Opinion
No. A05-785.
Filed January 10, 2006.
Appeal from the Department of Employment and Economic Development, File No. 2329 05.
Kent A. Carlson, Legal Aid Service of Northeast Minnesota, (for relator).
Michelle Anderson, (for respondent employer).
Linda A. Holmes, (for respondent Department).
Considered and decided by Willis, Presiding Judge; Minge, Judge; and Worke, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2004).
UNPUBLISHED OPINION
Relator Sara J. Powell challenges a denial of unemployment benefits. Powell asserts that her failure to disclose that she was subject to charges for burglary and forgery when she applied for a position that involved certain financial responsibilities did not constitute employment misconduct. Because we conclude that in the circumstances of her employment, such failure to disclose the charges and convictions was misconduct, we affirm.
FACTS
Respondent Continental Machinery employed Powell from September 8, 2004, to January 28, 2005, as an office manager. The position included certain financial duties, including preparing quotations for projects, preparing invoices, reviewing bills, entering bills in the accounting system, preparing checks, and arranging for signatures on checks. Unbeknownst to Continental, Powell was charged with felony forgery and burglary for cashing two payroll checks, to which she was not entitled, at a prior job and before accepting employment with Continental.
At the time Powell applied for the job at Continental, neither Continental nor the employment agency, who participated in the hiring process, inquired about Powell's criminal record. Although the charges were pending at the time that Powell applied for the position, she did not disclose the information regarding the criminal investigation or charges.
Continental first became aware of the criminal charges about 12 weeks after Powell began working. At that time, Powell approached an officer of Continental, who is also an attorney, and informed him that she was pleading guilty to the felony forgery and burglary charges. At the same time, she stated that she was innocent. He suggested that Powell reconsider the guilty plea, and told her that Continental was willing to presume her innocence during the criminal proceedings. Powell did not withdraw her guilty plea and three weeks after her discussion with the officer, she was sentenced. The sentence included probation. As a condition of her probation, Powell was prohibited from having access to business banking accounts or monies without the prior approval of her probation officer or her employer. Powell did not disclose her conviction or the probation limitations to Continental or clear her work activities with her probation officer. Continental learned of her conviction approximately three weeks after it occurred from a newspaper account. Because of the conviction, the similarity between her work at Continental and the circumstances of her violation, and her failure to disclose the pending charges when she was hired, Continental terminated Powell.
Powell applied for unemployment benefits. The Department of Employment and Economic Development (DEED) denied benefits on the grounds of employment misconduct. Powell appealed this decision and the unemployment law judge (ULJ) upheld the denial. Powell then sought review by the senior unemployment review judge (SURJ), who declined to conduct a de novo review and adopted the decision of the ULJ. Powell now seeks certiorari review by this court.
DECISION
The issue before this court is whether Powell's conduct constituted employment misconduct. Whether an employee engaged in employment misconduct presents a mixed question of law and fact. Schmidgall v. FilmTec Corp., 644 N.W.2d 801, 804 (Minn. 2002). Whether an employee committed the specific acts alleged to be misconduct is a question of fact for determination by the SURJ. Scheunemann v. Radisson S. Hotel, 562 N.W.2d 32, 34 (Minn.App. 1997). The factfinder will weigh the evidence, determine credibility, and outline the facts to be used in the misconduct determination. Id. The findings of fact are viewed in the light most favorable to the SURJ's decision, and will not be disturbed if the evidence reasonably tends to sustain the findings. Ress v. Abbott Nw. Hosp., Inc., 448 N.W.2d 519, 523 (Minn. 1989).
It is undisputed that Powell had felony charges pending against her when she applied for employment with Continental and was convicted based on a guilty plea. The SURJ, in adopting the ULJ's findings, determined that Powell failed to disclose the pending criminal charges when she applied for the position as Continental's office manager. Moreover, the SURJ found that Powell did not comply with one of the terms of her probation, which prohibited her from having access to business or banking records without the consent of her employer or probation officer. Instead, she continued to work with Continental's financial accounts. Because of the nature of the charges and Powell's duties in dealing with Continental's financial matters, the SURJ concluded that Continental had a right to expect that Powell would disclose such charges at the time she applied for the position, despite its failure to directly question Powell about criminal conduct. The record reasonably sustains the factual findings.
Next, this court must determine if the facts constitute employment misconduct. Whether specific conduct constitutes employment misconduct under this statute is a question of law "upon which this court remains free to exercise its independent judgment." Ress, 448 N.W.2d at 523. Therefore, this question of law is reviewed de novo. Id.
The statute defines employment misconduct as follows:
Employment misconduct means any intentional, negligent, or indifferent conduct, on the job or off the job (1) that displays clearly a serious violation of the standards of behavior the employer has the right to reasonably expect of the employee, or (2) that displays clearly a substantial lack of concern for the employment.
Inefficiency, inadvertence, simple unsatisfactory conduct, a single incident that does not have a significant adverse impact on the employer, conduct an average reasonable employee would have engaged in under the circumstances, poor performance because of inability or incapacity, good faith errors in judgment if judgment was required, or absence because of illness or injury with proper notice to the employer, are not employment misconduct.
Minn. Stat. § 268.095, subd. 6(a) (2004).
We note that under Minn. Stat. § 268.095, subd. 6a(a)(1), this court is allowed to presume that the commission of a felony, on or off the job, that substantially interfered with or had significant adverse impact on the employment constitutes employment misconduct. Powell's conduct seems to fall within this subdivision. But because the SURJ's decision, which Powell appeals, is premised on subdivision 6, and not 6a, we will analyze the facts of this case under subdivision 6.
The SURJ found that Powell engaged in employment misconduct by failing to make an affirmative disclosure regarding the criminal charges for acts committed while employed by another company. While an employer has a right to expect honesty from an employee, a person generally has no duty to disclose material facts. Compare Cherveny v. 10,000 Auto Parts, 353 N.W.2d 685, 688 (Minn.App. 1984), with L H Airco, Inc. v. Rapistan Corp., 446 N.W.2d 372, 380 (Minn. 1989). However, a duty is imposed when disclosure is "necessary to clarify information already disclosed, which would otherwise be misleading," L H Airco, 446 N.W.2d at 380, or when one party has special knowledge of material facts, Klein v. First Edina Nat. Bank, 293 Minn. 418, 421, 196 N.W.2d 619, 622 (1972). A duty may also be imposed where a fiduciary relationship exists between the parties. L H Airco, 446 N.W.2d at 380; Appletree Square I Ltd. P'ship v. Investmark, Inc., 494 N.W.2d 889, 892 (Minn.App. 1993), review denied (Minn. Mar. 16, 1993). Generally, "[a]ll employees, to a lesser or greater extent, have a fiduciary relationship to their employers, . . . with a duty to act in the interests of the employer and not as an adversary." State by McClure v. Sports Health Club, Inc., 370 N.W.2d 844, 858 (Minn. 1985) (citing Restatement (Second) Agency §§ 1, 2, 13 (1957)).
The test for determining whether an employee's misrepresentation during the prehiring process results in misconduct is whether the misrepresentation is material to the duties of the position sought by the employee. Heitman v. Cronstroms Mfg., Inc., 401 N.W.2d 425, 428 (Minn.App. 1987). In Heitman, the court found that the employee intentionally withheld information regarding a prior back injury, and failed to truthfully answer a question on the employment application that related to previous accidents and injuries. Id. at 427. The court remanded for further findings to determine whether the failure to disclose a prior back injury was a material, and thus a disqualifying, misrepresentation when employment required heavy lifting. Id. at 428.
The Supreme Court of Iowa relied on Heitman for its conclusion that "the rule seems well settled that misrepresentations made by an employee on a job application or interview can constitute misconduct so as to preclude an award of unemployment benefits"). Larson v. Employment Appeal Bd., 474 N.W.2d 570, 571 (Iowa 1991) (holding that although there was ample evidence of misconduct, including relator's misrepresentations, relator was actually terminated for incompetence and, therefore, was not disqualified from receiving unemployment benefits). Conversely, nonmaterial misrepresentations do not constitute employment misconduct. Indep. School Dist. No. 709 v. Hansen, 412 N.W.2d 320, 323 (Minn.App. 1987) (holding that an employee's failure to disclose his alcoholism did not constitute misconduct because it was not material to his job as a school chef, and, therefore, the employee was not disqualified from receiving benefits); see also Frey v. Ramsey County Cmty. Human Servs., 517 N.W.2d 591, 597-98 (Minn.App. 1994) (finding that if the employee would not have been hired without the lie or fraud, refusal to allow the employee to profit from that misconduct through the receipt of unemployment benefits is proper).
In this case, Powell failed to disclose to her potential employer that she was charged with forgery and burglary. While never directly questioned about criminal acts, Powell was applying for a position that involved important financial tasks and provided access to financial data that could undoubtedly be used to defraud the employer. Being charged with forgery is material to that type of position. Powell's failure to disclose information about the charges constitutes a deviation from the standards Continental had a right to expect. It is likely that information regarding Powell's criminal acts would have had an impact on Continental's hiring decision. Furthermore, Continental had the right to determine that an office manager with access to check preparation and other financial responsibilities not have a current conviction for theft and forgery and that in this sense the convictions violated expected standards of Powell in her position and constituted employment misconduct. Finally, Powell's failure to obtain consent of Continental or her probation officer for Continental access to financial records is yet another basis for concluding there was a violation of expected standards and employment misconduct. Under the circumstances, we conclude that the SURJ did not err in determining that Powell was discharged for employment misconduct.
Persons holding positions which involve financial responsibilities are frequently bonded. In any event, employers must be able to trust an employee's integrity when they have access to financial records and are involved in preparing checks. An employer is entitled to consider an employee's criminal record for felony forgery and burglary, which is incompatible with such a position. Such a record undoubtedly affects an employer's ability to obtain a bond covering that individual.