A recent Tennessee Court of Appeals decision involving a claim for unemployment benefits reiterated the general principle that ordinarily, an employee’s conduct off the working premises and outside the course and scope of his employment is not considered misconduct connected with work. Dura Auto Sys. v. Neeley

In Dura Automotive Systems v. Neeley, the claimant was terminated by his employer after it learned that the claimant admitted to smoking marijuana outside of work. The employer had a policy prohibiting its employees from using illegal drugs.

After termination, the claimant filed for unemployment benefits. His claim was denied by the Agency, which found that the claimant engaged in work related misconduct under Tenn. Code Ann. 50-7-303(a)(2)(A). The Appeals Tribunal reversed the Agency’s decision finding that the claimant had passed the company’s drug test (even though the claimant had admitted to smoking marijuana in the past) and that the claimant’s work performance had not been affected by his use of marijuana. Therefore, the claimant had not committed “misconduct connected with the claimant’s work” as required by Tennessee law to disqualify a claimant from receiving unemployment benefits.

The Board of Review affirmed the decision of the Appeals Tribunal awarding unemployment benefits, but the Chancery Court reversed the decision finding that the claimant had committed misconduct.

On appeal to the Tennessee Court of Appeals, the court agreed with the Appeals Tribunal finding that the employer had failed to demonstrate that the claimant’s drug use actually had any adverse effect on the claimant’s work and that the claimant had also passed the drug test required by the employer. Thus, the court of appeals concluded that the claimant’s conduct may have provided the employer an adequate basis to discharge him, but it did not warrant denying the claimant unemployment compensation.

In sum, despite an employee’s off site illegal conduct serving as a legitimate basis for termination, unless the conduct is connected to the employee’s work, it will not disqualify the employee from recovering unemployment benefits.

When, if ever, does providing poor service to a restaurant’s customers amount to “misconduct” under Tennessee’s unemployment compensation law? That’s the subject of a recent case (Doji, Inc. v. Neeley et al.) decided by the Tennessee Court of Appeals. Doji dba Demos v JG Neeley TDLWD and Ruffin OPN

As an initial matter, termination for “misconduct” will disqualify a claimant from receiving unemployment benefits under Tennessee law. See T.C.A. 50-7-303(a)(2)(A).

The court of appeals first noted that until recently, the term “misconduct” has not been defined by statute. [Note: Effective 1/1/2010, a definition of "misconduct" has been added to the Tennessee Code].

Instead, the court of appeals noted that the term “misconduct” had been defined by Tennessee case law to mean “conduct evincing such wilful and wanton disregard of an employer’s interests as is found in deliberate violations or disregard of standards of behavior which the employer has the right to expect of his employee, or in carelessness or negligence of such degree or recurrence as to manifest equal culpability, wrongful intent or evil design, or to show an intentional and substantial disregard of the employer’s interests or of the employee’s duties and obligations to the employer.”

In contrast, the court of appeals noted that “mere inefficiency, unsatisfactory conduct, failure in good performance as the result of inability or incapacity, inadvertences or ordinary negligence in isolated instances, or good faith errors in judgment or discretion are not to be deemed “misconduct” within the meaning of the statute.”

Applying the facts of the case to the definition of “misconduct” established by case law, the court of appeals held that “we are convinced that the sporadically poor quality of service provided by [the claimant] to [the employer's] customers is not the sort of deliberate violation of an employer’s policies that constitutes misconduct within the meaning of the unemployment statutes.”

As noted above, the Tennessee Code now contains a definition of “misconduct”. The new definition of “misconduct” tracks the case law definition for the most part and provides as follows:

Per T.C.A. 50-7-303(b)(3)(A):

“Misconduct” includes, but is not limited to, the following conduct by a claimant:

(1) Willful or wanton disregard of the rights or interests of the employer;

(2) Deliberate violations or disregard of standards of behavior that the employer has the right to expect of an employee;

(3) Carelessness or negligence of such a degree or recurrence to show an intentional or substantial disregard of the employer’s interest or to manifest equal culpability, wrongful intent or evil design;

Per T.C.A. 50-7-303(b)(3)(B):

“Misconduct” also includes any conduct by a claimant involving dishonesty arising out of the claimant’s employment that constitutes an essential element of a crime for which the claimant was convicted;

And, finally, per T.C.A. 50-7-303(b)(3)(C):

“Misconduct” does not include:

(1) Inefficiency, or failure to perform well as the result of inability or incapacity;

(2) Inadvertence or ordinary negligence in isolated instances; or

(3) Good faith errors in judgment or discretion.