Opinion
No. COA10-746
Filed 3 May 2011 This case not for publication
Appeal by Petitioner from order entered 16 March 2010 by Judge Abraham Penn Jones in Wake County Superior Court. Heard in the Court of Appeals 12 January 2011.
Michael C. Lord for Petitioner-appellant. Employment Security Commission of North Carolina, by Thomas H. Hodges, Jr., and Sharon A. Johnston, for Respondent-appellees.
Wake County No. 09 CVS 16547.
Tri-Arc Food Systems, Inc. ("Tri-Arc") appeals, arguing its former employee engaged in workplace misconduct by virtue of being incarcerated. We conclude the trial court properly affirmed the Employment Security Commission's ruling because Tri-Arc failed to demonstrate that incarceration constituted workplace misconduct.
I. Factual and Procedural Background
Sandy L. Towns last worked for Tri-Arc Food Systems, Inc., a Bojangles of America, Inc. licensee, on 24 August 2008 as a maintenance employee. He was then incarcerated for four months. After his release, Tri-Arc informed Towns he no longer had a job with the company. On 11 January 2009, he filed a claim with the Employment Security Commission of North Carolina ("Commission" or "ESC") for unemployment benefits. Tri-Arc contested Towns' claim on the grounds that Towns quit work by "moving out of town" when he was incarcerated. Initially, an ESC adjudicator disqualified Towns from receiving benefits beginning 11 January 2009 because he left work without good cause attributable to his employer. Towns appealed.
There appears to be some confusion over whether Mr. Towns' name is "Lamont L. Towns" as it is listed in the caption or "Sandy Lamont Towns."
We address the nature of the incarceration below.
We use the term "Commission" to refer to the Employment Security Commission when its commissioners sit as an adjudicatory body and as a respondent in this case. We use the term "ESC" to refer to the organization as a whole, as well as its rules, regulations, and employees.
The original telephonic ESC appellate hearing was rescheduled after Tri-Arc requested a continuance. Tri-Arc failed to participate in the rescheduled hearing that took place on 7 May 2009. Tri-Arc does not offer any reason for its failure to participate in the hearing. After the hearing, the appeals referee affirmed the initial ruling, but did so on alternative grounds. The appeals referee found Towns "was discharged . . . due to the fact that he was incarcerated for 4 months." The appeals referee's fifth finding of fact stated that Towns "alleges that his mother told him that the employer said they would hold his job for him while he was incarcerated." He ruled Towns was discharged for misconduct connected with his work within the meaning of N.C. section 96-14(2). Towns appealed the decision to the Commission.
The Commission reversed the appeals referee's decision, holding Towns was not discharged for misconduct or substantial fault connected with his work. In doing so, the Commission modified finding of fact 5 to read as follows: "On or about August 28, 2009, the claimant's mother called the employer about the claimant's incarceration and was told his job would be held open for him." The Commission adopted the appeals referee's other findings of fact. Tri-Arc appealed to Wake County Superior Court. The Superior Court affirmed the Commission's decision in its entirety. Tri-Arc timely appealed to this Court.
The Commission may "affirm, modify, or set aside any decision of an appeals referee on the basis of the evidence previously submitted." N.C. Gen. Stat. § 96-15(e) (2009).
II. Jurisdiction
Tri-Arc appeals from the final judgment of a superior court; therefore, we have jurisdiction over its appeal. See N.C. Gen. Stat. § 96-15(i) (2009) (appeal from the judgment of the superior court reviewing a Commission decision "may be taken . . . as provided in civil cases"); N.C. Gen. Stat. § 7A-27(b) (2009) (appeal lies of right to this Court from the final judgment of a superior court).
III. Analysis
Tri-Arc argues the Commission's decision "perverts the laudable purposes of the Employment Security Law" and should therefore be reversed. We disagree.
Generally, an individual is presumed to be entitled to benefits. Intercraft Indus. Corp. v. Morrison, 305 N.C. 373, 376, 289 S.E.2d 357, 359 (1982). The Employment Security Act ("the Act") was designed to provide benefits to "persons unemployed through no fault of their own." N.C. Gen. Stat. § 96-2 (2009) (statement of policy). Thus, an individual is excluded from benefits if the Commission determines that person is "unemployed because he or she was discharged for misconduct connected with the work." N.C. Gen. Stat. § 96-14(2) (2009).
Misconduct connected with the work is defined as conduct evincing such willful or wanton disregard of an employer's interest as is found in deliberate violations or disregard of standards of behavior which the employer has the right to expect of an 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.
Id. While the Act does was not intended to aid those who are unemployed as a result of their own work-related misconduct, the General Assembly passed the Act to prevent economic insecurity caused by unemployment. N.C. Gen. Stat. § 96-2. We have concluded that in order to promote the Act's policy objectives, its provisions "should be liberally construed in favor of applicants." Couch v. N.C. Emp't Sec. Comm'n, 89 N.C. App. 405, 412, 366 S.E.2d 574, 578 (1988).
The employer bears the burden of establishing misconduct. McGaha v. Nancy's Styling Salon, 90 N.C. App. 214, 218, 368 S.E.2d 49, 52 (1988). An employer is not, however, required to demonstrate actual harm to prove misconduct. Lynch v. PPG Indus., 105 N.C. App. 223, 226, 412 S.E.2d 163, 165 (1992). Workplace rule violations constitute misconduct unless the employee's conduct is reasonable and the employee had good cause to deviate from workplace rules. Binney v. Banner Therapy Prods., Inc., 362 N.C. 310, 316, 661 S.E.2d 717, 720 (2008). Absent a specific rule violation, "[m]isconduct may consist in deliberate violations or disregard of standards of behavior which the employer has the right to expect of his employee." Id. (quoting Hagan v. Peden Steel Co., 57 N.C. App. 363, 365, 291 S.E.2d 308, 309 (1982)) (alteration in original) (internal quotation marks omitted). In this case, Tri-Arc offered no evidence of its workplace rules; therefore, it must establish Towns deliberately violated or disregarded standards of behavior to which Tri-Arc justifiably expected Towns to adhere.
The standard of review in appeals from Commission decisions is established by statute. "In any judicial proceeding under this section, the findings of fact by the Commission, if there is any competent evidence to support them and in the absence of fraud, shall be conclusive, and the jurisdiction of the court shall be confined to questions of law." N.C. Gen. Stat. § 96-15(i) (2009). Questions of law are reviewed de novo. E.g., Carolina Power Light Co. v. Emp't Sec. Comm'n of N.C., 363 N.C. 562, 564, 681 S.E.2d 776, 778 (2009). The Commission's unchallenged findings of fact are binding on appeal — even if unsupported by the evidence. E.g., Hagan, 57 N.C. App. at 364, 291 S.E.2d at 309. Tri-Arc challenges only finding of fact 5; therefore, the Commission's remaining findings of fact are binding on this Court.
First, Tri-Arc contends finding of fact 5 is not supported by competent evidence because the only evidence supporting the finding is hearsay. We agree, although we note that Tri-Arc failed to object to this evidence. However, this finding is not essential to the Commission's ruling.
In arguing Towns' absence due to his incarceration constitutes work-related misconduct, Tri-Arc asks us to take judicial notice of the nature of Towns' conviction. In the telephonic appellate hearing, Towns conceded he was incarcerated for four months, but did not say why. "[R]eview is solely upon the record on appeal. . . ." N.C. R. App. P. 9(a). In all appeals from superior court review of administrative decisions, the record must contain "copies of all items properly before the superior court as are necessary for an understanding of all issues presented on appeal." N.C. R. App. P. 9(a)(2)(e). Tri-Arc had ample opportunity to present evidence of the nature of the conviction, but failed to participate in the hearing or otherwise submit evidence. While the nature of Towns' incarceration is critical to this case, this a factual matter that should have been adjudicated below. With very few exceptions, none of which apply here, appellate courts do not make findings of fact. See N.C. Gen. Stat. § 96-15(i) (stating that our jurisdiction is limited to determining whether the Commission's findings are supported by competent evidence and considering questions of law).
Tri-Arc failed to submit any documentation on this point to any ESC adjudicatory body, the Superior Court, or this Court for consideration. Rather, in its brief, Tri-Arc refers us to the North Carolina Department of Corrections "offender search" webpage, inviting our Court to embark on a fact-finding investigation. We decline this invitation. We note that a trial court is required to take judicial notice under the North Carolina Evidence Code only when "supplied with the necessary information." N.C. R. Evid. 201(d). In this case, no tribunal was presented with documentation from which it could take judicial notice. We decline to take judicial notice of the nature of Towns' conviction.
The dispositive issue, then, is whether a four-month absence from work at a fast food restaurant due to the employee's incarceration for any reason is a deliberate violation of standards of behavior to which the employer justifiably expects the employee to adhere. See Binney, 362 N.C. at 316, 661 S.E.2d at 720 (adopting this standard in cases where there has been no specific rule violation). We hold it is not. Therefore, the lack of support for finding of fact 5 does not require us to reverse or remand.
While the Act's statement of policy indicates it is designed to provide benefits to "persons unemployed through no fault of their own," N.C. Gen. Stat. § 96-2, the statutory definition of misconduct requires a high level of culpability related to an employee's disregard for the employer's interests, see supra (setting out the pertinent portion of section 96-14(2) in full). "An employee's misconduct need not occur at the workplace or in connection with employment tasks to violate expectable behavioral norms." Lynch, 105 N.C. App. at 225, 412 S.E.2d at 165 (citing In re Collins v. B G Pie Co., 59 N.C. App. 341, 296 S.E.2d 809 (1982)). Our research indicates that whether an incarceration-related absence constitutes misconduct depends on the character of the criminal conviction or other reason for incarceration. The violation of certain social norms is so egregious it necessarily runs afoul of standards of conduct employers rightfully expect from their employees, while other violations — even violations that result in incarceration — do not. In other words, not all conduct that might result in incarceration constitutes a deliberate violation of standards of behavior an employer might reasonably expect of its employees in the absence of specific rules.
The General Assembly modified section 96-14(2) and provided that a work absence resulting from certain convictions constituted misconduct per se. See N.C. Gen. Stat. § 96-14(2) (requiring a mandatory finding of misconduct as a result of an absence due to "conviction by a court of competent jurisdiction for manufacturing, selling, or distribution of a controlled substance punishable under G.S. 90-95(a)(1) or G.S. 90-95(a)(2) while in the employ of said employer"). The crimes referenced in section 96-14(2) are not exclusive. Id.; Lynch, 105 N.C. App. at 225-26, 412 S.E.2d at 165 (recognizing the non-exclusive nature of the list and holding the petitioner engaged in misconduct by committing a crime not referenced by the statute). But if the General Assembly had intended for all convictions resulting in incarceration to constitute work-related misconduct, it would not have provided a non-exclusive list. Instead, it appears the ESC and the courts are to determine which types of incarceration-related absences constitute misconduct within the context of section 96-14(2). Thus, the General Assembly recognized that some employers may retain employees despite their incarceration because incarceration does not (or should not) necessarily impact an employer's interests. For example, an individual can be incarcerated while he is awaiting trial on a charge for which he is later acquitted. Furthermore, an extended absence is not per se workplace misconduct because the absence may have been justified.
In its brief, Tri-Arc maintains that, according to our decision in Lynch v. PPG Industries, "[a]n employee's act in violation of a criminal statute as reflected in a conviction constitutes misconduct as a matter of law." The Lynch Court said nothing to that effect. See 105 N.C. App. at 223-26, 412 S.E.2d at 163-65. There, the petitioner was discharged for misconduct after he was incarcerated for a conviction for possession of cocaine with intent to sell or deliver. Id. at 225, 412 S.E.2d at 165. We held the petitioner engaged in misconduct because his criminal behavior constituted "intentional misconduct in substantial disregard of his employer's interests." Id. at 226, 412 S.E.2d at 165. In Collins v. B G Pie Co., we held "absence from employment in violation of a work rule due to incarceration for a willful or legally unexcused probation violation" constitutes work-related misconduct. 59 N.C. App. at 342, 296 S.E.2d at 810. There, we noted that, "[i]n order to activate his suspended sentence, the court had to believe that claimant was able to pay his debt but did not." Id. at 343, 296 S.E.2d at 811. We concluded the petitioner's incarceration meant he had acted in "willful disregard of his employer's work rules." Id. Thus, our case law has focused on the nature of the conviction or reason for the employee's incarceration.
Tri-Arc provided no evidence of workplace rules or industry-wide workplace norms. The Act is to be liberally construed in favor of applicants. Couch, 89 N.C. App. at 412, 366 S.E.2d at 578. And the burden of establishing misconduct is on the employer. McGaha, 90 N.C. App. at 218, 368 S.E.2d at 52. It is undisputed that Tri-Arc terminated Towns due to his incarceration. However, because the record does not disclose the reason for Towns' incarceration, we cannot conclude Tri-Arc met its burden in establishing Towns engaged in a deliberate violation of standards of behavior to which the employer justifiably expects the employee to adhere.
The trial court's ruling is
Affirmed.
Judges CALABRIA and STROUD concur.
Report per Rule 30(e).