TBA Law Blog

Posted by: Patricia Wall & Alfred Smith on Jan 25, 2010

Journal Issue Date: Feb 2010

Journal Name: February 2010 - Vol. 46, No. 2

What Ain't Misbehavin' for Unemployment Insurance Purposes?

As claims for unemployment insurance (UI) continue to rise with a worsening economy, more employers are challenging them in order to avoid increased tax rates that may result from being charged for those benefits. The unemployment insurance program is a joint federal/state program[1] that imposes a current federal tax rate of 6.2 percent on the first $7,000 of wages per year paid to each covered employee. The employer must pay this for all employees who work in 20 weeks in a year or who are paid $1,500 in a quarter. However, the employer is eligible for a credit of 5.4 percent against the federal tax for payment of state UI taxes. State tax rates are based upon the employer's tax experience rating and are below 5.4 percent if an employer has a low experience rating based upon the fact that it has not been charged for a lot of benefits being paid. Thus, there is an incentive to keep charges low by contesting claims for benefits that the employer does not consider to be warranted.

Being discharged for misconduct in connection with work disqualifies an employee for unemployment insurance (UI) benefits. However, many employers are not entirely clear about exactly what constitutes misconduct for UI purposes. Although misconduct has traditionally been considered on a case-by-case basis in most states, many have adopted the definition of the Wisconsin Supreme Court in Boynton Cab. Co. v. Neubeck,[2] (Wisc. 1941). This article analyzes this definition and consider what misconduct means for UI purposes. It is not the authors' intent to present the law in any particular jurisdiction, but to merely give an overview of this law in the majority of jurisdictions. However, the law in Tennessee will be used in many instances for illustrative purposes.

Preliminary Considerations

In determining what is misconduct, consideration must be given to the public policy concerns underlying employment security law. Most states, including Tennessee, express this in their statutory law. According to Tenn. Code Ann.  § 50-7-102,

The legislature, therefore, declares that in its considered judgment, the public good and general welfare of the citizens of this state [Tennessee] require the enactment of this measure ... for the benefit of persons unemployed through no fault of their own. [Emphasis added]

Thus, courts have found that public policy concerns require a liberal interpretation of the unemployment statutes. In Weaver v. Wallace,[3] the Tennessee Supreme Court found "the disqualification because of 'misconduct connected with their work' provision, being penal in nature, is to be construed liberally in favor of the employee so as to minimize the penal character of the provision by excluding cases not clearly intended to be within the exception." Until 2009 Tennessee was one of the states that did not provide a statutory definition of misconduct. This was determined on a case-by-case basis.[4] The employer has the burden of disqualification.[5] Tenn. Code Ann.  §50-7-303(a)(2), provides in pertinent part:

(A) DISQUALIFYING EVENTS. A claimant shall be disqualified for benefits:

If the Commissioner finds that a claimant has been discharged from such claimant's most recent work for misconduct connected with such claimant's work.

The statute does not define "misconduct connected with work." In Weaver v. Wallace,[6] the Tennessee Supreme Court said that for conduct to amount to misconduct it must be a "breach of duty owed to the employer, as distinguished from society in general." The court had also said that fault should be considered when determining whether an employee has engaged in misconduct connected with work.[7]

In Armstrong v. Neel,[8] the court held the above cases, and others, read together, stand for the proposition that misconduct must at least be intentional conduct that materially breaches a duty the employee owes to the employer. The court went on to adopt the following standard from Wisconsin that other panels of the court of Appeals had previously adopted in several unreported opinions:

... conduct evincing such wilful and 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, or in carelessness or negligence of such degree or recurrence as to manifest equal culpability, wrongful intent or evil design, or to show an intentional and substantial disregard of the employer's interests or of the employee's duties and obligations to the employer. On the other hand mere inefficiency, unsatisfactory conduct, failure in good performance as the result of inability or incapacity, inadvertences 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.9

Later, the Tennessee Supreme Court affirmed this standard. In Cherry v. Suburban Manufacturing Company,[10] the court said, "In order to establish a disqualification, there must be shown a material breach of some duty which the employee owes to the employer."

In 2009 the Tennessee legislature enacted a statutory definition of misconduct which substantially adopted the Boynton Cab definition. Tenn. Code Ann. 50-7-303 (a) (2), which provides for a disqualification from unemployment benefits for those who are discharged for misconduct, was amended as follows:

For purposes of subdivision (a)(2):
(A) "Misconduct" includes, but is not limited to, the following conduct by a claimant:
(1) Willful or wanton disregard of the rights or interests of the employer;
(2) Deliberate violations or disregard of standards of behavior which the employer has the right to expect of an employee;
(3) Carelessness or negligence of such a degree or recurrence to show an intentional or substantial disregard of the employer's interest or to manifest equal culpability, wrongful intent or evil design;
(B) In addition to the provisions of subdivision (A), "misconduct" also includes any conduct by a claimant involving dishonesty arising out of the claimant's employment that constitutes an essential element of a crime for which the claimant was convicted.
(C) "Misconduct" does not include:
(1) Inefficiency, or failure to perform well as the result of inability or incapacity;
(2) Inadvertence or ordinary negligence in isolated instances; or
(3) Good faith errors in judgment or discretion.[11]

This statutory definition of misconduct differs from the Boynton Cab definition in three respects. First, it omits the language "or to show an intentional and substantial disregard of the employer's interest or of the employee's duties and obligations to his employer" from the Boynton Cab statement of what conduct constitutes misconduct. Second, it adds a provision that misconduct "also includes any conduct by a claimant involving dishonesty arising out of the claimant's employment that constitutes an essential element of a crime for which the claimant was convicted." Finally it omits "unsatisfactory conduct, failure in good performance" from the statement of what does not constitute misconduct. Despite these differences, the essential elements of the Boynton Cab standard for defining misconduct remain intact. Given the substantial similarities in the essential elements defining what does and does not constitute misconduct, it is not expected the adoption of this statutory definition of misconduct will result in a substantial change to the types of conduct that are found to constitute misconduct under Tennessee law.

An employee is an agent of the employer and thus must act in the best interest of the employer. Courts have ruled that misconduct means a "substantial disregard for the employer's interests."[12] In other words, the employee's conduct must be intentional and not in the employer's interest. However, repeated acts of carelessness or negligence, especially after warnings, can rise to the level of misconduct. When making a determination concerning misconduct, one must also consider the final act before the discharge. The length of time between the act and the discharge should be considered as well.

Other factors relevant in making a determination of misconduct connected with the work include an employer's work rules. Does the employer have a specific rule or policy that covers this particular situation? If so, how are employees made aware of it? Do they receive specific training? What evidence does the employer have to show that this particular employee was made aware of the work rules? Are employees required to sign a statement when they are hired to the effect that they have received a copy of the work rules and/or that they have received training? Did the employee receive any warnings concerning the alleged behavior? Did the employer ask the employee for an explanation of the behavior? If so, how did he respond? Was there any corroborating evidence and/or witnesses to the behavior? Does the employer have a progressive disciplinary procedure? Had the discharged employee received any previous warnings in this process? If so, what did they involve? If an employee is made aware of the work rules and violates them anyway, he is not acting in the employer's best interest.

The next sections of this paper will analyze misconduct in the following common discharge situations: attendance problems, insubordination, inappropriate acts or language, poor work performance, accidents, and loss of driving privileges or insurability.[13]

Attendance Problems

An employee can be discharged for misconduct connected with work for excessive and unexcused absenteeism and/or tardiness. To be excused for UI purposes, the absences must be beyond the employee's control, e.g., illness or job-related injuries. Further, the claimant must properly notify the employer. Most employers have policies concerning absenteeism/tardiness and proper notification procedures. Some employers have a point system for discharging employees for this. In Wallace v. Stewart (Tenn 1978),[14] the Tennessee Supreme found that
[n]o aspect of contract of employment is more basic than the right of the employer to expect employees will appear for work on the day and at the hour agreed upon. Persistent failure to honor that obligation evinces a substantial disregard for the employer's interest and may justify a finding of misconduct connected with the employment.

In Bianco v. Commissioner of Labor,[15] the Supreme Court of New York upheld the Unemployment Insurance Appeal Board's finding of misconduct connected with work for Ms. Bianco's continuous tardiness. She was employed as a secretary and was late 24 times during August and September of 2006 despite being warned about her tardiness. Further, the Supreme Court upheld her liability for the overpayment of UI benefits for making a false statement to the agency when she filed for benefits, but it did not support the determination of a forfeiture penalty as the false statement was not intentional. Ms. Bianco had told the agency that she was terminated for failure to meet the employer's standards.

When discharging employees for excessive absenteeism and/or tardiness, an employer must be sure to comply with the Family Medical Leave Act (FMLA)[16] and the Americans with Disabilities Act (ADA).[17] Passed in 1990, the ADA prohibits discriminatory practices against those workers who have disabilities, but who are otherwise qualified to perform the essential functions of the job. The act applies to employers who have fifteen or more regular full-time employees. There are four prima facie elements of a case under the ADA:

  1. the employer is subject to the ADA;
  2. the employee is disabled within the meaning of the act;
  3. the employee is otherwise qualified to perform the essential functions of the job, with or without reasonable accommodation; and
  4. the employee suffered an adverse employment action because of the disability.

The FMLA requires employers with over 50 employees to provide unpaid leave to employees who need to care for a spouse, child, or parent suffering with a serious medical condition. An employee cannot be terminated for taking leave under this policy, and has a right to restoration to the same or a similar position upon returning to work. For coverage under the FMLA, an employer must employ "50 or more employees for each working day during each of 20 or more calendar work weeks in the current or preceding calendar year. However, an employer that has several franchises with a total of 50 or more employees can be deemed 'integrated' under the act and thus be a covered employer."[18]

The criteria for integration are set forth in the FMLA regulations.[19] Under these regulations, "integration is not determined by the application of any single criterion, but rather the entire relationship ... viewed in its totality."[20] Further, the following should be considered: "(i) the commonality of management, (ii) the interrelation between operations, (iii) the centralized control of labor relations, and (iv) the degree of common ownership or financial control."[21]

In Poe v. Neeley,[22] the court found that an employer's failure to provide proper notice to an employee of his FMLA rights precluded a finding that his absenteeism was so excessive as to amount to misconduct. In this case the employee had notified the employer of an off-the-job injury that prevented him from reporting to work. He was verbally informed that he needed to fill out FMLA paperwork, but was not provided the written notice of his obligations and the potential consequences that is required under the act.[23] The employee failed to fill out the FMLA paperwork and was subsequently discharged for excessive absenteeism under the employer's attendance policy that provided for termination for a set number of unexcused absences. In analyzing the employee's attendance under this policy, the court found that the absences that resulted from this incident could not be counted against the employee because of the employer's failure to meet its obligation to provide written notice to the employee under the act. The court further found that once these absences were excluded, the employee had not accrued the number of absences required for termination under the employer's attendance policy and that he was therefore not discharged for misconduct.

However, an employer can discharge an employee for misuse of FMLA. In Kariotis v. Navistar International Transportation Corporation (7th Cir.1997),[24] the 7th Circuit decided that "an employer can fire an employee if the employer has an honest suspicion that an employee has misused his or her leave." In Kariotis, the plaintiff was engaged in various physical activities while on FMLA for knee replacement surgery.

In Smith v. Iowa,[25] Ms. Smith, an Iowa state employee, took FMLA leave while suffering from depression. She resigned shortly before she was due to return to work. She asked to return to work a few days later, but the employer refused. She filed suit under ADA, claiming that supervisors refused to rehire her because they knew that she suffered from depression and were retaliating for her having taken FMLA leave.

The Iowa Court of Appeals ruled for Smith, saying that, even if Smith did not make an ADA request for accommodation that the "employer must meet the employee halfway" and help. Further, it found the retaliation claim under the FMLA to be valid, and that there was no reasonable explanation for the employer's refusal to reinstate Smith. The employer should have determined if Smith's resignation was valid or due to her clinical depression.

How can employers avoid this type of problem? Employers already "on notice" of an employee's mental disorder, should "interact" with the employee, and not just accept what he says initially. This may require the establishment of specific procedures for such situations. Further, employers must recognize the ever-expanding definition of disability in accordance with the new guidelines.[26] They would certainly face increased taxes to fund benefits paid to an employee terminated in violation of such laws as ADA or FMLA.


Failure to follow a direct order or perform a duty may be misconduct connected with work, and thus disqualifying for UI purposes. However, the employee may have a good reason for refusing to follow an order, e.g., safety hazard or performance of a crime. It may be impossible for the employee to complete the task, due to lack of time or proper material and/or equipment. There could be a misunderstanding between the employer and employee concerning the order.

In Trice v. Traughber,[27] the Tennessee Supreme Court reversed a finding of a disqualification for misconduct in a case where an employee had refused to report to work at a worksite that did not have proper sanitary facilities. The installation of sanitary facilities at the new work location had been delayed by a problem with access to water and the employee refused to report to the worksite until those circumstances had been corrected. While taking note of the substantial obligation that an employee had to report for work at the appointed time and place that had been articulated in Wallace v. Stewart,[28] that court also recognized a corollary duty on the part of the employer to provide reasonable and proper working conditions. The court found that it was not reasonable and proper to expect an employee to work for an extended period of time under those conditions and that his refusal to do so did not amount to misconduct. In reaching this conclusion, the court recognized that the termination of the employee under these circumstances was justified by the employer but, repeated its earlier observation in Cherry v. Suburban Manufacturing Co,[29] that a justifiable discharge is not, in and of itself, disqualifying misconduct.

Consideration must also be given to what the employer told the employee to do and what the employee actually did in the time allotted. Were the employer's instructions oral or written? If the task was not performed, did the employee verbally refuse to do the task? If so, what reason was given? Was the employee busy with other tasks? If so, what priority was the employee given for completing the tasks? Was the employee doing the work to the best of his ability and making a good faith effort to complete the task according to the employer's instructions? Did the employee have more than one supervisor? If so, was the employee given contradictory instructions? This is often a creditability issue for UI adjudicators, hearing officers and Boards of Appeal, as in the case of Stephen Dzuga-Smith v. Commissioner of Labor.[30]

The Supreme Court of New York ruled in this case that there was substantial evidence to support a finding of misconduct for violation of rules or insubordination. The employee was a nursing assistant discharged for failure to follow resident care procedures. He had received warnings concerning this and was told that failure to follow the procedures could be grounds for dismissal. Mr. Dzuga-Smith failed to follow procedure to help a resident use the toilet, in consequence of which the patient dislocated his hip. The employee was terminated and filed for UI benefits. He claimed these instructions had been added to the care plan after the resident dislocated his hip. The Unemployment Insurance Appeals Board determined that such was not the case.

In Hallowell v. Vestco,[31] the employee was discharged for refusing to obey the instruction of her manager to tuck her shirt into her pants in compliance with the employer's dress code. She worked for about 11 months without complying with the dress code pursuant to an agreement that she had with a previous manager. After a new manager took over, he spoke with her on several occasions about complying with the dress code and instructed her to comply. After two weeks, he again instructed her to tuck her shirt in. She refused to do so and was discharged. In upholding a disqualification for misconduct, the court noted that despite any prior agreement, the employee had an obligation to comply with a reasonable instruction and that she had been given a reasonable amount of time to do so.

Inappropriate Acts and/or Language

Inappropriate acts and/or language may be misconduct connected with work. Consideration must be given to whether the acts and/or language were profane or obscene and whether they were disrespectful to the employer, co-workers and/or customers.

The employer should document what happened or what was said. To whom was the employee speaking? Who else was present? Consideration should also be given to what else was taking place at the time. Was the employee in pain or fear? Was the employee angry or confrontational? How loudly did the employee speak? Was this type of language common in the place of employment? Was there a "substantial disregard for the employer's interest?"[32] Did the actions of the employee subject the employer to potential lawsuits or adverse reactions from customers?

In Armstrong v. Neel,[33] the employee was discharged for threatening to "whip" a co-worker if he continued his behavior. The threat occurred during an argument between the two employees while on break and after the co-worker had made a demeaning comment to the employee. The incident was brief and did not disrupt the workplace. It was, however, reported to management and the employee was discharged two days later for violating the employer's policy that "fighting, threatening, or abusing employees" could be grounds for termination. In reversing a disqualification for misconduct, the court noted that the employee did not initiate the incident, that the comment was directed to a co-worker rather than a supervisor, that the threat was made in the heat of the moment and was conditional and that the incident was brief and did not disrupt the workplace. The court also noted that the employee had never been warned that a violation of the employer policy would result in immediate discharge.

Poor Work Performance

As discussed earlier, misconduct must be an intentional and controllable act on the part of the employee in order to support a disqualification for unemployment benefits. This is more difficult to determine when considering quality of work. UI adjudicators basically evaluate the following four factors when making a determination:

  1. reason for discharge,
  2. working conditions,
  3. employer's supervision, and
  4. employee's efforts to remedy the situation.[34]

When considering the reason for discharge, one must determine why the employer decided to terminate the employee on this particular day. If a substantial time has passed between the behavior and the actual discharge, misconduct is not found. Further, the behavior must have an adverse impact on the employer's interest. Thus, acts which occur off the job and have no effect on the employer are usually not misconduct. Exceptions to this are acts that affect the employer's reputation and ability to perform work, e.g., being found guilty of grand theft may affect the ability of a state employee to be an arson investigator.

When examining working condition, UI adjudicators compare the expected work standard with the work that the employee actually performed. The expected standard may be described in a work rule, union agreement, law or regulation. It could also be specific to a particular industry or profession, e.g., following generally accepted accounting procedures is expected of certified public accountants.

The employer's efforts to supervise the work must also be considered. Did the employer act reasonably by warning the employee of deficient work? Did the employer document these warnings? Did the employer provide sufficient training for the employee?

When evaluating the employee's efforts to remedy the situation, UI adjudicators consider the employee's attempts to conform to standards. Was the employee aware of the warnings and did he attempt to improve? Were the employee's errors mere mistakes or inefficiencies?

In Overland Restaurant Management LLC v. Commissioner,[35] the employee was a waitress who was discharged for allegedly taking tips that did not belong to her from a "tip bucket" that was shared by the waitresses. It was alleged that the money that was taken from the bucket, consisting of about three or four dollars, belonged to another waitress. The employee maintained that she believed that the money was rightfully hers. The court found that the employer did not have a specific policy that governed the use of the tip bucket and that the record of the case therefore did not contain substantial and material evidence of misconduct on the part of the employee.


Occasionally, employers discharge employees due to being involved in a traffic accident on the job. Does this rise to the level of misconduct connected with the work sufficient to deny an employee UI benefits? It depends upon a careful analysis of several factors.

Was the accident caused by the employee's careless or negligent actions? If so, was this gross negligence tantamount to willful misconduct? Was this an isolated incident or had there been others? Was the employee following company procedures for making deliveries and completing job tasks? Had the employees received training to drive company vehicles? How did the accident occur? Did the employee receive a citation from law enforcement?

If the employee had been involved in prior accidents, had the employer disciplined him? Did the employee receive a final warning prior to the discharge? Did the employee's carelessness or negligence contribute to the last accident? In making a final determination of misconduct, did the complete record of the employee's accidents demonstrate culpability or intentional misconduct for UI purposes?

Accidents were the conduct that was involved in the fact situation in the Boynton Cab[36] case that first articulated the widely used definition of misconduct. In that case the employee was discharged primarily for the accidents that he had during the course of his employment. He was employed as a cab driver and was involved in three accidents within less than two months. The court examined the circumstances of each of the accidents. It found some fault on the part of the employee in connection with the first two accidents, but noted that he was not discharged in response to either of them. He was discharged following a third accident in which the evidence was not sufficient to establish fault on his part. In applying its formulation of the definition of misconduct, the court found that there was not a sufficient showing of fault, either in connection with the last accident or in connection with his overall driving record, to establish such a lack of proper regard for the employer's interests as to amount to such misconduct connected to work as to disqualify the employee from unemployment benefits.

Lack of Driving Privileges and/or Insurability

If an employee is discharged for loss of driving privileges and/or insurability is this disqualifying misconduct for UI purposes? If the employee's job description includes driving, the loss of driving privileges and/or insurability may be misconduct connected with work, and thus the employee will not be eligible for UI benefits. Was the employee's license suspended by a law enforcement agency? If so, why? Loss of driving privileges for medical reasons would obviously not be disqualifying misconduct.

In making a determination that loss of driving privileges and/or insurability is misconduct, there must be culpable acts on the part of the employee resulting in the loss. Further, this should occur during the term of the employment relationship. If some of the accidents leading to the suspension occurred before employment, did the employer ask about the employee's driving record prior to hiring? If so, was the employee truthful about the record? If the loss of insurability is due to change of insurance carriers by the employer, this would not be misconduct.

In Fairfield Toyota v. Bruegge[37] the Iowa Court of Appeals ruled that there was no misconduct based upon the last incident leading to the uninsurability. The employee, Darrin Bruegge, was a mechanic for Fairfield Toyota Inc. and regularly drove the employer's and customer's cars as part of his job. Bruegge's supervisor warned him in June of 1985 that insurability was necessary for his continued employment. The employer's insurance company was concerned that Bruegge had a conviction for speeding, two convictions of intentional tire squealing and had been involved in a traffic accident (although he was not charged). In June of 1986, Bruegge was involved in another accident when he drove into a ditch to avoid hitting a deer. When the insurance company denied further coverage for Bruegge, the supervisor asked him to resign.

Bruegge filed a claim for UI benefits and was denied by the agency adjudicator, who found that he had been discharged for misconduct. On appeal, the hearing officer affirmed the agency's finding that lack of insurability was misconduct and further finding that Bruegge had not been driving defensively or he could have avoided the accident. Bruegge appealed to the Employment Appeal Board, which reversed the hearing officer's decision and ruled that there was no misconduct, as the accident was beyond Bruegge's control and his driving record did not show culpability. Further, the Board found Bruegge's termination for misconduct was a pretext for reducing the employer's payroll because of economic problems.

Fairfield Toyota then appealed to the District Court, which reversed the Employment Appeal Board's decision and reinstated the hearing officer's decision. The District Court found Bruegge's driving record constituted misconduct and made him uninsurable. Bruegge then appealed to the Iowa Court of Appeals. This court found there to be substantial evidence in the record to support the Employment Appeal Board's decision and that the courts were bound by the agency's fact finding.[38] The Iowa Court of Appeal found no disqualifying misconduct in Bruegge's driving record. It cited  § 345 of the Iowa Administrative Code 4.32 (1) which defines misconduct as [A] deliberate act or omission by a worker which constitutes a material breach of the duties and obligations arising out of such worker's contract of employment. Misconduct as the term is used in the disqualification provision as being limited to conduct evincing such willful or wanton disregard of the employer's interest as is found in deliberate violation or disregard of standards of behavior which the employer has a right to expect of employees, or in carelessness or negligence of such degree of recurrence as to manifest equal culpability, wrongful intent or evil design, or to show an intentional and substantial disregard of the employer's interests or of the employee's duties and obligations to the employer. 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 of good faith errors in judgment or discretion are not to be deemed misconduct within the meaning of the statute.

While this was serious enough to discharge Bruegge, the Appeals Court found no disqualifying misconduct for UI purposes. Further, the court distinguished this case from Cook v. Iowa Department of Job Services,[39] the only other Iowa case dealing with insurability.

In Cook, the employee, a truck driver, had accumulated a number of points on his driving record for speeding violations and was in danger of losing his license. Most of these speeding citations were obtained during nonworking hours in his personal car. The court found that Cook intentionally violated the law knowing that this could impact his ability to work for the employer. Conversely, the Court of Appeals found that Bruegge had committed no intentional act after being warned about the danger of insurability. The Court of Appeals reversed the District Court and reinstated the Iowa Employment Appeal Board's decision.

Burden of Proof

In determining whether an employee has been discharged under circumstances that are disqualifying for unemployment benefits, it is the employer that bears the burden of proving misconduct by a preponderance of the evidence.[40] Further, the Tennessee Supreme Court in Cherry v. Suburban Manufacturing Company,[41] found

In order to establish a disqualification there must be shown a material breach of some duty which the employee owes to the employer. (citing Weaver v. Wallace, 565 S.W.2d 867, 870 (Tenn.1978)).

This burden must be met by proving the facts of the case with substantial and material evidence. The most common evidentiary problem faced by employers is reliance on hearsay evidence rather than providing direct testimony of persons who actually observed the events at issue. While hearsay evidence is generally admissible in administrative hearings conducted on unemployment claims, uncorrorborated hearsay cannot be the sole basis for a finding of misconduct. In Estate of Milton v. Commissioner, Tenn. Dep't of Employment Security,[42] the Tennessee Court of Appeals found "Although hearsay is admissible in administrative hearings, uncorroborated hearsay does not constitute substantial and material evidence." Further, in Johnson v. Neel,[43] the Tennessee Court of Appeals found "hearsay testimony and documents may be used, if properly qualified for admission, to corroborate other testimony of the wrongful acts of the claimant, but not as the sole evidence of his or her wrongful acts."


The unemployment insurance program was established to provide an economic cushion to workers who have lost their job through no fault of their own. When an employee has been discharged from employment, the burden is therefore placed upon the employer to show fault on the part of the employee in the form of misconduct connected to the work in order to deprive the employee of the benefits of the Unemployment Insurance program. The essential elements of misconduct are a material breach of a duty owed to an employer that is attributable to fault on the part of the employee. The fault can be due to intentional conduct on the part of the employee or to negligence of such degree or reoccurrence as to provide a basis or a finding of fault. The duty owed by the employee must arise out of the employment relationship itself. It can be established through general employer policies that are communicated to the employee or through a warning that a specific conduct will not be tolerated. While employers are generally allowed substantial discretion in developing policies and standards of conduct that are suitable to their individual needs,44# the reasonableness of these expectations can be questioned in determining whether the employee has committed misconduct sufficient to be disqualifying for unemployment benefits.[45]

In contesting an unemployment claim on the basis of disqualifying misconduct, an employer should be prepared to prove:

  1. that there was a standard of conduct that was expected of the employee,
  2. that this was communicated to the employee either through knowledge of the employer policy or through a warning,
  3. that the employee actually breached this duty and
  4. that the employee was at fault in breaching this duty, either through intentional conduct or through carelessness of such degree that it demonstrates fault.

An employer who analyzes the circumstances surrounding the termination of an employee in accordance with these criteria and who can present competent evidence to establish all of these elements will be in a strong position to challenge the award of unemployment benefits to a terminated employee. The employer can thereby avoid charges to its unemployment account that could increase its tax liability.


  1. 26 U.S.C.  § 3301-3310.
  2. 296 N.W. 636 (Wisc. 1941).
  3. 565 S.W. 2d 867, 869-870 (1978).
  4. Wallace v. Stewart, 559 S.W. 2d 647, 647-48 (Tenn. 1977): Troutt v. Carl K. Wilson Company, 410 S.W. 2d 177, 180 (Tenn 1968).
  5. 565 S.W. 2d 867 (1978).
  6. Id.
  7. McCellan v. Bible, 699 S. W. 2d 555, 556 (Tenn. 1985).
  8. 725 S.W.2d 953, 955 (Tenn. Ct. App. l986) (perm. app. denied March 9, l987).
  9. Boynton Cab Co. v. Newbeck, 237 Wis. 249, 296 N.W. 636, 640 (l94l).
  10. 745 S.W.2d 273, 275 (Tenn. l988).
  11. Public Chapter No. 479 PUBLIC ACTS, 2009.
  12. Irvin v. Binkley, 577 S.W. 2d 677 (Tenn. 1978).
  13. See "Handbook for a Sufficient Hearing Record," Employment Security Manual, 2008 for further clarification concerning these classifications.
  14. Wallace v. Stewart, 559 S.W. 2d 647, 647-48 (Tenn. 1977).
  15. 863 N.Y.S. 2d 276, (2008).
  16. 29 U.S.C.  §2601.
  17. 42 U.S.C.  §12101-12118.
  18. Cousin v. Sofono, 238 F. Supp. 2d 357 (2003).
  19. 29 C.F.R.  § 825.104 (2002).
  20. 29 C.F.R.  § 825.104(c)(2) (2002).
  21. Id.
  22. 2005 Tenn. App. LEXIS 370.
  23. 29 C.F.R.  § 825.301(b)(1) (2005).
  24. 131 F. 3d 672 (7th Cir. 1997).
  25. Iowa Ct. App., No. 8-460/07-1689.
  26. See Chapman 2009, HR Specialist: Employment Law.
  27. 797 S.W.2d 886; 1990 Tenn. LEXIS 356.
  28. Wallace v. Stewart, 559 S.W. 2d 647, 647-48 (Tenn. 1977).
  29. 745 S.W.2d 273, 275 (Tenn. l988).
  30. 875 N. Y.S. 2d 320 (2009).
  31. 2005 Tenn. App. LEXIS 271.
  32. Irwin v. Binkley, 557 S.W. 2d 677 (Tenn. 1978).
  33. 725 S.W.2d 953; 1986 Tenn. App. LEXIS 3446.
  34. Supra at 13.
  35. 2007 Tenn. App. LEXIS 447; Unemployment Ins. Rep. (CCH) P8426.
  36. 296 N.W. 636 (Wisc. 1941).
  37. 449 N.W. 2d 395 (Iowa App. 1989).
  38. Peoples Memorial Hospital v. Iowa Civil Rights Comm'n, 322 N.W. 2d 87, 91 (Iowa 1982).
  39. 299 N.W. 2d 698 (Iowa 1980).
  40. Cherry v. Suburban Manufacturing Company, 745 S.W.2d 273, 275 (Tenn. l988).
  41. Id.
  42. No. 03A01-9710-CH-00449, 1998 Tenn. App. LEXIS 329, 1998 WL 282919, at *2 (Tenn.Ct.App. May 19, 1998).
  43. No. 86-150-II, 1986 Tenn. App. LEXIS 3613, 1986 WL 14039, at *3 (Tenn.Ct.App. Dec. 12, 1986).
  44. Hollowell v. Vestco, 2005 Tenn. App. LEXIS 271.
  45. Trice v. Traughber, 797 S.W.2d 886; 1990 Tenn. LEXIS 356.

Patricia S. Wall PATRICIA S. WALL is an attorney and certified public accountant. She received her law degree in 1979 from the University of Tennessee College of Law, her MBA in 1987 from the University of Tennessee (Chattanooga), and Ed.D from Tennessee State University in 2004. She is an associate professor of business law at Middle Tennessee State University. Licensed to practice law in Tennessee and New York, Wall has worked in private practice, as an assistant district attorney, and for the Tennessee Departments of Commerce and Insurance (Securities Division), Employment Security, Labor, and Safety.


Alfred M. Smith Jr. ALFRED M. SMITH JR. is a graduate of Vanderbilt University and received his law degree in 1977 from the University of Tennessee. He is deputy general counsel with the Employment Security Division of the Tennessee Department of Labor and Workforce Development, where he is devoted to the administrative adjudication of unemployment eligibility.