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Nebraska Supreme Court Clarifies Employers Obligations of Proving Misconduct

The Nebraska Supreme Court recently clarified that employers bear the burden of proving misconduct if the employer claims that an applicant for unemployment compensation should be disqualified from benefits. See Badawi v. Alvin, 311 Neb. 603 (2022). This is a reminder to employers to consider whether or not opposing an unemployment compensation claim is worth the potential risks.

The Nebraska Employment Security Law provides for the following disqualifications:

  1. An individual shall be disqualified for benefits for the week in which he or she has been discharged for misconduct connected with his or her work, if so found by the commissioner, and for the fourteen weeks immediately thereafter.
  1. If the commissioner finds that the individual was discharged for misconduct that was not gross, flagrant, and willful or unlawful but which included being under the influence of any intoxicating beverage or any controlled substance listed in not prescribed by a physician licensed to practice medicine or surgery while the individual is on the worksite or while the individual is engaged in work for the employer, the commissioner shall cancel all wage credits earned as a result of employment with the discharging employer.
  1. If the commissioner finds that the individual's misconduct was gross, flagrant, and willful, or was unlawful, the commissioner shall totally disqualify such individual from receiving benefits with respect to wage credits earned prior to discharge for such misconduct.

NE ST § 48-628.10. The statute therefore provides varying levels of disqualification based on misconduct, gross misconduct, or being terminated for being impaired by alcohol or illegal drugs.

The statute does not explicitly define misconduct or gross misconduct: the Court in Badawi noted the following as its interpretation of misconduct:

ur cases have long defined to include behavior which evidences (1) wanton and willful disregard of the employer’s interests, (2) deliberate violation of rules, (3) disregard of standards of behavior which the employer can rightfully expect from the employee, or (4) negligence which manifests culpability, wrongful intent, evil design, or intentional and substantial disregard of the employer’s interests or of the employee’s duties and obligations.

The court has found gross misconduct in past cases where employees have engaged in theft, conversion of property, and falsifying records. In one case the court found that an employee’s alleged sexual harassment of a coworker constituted misconduct and, because the person being harassed was 17 years old and under the employee’s supervision, concluded that the behavior was “outrageous” and constituted gross misconduct.

The Nebraska Supreme Court in the Badawi case concluded that there was an insufficient record to support a finding that the employer met its burden of establishing misconduct on the part of the employee. The employer in the case did not appear for the hearing, and much of the transcript listed the testimony as “indiscernible”. As a result, rather than remanding the case for further proceedings, the court ruled that the applicant should be considered qualified for benefits despite his repeated refusal to work an alternative position during the COVID-19 pandemic.

Bearing this burden of proof in the context of unemployment compensation is a relatively minor issue. However, in certain scenarios, whether or not to do so also raises the need to assess the associated risks. For instance, if an employer is concerned that an adverse employment action taken against an employee may result in claims of discrimination, harassment, or retaliation, the employer may want to refrain from presenting its position to the contrary until a formal claim regarding those issues has been filed. To oppose unemployment compensation as a first step exposes the employer to potential subpoenas for documents and witness testimony from the Nebraska Department of Labor, which expedites the handling of these cases. The speed at which the employer would be expected to respond may not provide employers with sufficient opportunity to fully investigate and interview witnesses.

In addition, opposing this type of claim can sometimes in and of itself result in a former employee filing discrimination, harassment, or retaliation claims, or taking other actions they might not otherwise have pursued. A former employee may also decide to retaliate in the form of filing unfair labor practice charges, OSHA complaints, or other administrative complaints that may be available to them and are relatively easy to initiate.

If opposition to a claim for unemployment compensation results in administrative claims or litigation that may not have otherwise been filed, it may be questionable whether the benefits obtained justify the risks that were undertaken.