Wilson v. Employment Sec. Dept. of State

• Decision Date: 12 May 1997
• Docket Number: No. 38251-9-I,38251-9-I
• Citation: 940 P.2d 269,87 Wn.App. 197
• Court: Washington Court of Appeals
• Parties: Frederick WILSON, Appellant, v. EMPLOYMENT SECURITY DEPARTMENT OF THE STATE of WASHINGTON, Respondent.

Page 197

87 Wn.App. 197

940 P.2d 269

Frederick WILSON, Appellant, v. EMPLOYMENT SECURITY DEPARTMENT OF THE STATE of WASHINGTON, Respondent.

No. 38251-9-I.

Court of Appeals of Washington Division 1.

May 12, 1997.

Matthew J. Bean, Seattle, for Appellant.

Keith D. Armstrong, Olympia, for Respondent.

ELLINGTON, Judge.

Frederick Wilson was manager of a jewelry store. He was discharged for losing diamonds from the store's inventory. At issue is whether the Commissioner of the Employment Security Department ("the Commissioner") erred by denying unemployment benefits on the ground that the discharge was for misconduct connected with Wilson's work. We find that the acts of negligence upon which Wilson's dismissal was based do not constitute willful disregard of his employer's interest and we reverse the denial of benefits.

FACTS

For about a year and a half prior to his discharge, Frederick Wilson managed a jewelry store owned by Sterling, Inc. Wilson had 17 years' experience in retail jewelry management.

Two incidents led to Wilson's discharge, although it appears from the record that his dismissal was based to a greater degree on the second incident. The first incident occurred in August, 1994, after Wilson had received five loose diamonds from a vendor. Upon receipt of the diamonds, Wilson failed to log them into his stock and failed to perform a daily diamond count. Because of this, one of the diamonds, valued at over $900, was lost. In a written statement, Wilson said:

I am not aware of what has happened to this stone, but am aware this would not have happened if the diamonds had been logged and properly counted. I realize that by my above described actions, I have violated company policy in that I was negligent in my handling of loose diamonds from a vendor.

The second incident occurred on February 3, 1995. On that date, a fellow employee gave Wilson a loose diamond valued at $490. The diamond was in a clear plastic bag. Wilson placed the bag on his desk. At the time, there were several empty clear plastic bags lying on his desk. Later, Wilson cleared his desk of the plastic bags and, in so doing, threw away the bag containing the diamond. In his written statement, Wilson states that at the time he placed the bag containing the diamond on his desk, he realized that "the diamond should have gone into the safe, but it did not." Wilson also stated: "I realize that by my above described actions, I have violated company policy and that I was negligent in my handling of this loose diamond."

Wilson was terminated from his employment on March 7, 1995, soon after the second incident, and applied for unemployment benefits. Benefits were allowed on the ground that Wilson's actions were not deliberate and thus misconduct was not established. The employer appealed. After a hearing, the administrative law judge denied benefits on the ground that Wilson's actions leading to his discharge amounted to misconduct under RCW 50.20.060. Wilson petitioned for review, asserting that he did not intentionally lose the diamonds, but rather "simply made a mistake." The Commissioner adopted the administrative law judge's findings of fact and conclusions of law and affirmed the denial of benefits on the ground that Wilson was discharged for misconduct and thus was ineligible for benefits. Wilson appealed to superior court, which affirmed, finding that "claimant's conduct presented in the record rises to the level of disqualifying misconduct as defined by RCW 50.04.293 and [claimant] is thus disqualified from benefits pursuant to RCW 50.20.060."

DISCUSSION

In reviewing an administrative decision, the appellate court stands in the same position as the superior court. Penick v. Employment Security Dep't, 82 Wash.App. 30, 37, 917 P.2d 136, review denied, 130 Wash.2d 1004, 925 P.2d 989 (1996). Thus, we apply the appropriate standard of review directly to the administrative record. Snohomish County v. State, 69 Wash.App. 655, 664, 850 P.2d 546 (1993), review denied, 123 Wash.2d 1003, 868 P.2d 871 (1994).

Relief from an agency order in an adjudicative proceeding will be granted if, inter alia, the agency has erroneously interpreted or applied the law, RCW 34.05.570(3)(d); the order is not supported by substantial evidence, RCW 34.05.570(3)(e); or the order is arbitrary or capricious, RCW 34.05.570(3)(i). Thus, factual findings are reviewed under the substantial evidence standard, under which there must be a sufficient quantum of evidence in the record to persuade a reasonable person that the declared premise is true. Penick v. Employment Security Dep't, 82 Wash.App. at 37, 917 P.2d 136. Conclusions of law are reviewed under the error of law standard. We give great deference to the Commissioner's factual findings and substantial weight to the agency's interpretation of the law. Penick, 82 Wash.App. at 37-38, 917 P.2d 136.

The determination of whether an employee's behavior constitutes misconduct is a mixed question of law and fact. Tapper v. Employment Security Dep't, 122 Wash.2d 397, 402, 858 P.2d 494 (1993). In reaching this determination, the court should give the agency's factual findings the same level of deference to which they are entitled under any other circumstance, but the process of applying the law to the facts is a question of law subject to de novo review. Tapper, 122 Wash.2d at 403, 858 P.2d 494. At issue in the present case is whether the facts, as applied to the law, constitute misconduct. We review this issue de novo and conclude that they do not.

Under the Employment Security Act, an individual is disqualified from benefits if he or she was discharged "for misconduct connected with his or her work". RCW 50.20.060. Misconduct is "an employee's act or failure to act in willful disregard of his or her employer's interest where the effect of the employee's act or failure to act is to harm the employer's business." RCW 50.04.293.

To date, there has been no judicial construction of the statutory definition of misconduct, and in particular the portion of the definition that refers to an employee's actions or inactions "in willful disregard of his or her employer's interest." ¹ We find that, although written without the statutory definition in mind, the fourth part of the test of misconduct as set forth in Tapper provides guidance for interpreting this portion of the statutory definition. Under that part of the test, in order to constitute misconduct, an employee's violation of an employer's rule "must be intentional, grossly negligent, or continue to take place after notice or warnings." Tapper, 122 Wash.2d at 409, 858 P.2d 494. Behavior that is mere incompetence, inefficiency, erroneous judgment, or ordinary negligence does not constitute misconduct for purposes of denying unemployment compensation. Tapper, 122 Wash.2d at 409, 858 P.2d 494.

Judging Wilson's conduct under these principles, we find no misconduct. There is no evidence in the record to show that Wilson acted with a deliberate intent to violate his employer's policy or in willful disregard of his employer's interest. There is no evidence that Wilson acted out of an intent to cause his employer harm. Rather, the only intent on Wilson's part shown by the record is, simply put, an intent to do what he did, namely to delay logging in five loose diamonds on one occasion and to delay putting another loose diamond into the safe. These acts were, by Wilson's own admission, in violation of the employer's...