How can I challenge an employee’s claim for unemployment benefits based on their misconduct?

Responding to unemployment insurance (UI) benefit claims can be a complex process for employers. It is important that an employer understands the legal definition of misconduct before deciding whether to challenge a terminated employee’s claim for unemployment benefits.

Under California UI Code Section 1256, if an employer fires an employee, unemployment benefits will be denied only if the employer can show that the employee was discharged for misconduct connected with their most recent work.

“Misconduct,” as used in the code, is defined as willful or wanton disregard of an employer’s interests, or such carelessness or negligence as to manifest equal culpability (Amador v. Unemployment Insurance Appeals Board, 35 Cal. 3d 671 (1984); UI Code, Section 1256)).

It is important to note that misconduct is narrowly defined. Terminations for mere inefficiency, unsatisfactory conduct, poor job performance, inadvertent errors or ordinary negligence in isolated instances, or good-faith errors in judgment or discretion will not rise to the level of misconduct.

On the other hand, the following are examples of misconduct that typically will result in denial of unemployment benefits: theft, fraud, intoxication, deliberate violation of safety rules, workplace violence, deliberately falsifying a timecard and harassment.

The California Employment Development Department (EDD) has a Benefit Determination Guide available that provides some helpful guidance on what constitutes misconduct.

Employers should understand that terminating an employee for misconduct or violating company policy will not automatically disqualify the employee from receiving unemployment benefits.

A California Supreme Court case established that an employee’s discharge for misconduct will not necessarily bar the employee from receiving unemployment benefits; the employee’s actual misconduct will need to be examined to determine if it meets the criteria established by law (Paratransit, Inc. v. Unemployment Insurance Appeals Board, 59 Cal. 4th 551 (2014)).

The EDD will examine the employee’s specific conduct and make an independent determination of whether the employee’s actions rise to the level of misconduct that would bar them from receiving unemployment benefits.

Employers also must keep in mind that the law presumes an employee was not fired for misconduct (UI Code, Section 1256). The burden of proving misconduct falls on the employer and it is up to the employer to submit evidence relating to the misconduct.

The EDD will require an employer to provide strong proof of misconduct before it disqualifies an employee from receiving unemployment benefits.

Because of the narrow definition of misconduct under the law, it may prove difficult for an employer to successfully challenge a terminated employee’s unemployment insurance claim.

Before investing the time and money to fight a former employee’s claim for benefits, an employer, in consultation with legal counsel, should evaluate carefully the reason for an employee’s termination and whether the employer can provide evidence of misconduct.

Read more about Responding to Unemployment Insurance Claims in the HR Library.