Court of Appeals Division I
State of Washington
Opinion Information Sheet
Docket Number: 42305-3-I
Title of Case: Donna Haney, Appellant
v.
Employment Security, State of Wa, Respondent
File Date: 06/14/1999
SOURCE OF APPEAL
----------------
Appeal from Superior Court of King County
Docket No: 97-2-08446-6
Judgment or order under review
Date filed: 02/13/1998
Judge signing: Hon. Robert S. Lasnik
JUDGES
------
Authored by Faye C. Kennedy
Concurring: Susan R. Agid
William W. Baker
COUNSEL OF RECORD
-----------------
Counsel for Appellant(s)
Paul H. King
Attorney At Law
318 6th Ave S Ste 117
Seattle, WA 98104
Counsel for Respondent(s)
Steve Victor
Attorney At Law
640 N Aurora Ave
Tacoma, WA 98406
IN THE COURT OF APPEALS FOR THE STATE OF WASHINGTON
DONNA HANEY, )
) NO. 42305-3-I
Appellant, )
) DIVISION ONE
v. )
)
EMPLOYMENT SECURITY DEPARTMENT, ) STATE OF WASHINGTON,
) PUBLISHED OPINION
) Respondent. )
FILED
KENNEDY, C.J. -- Donna Haney's employer, LifeGuard Monitoring Systems,
discharged her for insubordination after she in response to a letter of
reprimand warning her that any further personal attacks on her co-workers
or management would result in her immediate discharge accused management of
having big egos and self-serving personal agendas. The Employment Security
Department Commissioner denied Haney unemployment benefits, concluding that
she engaged in disqualifying misconduct. The superior court affirmed, and
Haney appeals.
First, we reject Haney's contention that National Labor Relations Act
(NLRA) principles should be considered in determining if an individual
claimant not covered under the NLRA engaged in disqualifying misconduct
under the Employment Security Act (ESA), because doing so would not further
the purposes of the NLRA or the ESA and would inevitably lead to
unnecessary confusion regarding what does or does not constitute
disqualifying misconduct. Second, applying the ESA without reference to
NLRA principles, we conclude that the administrative record in this case
sufficiently supports the Employment Security Department Commissioner's
conclusion that Haney engaged in disqualifying misconduct. Accordingly, we
affirm the denial of unemployment benefits.
FACTS
LifeGuard Monitoring Systems hired Donna Haney on July 19, 1994, to
work in its customer service department. During her employment, Haney
consistently displayed a negative attitude, and criticized her fellow
employees verbally and with written "nasty grams." Administrative Hearing
Record (AHR) at 93. On November 9, 1996, Haney initiated a hostile
confrontation with another employee. Haney screamed at the other employee,
warned the other employee not to accuse her of making a certain work-
related mistake, and demanded that the other employee leave the premises.
"The confrontation caused the other employee to feel humiliated,
intimidated, and verbally and physically threatened." AHR at 94.
In response to the November 9, 1996 incident, LifeGuard gave Haney a
written letter of reprimand, condemning her conduct. In the letter,
LifeGuard referenced an earlier job performance review that included the
following comments:
2. Donna displays an attitude toward peers and management that is not
consistent with the company's objective for positive mental attitude.
3. Donna's attitude is noted as disruptive amongst fellow staff members.
4. Donna's criticism towards fellow staff members is generally negative,
rather than constructive.
AHR at 76. LifeGuard then advised Haney that "{a}ny further personal
conduct of this nature {would} be grounds for immediate termination," and
that "{a}ny dispute of said incident and this letter of reprimand, must be
submitted in writing by November 22, 1996{.}" AHR at 76.
In a letter dated November 14, 1996, Haney disputed management's charge
that she was disruptive, overly critical, and displayed a negative attitude
toward her co-workers and management. In addition, Haney accused
management of having big egos and self-serving personal agendas:
In my 30 years in the work force, 20 years of it in lower to middle
management, I have never seen a management team with egos as big or agendas
as personal. This is self serving {sic} not company or staff serving.
AHR at 77. On January 24, 1997, citing her response to the letter of
reprimand as the proverbial last straw, LifeGuard discharged Haney:
The grievance filed against you on November 9, 1996 is representative of
the performance issues specifically outlined in your performance review
which were noted in the section titled "Needs Improvement". The unusual
nature of the grievance clearly identified that you posed a serious threat
to the safety or health of other employees, and accordingly you were issued
a final warning with emphasis on termination should any further personal
conduct of this nature continue.
Your reply given to senior management on November 14, 1996 with regards to
your final warning of reprimand displayed a clear disregard and disrespect
for management, and is determined to be an act of insubordination to
management. Immediate discharge is justified.
AHR at 78.
The State Employment Security Department denied Haney unemployment
benefits under RCW 50.20.060, concluding that LifeGuard discharged her for
work-related misconduct. An Administrative Law Judge (ALJ) from the Office
of Administrative Hearings affirmed the Department's decision and the
Employment Security Department Commissioner affirmed the Office of
Administrative Hearings' decision, adopting the ALJ's findings of fact and
conclusions of law as his own. Haney then filed a petition for review in
King County Superior Court, and the Superior Court affirmed the
Commissioner's order denying Haney unemployment benefits:
The court gave serious consideration to petitioner's argument that because
her inappropriate remarks about management were made in the context of
responding to a letter of reprimand they should be given greater leeway
under the so-called "equality principle" embodied in a number of NLRB
decisions. See, e.g., American Telephone and Telegraph Co. v. NLRB, 521
F.2d 1159 (2d Cir. 1975). However, given the totality of the circumstances
described in this fact pattern, the court rejects petitioner's contention
that this activity was not intentional misconduct thus justifying the
decision of the Commissioner below.
Clerk's Papers at 12. Haney appeals the Superior Court's order affirming
the Employment Security Department Commissioner's decision denying her
unemployment benefits.
DISCUSSION
"Under the Employment Security Act, an individual who is discharged 'for
misconduct connected with his or her work' is disqualified from benefits."
Hamel v. Employment Sec. Dep't, 93 Wn. App. 140, 145, 966 P.2d 1282 (1998)
(quoting RCW 50.20.060), review denied, No. 67722-1 (Wash. June 1, 1999).
The ESA defines "misconduct" as "an employee's act or failure to act in
willful disregard of his or her employer's interest where the effect of the
employee's act or failure to act is to harm the employer's business." RCW
50.04.293. Therefore, to constitute "disqualifying misconduct," the
employee's conduct must be "both willful ('willful disregard of {the}
employer's interest') and harmful to the employer ('effect . . . is to harm
the employer's business.')." Dermond v. Employment Sec. Dep't, 89 Wn. App.
128, 133, 947 P.2d 1271 (1997) (quoting Galvin v. Employment Sec. Dep't, 87
Wn. App. 634, 641-42, 942 P.2d 1040 (1997), review denied, 134 Wn.2d 1004
(1998)); accord Hamel, 93 Wn. App. at 144-47.
I. National Labor Relations Act
As an initial matter, Haney, relying on cases interpreting section 7 of the
National Labor Relations Act, contends that an employee responding to an
employer's disciplinary action should be allowed to make candid or even
insulting comments without this otherwise insubordinate conduct
constituting disqualifying misconduct. But Haney concedes that her conduct
is not covered by NLRA and does not argue that the NLRA preempts the ESA's
definition of misconduct. Therefore, the issue presented is whether NLRA
principles should be considered when determining if a claimant not covered
under the NLRA engaged in disqualifying misconduct under the ESA.
The NLRA's declared purpose is to equalize the bargaining positions of
employers and employees "by encouraging the practice and procedure of
collective bargaining and by protecting the exercise by workers of full
freedom of association, self-organization, and designation of
representatives of their own choosing, for the purpose of negotiating the
terms and conditions of their employment or other mutual aid or
protection." 29 U.S.C.A. sec. 151 (1998). To carry out this purpose, the
National Labor Relations Board "has long held that while employees are
engaged in collective bargaining, including the presentation of grievances,
they are essentially insulated from discipline for statements made to
management representatives which, if made in other contexts, would
constitute insubordination." Ryder Truck Lines, Inc., 239 N.L.R.B. 1009,
1010 (1978); accord Earle Indus. v. N.L.R.B., 75 F.3d 400, 405 (8th Cir.
1996) ("In view of the purposes of the NLRA, we have recognized that an
employer cannot insist on subordination in the context of bargaining or
grievance processes.").1 From the NLRB's perspective, if employees are not
afforded a reasonable amount of leeway in their negotiations with
management, the equal bargaining power and collective representation aims
of the NLRA could be seriously undermined:
A frank, and not always complimentary, exchange of views must be expected
and permitted the negotiators if collective bargaining is to be natural
rather than stilted. . . . If an employer were free to discharge an
individual employee because he resented a statement made by the employee
during a bargaining conference, either one of two undesirable results would
follow: collective bargaining would cease to be between equals (an
employee having no parallel method of retaliation), or employees would
hesitate ever to participate personally in bargaining negotiations, leaving
such matters entirely to their representatives.
Crown Cent. Petroleum Corp. v. N.L.R.B., 430 F.2d 724, 731 (5th Cir. 1970)
(quoting Bettcher Mfg. Corp., 76 N.L.R.B 526, 527 (1948)).
For example, in Hawaiian Hauling Serv., Ltd. v. N.L.R.B., 545 F.2d 674, 675
(9th
Cir. 1976), after an employee called the employer's general manager a liar
during a grievance proceeding, the general manager immediately discharged
the employee for insubordination. The NLRB concluded that the discharge
was repugnant to NLRA policy permitting employees to pursue grievances and
ordered the employer to reinstate the employee. Hawaiian Hauling Serv.,
Ltd., 219 N.L.R.B. 765, 766 (1975), enforced 545 F.2d 674 (9th Cir. 1976).
On appeal, the Ninth Circuit Court of Appeals noted that "grievance
meetings often generate high emotions" and that "a large number of
grievances turn on credibility{.}" Hawaiian Hauling, 545 F.2d at 676-77.
Therefore, the court held that "the Board was within its discretion when it
viewed the dispute from the perspective of the possible chill on pursuing
grievances" and enforced the NLRB's reinstatement order. Id. at 677.
Although Haney's argument contains a certain amount of surface logic,
careful scrutiny reveals that these NLRA principles should not be
considered in determining if an individual claimant not covered under the
NLRA engaged in disqualifying misconduct under ESA when disputing an
employer's disciplinary action. First, the only reason that the NLRB
tolerates this otherwise insubordinate behavior is to further the equal
bargaining power and collective representation aims of the NLRA. As Haney
concedes, an individual claimant not covered under the NLRA does not act on
behalf of a union or any fellow employees. Second, if this court were to
hold that insubordination in response to a disciplinary action does not
constitute disqualifying misconduct, an employee could invoke his or her
employer's disciplinary procedures, harangue management, and be discharged
without sacrificing unemployment benefits. Such a holding would contravene
the ESA's purpose of reducing the impact of involuntary unemployment on
persons "unemployed through no fault of their own." RCW 50.01.010.
Admittedly, it would be difficult for an employee to vigorously
dispute an employer's disciplinary action without challenging some of the
employer's reasons or bases for taking the disciplinary action. But RCW
50.04.293 and RCW 50.20.060 adequately protect employees who choose to take
issue with an employer's disciplinary action. That is, if an employee
responds to a disciplinary action taken by an employer in a reasonable,
restrained, and respectful manner, he or she would not be willfully
disregarding his or her employer's interests or actually harming his or her
employer's business. Consequently, interjecting NLRA principles into
unemployment compensation cases involving individual claimants not covered
under the NLRA would not further the purposes of the NLRA or the ESA, and
would inevitably lead to unnecessary confusion regarding what does or does
not constitute disqualifying misconduct under the ESA. Therefore, we apply
the ESA without reference to NLRA principles to determine if a claimant not
covered under the NLRA, such as Haney, engaged in disqualifying misconduct.2
II. DISQUALIFYING MISCONDUCT
As discussed above, to constitute "disqualifying misconduct" under the
ESA, the employee's conduct must be "both willful . . . and harmful to the
employer{.}" Dermond, 89 Wn. App. at 133 (citations omitted). This
inquiry generally involves a mixed question of law and fact. Id. at 132.
"On mixed questions of law and fact, we determine the law independently and
then apply the law to the facts as found by the agency." Hamel, 93 Wn.
App. at 145.3 In the unemployment benefits context, what constitutes
willful misconduct that actually harms an employer's business is a question
of law; whether a particular claimant engaged in willful misconduct that
actually harmed his or her employer's business is a question of fact.
In this case, the ALJ found that the "content and tone of {Haney's} written
response to the letter of reprimand was in knowing and intentional
disregard of reasonable employer expectations well known to the claimant
and well known in the workplace, and were indicative of an on-going
attitudinal problem which resulted in harm to the employer's legitimate
interests." AHR at 95.4 The ALJ also found that "{t}he conduct continued
despite counseling and warning," and "was not beyond the claimant's
reasonable control." AHR at 95. Therefore, the ALJ concluded that "the
conduct for which {Haney} was discharged was misconduct within the meaning
of RCW 50.20.060." AHR at 95.
A. Willful Disregard of Employer's Interests
"{A}n employee acts with willful disregard when he {or she} (1) is
aware of his {or her} employer's interest; (2) knows or should have known
that certain conduct jeopardizes that interest; but (3) nonetheless
intentionally performs the act, willfully disregarding its probable
consequences." Hamel, 93 Wn. App. at 146-47. "{A}n employer's previous
warnings to avoid certain behavior may provide strong evidence of the
employee's knowledge that the conduct is inconsistent with the employer's
interest." Id. at 148.5 "Mere incompetence, inefficiency, erroneous
judgment, or ordinary negligence does not constitute misconduct for
purposes of denying unemployment
compensation." Dermond, 89 Wn. App. at 133.
Haney contends that the administrative record does not support a finding
that her response to the letter of reprimand was made in willful disregard
of LifeGuard's interests, because she was not specifically warned that a
candid, insulting response to the letter of reprimand was unacceptable.
But Haney states the issue too narrowly. Although her response to the
letter of reprimand was the proverbial last straw, LifeGuard discharged her
for her continuous disruptive, overly critical, and negative attitude
toward her co-workers and management. Therefore, the true issue is whether
the administrative record supports a finding that Haney's response to the
letter of reprimand, in light of her continuous disruptive, overly
critical, and negative attitude toward her co-workers and management, was
made in willful disregard of LifeGuard's interests.
A review of the administrative record indicates that LifeGuard repeatedly
warned Haney that her overly critical personal comments to her fellow
workers and her demonstrative lack of respect for management violated
company policy and were adversely affecting the workplace. In addition, in
the letter of reprimand, LifeGuard specifically warned Haney that any
further personal attacks on her co-workers or management would result in
her immediate discharge. Moreover, the fact that Haney accused LifeGuard's
management of having big egos and self-serving personal agendas in a typed
response demonstrates some forethought and purpose. Therefore, we conclude
that the administrative record sufficiently supports a finding that Haney's
response to the letter of reprimand, in light of her continuous disruptive,
overly critical, and negative attitude toward her co-workers and
management, was made in willful disregard of LifeGuard's interests.
B. Actual Harm to Employer's Business
"{T}o establish that an employee's conduct had the effect of causing harm
to the employer's business, actual detriment to the employer's operations
must be objectively demonstrated." Dermond, 89 Wn. App. at 135-36. "While
the harm suffered need not be tangible or economic, . . . the Legislature
intended that it be more than imaginary or theoretical." Id. at 135.
"Each case must be examined on its own facts." Id. at 136.
In this case, Douglas J. Watson, a LifeGuard Sales Manager, testified
that Haney's conduct was "intimidating" to other employees, that the
November 9, 1996 incident was "very disruptive," and that the other
employee involved in the November 9, 1996 incident "was in fear of her well-
being." AHR at 24. Watson further testified that management was "taken
aback" by Haney's response to the letter of reprimand, AHR at 21, and that
management felt compelled to take action: "We couldn't tolerate this
perpetual feeling of . . . what was going on in the office, all the -- air
was so thick you could almost cut it with a knife." AHR at 32. Needless
to say, an employer has a strong interest in maintaining a congenial and
productive workplace. See Binkley v. City of Tacoma, 114 Wn.2d 373, 382,
787 P.2d 1366 (1990). Therefore, we conclude that the administrative
record sufficiently supports the ALJ's finding that Haney's response to the
letter of reprimand, in light of her continuous disruptive, overly
critical, and negative attitude toward her co-workers and management,
actually harmed LifeGuard's business.
In sum, applying the ESA without reference to NLRA principles, the
administrative record sufficiently supports the ALJ's findings that Haney
willfully disregarded LifeGuard's known interests and actually harmed
LifeGuard's business when she, in a typed response to the letter of
reprimand, accused management of having big egos and self-serving personal
agendas. These findings, in turn, support the ALJ's conclusion that Haney
engaged in disqualifying misconduct under the ESA. Therefore, we affirm
the Employment Security Department's denial of Haney's claim for
unemployment benefits.
WE CONCUR:
1 Likewise, under Washington's Public Employees' Collective Bargaining
statute, a covered employee's conduct during a collective bargaining or
grievance proceeding is protected if it is "reasonable" under the
circumstances:
Reasonable employee activity is protected while unreasonable employee
activity is not but reasonableness is gauged in the context of the labor
dispute, recognizing that the law favors "a robust exchange of viewpoints,"
and that economic pressure is a legitimate tool.
Vancouver Sch. Dist. No. 37 v. Service Employees Int'l Union, 79 Wn. App.
905, 923, 906 P.2d 946 (1995), review denied, 129 Wn.2d 1019 (1996).
2 Because Haney concedes that her response to the letter of reprimand is
not a protected activity under the NLRA, we need not and do not decide if
NLRA-protected activity can constitute disqualifying misconduct under
Washington's Employment Security Act. We note, however, that state courts
are split on this issue. For example, in Pennsylvania, "although NLRB
rulings are not binding on {the} courts, a determination that the Act
protects the claimant's activity is persuasive when considering whether the
same behavior constitutes willful misconduct pursuant to the Pennsylvania
Unemployment Compensation Law." Caterpillar, Inc. v. Unemployment
Compensation Bd. of Review, 550 Pa. 115, 703 A.2d 452, 457 (1997). In
Ohio, on the other hand, federal labor law is irrelevant for purposes of
determining if an employee engaged in disqualifying misconduct under Ohio's
Unemployment Compensation Act:
{A} hearing officer from the Bureau of Employment Services cannot evaluate
the behavior of the union and the employer according to the National Labor
Relations Act. Federal labor law does not apply and confuses the relevant
focus of the hearing officer's inquiry: "Are the employees unemployed
through no fault of their own?"
Alsip v. Klosterman Baking Co., 113 Ohio App. 3d 439, 680 N.E.2d 1320, 1325
(1996), review denied, 674 N.E.2d 376 (1997); accord Bernhardt v. Labor &
Indus. Review Comm'n, 207 Wis. 2d 292, 558 N.W.2d 874, 875 (1996) (holding
that "NLRB law does not constitute persuasive authority with Wisconsin's
employment compensation law" for purposes of determining if a claimant
engaged in disqualifying misconduct), review denied, 562 N.W.2d 602 (1997);
see also New York Tel. Co. v. New York Labor Dep't, 440 U.S. 519, 529 n.15,
99 S. Ct. 1328, 59 L. Ed. 2d 553 (1979) (plurality opinion) (suggesting
that if a state employment agency applied NLRA principles to decide if a
claimant qualifies for state unemployment benefits, the agency would be
impermissibly infringing on the NLRB's exclusive authority to determine if
an unfair labor practice occurred).
3 "On issues of law, we may substitute our judgment for that of the
administrative body; however, we accord substantial weight to the agency's
view of the law it administers." Hamel, 93 Wn. App. at 144-45. On issues
of fact, we review the administrative record as a whole for substantial
evidence supporting the agency's findings. Id.
4 A finding of fact mislabeled as a conclusion of law is reviewed as a
finding of fact. Miller v. Anderson, 91 Wn. App. 822, 825 n.1, 964 P.2d
365 (1998).
5 In Hamel, Division Two held that a violation of a company rule after
repeated warnings in and of itself is not enough to establish willful
misconduct. Hamel, 93 Wn. App. at 146-48. Division One's opinion in
Dermond can be read as permitting a finding of willful misconduct where the
claimant violated a company rule after repeated warnings: "In deciding
whether an employee's conduct is disqualifying misconduct under the
statute, we examine whether the employee's violation of the employer's rule
is intentional, grossly negligent, or continue{s} to take place after
notice or warnings." Dermond, 89 Wn. App. at 133 (citation and internal
quotations omitted). But as Division Two notes, there must be evidence
that the claimant acted intentionally and not merely incompetently or
negligently. Hamel, 93 Wn. App. at 146-47.