Probationary Employee Who Falsified Time Records Was Disqualified from Receiving Unemployment Compensation Benefits

Category: Client Update
Date: Oct 20, 2014 01:43 PM

Jim Irving was hired in December 2009 as a probationary heavy truck driver for the Los Angeles Unified School District (District).  Irving attended a pre-disciplinary conference on May 3, 2010, and was dismissed from his probationary position effective June 23, 2010 for failing to comply with departmental policy, falsifying time reports, and neglecting to accurately document his activities.  Irving filed a claim with the Employment Development Department (EDD) for unemployment insurance compensation benefits, which was granted.  The District appealed, and the EDD scheduled an administrative hearing.

At the administrative hearing, Alfred Sixtos, the assistant truck operations manager for the District, testified that Irving's shift ran from 2:30 p.m. to 11 p.m. Drivers get two 10-minute breaks or one 20-minute break, not to be taken in the first or last hour, and one 30-minute lunch break to be taken between the fourth and sixth hours of their shift.  Drivers are not permitted to leave the District's boundaries during their lunch or breaks.  On February 4, 2009, Irving signed a written acknowledgement which explained the limitations on breaks and where they could be taken.  Drivers use time records to document where they are throughout the course of their day and when they take breaks.  While the District was conducting an investigation into another driver, it uncovered evidence that over the course of one month, Irving took 10 breaks or lunches within the last hour of his shift, all of which were taken outside the District's boundaries and falsely recorded on Irving's time records.  Irving admitted at the hearing that on 10 occasions he took breaks outside the District's boundaries.  He admitted that nine of the ten breaks were taken during the last hour of his shift, and that it was a mistake to take breaks after the sixth hour of his shift.  Irving also admitted that on four of those occasions, his break exceeded the 50-minute allowable time period. 

The administrative law judge found that Irving was discharged for misconduct and was therefore disqualified from receiving unemployment insurance compensation benefits.  Irving filed a petition for writ of mandate, which the superior court granted following a hearing.  At the hearing, Irving testified that he was instructed by his supervisors to falsify his time records regarding the timing of his breaks so that it would appear as though his hours complied with federal law.  The superior court found that while Irving falsified his records on multiple occasions, he testified credibly that he falsified his records because his supervisors told him to do so. Therefore, any "false" timekeeping was the result of a good faith misunderstanding as to his job duties and responsibilities.  The District appealed the superior court's decision, and the Court of Appeal reversed.

Unemployment Insurance Code section 1256 provides that an employee discharged for misconduct connected with his or her most recent work is disqualified from receiving unemployment compensation benefits.  The employer bears the overall burden of proving misconduct.  The regulations interpreting the Unemployment Insurance Code identify four factors generally used to determine whether misconduct has occurred: (1) the claimant owes a material duty to the employer under the contract of employment; (2) there is a substantial breach of that duty; (3) the breach is a willful or wanton disregard of that duty; and (4) the breach disregards the employer's interests and injures or tends to injure the employer's interests.  All four factors must be met.  Inefficiency, unsatisfactory conduct, ordinary negligence or good faith errors do not constitute "misconduct" within the meaning of section 1256.  The regulations also state that "dishonesty" includes such acts and statements as lying, theft, and making false entries on records.  

The Court of Appeal found that it was undisputed that Irving took breaks on four occasions that lasted beyond the allowable 50 minutes, and knowingly failed to reflect the excessive breaks on his time records.  Irving admitted at the administrative hearing that he was never instructed not to document excessive breaks on his timesheets, nor did he notify anyone at the District that he had exceeded his allotted break time.  The Court of Appeal held that Irving's conduct constituted dishonesty as defined by the regulations, and also constituted misconduct within the meaning of section 1256.  Therefore, Irving was disqualified from receiving unemployment compensation benefits.   


In our August 2014 Client Update, we reported on the case of Paratransit, Inc. v. Unemployment Insurance Appeals Bd. (2014) 59 Cal.4th 551, in which a vehicle operator was terminated for insubordination for failing to sign a memorandum explaining that he was being suspended for two days without pay because of a harassment incident.  The California Supreme Court held that the employee did not engage in misconduct as defined by section 1256.  There was no evidence that the employee refused to sign the disciplinary notice to frustrate the employer's objectives or for the sake of being difficult.  Further, a single act of disobedience without prior warnings is generally not misconduct under section 1256 unless it is substantially detrimental to the employer's interest, and there was no evidence of harm to the employer's business.  Therefore, the Court held that the employee was entitled to unemployment compensation benefits. 

Irving v. California Unemployment Insurance Appeals Bd. (2014) 229 Cal.App.4th 946.

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