Unemployment compensation and “Just Cause” for discharge – a really good decision for Indiana employers
Today, August 31, 2012, the Indiana Court of Appeals ruled in favor of an employer who had discharged an employee for poor performance. The Indiana Department of Workforce Development had previously awarded the employee unemployment compensation because the employer had failed to establish that the employee was discharged for “just cause” – which under Indiana law would disqualify the employee from receiving benefits. The court of appeals disagreed and ruled that the employee’s poor performance constituted a “breach of duty reasonably owed the employer.” A “breach of duty reasonably owed the employer” is one of the nine reasons that constitute “Just Cause” for discharge under Indiana law.
A common problem – poor performance that doesn’t improve
In this case, a clerical worker was discharged for “poor job performance” in the form of a plethora of proofreading mistakes on printed materials for distribution, rudeness, insubordination, and personality conflicts with co-workers. The employee’s supervisors repeatedly discussed with employee the mistakes she had made, that her accuracy must improve, and that every document must be proofread before it is printed. But the mistakes “would happen over, and over, and over again.” Co-workers had continuing problems with the employee where she would always blame others for her problems. Despite counseling on multiple occasions, she showed no improvement. So, she was discharged and filed for unemployment compensation claiming that she was discharged – but not for just cause. The Review Board upheld the decision of the administrative law judge granting her unemployment benefits. The employer appealed and won.
Poor performance in the face of repeated warnings can be “Just Cause”
The court held that an employer may utilize “breach of duty” as a basis for justifying its action if the conduct is of such a nature that a reasonable employee of the employer would understand that the conduct in question was a violation of a duty owed the employer and that the employee would be subject to discharge for engaging in the activity or behavior. Significantly, the court did not require there to be a specific rule violation or a showing of uniform enforcement – which is another one of the nine reasons that constitute “Just Cause” in Indiana.
What this means for Indiana employers
For a very long time it has been difficult for Indiana employers to establish “Just Cause” for discharge based on poor performance. The Department of Workforce Development deputies and administrative law judges more often look for specific proof of an employee’s violation of a reasonable and uniformly enforced work rule. This decision highlights the important point for employers that poor performance – repeated over time, with fair warning of the consequence of discharge – can actually be a breach of duty reasonably owed the employer. Denial of unemployment compensation would be the result and employers and employees should understand that. For employers, consider always listing “breach of duty” when the facts support a discharge based on poor performance. You might just win your case.
