Can an "honest mistake" be "willful misconduct?"

Yes, apparently, according to a sharply divided Pennsylvania Commonwealth Court opinion issued in Oliver v. Unemployment Compensation Board of Review.

Typically, unemployment compensation benefits are awarded to a claimant who is not responsible for willful misconduct. The burden of proving willful misconduct is on the employer.

Traditionally, willful misconduct has required a knowing action on the part of the claimant that his or her conduct was in violation of a known work rule. There is a case denying benefits that held that a negligent violation of a workrule might be sufficient. In that case, Heitczman v. Unemployment Compensation Board of Review, 638 A.2d 461 (Pa. Cmwlth. 1994), a claimant was aware of a rule requiring him to walk around the back of his truck before backing up. He failed to do so, and backed his truck into a light standard resulting in damage to the truck, after which he was terminated. The referee had granted benefits, finding that the light standard had been in the claimant's "blind spot," but the board reversed and the court affirmed finding that regardless whether the collision was "accidental" or not, the claimant had deliberately failed to walk around the back of the truck, and thereby had deliberately violated a workplace rule.

In Oliver, the claimant, a teacher at a pre-school, had been reminded two weeks earlier of the school's "zero tolerance policy" regarding failure to keep 100% of all children in their care under 100% control.

While exiting a playroom to lead her students outside, the claimant tripped then closed the door behind her accidentally leaving one of her students in the room. Several minutes later it was pointed out to her that she had only five of her six charges, and had left one of them alone in the playroom unattended. She was terminated, although she claimed that the violation had been an "honest mistake."

The Commonwealth Court ruled that "honest mistake" or not, the claimant knew that the policy existed, she had previously been warned, and she had nonetheless violated it when she left the student alone in the playroom. Of note was that the court considered all of the explanations the claimant offered, and still noted that her violation of the policy, regardless of whether accidental or deliberate, was "knowing," and accordingly justified a denial of benefits.

The moral of the story is that in order to prevail at UC hearings in Pennsylvania where an employer alleges "willful misconduct," it will be easier for employers to establish the employee's "knowledge" of the violated work rule and less important for the employee to explain the reasons behind the violation.

Whose Dream is it Anyway?

Last week, Glenn Beck shared, or I should say borrowed the venue at Martin Luther King gave his seminal "I Have a Dream" speech.

Beck claimed that the rally was to honor "our heroes, our heritage and our future." (While I hate to link to it, Beck's site is here.) He claimed the rally was a non-political event to pay tribute to America’s service personnel and "other upstanding citizens who embody our nation’s founding principles of integrity, truth and honor."

Perhaps I am plagued by the paranoia that afflicts some diasporan Jews, but his rallying cry to "restore honor" is eerily reminiscent of Hitler's early speeches in pre-war Germany.

I arrived at this juxtaposition on my own, but it appears I am not alone in seeing the pattern, witness here and here .

Fact is that Beck trades on his "commoner" image without any reasonable foundation. He is not one of his followers. He makes more than 20 million dollars a year spewing vitriol, hatred and paranoia. And he does so without shame, while invoking God.

As a civil rights attorney, I will defend his right to speak, regardless of the lack of any intellectual content to his drivel, but the fact that he appeals to anyone without cortical level impairment remaings frightening.

As one of my very favorite bloggers, Helen Philpot of "Margaret and Helen" wrote recently here:

"The greatest threat against America is not terrorism. It’s not a mosque in Manhattan. It’s not gay marriage. It’s not healthcare reform. And, believe it or not, it’s not even Beck or Palin. The greatest threat against America are the tens of millions of Americans who won’t turn out to vote this November effectively giving power to 87,000 angry assholes."

Nothing positive can come from such negative energy. Nothing positive ever came from Hitler either.

Employee or Independent Contractor? How much are you willing to bet?

A significant number of employers cut corners by classifying their employees as "independent contractors." These employers are also hoping to avoid considerable employment taxes which are due to Federal, state and even local departments of revenue. The New York Times reported yesterday that Federal and state officials are beginning to pursue aggressively those employers who misclassify employees as independent contractors, in an effort to address their deficits.

Professional firms are among the most notorious who do this. I know many law firms who treat their associates as independent contractors, issuing 1099's at year's end, and expecting their associates to file business tax returns in those municipalities where such taxes are required. In addition, many other service companies --- cleaning, contracting, delivery --- use the "independent contractor" approach to dodge paying employment taxes.

While case law varies from state to state, much of the legal analysis comes from a well-established United States Supreme Court decision United States v. Silk, 331 U.S. 704 (1947). In that case, the Court outlined several criteria which are still followed to this date in determining whether an employee is an employee or a genuine independent contractor:

1. The degree of the employer's control, that is, to what extent does the employer dictate how, when and where the job is performed?
   
2. The alleged independent contractor’s investment in facilities and tools. Does the employer supply the tools, equipment and supplies or does the independent contractor?
3. The independent contractor’s exposure to “profit and loss.” Is the alleged independent contractor dealing with costs versus sales or is their compensation thinly disguised piece work, hourly work, or salaried?
4. The permanency of the relationship between the parties. Is this a one shot deal? Have the two been working together for years? Is the employer "assigning" jobs to the independent contractor like a referral agency, or is the employee intrinsically part of the employer's operations?
5. The skill involved.

Courts have also considered collateral issues such as the independent contractor’s ability to work for others and the independent contractor’s ability to “determine their own direction in the marketplace” in assessing whether an individual is an employee or an independent contractor.

Remember that there can be individual liability on the part of corporate officers for unpaid employment taxes, and no corporate structure will adequately protect individuals from such liability. In addition, many states provide for criminal liability on the part of non-paying employers, and I know of more than one corporate officer with reporting probation while a past balance of unemployment compensation tax is paid off.

So, you may call those employees of yours independent contractors, but how much do you really want to bet?