Craig Medeiros worked for Paratransit, Inc. as a vehicle operator for six years.  Medeiros was a member of a union.  The collective bargaining agreement (CBA) between the union and Paratransit stated that an employee must sign all disciplinary notices when presented to him or her, provided that the notice states that by signing, the employee only acknowledges receipt of the notice and does not admit fault or to the truth of the statements in the notice. 

In 2008, Paratransit concluded that Medeiros unlawfully harassed a passenger.  It met with Medeiros and provided him a memorandum explaining that he was being suspended for two days without pay because of the incident.  Paratransit explained the substance of the memorandum and asked him to sign above the words, "Employee Signature as to Receipt."  Medeiros refused, stating that signing would constitute an admission of guilt, and asked for a union representative.  Paratransit said Medeiros was not entitled to have a union representative present and warned him that his refusal to sign was in violation of the CBA and would be viewed as insubordination and grounds for termination of his employment.  Medeiros again refused, stating that the union president told him not to sign anything without a union representative present.  Paratransit terminated Medeiros' employment for insubordination. 

Medeiros filed an application for unemployment benefits which the Employment Development Department (EDD) denied.  Medeiros appealed.  At the hearing before the ALJ, Medeiros testified that he was confused and tired during the meeting with Paratransit, and that Paratransit brought up matters that had occurred six years earlier, which only added to his confusion.  Nonetheless, the ALJ affirmed the EDD's denial of benefits, finding that Medeiros was disqualified from receiving benefits because he was discharged for misconduct connected with work.  Medeiros appealed to the Unemployment Insurance Appeals Board (Board), which reversed the ALJ's decision.  Through a series of writs and appeals, this case ultimately reached the California Supreme Court, which found in favor of Medeiros.

California Unemployment Insurance Code Section 1256 provides that an individual is not eligible for unemployment compensation benefits upon a finding that he was discharged for misconduct connected with his most recent work.  Violating an employer's reasonable order because of a good faith error in judgment does not disqualify an employee from receiving benefits.  Rather, there must be substantial evidence that the employee deliberately, willfully, and intentionally disobeyed.  The reasonableness of the employee's actions must be judged from his standpoint in light of the circumstances facing him and the knowledge he possessed at the time.  An employer's right to discharge an employee for an act of disobedience does not necessarily mean that the act amounted to misconduct for purposes of the Unemployment Insurance Code. 

Here, there was no evidence that Medeiros refused to sign the disciplinary notice to frustrate Paratransit's objectives or for the sake of being difficult.  The notice did not explicitly state that Medeiros' signature was solely for receipt purposes, and, under the circumstances, it was not unreasonable for Medeiros not to accept Paratransit's verbal assurances as to the legal effect of his signature.  Further, a single act of disobedience without prior warnings is generally not misconduct unless it is substantially detrimental to the employer's interest.  However, there was no evidence on the record that Medeiros' refusal to sign without first consulting his union interfered with or threatened Paratransit's business.  Therefore, the California Supreme Court held that, even assuming Paratransit's order to sign the notice was reasonable and Medeiros' refusal to sign justified termination, the undisputed facts do not establish that Medeiros committed misconduct within the meaning of Section 1256.  Rather, Medeiros' refusal to sign was a good faith error in judgment that does not disqualify him from unemployment benefits.  Thus, Medeiros is entitled to unemployment benefits.               

Note:

Agencies often oppose claims for unemployment benefits filed by former employees.  As this case illustrates, it may be difficult to prove that an employee is disqualified from obtaining benefits due to misconduct.  A refusal to comply with a workplace rule is likely not enough.  Ordinary negligence, or good faith errors in judgment are also not sufficient.  It is important to keep in mind that the decision does not address the issue of whether it was proper to terminate the employee, but whether the circumstances surrounding the termination justified a denial of unemployment benefits.  Agencies that oppose a former employee's attempt to get unemployment benefits should be prepared to demonstrate the employee engaged in willful disobedience, received prior warnings or notices and/or somehow frustrated the agency's objectives. 

Paratransit, Inc. v. Unemployment Insurance Appeals Bd. (2014) 327 P.3d 840.