Opinion
No. 344 C.D. 2013
10-25-2013
Paul Renaut, Petitioner v. Unemployment Compensation Board of Review, Respondent
BEFORE: HONORABLE RENÉE COHN JUBELIRER, Judge HONORABLE MARY HANNAH LEAVITT, Judge HONORABLE ROCHELLE S. FRIEDMAN, Senior Judge
OPINION NOT REPORTED
MEMORANDUM OPINION BY JUDGE COHN JUBELIRER
Paul Renaut (Claimant) petitions for review of the Order of the Unemployment Compensation (UC) Board of Review (Board) affirming the Decision of the UC Referee (Referee), which found Claimant to be ineligible for benefits pursuant to Section 402(b) of the UC Law (Law) on the basis that he quit his employment with JNET Communications (Employer) without cause of a necessitous and compelling nature. On appeal, Claimant argues that he had necessitous and compelling cause to quit because Employer was engaging in unethical or illegal billing practices. Discerning no error, we affirm.
Act of December 5, 1936, Second Ex. Sess., P.L. (1937) 2897, as amended 43 P.S. § 802(b).
Claimant worked for Employer as an account manager from 2004 until October 9, 2012, with a final rate of pay of $69,000 per year. (Referee Decision, Findings of Fact (FOF) ¶ 1.) On October 9, 2012, Claimant quit his employment. Claimant applied for UC benefits on October 11, 2012. On his initial claims application, Claimant cited health problems in the form of "stress due to [an] untenable and malicious work environment" as his reason for quitting. (Internet Initial Claims at 3, R. Item 2.) The UC Service Center denied Claimant's claim because he did not show that he exhausted all alternatives prior to quitting his employment. (Notice of Determination at 1, R. Item 5.)
Claimant appealed the UC Service Center's determination and a hearing was held before the Referee. At the hearing Claimant, represented by counsel, testified on his own behalf. Employer did not participate in the hearing. Following the hearing, the Referee made the following findings of fact:
2. In the claimant's capacity with the employer he is responsible to bill the client for any services performed by the employer.
3. In December 2007 the claimant became aware of potential inaccuracies in the billing of the client's account.
4. In 2009 the employer addressed the claimant's concerns.
5. In April 2012 the claimant continued to express concerns in the inaccuracy of the billing to the client.
6. The claimant notified both the employer and the client regarding his concerns.
7. The employer performed an internal audit and credited the client for inaccuracies found.(FOF ¶¶ 2-10.) The Referee held that Claimant did not provide sufficient evidence to show that his concerns with Employer's billing practices were the cause of his resignation. The Referee noted that, although Claimant testified that he became concerned about Employer's billing practices five years before he quit, he continued to perform the billing tasks for those five years. The Referee determined that Claimant did not provide credible evidence of a hostile work environment. The Referee noted that Employer twice addressed Claimant's concerns with its billing practices and that Claimant had the option not to send bills to the client that he believed to be improper. With regard to the Performance Improvement Plan, the Referee held that Claimant did not take any action to attempt to correct the Performance Improvement Plan and failed to exhaust all his options prior to quitting. Accordingly, the Referee denied Claimant UC benefits pursuant to Section 402(b) of the Law.
8. The employer provided the claimant with a performance improvement plan requiring the claimant to increase revenue from the client by 20%.
9. The claimant alleges the performance improvement plan contained illegal and immoral practices.
10. On October 9, 2012, the claimant voluntarily separated from employment due to intolerable working conditions the claimant [at]tributes to his expressing his concerns with the employer's billing practices.
Claimant appealed the Referee's Decision to the Board, arguing that the Referee's findings of fact did not accurately reflect Claimant's testimony that: Employer engaged in improper billing practices; Employer subjected Claimant to a hostile work environment for questioning these billing practices; Claimant's health suffered due to such harassment; and that Claimant resigned rather than continue to engage in the unlawful billing practices. (Petition for Appeal at 4-6, R. Item 13.) The Board adopted and incorporated the Referee's findings of fact and conclusions of law as its own and affirmed the Referee's Decision holding that Claimant was ineligible for benefits under Section 402(b). Claimant petitioned this Court for review.
This "Court's review is limited to determining whether constitutional rights were violated, whether an error of law was committed, whether a practice or procedure of the Board was not followed or whether the findings of fact are supported by substantial evidence in the record." Western & Southern Life Insurance Co. v. Unemployment Compensation Board of Review, 913 A.2d 331, 334 n.2 (Pa. Cmwlth. 2006).
On appeal, Claimant argues that: (1) the Board did not properly apply case law in determining whether Claimant quit his employment because he genuinely believed Employer was engaging in illegal or unethical billing practices; (2) the Board disregarded uncontradicted, competent evidence in making its findings of fact; and (3) certain of the Board's findings of fact are not supported by substantial evidence.
Claimant devotes a significant portion of his brief to arguing that the Referee erred in faulting Claimant for not presenting the testimony of a representative of the client with whom Claimant communicated his concerns over Employer's billing practices. Nowhere in the Referee's Decision or the Board's Order adopting the Referee's Decision do the Referee or the Board state that Claimant should have called this individual to testify. Therefore, we will not address this argument.
We first address Claimant's argument that the Board did not properly apply the legal standard used to determine whether a claimant has necessitous and compelling cause to quit due to an employer's allegedly unethical or illegal business practices. Section 402(b) of the Law provides that a claimant is ineligible for UC benefits if he voluntarily leaves work without cause of a necessitous and compelling nature. 43 P.S. § 802(b). A claimant has cause of a necessitous and compelling nature to quit if his employer requires him to engage in illegal activity. Kroepil v. Unemployment Compensation Board of Review, 411 A.2d 1320, 1322 (Pa. Cmwlth. 1980). A claimant has necessitous and compelling cause to quit if his employer engages in illegal activities as a regular part of its business, even if the claimant himself is not required to engage in the illegal activities. Gould v. Unemployment Compensation Board of Review, 430 A.2d 731, 732 (Pa. Cmwlth. 1981). A claimant may also have necessitous and compelling cause to quit if directed by the employer to take actions which, if not illegal, are unethical or violate professional standards. See Share v. Unemployment Compensation Board of Review, 512 A.2d 794, 795 (Pa. Cmwlth. 1986) (holding that an accountant had good cause to quit when her employer instructed her to make inaccurate accounting entries).
However, this Court has drawn a distinction between cases in which a claimant finds his work distasteful or objectionable and cases in which the employer is objectively engaging in illegal or unethical business practices. In Ayres v. Unemployment Compensation Board of Review, 598 A.2d 1083 (Pa. Cmwlth. 1991), the claimant worked as a telemarketer selling "'accidental death' insurance." Id. at 1085. The claimant "believed that presenting offers for insurance in the manner required by [the] employer was unethical and against her conscience," and quit. Id. The claimant believed the mandated sales pitch would mislead customers into believing they were purchasing life insurance rather than coverage for accidental death only, and that the premiums were unreasonable given the level of coverage. Id. at 1086. This Court held that:
In cases where employees quit over matters of conscience, it is necessary to distinguish those employees who merely find their work distasteful or who dislike their duties from employees whose work required them to do something wrong. . . . For example, a person might find work as a salesperson distasteful if she does not believe in the product. If this belief is only personal, without any demonstration that the duties of employment conflict with any objective standard of ethics, legality or morality, the employee's decision to quit is for personal reasons and is not compensable.Id. at 1087 (citations omitted). Thus, a claimant's subjective belief, without a "demonstration that the duties of employment conflict with any objective standard of ethics, legality or morality," id., is not necessitous and compelling cause to quit employment.
Therefore, we hold that where there is no express violation of law, regulation or professional ethics . . . an employee does not establish cause of a compelling or necessitous nature in this type of case unless the employee proves that the duties required by employer so affected his or her professional and personal integrity that it would justify the voluntary quit. . . . The practice of employer, at best, must be highly questionable so that avoidance of the practice would be the prudent course of action.
In this case, Claimant argues that Employer was engaged in a systematic practice of overbilling at least one of its clients and that the Performance Improvement Plan Employer required Claimant to formulate and implement would require Claimant to engage in illegal or unethical activities in order to generate higher revenues from the client. Claimant argues that these illegal or unethical practices, combined with harassment from Employer when he objected to the practices, constituted necessitous and compelling cause for him to quit. The Board's findings of fact, however, do not support Claimant's argument. The Board did not find that Employer was engaged in systematic or intentional overbilling of the client. Rather, the Board found that after Claimant raised the issue of possible overbilling, Employer performed an internal audit and credited the client for the inaccuracies found. (FOF ¶ 7.) The Board also found that Claimant was not required to submit bills to the client that he believed to be incorrect. (Referee Decision at 2.) Although Employer's bills to the client may have contained inaccuracies, it is not clear from the record that Employer was engaged in illegal or unethical conduct. Claimant admitted that when he told Employer's owner of the potential overbilling he lacked significant proof that the client was actually being overbilled. (Hr'g Tr. at 4, 12.) Likewise, there is no "smoking gun" in the documentary evidence submitted by Claimant, which comprises emails sent between Claimant, Employer, and the client, along with the Performance Improvement Plan. The emails indicate that Claimant and the client both questioned whether the client was being billed for break time, but nothing in the emails indicates that Employer was intentionally overbilling the client.
From the record, it appears that Employer was providing call center sales services to the client. Claimant believed the client was being overbilled because salespersons were reported as working for almost the entirety of their scheduled shifts. Claimant believed that the salespersons were legally required to be given breaks and that the billing must, therefore, be inaccurate. Claimant did not, however, "have access to the report that showed employees' break times." (Hr'g Tr. at 4.) Claimant also admitted that it was possible that the employees were working overtime. (Hr'g Tr. at 12.)
Claimant argues that even absent a finding that Employer was engaged in illegal or unethical activity, Claimant sincerely believed that it was and this constituted necessitous and compelling cause for him to quit. In support, Claimant cites Zinman v. Unemployment Compensation Board of Review, 305 A.2d 380 (Pa. Cmwlth. 1973), and Tom Tobin Wholesale v. Unemployment Compensation Board of Review, 600 A.2d 680 (Pa. Cmwlth. 1991). In Zinman the employer had a policy of recording telephone conversations with its clients without the clients' knowledge. Zinman, 305 A.2d at 381. The claimant objected to the procedure and was exempted from recording telephone calls. Id. Nonetheless, the claimant quit. Id. Noting that "[t]he recording of telephone communications without the permission of all parties thereto is a misdemeanor," this Court held that the employer's conduct in this regard gave the claimant cause to quit of a necessitous and compelling nature. Id. Thus, in Zinman, there was more than a claimant's subjective belief that the employer was engaging in an illegal practice.
In Tom Tobin Wholesale, the claimant, a computer programmer, was asked by his employer to modify a computer program in such a way that the employer would be able to avoid reporting its cash transactions. Tom Tobin Wholesale, 600 A.2d at 682. The Board credited the claimant's assertion that the modification was for illegal purposes. Id. This Court held that, even though the employer had not used the software for an illegal purpose or directly ordered the claimant to commit an illegal act, it was sufficient that the claimant had a reasonable belief that he was engaged in an illegal act. Id. at 683. Importantly, however, this Court distinguished Ayers on the basis that, in Ayers, "there was no substantial evidence to show an express violation of law, regulation or professional ethics." Id. at 683 n.3.
As discussed above, however, Claimant failed to convince the Board that Employer was engaged in illegal activity. Claimant failed to show that Employer's overbilling of the client was intentional, rather than accidental, and Claimant admitted that in many cases he lacked evidence that the billing information with which he was supplied was incorrect. (Hr'g Tr. at 4, 12.) Because Claimant did not show that Employer's business practices were illegal or unethical, the Board did not err in concluding that they did not constitute necessitous and compelling cause to quit his employment.
Claimant argues that the Board erred in considering whether Claimant had attempted to maintain his employment. Claimant argues that a claimant who quits due to an employer's illegal or unethical business practice is not required to attempt to rectify such practices. Claimant is correct that cases involving claimants who quit their employment because of an employer's illegal conduct have not always required the claimant to attempt to convince the employer to correct the conduct. However, before the Referee and the Board, Claimant was arguing not only that that he quit because of Employer's billing practices, but also because of concerns about his health, a hostile work environment, and the impossibility of meeting the requirements of the Performance Improvement Plan.
A claimant who quits for health reasons must show that he attempted to maintain his employment by notifying the employer of his medical condition and giving the employer a chance to accommodate it. Bailey v. Unemployment Compensation Board of Review, 653 A.2d 711, 713-14 (Pa. Cmwlth. 1995). Similarly, a claimant who quits due to harassment or problems with coworkers must show that he attempted to resolve the problem and maintain his employment. Donaldson v. Unemployment Compensation Board of Review, 434 A.2d 912, 914 (Pa. Cmwlth. 1981). A claimant who quits due to a change in working conditions, such as Claimant's new responsibility for the Performance Improvement Plan, must show that he made a reasonable effort to maintain his employment. Unangst v. Unemployment Compensation Board of Review, 690 A.2d 1305, 1307 (Pa. Cmwlth. 1997). Thus, given the arguments Claimant raised below, the Referee and the Board properly considered whether Claimant made a reasonable effort to preserve his employment.
Next, Claimant argues that the Board disregarded his uncontradicted, competent testimony in rendering its findings of fact. Much of the argument in Claimant's brief essentially asserts that the Board should have made different findings than it did. Claimant argues that the Board should have found that: Employer was engaged in a systematic and intentional process of overbilling the client; Claimant was harassed after he raised concerns about the overbilling; Employer's response to the overbilling was inadequate; and the 20% profit sought by the Performance Improvement Plan could not be achieved through legitimate means. Claimant's testimony could support these findings; however, the Board was not obligated to render all of its findings of fact strictly in line with Claimant's testimony.
Where, as in this case, "the burdened party is the only party to present evidence and does not prevail" before the Board, we must consider whether the Board capriciously disregarded competent evidence. Fitzgerald v. Unemployment Compensation Board of Review, 714 A.2d 1126, 1129 n.5 (Pa. Cmwlth. 1998). "The Board capriciously disregards evidence when it willfully and deliberately disregards competent evidence which a person of ordinary intelligence could not possibly have avoided in reaching the result." Id. However, the Board is the ultimate factfinder and it is within the Board's purview to determine "the weight and credibility of the evidence presented to it." Swope v. Unemployment Compensation Board of Review, 497 A.2d 289, 290 (Pa. Cmwlth. 1985). "In making such determinations, the Board is free to reject the testimony of any witness, even uncontradicted testimony." Russo v. Unemployment Compensation Board of Review, 13 A.3d 1000, 1003 (Pa. Cmwlth. 2010).
In light of the documentary evidence presented by Claimant, the Board did not accept Claimant's testimony concluding that Employer's business practices were illegal. Indeed, the documentary evidence Claimant introduced does not compel a conclusion that Employer was engaged in illegal or unethical practices. (Hr'g Exs. C-1 - C-6.) This documentary evidence, which consists of emails sent in April and May 2012 between Claimant, other of Employer's employees, and the client, indicates that Claimant expressed concerns about Employer's billing practices, particularly that lunches or breaks were being included in employees billable hours charged to the client, and that the client also had such concerns. The emails do not show that the inclusion of lunches and breaks in billable hours was deliberate and they do not indicate that Employer was unwilling to rectify the bills. A person of ordinary intelligence could review Claimant's testimony and documentary evidence yet still conclude that Employer's billing practices were not illegal or unethical. Therefore, the Board did not capriciously disregard Claimant's testimony or evidence in this regard.
With regard to harassment, the Referee's Decision, adopted by the Board, explicitly found that the Claimant did not provide credible evidence of harassment. (Referee Decision at 2.)
We note that while the Claimant broadly introduced the documentary evidence in his testimony, he did not explain how the various documents supported his testimony that Employer was engaged in a systematic, intentional process of overbilling the client.
Likewise, Claimant's testimony regarding the Performance Improvement Plan does not require the conclusion that the goal of 20% profits could be achieved only through illicit means. Claimant's issues with the Performance Improvement Plan appear to be more in the nature of a difference in business judgment:
R[eferee:] And you said you couldn't meet this new performance improvement plan for the client. What attempts did you do to try to meet it or to try to correct what you thought were errors in it?(Hr'g Tr. at 13.) The Performance Improvement Plan, however, only states that supervisors and quality assurance personnel must be on the telephones 10 hours per week; it does not support Claimant's contention that quality assurance personnel were to be taken off the phones altogether. (Performance Improvement Plan at 3, Hr'g Ex. C-5.) Thus, the Board did not capriciously disregard competent evidence in failing to find that the Performance Improvement Plan required illegal or unethical billing practices.
C[laimant:] Well I had let the call center director know for example they were going to put quality assurance people on the telephone lines and it's listed under increasing billable hours. Now in doing that, that meant we were not meeting another part of the contract where quality assurance people had to monitor some of the calls per agent, per week and I knew that this - the whole purpose of putting QA people on was to increase the billable hours as opposed to doing what's right for the company and as a result they started doing that and our performance went down. Our cancellation rates went up and the client was upset about that as well but I had no - I could not change that because we had to make the program more profitable.
Some of the findings Claimant argues the Board should have made are simply not relevant to the issue of whether Claimant had necessitous and compelling cause to quit his employment due to Employer's allegedly illegal or unethical billing practices. For instance, the Claimant argues that the Board should have found that: the Performance Improvement Plan "was created at the same time that the repayments to [the client] were occurring, and therefore [was] intended to increase the monies it obtained from" the client. (Claimant's Br. at 18.) Claimant does not explain why it was improper for Employer to attempt to increase its revenue from the client. Claimant also argues that the Board should have found that the Performance Improvement Plan "was not part of [Claimant's] job duties, and therefore, should not have been assigned to him." (Claimant's Br. at 18.) As the Board points out, however, "[a]n employer may make reasonable modification in job assignments." Accu-Weather v. Unemployment Compensation Board of Review, 634 A.2d 818, 820 (Pa. Cmwlth. 1993).
Finally, we address Claimant's argument that certain of the Board's findings of fact are not supported by substantial evidence. Claimant argues that the Board's finding that "[t]he employer performed an internal audit and credited the client for inaccuracies found" is not supported by substantial evidence. (FOF ¶ 7.) Claimant argues that this finding of fact is an error because there is no evidence that Employer performed a "proper" audit. (Claimant's Br. at 19 (emphasis in original).)
This Court may not disturb the Board's findings of fact on appeal "so long as the record, taken as a whole, contains substantial evidence to support them." Middletown Township v. Unemployment Compensation Board of Review, 40 A.3d 217, 223 (Pa. Cmwlth. 2012). "Substantial evidence is defined as relevant evidence upon which a reasonable mind could base a conclusion." Id. The fact that a party might view testimony differently than the Board "is not grounds for reversal if substantial evidence supports the Board's findings." Tapco, Inc. v. Unemployment Compensation Board of Review, 650 A.2d 1106, 1109 (Pa. Cmwlth. 1994).
Here, Claimant testified that Employer told him it would "do an internal audit and obviously resolve any improper billing practices should [it] find any." (Hr'g Tr. at 6.) Claimant also testified that, after he contacted the client with his concerns regarding Employer's billing practices, Employer adjusted the hours billed to the client. (Hr'g Tr. at 6.) Thus, there is substantial evidence for the Board's finding that Employer conducted an audit and credited the client for inaccuracies found.
Claimant also argues that the Board erred in finding that he did not quit due to Employer's billing practices, but due to what Claimant felt to be a hostile work environment. (FOF ¶ 10.) However, this finding is supported by Claimant's resignation e-mail, in which he complained almost exclusively of retaliation and made only a passing mention of employer's billing practices. (E-mail from Claimant to Employer (October 9, 2012), Hr'g Ex. C-6.) Although Claimant's testimony could also support a finding that he quit due to Employer's billing practices, we are constrained from disrupting the Board's findings of fact where they are supported by substantial evidence.
For these reasons, we affirm the Order of the Board.
/s/ _________
RENÉE COHN JUBELIRER, Judge ORDER
NOW, October 25, 2013, the Order of the Unemployment Compensation Board of Review in the above-captioned matter is hereby AFFIRMED.
/s/ _________
RENÉE COHN JUBELIRER, Judge BEFORE: HONORABLE RENÉE COHN JUBELIRER, Judge HONORABLE MARY HANNAH LEAVITT, Judge HONORABLE ROCHELLE S. FRIEDMAN, Senior Judge
OPINION NOT REPORTED
DISSENTING OPINION BY SENIOR JUDGE FRIEDMAN
I respectfully dissent. The majority affirms the decision of the Unemployment Compensation Board of Review (Board), which denied benefits to Paul Renaut (Claimant) on the basis that he did not have a necessitous and compelling reason for resigning from his job with JNET Communications (Employer). Because the Board failed to make findings on germane issues in the case, I would vacate and remand this case to the Board for additional findings.
As the finder of fact, the Board is responsible for determining the weight to be given evidence and the credibility to be afforded witnesses. Fitzgerald v. Unemployment Compensation Board of Review, 714 A.2d 1126, 1130 (Pa. Cmwlth. 1998). Where, as here, the burdened party is the only party to present evidence and does not prevail before the Board, our scope of review is whether the Board erred as a matter of law or capriciously disregarded competent evidence. Id. at 1129 n.5. "The Board capriciously disregards evidence when it willfully and deliberately disregards competent evidence which a person of ordinary intelligence could not possibly have avoided in reaching the result." Id.
The Board adopted the referee's findings of fact and conclusions of law in their entirety.
Claimant asserts that Employer forced his involvement in illegal or unethical workplace activities, which can constitute a necessitous and compelling reason for resigning under section 402(b) of the Unemployment Compensation Law. See Tom Tobin Wholesale v. Unemployment Compensation Board of Review, 600 A.2d 680, 683 (Pa. Cmwlth. 1991).
Act of December 5, 1936, Second Ex. Sess., P.L. (1937) 2897, as amended, 43 P.S. §802(b).
The majority states that "[i]n light of the documentary evidence presented by Claimant, the Board did not accept Claimant's testimony concluding that Employer's business practices were illegal." (Maj. Op. at 11.) However, the Board did not expressly reject Claimant's testimony, nor did it find that Employer's business practices were legal.
The Board did find that Claimant notified Employer and a client that Employer was billing the client inaccurately. Employer performed an audit and determined that the client had been inaccurately billed. (Board's Findings of Fact, Nos. 5-7.). However, the Board did not address the gravamen of this case, i.e., whether these "inaccuracies" resulted from unethical billing practices. The majority states that "it is not clear from the record that Employer was engaged in illegal or unethical conduct." (Maj. Op. at 7.) I submit that it is the function of the Board, and not this court, to assess the legality and ethicality of Employer's conduct.
Lacking relevant findings and credibility determinations, the majority fills in the gaps using evidence from the transcript, essentially assuming the Board's role as the fact finder. The majority engages in such factfinding throughout its opinion by concluding that: "Employer's billing practices were not illegal or unethical," (Maj. Op. at 11-12), "Claimant failed to show that Employer's overbilling of the client was intentional, rather than accidental," (Maj. Op. at 8), and Claimant's issues with the Performance Improvement Plan "appear to be more in the nature of a difference in business judgment," (Maj. Op. at 12). --------
The majority's ubiquitous reliance on the transcript further illustrates the deficiencies with the Board's findings. The majority highlights substantial evidence to support findings that the Board did not make, an exercise that is necessary because the Board failed to make findings on fundamental issues in the case.
Accordingly, I would vacate and remand this case to the Board for additional findings on the issues above.
/s/_________
ROCHELLE S. FRIEDMAN, Senior Judge