Indiana Business Unemployment Compensation

The Indiana Court of Appeals has awarded unemployment compensation to an employee who violated a neutral attendance policy, making it clear in a new opinion that absences from work caused by a medical condition do not constitute “just cause” for termination of employment. As a result, an employee terminated because of such absences is likely to be entitled to unemployment compensation, even if the employee is terminated pursuant to a written, uniformly enforced no-fault attendance policy.

In Giovanoni v. Review Board of the Indiana Department of Workforce Development, 900 N.E.2d 437 (Ind. Ct. App. 2009), the Court of Appeals reversed a decision of the Review Board of the Department of Workforce Development which had found that an employee terminated after numerous such absences was not entitled to unemployment benefits. In overturning the Review Board, the Court of Appeals analyzed the conflicting case law interpreting relevant portions of the Unemployment Compensation Act (“UCA”), which it noted was “enacted to ‘provide for payment of benefits to persons unemployed through no fault of their own.'” 900 N.E.2d at 439, quoting Ind. Code § 22-4-1-1 (emphasis added by the Court).

The Court of Appeals focused its attention chiefly on whether the claimant, Mr. Giovanoni, had been terminated for “just cause” as that term is defined by the UCA. Under the UCA, “[d]ischarge for just cause” includes but is not limited to:

(1) separation initiated by an employer for falsification of an employment application to obtain employment through subterfuge;

(2) knowing violation of a reasonable and uniformly enforced rule of an employer;

(3) unsatisfactory attendance, if the individual cannot show good cause for absences or tardiness;

(4) damaging the employer’s property through willful negligence;

(5) refusing to obey instructions;

(6) reporting to work under the influence of alcohol or drugs or consuming alcohol or drugs on employer’s premises during working hours;

(7) conduct endangering safety of self or coworkers; or
(8) incarceration in jail following conviction of a misdemeanor or felony by a court of competent jurisdiction or for any breach of duty in connection with work which is reasonably owed an employer by an employee.

Ind. Code § 22-4-15-1(d). The Court’s decision ultimately turned on whether Mr. Giovanoni was at fault for his absences. Its analysis focused on the tension between subsections (d)(2) and (d)(3) of the statutory definition of just cause.

Mr. Giovanoni’s employer, Clarian Health Partners, Inc., (“Clarian”) had a no-fault policy regarding absences and a progressive discipline scheme under which Giovanoni, a pharmacy technician, had received three (3) written warnings. The last warning notified him that any further occurrences would result in termination. Clarian had discussed the situation with Mr. Giovanoni each time he had received a warning, and when his fourth occurrence occurred, he was terminated. 900 N.E.2d at 438. Clarian argued that the termination fell within subsection (d)(2) of the “just cause” definition as a violation of a known and uniformly enforced rule. Mr. Giovanoni argued that, although he may have had unsatisfactory attendance, his absences were for “good cause” – i.e., medical reasons, as defined by subsection (d)(3).

The Court of Appeals sided with the terminated employee, holding that “. . . termination for unsatisfactory attendance must be analyzed solely under Section (d)(3).” 900 N.E.2d at 444 (emphasis added). The Court reasoned that Clarian’s policy, while neutral, nevertheless “exposed an employee to termination regardless of the reason for the employee’s absence,” and that, as a result, the policy was “unreasonable for purposes of Section (d)(2).” Id.

The result of the Court’s decision is that employers who maintain neutral attendance policies like Clarian’s (and such policies are fairly typical) will likely fail in their challenges to unemployment compensation claims filed by terminated employees if: (1) the termination was for attendance reasons in violation of such a policy; and, (2) the employee can show good reasons (such as the need for medical treatment) for the absences that caused the termination. Stated differently, if an employer seeks to challenge a claim for unemployment filed by someone terminated for poor attendance, the employer will need to be prepared for the employee’s argument that the absences were not his or her fault. This will be true even if the absences are well documented and even if the employee received written warnings pursuant to the neutral attendance policy.

Although the facts of Giovanoni involved mostly medical absences, the Court’s holding is not expressly limited to medical absences. The question of who is at fault for an employee’s absence may arise in numerous factual scenarios. In fact, Mr. Giovanoni’s last absence was not due to medical reasons at all, but was “apparently due to road conditions caused by severe winter weather.” 900 N.E.2d at 444. The Court held this to be “good cause” and awarded him unemployment compensation.

It should be noted that the Giovanoni case was unusual in that the claimant, whose need for medical treatment was well documented and not in dispute, was not eligible for the leave mandated by the Family and Medical Leave Act. As a practical matter, the Court’s decision will have the most impact on the decisions employers face with respect to newly hired employees with attendance problems where those problems are arguably not the fault of the employee.

The statements contained herein are for information purposes only and are not to be considered legal advice and should not be construed to form an attorney-client relationship. If you have questions regarding this article, please contact an attorney.

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