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Sinker v. Sweeney, 89 N.Y.2d 485 (Feb. 6, 1997).

LABOR LAW - UNEMPLOYMENT BENEFITS - DISBARMENT

A FELONY "IN CONNECTION WITH" EMPLOYMENT INCLUDES CONDUCT WHICH BREACHES AN EXPRESS OR IMPLIED DUTY THE EMPLOYEE OWES THE EMPLOYER REGARDLESS OF WHETHER OR NOT THE FELONIOUS CONDUCT WAS COMMITTED AGAINST THE EMPLOYER OR COMMITTED IN THE COURSE OF EMPLOYMENT.

[SUMMARY] | [ISSUE & DISPOSITION] | [AUTHORITIES CITED] | [COMMENTARY]

SUMMARY

An attorney who was working for a title abstract company was convicted of submitting a false insurance claim for alleged theft of personal property. As a result of the conviction, the attorney was disbarred and terminated by his employer. The Commissioner of Labor denied the attorney's application for unemployment insurance benefits. The Commissioner's denial of benefits was sustained by an Administrative Law Judge, the Unemployment Insurance Appeal Board, and the Appellate Division.

ISSUE & DISPOSITION

Issue

Whether N.Y. Labor Law § 593(4) precludes unemployment benefits where the claimant is convicted of a felony committed neither against the employer nor in the course of employment.

Disposition

Yes. A felony is "in connection with" employment for purposes of N.Y. Labor Law § 593(4) if it results in breach of an express or implied duty the claimant owes the employer.

AUTHORITIES CITED

Cases Cited by the Court

  • Punter v. Ross, 43 N.Y.2d 743 (1977).
  • De Grego v. Levine, 39 N.Y.2d 180 (1976).
  • Rosedietcher v. Levine, 33 N.Y.2d 377 (1974).
  • Bruggeman v. Roberts, 477 N.Y.S.2d 449 (N.Y. App. Div. 1984).
  • Caryl v. Roberts, 466 N.Y.S.2d 825 (N.Y. App. Div. 1983).
  • Markowitz v. Roberts,464 N.Y.S.2d 262 (N.Y. App. Div. 1983).

Other Sources Cited by the Court

Related Sources

COMMENTARY

State of the Law Before Sinker v. Sweeney

New York courts have previously interpreted Labor Law § 593 to disqualify an employee from unemployment insurance benefits in cases where the employee is discharged for engaging in conduct that is in "willful disregard" of reasonable employer expectations. In Punter v. Ross, 43 N.Y.2d 743 (1977), the Court of Appeals held that the claimant, a credit and collection clerk for a department store, was disqualified from unemployment benefits due to her intentional completion of an insurance form on behalf of her employer without authorization. Such misconduct "bears materially on claimant's fitness and integrity to serve in the capacity of a credit and collection clerk." Id. at 744. In DeGrego v. Levine, the Court of Appeals similarly determined that denial of unemployment benefits is appropriate in situations where the employee engaged in misconduct or provoked discharge. 39 N.Y.2d 180 (1976). In that case, an employee was terminated for wearing a political button. The court ruled the employee was eligible for the unemployment benefits because there was no evidence that the employee's conduct was "detrimental to the employer's interest or in violation of a reasonable work condition so as to constitute misconduct." Id. at 184. The court denied unemployment benefits to an employee who was terminated for falsification of his employment application by not reporting a prior arrest. Rosedietcher v. Levine, 33 N.Y.2d 377 (1974). The court held that in the interest of the employer an audit clerk for a stockbroker should be trustworthy, thus requiring full disclosure of any previous arrests.

Furthermore, the New York Appellate Division held in three cases that claimants were properly disqualified from receiving unemployment benefits even though their misconduct was not directly related to their employment. See Bruggeman v. Roberts, 477 N.Y.S.2d 449 (1984) (holding that an employee's felonious misconduct committed during nonworking hours reflected negatively on the employee's integrity and on the employee's relationship to his employer and precluded the employee from recovering unemployment benefits); Caryl v. Roberts, 466 N.Y.S.2d 825 (1983) (ruling that an employee's intentional disregard of reasonable standards of behavior at an employer awards dinner constituted misconduct that disqualified the employee from unemployment benefits); Markowitz v. Roberts, 464 N.Y.S.2d 262 (1983) (determining that an employee's felonious actions committed during nonworking hours prohibited the employee from receiving unemployment benefits because the employee has an obligation to adhere to standards of behavior that an employer may reasonably expect of an employee).

Effects of Sinker v. Sweeney On Current Law

The Court of Appeals' holding expands the scope of activities which would prevent a former employee from collecting unemployment benefits. Prior to this case, a felony committed "in connection with" employment had been interpreted as a covering a variety of acts which violated a duty to the employer. The scope of this duty varies in accordance with "the nature of the duty involved" Sinker v. Sweeney, at 2. (For discussion of cases defining this duty see above section on State of Law Before Sinker v. Sweeney. See particularly Bruggeman v. Roberts.)

The common requirement for denial of benefits is "wilful disregard of standards of behavior which employers have a right to expect of their employees." Sinker, at 2. The Sinker court found that the claimant's submission of a false insurance claim for loss of personal items demonstrated disregard for employer standards and was a breach of duty with a resulting harm to the employer. The employer in this case was a title abstract company and had to maintain its reputation as a trustworthy and reliable business. Claimant's actions jeopardized his employer's reputation. This result affirms the reasoning of the Third Department in Bruggeman v. Roberts. Under Sinker, future claimants will be denied unemployment benefits when their off-hours misconduct risks either the professional qualifications of the claimant or the reputation of the employer's business.

Unanswered Questions

The court bases its decision to deny unemployment insurance benefits on appellant's violation of a duty owed to his employer; however, the boundaries of the duty are unclear. How far does this duty extend, and what events constitute a breach of this duty? Is the duty based on a reasonable standard in accordance with the type of job or may the employer set the duty himself? For example, may an employer say that an employee's duty consists of never being convicted of any crime?

One possible interpretation of the court's decision is that a duty to the employer is breached when the conviction is related to the employee's current position. This interpretation of the decision limits the reach of the duty. See Markowitz v. Roberts , 464 N.Y.S.2d 262 (1983) (holding a government agency's integrity was affected when its employee, a high agency official, was convicted of bribery); DeGrego v. Levine, 39 N.Y.2d 180 (1976) (holding that unemployment insurance benefits may be denied where the employee's actions are "detrimental to [the] employer's interest").

Survey of the Law in Other Jurisdictions

Individuals are generally entitled to unemployment benefits only when their unemployed status arose through no fault of their own. In keeping with this general policy a number of states have enacted statutes which deny benefits to individuals who lose their employment through misconduct in connection with their employment. A Washington State statute, Wash. Rev. Code § 50.20.060 (1990), has nearly identical language to that of N.Y. Labor Law § 593(4). Washington courts seeking to clarify the language of the statute have required the employer to show that a reasonable person would find a nexus between the employee's misconduct and the work of the employer. Nelson v. Department of Employment Sec., 655 P.2d 242 (1982). The "in connection with employment" stated in Maryland Code § 8-1003 (1991) has been construed as not requiring that the conduct occur during work hours or on the employer's property, but there must be a breach of a duty to the employer and not just an adverse effect upon the employer. Employment Sec. Bd. v. Lecates, 145 A.2d 840 (1958). Louisiana courts have stated that the misconduct need not occur during work time or on the employer's premises. Rather, the misconduct must show a willful or wanton disregard for an employer's interests and such disregard is shown where the conduct leaves the employee unable to come to work or to perform the requirements of his employment. Grimble v. Brown, 171 So. 2d 653 (1965).

Several other state statutes are more explicit and do not require that the misconduct be "in connection" with the employment. For example, the Maine statute provides for the disqualification from benefits for unemployment due to the conviction of any felony or misdemeanor. Maine Rev. Statutes Ann. 26 § 1193 (West 1964). Similarly, Cal. Unemployment Insurance Code § 1256.1 (West 1986) states that if an individual is absent from work for a period in excess of twenty-four hours due to incarceration or conviction of an offense, the individual is deemed to have left work voluntarily and is therefore disqualified from receiving benefits. However, where an employee is discharged for criminal activity occurring during non-work hours, the off-duty activity must harm the employer's interests. American Federation of Labor and Congress of Indus. Organizations v. Unemployment Ins. Appeal Bd., 23 Cal.App.4th 51 (1994).

Prepared By:

  • Scott M. Davies, 97
  • Andrew Fowler, 98
  • John A. Jeziorski, 98
  • Anita J. Lee, 98
  • Michael Smith, 98
  • Reese E. Solberg, 97
  • Joymarie Torres, 98