Illinois Narrows "Disqualifying Misconduct" for Unemployment Insurance Benefits Claims Purposes

February 11, 2016

Author: Rena Pirsos, XpertHR Legal Editor

A recent amendment to Illinois law and an Illinois Supreme Court ruling have clarified the meaning of "misconduct" that disqualifies a former employee from collecting unemployment insurance (UI) benefits. While both the new law and the ruling provide needed guidance, employers in the state may find it harder to fight a benefit claim on this basis if they do not have specific policies in place.

When a former employee collects UI benefits, the employer's UI account is charged for them. The more benefits charged to an employer's account, the higher the employer's UI contribution rate will be. One way an employer can fight a former employee's claim for benefits, and keep its UI rate down, is by asserting to the state UI agency that the employee is disqualified from receiving the benefits because he or she was discharged for "misconduct."

The Illinois Unemployment Insurance Act (the Act) renders an employee who has been discharged from employment for "misconduct" as ineligible for state UI benefits. The Act broadly defines employee "misconduct" as the deliberate and willful violation of a reasonable rule or policy of the employer.

An amendment to the Act (H.B. 1285), which took effect January 3, 2016, clarified this definition by adding eight work-related behaviors that are now automatically considered disqualifying misconduct, despite the statute's general definition:

  • Falsifying an employment application or other documentation to secure a job with the employer;
  • Failing to maintain required licenses, registrations and certifications for the job;
  • Knowingly and repeatedly violating reasonable and legally compliant attendance policies despite a written warning;
  • Damaging employer property through grossly negligent conduct;
  • Refusing to obey the employer's reasonable and lawful instruction (e.g., insubordination);
  • Consuming alcohol or illegal drugs on the employer's premises during working hours in violation of the employer's policies;
  • Reporting to work under the influence of alcohol or illegal drugs; and
  • Engaging in grossly negligent conduct that endangers the safety of the employee or co-workers.

An Illinois employer that wants to use the disqualifying misconduct argument will now have to prove that the employee's actions fell under one of these eight specific behaviors. However, if a discharged employee's behavior does not fall into one of the eight categories, an employer can still fight a UI benefit claim if it can prove that the employee deliberately and willfully violated an express work rule or policy, according to a ruling by the Illinois Supreme Court.

In Petrovic v. The Department of Employment Security, a commercial airline carrier fired an employee for requesting, without authorization, that a bottle of champagne be delivered to a passenger and that the passenger's seat be upgraded to first class free of charge, even though the passenger was ineligible for either of these accommodations. The airline tried to prevent the employee from receiving UI benefits by asserting that she was discharged for disqualifying misconduct. Because the fired employee's actions did not fall under any of the eight circumstances of the amendment, the Court analyzed the situation based on the Act's general definition of misconduct.

The Court ruled that the employee was not disqualified from receiving UI benefits because she did not deliberately and willfully violate a reasonable rule or policy of her employer. The airline's mistake was that it did not have a rule or policy in place to rely on that prohibited the employee's specific actions; instead, it merely claimed that the employee violated a "commonsense" rule that the employee should have known about.

The Court, noting that several Illinois appellate courts have allowed the denial of benefits based on a "commonsense realization that certain conduct intentionally and substantially disregards an employer's interests," rejected this argument. It said that this approach cannot be reconciled with the statutory requirement of a deliberate and willful violation.

The Court's conclusion sets a standard that Illinois employers should pay close attention to: "[I]n the absence of evidence of an express rule violation, an employee is only disqualified for misconduct if" the conduct was otherwise illegal or is, on its face, an intentional tort. An employer's rule or policy need not be written or formalized, the Court noted, but it must be clearly communicated to employees in order to notify them of the potential for discharge for any violations.

Accordingly, Illinois employers should arm themselves by:

  • Having work rules or policies in place that define specific actions or behaviors that are considered misconduct;
  • Clearly and directly communicating them to employees; and
  • Ensuring that managers and supervisors actually enforce the rules or policies and properly document any violations.