specifies that consideration “must be something of
value in addition to any of the employee’s existing entitlements,”
such as an additional lump sum payment of money or periodic
payment of the employee’s salary to which he or she is not
otherwise entitled for a specified period of time after termination.
Payment for vacation benefits to which the employee would
otherwise have been entitled upon termination is, for example,
inadequate consideration to support a release.
b.
The agreement cannot require the employee to waive future rights
While the EEOC does not elaborate on this requirement, the
document clearly states that severance agreements cannot waive
claims arising in the future.
c.
The agreement cannot waive certain existing rights
Although severance agreements may waive an employee’s right to
file suit against his or her employer for prior acts of discrimination or
retaliation, the agreement may not restrict an employee’s right to
file a charge of discrimination with the EEOC. In addition, the
agreement cannot limit an employee’s right to testify, assist, or
participate in an investigation, hearing or other proceeding
conducted by the EEOC. Accordingly, severance agreements
should contain the following EEOC carve-out language:
(1)
d.
Employee understands that nothing in this RELEASE or this
Agreement prevents him or her from filing a charge with the
Equal Employment Opportunity Commission (the “EEOC”) or
any comparable federal, state or local government agency,
or participating in any investigation or proceeding conducted
by such agencies. However, Employee understands and
agrees that he or she is waiving any entitlement to or right to
recover any monetary relief and/or other personal relief as a
result of any such EEOC or comparable government agency
proceeding, or any subsequent legal action relating to acts,
occurrences, omissions or events arising on or before the
date of this Agreement brought by the EEOC or comparable
government agency on Employee’s behalf.
The waiver must be knowing and voluntary
An employee must knowingly and voluntarily consent to a waiver of
the right to sue in a severance agreement or release. The
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determination of whether a waiver is knowing and voluntary
depends on the statute under which the suit has been brought (e.g.,
Title VII, the FLSA, or the ADEA). To determine whether an
employee knowingly and voluntarily waived his or her discrimination
claims, some courts rely on traditional contract principles and focus
primarily on whether the language in the waiver is clear and easily
understood. Most courts, however, look beyond the contract
language and consider factors surrounding the termination and the
employment relationship to determine whether the employee
knowingly and voluntarily waived his or her rights to sue. The
EEOC identifies the following as the factors that the courts
generally consider:
e.
(1)
Whether the waiver was written in a manner that was clear
and specific enough for the employee to understand based
on his or her education and business experience;
(2)
Whether the employee was induced to sign by fraud, duress,
undue influence, or other improper conduct by the employer;
(3)
Whether the employee had enough time to read and think
about the advantages and disadvantages of the agreement
before signing it;
(4)
Whether the employee consulted with an attorney or was
encouraged or discouraged by the employer from doing so;
(5)
Whether the employee had any input in negotiating the
terms of the agreement; and
(6)
Whether the employer offered the employee considerations
(e.g., severance pay) that exceeded what the employee was
already entitled to by law or contract, and the employee
accepted the offered consideration.
Special requirements for waiver of age discrimination claims in
separation agreements
The following requirements are applicable to waivers under the
ADEA, as amended by the Older Workers Benefit Protection Act
(OWBPA), applicable to employees 40 years of age and over:
(1)
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The waiver must be knowing and voluntary;
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f.
(2)
The agreement must be written in plain language geared to
the level of comprehension and education of the average
individual(s) eligible to participate;
(3)
The waiver must specifically reference the ADEA. Any
enforceable waiver must expressly spell out the “Age
Discrimination in Employment Act” by name;
(4)
The agreement must advise the employee in writing to
consult with an attorney. According to the EEOC, it is
insufficient for an agreement to suggest that an employee
consult with his or her legal representative. Instead, the
release must specifically advise the employee to seek the
advice of an attorney;
(5)
An employer must give the employee 21 days from the date
of the employer’s final offer to consider the release, or 45
days in the case of a group termination;
(6)
The employer must allow a seven-day revocation period.
Employees must be given the right to revoke an age
discrimination waiver for seven days following execution of
the agreement. This seven-day period cannot be changed
or waived by either party for any reason;
(7)
The waiver must not include future rights;
(8)
An agreement cannot waive an employee’s rights regarding
acts of discrimination that occur after the date of signing;
(9)
The waiver must be supported by consideration;
(10)
In cases of group terminations, the employer must give
certain written disclosures. Specifically, the employer must
inform employees in writing of the “decisional unit” – the
class or group of employees from which the employer chose
the laid off employees, the “eligibility factors” for the
program, applicable “time limits,” and the “job titles and ages
of all individuals” eligible or selected, and not eligible or not
selected, for the program.
Bottom line
Waivers can be a useful tool for employers, but they will only be
effective if written carefully to meet the specific requirements of the
EEOC, statutory law and case law, and if they are presented and
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administered in a manner that would support their characterization
as “knowing and voluntary.”
H.
Future References
Employer must decide how it will address post-employment requests for
references – for example how an employer will handle calls from prospective
employers for a reference check. The best practice is to have (and follow) a
policy which limits information provided to a former employee’s title, dates of
employments, and final salary. Such policy can help avoid defamation/slander
liability.
It is important to respond carefully and consistently to references check
requests/calls from prospective employers. An employer should designate one
person, preferably an experienced human resources employee, to respond to
such requests.
If the former employer chooses to speak with a prospective employer in support
of the employee and fails to disclose knowledge of misconduct to the prospective
employer, the former employer may be subject to a negligence suit.
IV.
TERMINATION MEETING
Termination meetings should be conducted in person. Face to face meetings can be
unpleasant, but they are the appropriate/professional way to handle employee
terminations. An employee should not be informed they are being terminated by email,
voicemail, or even through a phone call or a letter. In person meetings are also the best
chance to maintain, or in some cases establish, good-will between the employee and
employer. Good-will can go a long way toward avoiding litigation.
A.
Who Should Attend the Meeting
Two employer representatives (usually immediate supervisor and an HR
representative) should conduct the termination. At least one of the employer
representatives should take notes of the meeting. The meeting itself should be
brief.
If the employee is highly volatile or there are security concerns for the meeting,
consider having security personnel present. The employer representatives
conducting the meeting should sit nearest the door so that the employee is not
between them and the door.
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B.
Where to Conduct the Meeting
The termination meeting should be conducted in a quiet place where you will not
be interrupted. The meeting room should be in a location that does not alert
other people as to what is taking place.
C.
When to Hold the Meeting
There are differing schools of thought on what is the best time to conduct a
termination meeting. Some believe that terminations should be carried out on
Fridays since the weekend will give the terminated employee a few days to allow
emotions to cool. Others believe that Fridays (as well as a day before a holiday
or vacation) should be avoided because an employee who is let go on a Friday
has two days to brood about his or her treatment by the company and to look for
ways to retaliate.
In our experience, the timing of the termination meeting does not matter in the
long run. Rather, once the decision to terminate an employee is made, the
termination should be carried out prior to the end of the work day if possible. If
not, then the termination should be conducted at the start of the following work
day (for which the employer will still have to pay the terminated employee).
People are fresher, more rested and better equipped to deal with adversity and
stress earlier in the day. People tend to be tired and short-tempered later in the
day, which may increase the chance for an unpleasant reaction to bad news.
Letting someone go at the end of the work day may also not be a good idea
because the terminated employee will leave the premises at the same time as
other employees. This could create a potential for employee interactions that
might encourage inappropriate behaviors and other avenues for litigation.
D.
What to Do at the Termination Meeting
The actual termination meeting should last about 10 to 15 minutes. Prepare
what you will say ahead of time. It’s a good idea to have a checklist in front of
you so that you don’t get sidetracked and forget any important points. Consider
including the following in your termination meeting:
1.
Give an adequate reason for the discharge
Briefly explain why you are firing the employee. If the “why” is due to
performance, it should be evident to the employee because of
performance evaluations and past discussions about performance with
supervisors.
The best tone to strike is objective and professional. Make sure you don’t
minimize the problems that led to your decision. Even if your intent is
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simply to spare the employee’s feelings, these soothing words could come
back to haunt you if the employee decides to file a lawsuit and you are
forced to defend the decision to fire.
Try to avoid being drawn into an argument about the decision. If the
employee wants to vent or express unhappiness, you can simply say, “I
understand you feel that way, but the decision is final.”
2.
Make it clear that the decision is final
If you take the position that the decision has already been made, all
alternatives have been considered, and all the other managers or owners
are in agreement (if there are any others who are involved in decisions of
this nature), and that you are merely giving this information to the worker,
you’ll find it easier to keep your cool and keep control of the situation.
3.
Address severance paperwork and other outstanding contractual
obligations
If the employer will offer a severance package, explain what it includes. If
the employee is expected to sign a release or waiver in order to get the
severance, briefly explain the terms and give the employee a copy of the
document to review.
If the employee has contractual obligations to the company that will
continue, such as a non-compete or nondisclosure agreement, briefly
review those documents with the employee.
The employee may have had access to confidential and/or sensitive
information while employed. Explain to the employee that the information
must remain strictly confidential and that his or her obligations with regard
to confidentiality continue even after termination.
4.
Briefly run through benefits
Briefly cover the vacation pay, separation pay, continuation of health
insurance or life insurance benefits, etc., that you are offering.
5.
Explain your job reference policy
Discuss how references will be handled, how the employer will inform staff
of the employee’s absence, how the employer will respond to outside
inquiries about his or her employment at the company. Give the employee
the name of the person at the company (senior HR person) who should be
contacted by future employers if necessary.
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6.
Collect Company property from employee
You’ll need to collect any keys, computers, cell phones, company car,
company credit cards, or any other property belonging to the Company
from the employee.
Instruct the IT Department to shut down the employee’s email and access
to company computers and files in a separate location while HR conducts
the termination meeting. If the employee needs something on his or her
work computer after the meeting, make arrangements for the employee to
access the computer under the supervision of the IT Department. This
ensures that files are not deleted/sent/retained by the employee.
Care should also be taken to delete and remove the terminated
employee’s name from company letterhead, stationary, e-mails, and/or
websites following the termination.
7.
End the meeting
Before you leave the employee, provide contact information for yourself or
someone else at the company who can answer questions that come up
later, assist the employee in collecting personal belongings and turning in
company property, and be sure to provide any relevant paperwork for
benefits and outplacement.
If possible, end the meeting on a positive note. Wish the employee good
luck and shake his or her hand. If you can honestly say something
positive about the employee’s tenure at the company, by all means do so.
V.
UNEMPLOYMENT INSURANCE BENEFITS
Generally, employees who lose their jobs are entitled to unemployment compensation
benefits. Employers may not be obligated to provide benefits, however, if the employee
is discharged for “cause.” Be forewarned, however, that an act an employer views as
“cause” for discharge may not be considered “cause” by the Department of Labor.
Moreover, an employer may decide as a matter of policy not to oppose a claim for
compensation by an employee discharged for cause.
A.
Eligibility for Unemployment Insurance Benefits
1.
Eligibility – Generally
In general, an individual who was employed in New York but whose
employment ended and is currently unemployed will be eligible for
unemployment insurance benefits, provided:
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2.
a.
He/she was employed for at least 18 months within New York State
prior to filing an unemployment claim;
b.
His/her employment ended under non-disqualifying circumstances;
c.
He/she is available for work;
d.
He/she is capable of performing work; and
e.
He/she is actively seeking employment.
Availability and Capability
If a claimant is not ready, willing or able to work, or not actively seeking
employment, he/she will not be eligible for unemployment benefits. Labor
Law § 591(2)-(4).
a.
Availability
(1)
b.
(a)
ready, willing and able to work; and
(b)
actively seeking employment for which he/she is
reasonably fit to perform by his/her training and
experience.
Capability
(1)
3.
In order to be considered “available” for work for
unemployment purposes, a claimant must be:
In order to be considered “capable” of performing work, the
claimant must be physically and mentally able to:
(a)
Perform work in his/her usual field of employment
work; or
(b)
Perform any other work that the claimant is
reasonably fit to perform by training and experience.
Employment Search / Refusal of Employment
a.
Actively Seeking Employment
A claimant must be actively engaged in seeking employment to be
eligible for unemployment benefits. Labor Law § 591(2), (4).
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Whether or not a claimant is actively seeking employment depends
on whether he/she is “engaged in systematic and sustained efforts
to find work.” Labor Law § 591(2). In other words, it will depend on
what affirmative steps the claimant takes to find another job.
The following is a non-exhaustive list of things a claimant can do to
be considered to have actively sought employment:
b.
(1)
Search out and apply for employment opportunities;
(2)
Engage the services of a job placement agency or
professional; or
(3)
Participate in reemployment services that may be available
through the claimant’s union, the Department of Labor or
elsewhere. Labor Law § 591(4).
Refusal of Employment
After filing a claim for unemployment benefits, a claimant may be
disqualified from receiving benefits if he/she refuses to accept an
offer of suitable employment. Suitable employment is employment
that the claimant is reasonably fit to perform by his/her training and
experience. Labor Law § 593(2).
If, after receiving 10 weeks of unemployment benefits, a claimant is
still unemployed and has not obtained a definite start date for new
employment, he/she may also be disqualified from receiving further
benefits if he/she refused an offer of any employment he/she is
capable of performing, provided:
(1)
The claimant will be paid at least 80% of the wages he/she
earned in the high earnings quarter of the base period;
(2)
The claimant will not be paid substantially less than the
prevailing wage for similar work in the area; and
(3)
Accepting the offered employment would not:
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(a)
Interfere with the claimant’s “right to join or retain
membership” in a union; or
(b)
Substantially increase the claimant’s commuting
expense relative to what it cost to commute to his/her
former job; or
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B.
(c)
Result in the claimant living an “unreasonable
distance” from the offered place of employment; or
(d)
Result in the claimant going to work at an
establishment where there is a strike or lockout.
Labor Law § 593(2).
Determination of Benefits
1.
Qualifying for Benefits – Generally
In order to qualify for unemployment benefits, a claimant must establish
that he/she has:
2.
a.
Accrued a “base period” of at least 20 “weeks of employment” in
the 52 weeks prior to filing a claim; and
b.
Earned a certain amount of wages for work performed within
specified quarters within the base period. Labor Law § 527(1)(d).
The “Base Period”
a.
Calculating the Base Period
There are two possible “base periods” that can be used to
determine whether or not a claimant qualifies for unemployment
benefits: the basic base period, and the alternate base period.
Labor Law § 520.
(1)
Basic Base Period
The “basic base period” is defined as the first four of the last
five completed calendar quarters prior to the calendar
quarter immediately preceding the claimant’s filing of an
unemployment claim. Labor Law § 520(1).
(2)
Alternate Base Period
The “alternate base period” is defined as the last four
completed calendar quarters prior to the calendar quarter
immediately preceding the claimant’s filing of an
unemployment claim. Labor Law § 521(2).
If a claimant fails to qualify for benefits using the basic base period,
the alternate base period will be used. If a claimant fails to qualify
for benefits using either the basic base period or the alternate base
period, but received Workers Compensation benefits or Volunteer
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Firefighters benefits, the Department of Labor may use the seven,
rather than five, calendar quarters prior to the claim in order to
determine whether the claimant meets the base period
requirements.
Any time that the claimant was suspended in the 52 weeks prior to
filing an unemployment claim during which the claimant did not
perform any work for the employer will not count towards
establishing the base period. In re Odell, 233 A.D.2d 663, 649
N.Y.S.2d 735 (3d Dep’t 1996).
b.
Wages Earned During the Base Period
Regardless of which base period is used, in order to qualify for
benefits, a claimant must have worked and been paid a minimum
amount of wages as follows:
3.
(1)
A minimum of $1,900 during at least one of the quarters
within the base period (referred to as the “high wages
quarter”); and
(2)
A minimum of $4,620 during the other quarters of the base
period other than the high wages quarter. Labor Law
§ 527(1)(d).
Amount of Benefits
If a claimant is qualified for benefits, he/she will be paid unemployment
benefits at his/her “weekly benefit rate.”
If a claimant earned wages in all of the base period quarters, the
claimant’s weekly benefit rate will be equal to:
a.
1/26th of the claimant’s high quarter earnings from the base period
up to a maximum weekly benefit of $420, if the claimant’s high
quarter earnings were more than $3,575; or
b.
1/25th of the claimant’s high quarter earnings from the base period,
with a minimum weekly benefit of $100, if the claimant’s high
quarter earnings were $3,575 or less. Labor Law § 590(5).
If a claimant earned wages in only two or three of the base period
quarters, the claimant’s weekly benefit rate will be equal to:
a.
1/26th of the average of the two quarters with the highest earnings,
if the claimant’s high quarter earnings were more than $4,000; or
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4.
b.
1/26th of the claimant’s high quarter earnings with a minimum
weekly benefit of $143, if the claimant’s high quarter earnings are
more than $3,575 but equal to or less than $4,000; or
c.
1/25th the claimant’s high quarter earnings, if the claimant’s high
quarter earnings were less than or equal to $3,575. Labor Law
§ 590(5).
Partial Benefits
There may be situations where an unemployment claimant would be
eligible for benefits but has also worked during a week for which he
receives unemployment benefits. An unemployment claimant who works
during a benefit week will still be entitled to receive partial unemployment
benefits if the claimant:
5.
a.
Does not work more than three days during the benefit week; and
b.
Does not earn more than the maximum weekly benefit the claimant
would otherwise be entitled to had he/she not performed any work
during the benefit week.
Duration of Benefits
Although an eligible claimant will be able to collect unemployment
benefits, he/she cannot collect such benefits indefinitely. A claimant
receiving his/her full weekly benefit (i.e., not receiving partial benefits) can
collect unemployment for a maximum of 26 weeks. A claimant who is
partially employed and receiving partial benefits can collect unemployment
until he/she collects a dollar amount equal to what he/she would have
been entitled to had he/she been receiving the full weekly benefit a greater
number of weeks if the claimant is partially employed, even if it takes
longer than 26 weeks to do so.
Under certain circumstances—for example, during periods of high
unemployment or where a claimant attends a training course approved by
the Commissioner of Labor—additional unemployment benefits may be
available to a claimant that enable to claimant to collect unemployment for
longer than 26 weeks. Additional benefits collected by a claimant
attending a Commissioner-approved training course will not be charged
back to the claimant’s prior employer.
6.
Impact of Severance or “Dismissal Pay”
If an employer provides a claimant with severance or other form of
“dismissal pay” within 30 days (or less) of his/her last date of employment,
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the claimant will generally not be eligible to receive unemployment
benefits if the severance amount paid exceeded the maximum benefit to
which the claimant would otherwise have been entitled to receive. Labor
Law §§ 591(6)(a), 591(6)(d).
“Dismissal pay” is defined as being “one or more payments made by an
employer to an employee due to his or her separating from service of the
employer regardless of whether the employer is legally bound by contract,
statute or otherwise to make such payments.” Labor Law § 591(6)(b).
The following types of payment made by the employer to the claimant do
not constitute “dismissal pay” for unemployment purposes:
C.
a.
Payments towards the employee’s pension or retirement;
b.
Payment of the employee’s accrued leave time;
c.
Payment for health insurance coverage after the last date of the
claimant’s employment; and
d.
Payments for supplemental unemployment benefits.
Disqualifying Circumstances
Depending on the circumstances under which a claimant’s employment ends,
he/she may be disqualified from receiving unemployment benefits.
1.
Marriage
The Unemployment Insurance Law expressly states that when an
employee leaves his/her employment because of marriage, he/she will be
disqualified from receiving unemployment benefits. Labor Law
§ 593(1)(b).
2.
Voluntary Separation
Generally, employees who voluntarily resign their employment will not be
entitled to unemployment insurance benefits. But there are a number of
exceptions to this general rule.
a.
Newly Developed Circumstances
Where circumstances develop over the course of the employee’s
employment that would have justified the employee in refusing to
accept the employment in the first instance, and those
circumstances cause the employee to resign, he/she will not be
disqualified from receiving unemployment benefits. Labor Law
§§ 593(1)(a), 593(2). For example:
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b.
(1)
Where the employee’s “right to join or retain membership” in
a union was interfered with;
(2)
Where there is a strike or lockout at his/her place of
employment;
(3)
The employee lives an “unreasonable distance” from his/her
place of employment; or
(4)
When the wages paid to the employee are “substantially
less” than the prevailing wage for similar work.
Compelling Family Reasons
Where the employee resigns because a “compelling family reason”
exists, he/she will not be disqualified from receiving unemployment
benefits. Labor Law § 593. The following circumstances are
statutorily recognized as constituting a “compelling family reason”:
c.
(1)
Domestic violence situations where the employee’s
continued employment would either put the employee or a
member of his/her family in danger;
(2)
Situations involving the “illness or disability” of someone in
an employee’s immediate family; or
(3)
Where the employee left his/her job due to the relocation of
his/her spouse’s place of employment.
Good Cause
Where the employee resigns for “good cause,” he/she will not be
disqualified from receiving unemployment benefits. Labor Law
§ 93(1)(a). Whether or not an employee resigned with or without
good cause will be a factually specific determination and depend on
the circumstances surrounding the resignation. In re Jimenez, 20
A.D.3d 843, 798 N.Y.S.2d 803 (3d Dep’t 2005).
The following circumstances are examples of what has been
recognized as constituting “good cause” for an employee’s
voluntary resignation:
(1)
A substantial change in the employee’s terms and conditions
of employment. In re Lavecchia, 265 A.D.2d 724, 695
N.Y.S.2d 780 (3d Dep’t 1999);
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(2)
Resignation in the face of disciplinary charges where the
actions underlying the charges do not amount to
disqualifying misconduct. In re Straw, 32 A.D.3d 1098, 821
N.Y.S.2d 302 (3d Dep’t 2006); In re Jimenez, 20 A.D.3d 843,
798 N.Y.S.2d 803 (3d Dep’t 2005);
(3)
A legitimate and reasonable fear for the employee’s own
safety. In re Torres, 421 A.D.2d 743, 660 N.Y.S.2d 192 (3d
Dep’t 1997); In re Clark, 156 A.D.2d 909, 550 N.Y.S.2d 125
(3d Dep’t 1989); and
(4)
Where the employer is requiring the employee to perform an
illegal or unethical act. In re Collen, 74 A.D.3d 1644, 904
N.Y.S.2d 796 (3d Dep’t 2010).
The following are examples of circumstances that do not constitute
“good cause” for an employee’s voluntary resignation:
(1)
Resignation in anticipation of being discharged. In re Davis,
2015 N.Y. App. Div. LEXIS 978 (3d Dep’t 2015);
(2)
Unwillingness to follow his/her employer’s reasonable
directive. In re Figueroa, 19 A.D.3d 914, 797 N.Y.S.2d 599
(3d Dep’t 2005);
(3)
Inability or unwillingness to keep up with his/her workload.
In re Matuszewski, 24 A.D.3d 1153, 806 N.Y.S.2d 315 (3d
Dep’t 2005);
(4)
Failure to return from a medical leave of absence without
authorization from the employer. In re Abend, 83 A.D.3d
1334, 924 N.Y.S.2d 585 (3d Dep’t 2011); In re Rodriguez, 29
A.D.3d 1145, 814 N.Y.S.2d 394 (3d Dep’t 2006);
(5)
Transfer to a new work location. In re Singh, 28 A.D.3d
1054, 814 N.Y.S.2d 332 (3d Dep’t 2006);
(6)
Stress related to an employee’s commute to and from work.
See In re Haggerty, 50 A.D.3d 1423, 857 N.Y.S.2d 927 (3d
Dep’t 2008);
(7)
Inability to afford living expenses. In re Oquendo, 20 A.D.3d
854, 800 N.Y.S.2d 460 (3d Dep’t 2005);
(8)
Dislike of or dissatisfaction with job or wages. In re
Benyoussef, 23 A.D.3d 902, 803 N.Y.S.2d 811 (3d Dep’t
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2005); In re Cherry, 18 A.D.3d 937, 794 N.Y.S.2d 502 (3d
Dep’t 2005); In re Koller, 288 A.D.2d 599, 732 N.Y.S.2d 289
(3d Dep’t 2001); In re Dragoi, 288 A.D.2d 685, 732 N.Y.S.2d
685 (3d Dep’t 2001); In re Yap, 257 A.D.2d 831, 684
N.Y.S.2d 14 (3d Dep’t 1999);
3.
(9)
An employer’s inability or refusal to accommodate
employee’s preferred work schedule to accommodate
employee’s child care arrangements. In re Seftel, 31 A.D.3d
1011, 819 N.Y.S.2d 175 (3d Dep’t 2006); In re Denson, 823
N.Y.S.2d 585 (3d Dep’t 2006); In re Erno, 10 A.D.3d 738,
782 N.Y.S.2d 143 (3d Dep’t 2004); and
(10)
Employer’s failure to provide the employee with health
insurance. In re Church, 186 A.D.2d 853, 588 N.Y.S.2d 612
(3d Dep’t 1992).
Misconduct
When a claimant became unemployed as a result of his/her own
misconduct, the claimant may be disqualified from receiving
unemployment benefits to which he/she may have otherwise been
entitled. Labor Law § 593(3).
But “not every mistake, exercise of poor judgment or discharge for cause
will rise to the level of misconduct” for purposes of unemployment.
Whether an employee engages in disqualifying misconduct is necessarily
a factual determination. In re Bush, 60 A.D.3d 1179, 875 N.Y.2d 322 (3d
Dep’t 2009).
The following are examples of different types of employee conduct that
have been recognized as constituting disqualifying misconduct for
unemployment purposes.
a.
Absence from Work
Excessive absenteeism has been held to be misconduct that would
disqualify a claimant from receiving unemployment benefits. See,
e.g., In re Tranberg, 205 A.D.2d 812, 615 N.Y.S.2d 290 (3d Dep’t
1994) (claimant who was terminated for excessive absenteeism
was disqualified from receiving unemployment benefits).
Unauthorized absence from work has also been held to constitute
disqualifying misconduct. See, e.g., In re Di Maria, 264 A.D.2d
984, 694 N.Y.S.2d 815 (3d Dep’t 1999) (affirming Board’s decision
disqualifying a claimant from receiving unemployment insurance
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benefits where her employment ended after she “took an
unauthorized break” on one occasion; In re Shayo, 4 A.D.3d 663,
771 N.Y.S.2d 748 (3d Dep’t 2004) (“Leaving work early without
authorization in disregard of a supervisor’s directive can disqualify a
claimant from receiving unemployment insurance benefits.”); In re
Smith, 303 A.D.2d 815, 755 N.Y.S.2d 322 (3d Dep’t 2003) (“The
record establishes that claimant felt ill on the day in question, but
disregarded the employer’s known policy to obtain permission from
a supervisor before leaving early…. Leaving work without
authorization…can constitute disqualifying misconduct.”); In re
Diallo, 263 A.D.2d 608, 692 N.Y.S.2d 783 (3d Dep’t 1999)
(“Unauthorized departure from work…can constitute disqualifying
misconduct.”).
b.
Dishonesty
Lying on an employment application can constitute disqualifying
misconduct where the employee was terminated for doing so after
the lie was discovered by the employer. See, e.g., In re Starich, 52
A.D.2d 965, 382 N.Y.S.2d 858 (3d Dep’t 1976) (holding an
employee was properly disqualified from receiving unemployment
benefits where he was terminated because he falsely claimed to be
a high school graduate on his employment application).
An employee’s dishonesty and act of lying to his/her employer
about his/her conduct also constitutes disqualifying misconduct.
See, e.g., In re Schaffer, 54 A.D.3d 1111, 866 N.Y.S.2d 368 (3d
Dep’t 2008) (“[I]t is well settled that an employee’s apparent
dishonest … can constitute disqualifying misconduct.”); In re
Gooch, 107 A.D.3d 1292, 1293, 967 N.Y.S.2d 529 (3d Dep’t 2013)
(holding that a claimant lied to her employer about having made a
mistake constituted misconduct sufficient to disqualify the claimant
from receiving unemployment insurance benefits); In re JungSzayer, 21 A.D.3d 1173, 800 N.Y.S.2d 795 (3d Dep’t 2005)
(holding a claimant was disqualified from receiving unemployment
insurance benefits where the “[c]laimant was terminated from her
employment as a nanny after she lied to her employer”).
c.
Insubordination
Employee insubordination may also constitute disqualifying
misconduct for purposes of unemployment. See, e.g., In re
Jackson, 120 A.D.3d 1503, 992 N.Y.S.2d 382 (3d Dep’t 2014)
(“Refusing to comply with an employer’s reasonable directive …
can constitute insubordination and, thus, disqualifying
misconduct.”); In re Tranberg, 205 A.D.2d 812, 615 N.Y.S.2d 290
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(3d Dep’t 1994) (holding a claimant who was terminated for
insubordination was disqualified from receiving unemployment
benefits).
d.
Theft of Time
An employee’s theft of time is misconduct that disqualifies him/her
from receiving unemployment insurance benefits. See, e.g., In re
Loeffler, 100 A.D.3d 1134, 953 N.Y.S.2d 513 (3d Dep’t 2012)
(employee disqualified from receiving unemployment insurance
benefits where she lied to her employer about having worked time
she did not work); In re Crawford, 84 A.D.3d 1670, 924 N.Y.S.2d
590 (3d Dep’t 2011) (holding a claimant who was fired for falsifying
her timesheet engaged in disqualifying misconduct); In re Tobin, 20
A.D.3d 839, 798 N.Y.S.2d 800 (3d Dep’t 2005) (holding a claimant
who had a co-worker punch her timecard when she was absent
from work engaged in theft of time that disqualified her from
receiving unemployment); In re Ferrar, 10 A.D.3d 766, 767, 783
N.Y.S.2d 880, 880 (3d Dep’t 2004) (holding claimant was properly
disqualified from receiving unemployment insurance benefits,
where he was terminated for theft of time for once extending his
break-time without authorization); In re Diallo, 263 A.D.2d 608, 692
N.Y.S.2d 783 (3d Dep’t 1999) (“[F]alsifying one’s time sheet can
constitute disqualifying misconduct.”).
e.
Violation of Policy
An employee’s failure to comply with an employer’s policy also
constitutes disqualifying misconduct. See, e.g., In re Cody, 37
A.D.3d 920, 829 N.Y.S.2d 729 (3d Dep’t 2007) (“An employee’s
actions that are contrary to established policies and have a
detrimental effect upon an employer’s interests have been found to
constitute disqualifying misconduct.”); In re Ferrar, 10 A.D.3d 766,
767, 783 N.Y.S.2d 880 (3d Dep’t 2004) (“It is well settled that … the
failure to comply with established workplace policies constitute
misconduct disqualifying an employee from receiving
unemployment benefits.”); In re Smith, 303 A.D.2d 815, 755
N.Y.S.2d 322 (3d Dep’t 2003) (holding claimant who failed to follow
employer’s policy was disqualified from receiving unemployment
benefits “failing to abide by workplace can constitute disqualifying
misconduct”).
4.
Criminal Activity
When an employee is terminated because he/she committed a felony in
connection with his/her employment, that criminal activity will constitute
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disqualifying misconduct for purposes of unemployment, provided:
D.
a.
He/she is convicted of the felony; or
b.
He/she has signed a statement admitted to engaging in the criminal
activity. Labor Law § 593(4).
The Unemployment Process
1.
Filing a Claim
The first step in the unemployment process if for the claimant to submit a
claim by filing an application for benefits with the Department of Labor.
a.
Misrepresentation
When a claimant willfully makes a false statement on his/her
application for unemployment benefits, he/she will be disqualified
from receiving unemployment benefits. Labor Law § 594(1). See,
e.g., In re Davis, 2015 N.Y. App. Div. LEXIS 978 (3d Dep’t 2015)
(“because claimant indicated on his application for unemployment
insurance benefits that his separation from employment was due to
lack of work, the Board’s finding that he made a willful false
statement to obtain benefits will not be disturbed”); In re Ferreira,
84 A.D.3d 1609, 922 N.Y.S.2d 877 (3d Dep’t 2011) (“[I]n light of
claimant’s admission that when she applied for benefits she
represented that she separated from employment due to lack of
work when, in fact, she voluntarily resigned, substantial evidence
supports the Board’s imposition of recoverable overpayments and
forfeiture penalties based upon claimant’s willful
misrepresentation.”).
A claimant who willfully makes a false statement on his/her
unemployment application will also be required to refund all of the
money he/she received through unemployment and pay a fine to
the unemployment benefits insurance fund. The amount of the fine
will be $100 or 15% of the total unemployment benefits paid,
whichever amount is greater, and will be imposed by the
Department of Labor in addition to any other criminal penalty that
may be imposed under federal or state law. Labor Law § 594(4).
2.
Employer response
The law has been amended to provide that employers who submit
incomplete or late submissions to NYSDOL regarding the agency’s
request for information concerning a claim for benefits will not be relieved
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of any charge to its account, even where the agency later determines that
the employee was ineligible for benefits or received an overpayment.
Employers must complete fully and return the agency’s request for
information by the date specified by NYSDOL.
3.
Initial Determination
After a claimant files an unemployment application for unemployment
benefits, the Department of Labor will make an initial determination
whether or not that claimant is entitled to receive unemployment insurance
benefits. The Department of Labor bases its initial determination on
information received from the claimant who filed the claim, and information
received from the employer on an information request form sent to the
employer by the Department of Labor.
4.
Administrative Law Judge (“ALJ”) Hearing
After the initial determination is rendered by the Department of Labor, both
the claimant and the employer have the right to challenge the initial
determination by requesting that the Department hold an administrative
law judge hearing on the matter. To request a hearing, the requesting
party must file a request for a hearing with the Department of Labor no
later than 30 days after the initial determination was mailed to that party.
Labor Law § 620.
An evidentiary hearing will then be held before an ALJ. Both the claimant
and employer have the right to be represented by an attorney at the ALJ
hearing. The claimant and employer are also both entitled to present
testimonial and/or documentary evidence in support of their respective
positions that the claimant is entitled to unemployment benefits or should
be denied unemployment benefits. Within 5 days of the conclusion of the
hearing, the ALJ will render a decision with regard to the claimant’s
entitlement to unemployment benefits. Labor Law §§ 620, 622.
a.
Impact of Prior Disciplinary Proceeding
In the case In re Ranni, 58 N.Y.2d 715, 717 458 N.Y.S.2d 910, the
New York Court of Appeals held that the doctrine of collateral
estoppel (i.e., issue preclusion) bars an unemployment claimant
from relitigating his misconduct when the at issue behavior was
already determined to be misconduct at a prior disciplinary
proceeding.
(1)
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An unemployment insurance benefits claimant can be
precluded from receiving benefits when his/her employment
was terminated for misconduct proven at a Civil Service Law
§ 75 disciplinary hearing. See, e.g., In re Matthew, 233
A.D.2d 645, 649 N.Y.S.2d 748 (3d Dep’t 1996) (“we find that
the Board properly accorded collateral estoppel effect to the
ALJ’s factual findings” at the Section 75 hearing); In re
Matias, 224 A.D.2d 851, 638 N.Y.S.2d 201 (3d Dep’t 1996)
(same); In re Shuaib, 268 A.D.2d 744, 702 N.Y.S.2d 168 (3d
Dep’t 2000) (same); In re Sona, 13 A.D.3d 799, 785
N.Y.S.2d 617 (3d Dep’t 2004) (same).
(2)
Education Law § 3020-a Proceedings
A tenured teacher whose employment was terminated
following an Education Law § 3020-a proceeding can also be
precluded from receiving benefits when his/her employment
was terminated for proven misconduct at such proceeding.
See, e.g., In re Czosek, 71 A.D.3d 1359, 900 N.Y.S.2d 154
(3d Dep’t 2010) (“[T]he factual findings of the Hearing Officer
are entitled to collateral estoppel effect inasmuch as
claimant was present at the Education Law § 3020-a hearing
and had a full and fair opportunity to be heard with respect to
the charges of misconduct forming the basis for his
dismissal”); In re Tranberg, 205 A.D.2d 812, 615 N.Y.S.2d
290 (3d Dep’t 1994) (“[W]e find no reason to reverse the
Board’s decision based on the fact that it accorded collateral
estoppel effect to the factual findings of a Hearing Panel
appointed pursuant to Education Law § 3020-a”).
5.
Appeals
a.
Appeals to the Unemployment Insurance Appeal Board
An ALJ decision can be appealed to the Unemployment Insurance
Appeal Board by either the claimant or employer provided the
employer appeared at the ALJ hearing. To appeal to the Board, the
appealing party must file a notice of appeal with the Department of
Labor within 20 days of being mailed the ALJ decision. The parties
will then each have an opportunity to submit a written statement in
support of their respective positions on the appeal (i.e., whether the
ALJ decision should be affirmed or reversed in whole or in part).
Labor Law § 621.
Although the Unemployment Appeal Board has the discretion to
hold a new evidentiary hearing, the Board will generally base its
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decision on the record established at the ALJ hearing and the
arguments made by the parties in their written statements to the
Board without holding a new hearing. Labor Law § 621.
b.
Appeals in Court
Any party that appeared on the appeal to the Unemployment
Insurance Appeal Board may appeal the Board’s decision in court.
All appeals of an Appeal Board decision are heard by the New York
State Appellate Division, Third Department. The Third
Department’s review of an Unemployment Insurance Appeal Board
will be limited to whether or not there was substantial evidence in
the record to support the Board’s decision.
To appeal a Board decision, the party appealing must send to the
Department of Labor written notice that the party is appealing the
Board’s decision to the Third Department. Such written notice must
be sent to the Board within 30 days of when the Board’s decision
was mailed to the appealing party. Labor Law § 624.
Any decision issued by the Third Department may then be
appealed to the New York Court of Appeals in the same manner as
in other litigation unrelated to unemployment.
E.
Contesting an Employee’s Claim for Benefits
After a claimant files his/her application for unemployment benefits, the
claimant’s former employer will have the ability to contest his/her claim. But
whether or not an employer should contest a former employee’s claim for
unemployment benefits is not necessarily a straightforward decision. In making
that decision, employers should at a minimum consider whether or not the
claimant already has, or may in the future, commence litigation against the
employer in connection with his/her former employment.
1.
Potential Impact on Litigation
Any testimony given during a hearing conducted in connection with an
individual’s claim for unemployment insurance benefits is statutorily
protected and may only be used by the Department of Labor in connection
with such claim. Section 537 of the Labor Law, provides that:
“Unemployment insurance information shall be for the
exclusive use and information of the commissioner [of labor]
in the discharge of his or her duties under this chapter and
shall not be open to the public nor be used in any court in
any action or proceeding pending therein unless the
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commissioner of labor is a party to such action or
proceeding, or such action or proceeding involves
information provided pursuant to paragraph g of subdivision
three of this section, notwithstanding any other provisions of
law.”
Labor Law § 537(1)(b). Section 537 further defines “unemployment
insurance information” as “information contained in the records of the
department [of labor] pertaining to the administration of this article [Article
18, the Unemployment Insurance Law], including information obtained by
the department from employers and employees.” Labor Law
§ 537(1)(a)(i).
In other words, an employee’s and employer’s testimony during an
unemployment insurance hearing is for the “exclusive use and
information” of the Department of Labor in connection with a claim for
unemployment insurance benefits.
But notwithstanding this statutory limitation, once testimony is given on
behalf of the employer at an unemployment hearing, the employer is
“locked in” to that testimony. Any subsequent change in that testimony
could give rise to challenges to the employer witnesses’ credibility in
subsequent litigation. Particularly with regard to any change in testimony
relating to the reason(s) why the claimant’s employment was terminated,
the employer could be exposed to claims of pretext and potential liability in
subsequent discrimination litigation.
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