Court Opinion

ID: 4641960
Source: CourtListenerOpinion
Date Created: 2020-12-11 14:13:24.468656+00
Date Added: 2024-06-11T08:00:26.347954
License: Public Domain

IN THE COMMONWEALTH COURT OF PENNSYLVANIA

The Community Youth and Women’s               :
Alliance,                                     :
                      Petitioner              :
                                              :
                v.                            :    No. 77 C.D. 2020
                                              :    Submitted: November 12, 2020
Unemployment Compensation                     :
Board of Review,                              :
                    Respondent                :

BEFORE: HONORABLE P. KEVIN BROBSON, Judge
        HONORABLE CHRISTINE FIZZANO CANNON, Judge (P.)
        HONORABLE ELLEN CEISLER, Judge

OPINION NOT REPORTED

MEMORANDUM OPINION
BY JUDGE BROBSON                              FILED: December 11, 2020

       Petitioner The Community Youth & Women’s Alliance (Employer) petitions
for review of an order of the Unemployment Compensation Board of Review
(Board). The Board affirmed a decision of the Unemployment Compensation
Referee (Referee), granting Miriam E. Wealer (Claimant)1 unemployment
compensation benefits. For the reasons set forth below, we vacate the Board’s
decision and remand this case to the Board for further proceedings consistent with
this opinion.

       1
         By order dated August 14, 2020, this Court granted Claimant’s application to intervene
in this matter.
      Claimant applied for unemployment compensation benefits on July 10, 2019,
after separating from her position as Executive Director with Employer.
(Certified Record (C.R.), Item No. 2 at 1-2.) The Altoona UC Service Center
(Service Center) determined that Claimant was ineligible for unemployment
compensation benefits for the week ending on July 13, 2019. (C.R., Item No. 6.)
Claimant filed a timely appeal of the Service Center’s determination, and a Referee
conducted a hearing. (C.R., Item Nos. 7, 10.) At the hearing, Employer presented
the testimony of Melissa Lopez (Lopez), an employee of Employer, and
Reverend Sherry Deets (Deets), a member of Employer’s board of directors.
Claimant testified on her own behalf.
      Lopez testified that she worked as an Office Assistant with Employer
since August 4, 2017. (Reproduced Record (R.R.) at 12.) Her primary duty was
assisting Claimant with everyday tasks, including answering the phone,
typing letters and grants, and reading Claimant’s emails. (Id. at 12-14, 27.) Lopez
testified that, as Executive Director, Claimant was the primary finance person in
charge of maintaining services and signing the checks for such services in amounts
under $5,000.2 (Id. at 14-16, 18.) Lopez stated that she learned on May 9, 2019,
that Employer’s insurance policy had been cancelled as of May 6, 2019, due to
nonpayment of the insurance premium. (Id. at 16, 21.) When Lopez told Claimant
about the lapse of insurance, Claimant stated that she wanted to keep the issue on
the “down low,” but that she would speak to members of Employer’s board of
directors to have the insurance reinstated. (Id. at 16.) Lopez further testified that,
in February or March 2019, Employer’s trash service through Waste Management

      2
        Amounts exceeding $5,000 required the additional signature of one of two board
members assigned to the responsibility. (R.R. at 15.)

                                          2
was cancelled also due to nonpayment. (Id. at 18.) It was Lopez’s understanding
that Claimant was responsible for maintaining both the insurance policy and trash
service for Employer.     (Id. at 16, 18.)   Claimant went on medical leave in
February 2019, and Lopez recalled that Claimant returned full-time in the middle of
March 2019. (Id. at 26-27.) While it is unclear from Lopez’s testimony exactly
when Claimant learned of the issues regarding nonpayment of the insurance and
trash service, Lopez testified that Claimant was or should have been aware of both
issues prior to the services being cancelled, i.e., between February and April 2019.
(Id. at 27-32.) Lopez testified that, after Employer discharged Claimant, the board
of directors informed Lopez and other staff members that Employer terminated
Claimant’s employment due to mismanagement, but they were not given specific
details. (Id. at 21.)
       Employer’s second witness, Deets, testified that she had served as Secretary
on Employer’s board of directors since the summer of 2017. (R.R. at 35.) Deets
learned of the lapse of insurance at Employer’s board meeting on June 19, 2019, and
she discovered the trash service cancellation after a neighbor filed a complaint in
early May. (Id. at 38-40, 49-50.) After reviewing the trash service fees, Deets was
alarmed by the significant amount Employer was paying. (Id. at 40.) Deets also
testified that loans had been taken out on the properties owned by Employer, which
was confusing to her, because the grants Employer received from the government
were typically sufficient to cover all of Employer’s operating costs. (Id. at 36-37.)
Deets stated that Claimant oversaw essentially all of Employer’s operations,
including managing service contracts and obtaining grants and loans, and Claimant,
therefore, would have been responsible for the management of these items of
business. (Id. at 36, 39, 41.) During the time Claimant was on medical leave,

                                         3
however, the board did not appoint an acting Executive Director to take on these
tasks. (Id. at 45.) Moreover, Deets stated that the reason for nonpayment of the
insurance policy and trash fees, particularly during the period of Claimant’s medical
leave—i.e., February through April of 2019—was because Employer did not have
the funds to pay the bills. (Id. at 47-48.) Neither Deets, nor any member of the
board of directors, discussed the lack of funds with Claimant. (Id. at 48.)
      Deets testified that, at the end of the June 19, 2019 board meeting,
the board of directors unanimously voted to terminate Claimant’s employment.
(R.R. at 42-43.) Concerning the reason for Claimant’s termination, Deets stated:
      It was a combination of things. But again, the precipitating issue
      was . . . the non-payment of insurance, the fact that for some reason we
      were paying outrageous trash fees. Actually, the loans were a factor in
      this. We felt that waiting for a retirement at the end of the year would—
      we wouldn’t have any money left. We would have to close our doors
      if we did not move to, to enter [sic] employment.
(Id. at 43.) Employer discharged Claimant on June 24, 2019, one week after the
June 19, 2019 board meeting. (Id. at 43-44.) Employer did not give an official
reason for discharge at the time of Claimant’s termination. (Id. at 44.) Neither Deets
nor anyone from the board of directors discussed the insurance issue or lack of funds
with Claimant prior to her termination. (Id. at 48, 54.)
      Claimant testified that Employer terminated             her employment       on
June 24, 2019, and, despite her requests for a reason for her discharge, Employer did
not give one. (R.R. at 83.) Prior to her termination, Claimant was unaware even
that her job was in jeopardy. (Id.) Claimant testified that Employer typically adheres
to what she referred to as a “three-strikes” policy for discharge, and, therefore, she
expected that she would have received some kind of warning prior to her discharge.
(Id.) Claimant was on medical leave beginning in February of 2019, and her doctor

                                          4
did not release her for full-time work until April 26, 2019. (Id. at 84-85, 90.)
During this two-and-a-half-month time period, Claimant stated that, apart from
occasionally checking her email, she did not conduct any work at all. (Id. at 91.)
Claimant was barely walking and, therefore, physically unable to work. (Id.)
Claimant did not attend the February, March, or April board meetings. (Id. at 89.)
Although Claimant was aware that no interim was appointed during her leave, she
assumed that most of Employer’s major operations were being handled by the other
full-time employees, noting that Employer’s bookkeeper, Kathy Ferguson
(Ferguson), had been employed there for fifteen years and handled the finances with
Claimant. (Id. at 86.) Claimant testified that the board of directors typically stepped
in to make any interim appointments, and she, therefore, did not have a conversation
with the board about a replacement. (Id. at 93.) Claimant was also aware that
Lopez’s sister was the president of the board of directors, and she thought Lopez
would have consulted with her sister if she had any concerns while Claimant was on
leave.3 (Id. at 86.) When Claimant learned that the insurance had lapsed in early
May, she immediately called Employer’s contact at the insurance company, who
was not helpful or able to get the policy reinstated. (Id. at 92.) Claimant thereafter
put out bids, calling three or four different companies to bid on the job. (Id. at 97.)
       During Claimant’s testimony, counsel for Employer attempted to introduce
certain emails that Claimant received or was copied on during or around her medical
leave, but the Referee excluded the evidence and disallowed the line of questioning.
(R.R. at 94.) The Referee explained: “Well we are wasting everyone’s time, because
your witness testified that, and this witness testified that there was no reason given

       3
         Claimant noted that when she told Lopez in early May to keep the insurance issue on the
“down low,” she was attempting to protect Lopez and Ferguson from getting terminated.
(R.R. at 86-87.) Claimant believed that it was a “fireable” offense for them, not for herself. (Id.)

                                                 5
to the Claimant at the time of separation. So, all of this [is] irrelevant. You did not
tell her she was being discharged for financial mismanagement.” (Id.) During later
questioning concerning Claimant’s alleged mismanagement, the Referee again
disallowed a line of questioning by counsel for Employer:
      [Employer Lawyer]: So it’s your testimony that [in] May the board was
      aware that the insurance [had lapsed] . . . .
      [Client Lawyer]: Objection.
      [Referee]: Basis?
      [Client Lawyer]: Well it[’]s argumentative.
      [Referee]: I’m going to sustain but on a different ground. She wasn’t,
      again, she was not told she was discharged because insurance—she
      allowed the insurance to lapse or her staff allowed the insurance to
      lapse. So, let’s move on . . . .
      [Employer Lawyer]: Did the [board of directors] ever discuss with you
      their concerns about the condition of the properties owned by
      [Employer]?
      [Claimant]: Yes. . . .
      [Employer Lawyer]: What did those conversations entail?
      [Claimant Lawyer]: Objection . . . .
      [Referee]: I’m going to sustain. Again, she wasn’t given a reason [for
      her termination].

(Id. at 97-98.)
      On rebuttal, Deets testified that the board of directors had multiple
conversations with Claimant in the past about Claimant’s handling of the finances
and, therefore, thought Claimant knew why her employment was being terminated.
(R.R. at 99-100.) Claimant did not say anything to the board of directors at the
termination meeting, but Claimant afterward asked Deets personally why she was
fired, to which Deets did not give an answer. (Id. at 100.)

                                          6
       Following the hearing, the Referee issued a decision, concluding that
Employer did not present sufficient evidence to establish that Claimant’s termination
was for reasons which rise to the level of willful misconduct under Section 402(e) of
the Unemployment Compensation Law (Law).4                  (R.R. at 120.)    The Referee,
therefore, determined that Claimant was eligible for unemployment compensation
benefits. (Id. at 121.) The Referee made the following findings of fact:
       1.        The Claimant worked full-time as the Executive Director, for
                 approximately 30 years, until her last day worked on
                 June 24, 2019 . . . .
       2.        The Claimant was out of work, due to a medical condition,
                 beginning on or about February 4, 2019, until on or about
                 April 26, 2019.
       3.        On or about April 26, 2019, the Claimant’s physician released
                 her to return to work full[-]duty.
       4.        In May 2019, the Claimant discovered that the property
                 insurance lapsed.
       5.        The Claimant contacted the current agent about renewing the
                 policy.
       6.        The Claimant also “put out bids” to renew the policy.
       7.        On June 21, 2019, the Claimant attended a meeting for the Board
                 of Directors.
       8.        On June 24, 2019, the Employer discharged the Claimant.
       9.        The Employer did not provide the Claimant with a reason she
                 was being discharged during the meeting, but did provide the
                 Claimant with a separation agreement for her review, in which
                 she would receive one month’s salary.
       10.       Prior to her discharge, the Employer did not issue the Claimant
                 any warnings.
(Id. at 119-20.) The Referee reasoned:

       4
            Act of December 5, 1936, Second Ex. Sess., P.L. (1937) 2897, as amended, 43 P.S.
§ 802(e).

                                               7
        In the present case, the Employer discharged the Claimant.
        The Employer did not provide a reason to the Claimant for her
        discharge during the discharge meeting. The testimony of the Board
        Secretary/Treasurer, and the Claimant, indicated the Employer did not
        provide any reason to the Claimant, during the discharge meeting for
        her termination. The Employer provided the Claimant with a separation
        agreement, where the Claimant would receive one month’s salary, at
        the time of discharge for her to review. The Employer did not inform
        the Claimant that she was being discharged because of the lapse of
        insurance on the property, the cost of the waste management services,
        or the financial condition of the organization.

        As such, while the Referee in no way questions the Employer’s right to
        discharge the Claimant from employment, the Referee cannot conclude
        that the Employer has presented sufficient, competent evidence to meet
        its burden of proof in establishing the Claimant’s discharge from
        employment was for reasons which rise to the level of willful
        misconduct in connection with the work. Accordingly, there can be no
        denial of benefits under Section 402(e) of the Law.
(Id. at 120.)
        Employer appealed the Referee’s decision to the Board. (C.R., Item No. 13.)
The Board affirmed the decision of the Referee, adopting and incorporating the
Referee’s findings of fact and conclusions of law. The Board reasoned, in relevant
part:
        Moreover, the Board resolves the conflicts in the testimony, in relevant
        part, in favor of the claimant and finds her testimony to be credible.
        In this matter, the employer did not meet its burden to prove that it
        discharged the claimant for willful misconduct under Section 402(e) of
        the Law. At the hearing, the employer’s witnesses testified that it
        discharged the claimant for mismanagement, but the parties agree that
        the employer did not give the claimant a reason for her discharge.
        Further, the claimant testified that prior to her discharge, the employer
        did not warn her that her performance was unsatisfactory.
(R.R. at 124-125.) Employer now petitions this Court for review.

                                           8
       On appeal,5 Employer argues:                (1) the Board erred in affirming the
Referee’s decision to exclude evidence relevant to the question of Claimant’s
misconduct; (2) the Board arbitrarily and capriciously disregarded relevant
evidence; and (3) the Board erred in concluding that Claimant’s actions did not
constitute willful misconduct. As to the issue of willful misconduct, Employer
contends, in part, that the Board misapprehended the law when it held that an
employer cannot establish willful misconduct if the employer did not provide the
claimant with a reason for the discharge at the time of termination. Whether the
Board applied the correct legal standard may affect this Court’s analysis of all of the
issues raised by Employer. For that reason, we will first examine whether the Board
misapprehended the law.
       Under Section 402(e) of the Law, any employee who is discharged or
temporarily suspended for willful misconduct is ineligible for unemployment
compensation benefits. It is well-established that “[w]hether conduct rises to the
level of willful misconduct is a question of law to be determined by this Court.”
Brown v. Unemployment Comp. Bd. of Rev., 49 A.3d 933, 937 (Pa. Cmwlth. 2012).
An employer bears the burden to prove that it discharged an employee for willful
misconduct. Adams v. Unemployment Comp. Bd. of Rev., 56 A.3d 76, 78-79 (Pa.
Cmwlth. 2012). The term “willful misconduct” is not defined by statute. The courts
have defined “willful misconduct” as follows: “(1) wanton or willful disregard for
an employer’s interests; (2) deliberate violation of an employer’s rules; (3) disregard
for standards of behavior which an employer can rightfully expect of an employee;
or (4) negligence indicating an intentional disregard of the employer’s interests or

       5
         This Court’s standard of review is limited to determining whether constitutional rights
were violated, whether an error of law was committed, or whether necessary findings of fact are
supported by substantial evidence. 2 Pa. C.S. § 704.

                                               9
an employee’s duties and obligations.” Grieb v. Unemployment Comp. Bd. of Rev.,
827 A.2d 422, 425 (Pa. 2003) (quoting Navickas v. Unemployment Comp. Bd. of
Rev., 787 A.2d 284, 288 (Pa. 2001)). In the event a court finds that a claimant’s
actions constitute willful misconduct, a claimant can still receive benefits if she can
show that she had good cause for her willful misconduct. Walsh v. Unemployment
Comp. Bd. of Rev., 943 A.2d 363, 369 (Pa. Cmwlth. 2008). In determining whether
an employer has discharged an employee for willful misconduct, we have held that
an employer is prohibited from offering one reason for discharge at the time of
separation and then later relying on a completely different reason. See Saleem v.
Unemployment Comp. Bd. of Rev., 35 A.3d 1283, 1290-93 (Pa. Cmwlth. 2012);
Browning-Ferris Indus. of Pa., Inc. v. Unemployment Comp. Bd. of Rev., 561 A.2d
856, 857 (Pa. Cmwlth. 1989).
      Here, Employer did not give Claimant a reason for termination at the time of
discharge. In response to Claimant having filed for unemployment compensation
benefits, Employer completed a questionnaire that it submitted to the Service Center,
in which it identified “mismanagement” as the reason for Claimant’s discharge.
Employer attached a one-page addendum to the questionnaire, explaining
Employer’s reasons for terminating Claimant’s employment. (C.R., Item No. 4.)
Those reasons included excessive trash fees, the lapse of insurance, lack of financial
disclosure to the board of directors, and other general financial mismanagement.
Employer asserted those same reasons for termination during the hearing before the
Referee, but the Referee limited questioning and excluded Employer’s evidence
because Employer did not give Claimant a reason for termination at the time of her
discharge.   (R.R. at 42-43, 94, 97-98.)       In affirming the Referee’s decision,
the Board appeared to take the Referee’s position that, if a reason for discharge is

                                          10
not given at the time of termination, an employer is later barred from establishing a
reason sufficient to meet its burden of proof under Section 402(e) of the Law.
(R.R. at 120, 124-125.)
      Employer now contends that the Board essentially interpreted the law to hold
that, in the absence of a stated reason for discharge at the time of termination, an
employer cannot present evidence of willful misconduct and, therefore, cannot
establish that a claimant engaged in willful misconduct. The Board, in its brief, does
not dispute this position. Rather, the Board cites Saleem and Browning-Ferris for
the proposition that, because Employer did not give Claimant a reason for discharge
at termination and, instead, established the reasons in its employer questionnaire,
Employer did not offer consistent reasons for Claimant’s discharge, such that the
actual reason cannot be ascertained. (See Board’s Brief at 9.) The Board conflates
two dissimilar concepts. Per the Board’s interpretation, an employer providing no
reason at the time of discharge but raising one later is the same as an employer giving
one reason at the time of discharge and later changing it to a completely different
reason. We disagree that these concepts are one and the same, and our precedent
holds only that employers are prohibited from switching to a different reason for
termination than the one it provided at discharge. Our precedent does not constrain
an employer that fails to provide a reason at discharge from later establishing one.
In the matter before us, Employer has alleged the same reasons for Claimant’s
discharge at all times since it completed the employer questionnaire: general
financial mismanagement, lapse of insurance, excessive trash fees, and lack of
financial disclosure to the board of directors. (C.R., Item No. 4; see C.R., Item
No. 13 at 5; Pet. Br. at 15-18.) Employer’s failure to provide these reasons to

                                          11
Claimant at the time of discharge does not prevent Employer from later establishing
them in order to meet its burden of proof under Section 402(e) of the Law.
      Turning to the issue of the Referee’s exclusion of evidence, it is clear that the
exclusion came as a result of the Referee’s misapprehension of the law, and,
therefore, it was error. This was, unfortunately, not a harmless error. The Referee
excluded evidence central to the question of whether Claimant was aware of certain
financial issues at critical times during her employment. (See, e.g., R.R. at 97-98.)
As a result, the Referee improperly precluded Employer from adducing facts that it
believed would form the basis for establishing that Claimant engaged in willful
misconduct. Thus, a remand for a new hearing is required.
      Accordingly, we vacate the Board’s decision and remand to the Board with
instruction that it remand the matter to the Referee for a new hearing and the issuance
of a new decision.

                                          P. KEVIN BROBSON, Judge

                                          12
       IN THE COMMONWEALTH COURT OF PENNSYLVANIA

The Community Youth and Women’s     :
Alliance,                           :
                      Petitioner    :
                                    :
           v.                       :   No. 77 C.D. 2020
                                    :
Unemployment Compensation           :
Board of Review,                    :
                    Respondent      :

                                  ORDER

     AND NOW, this 11th day of December, 2020, the order of the Unemployment
Compensation Board of Review (Board) is VACATED, and the matter is
REMANDED to the Board for further proceedings consistent with the attached
Opinion.
     Jurisdiction relinquished.

                                    P. KEVIN BROBSON, Judge