Benefits

No Unemployment Benefits for Employee Who Lied on Job Application

by Ryan Olson

Recently, the Minnesota Supreme Court held that an employee’s misrepresentations on an employment application qualified as “employment misconduct” under the Minnesota Unemployment Insurance Law, Minn. Stat. ch. 268. As a result, the employee was disqualified from receiving unemployment benefits.

MinnesotaApplicant Lies on Employment Application

In June 2014, “Brianne” applied to be a client service representative at Mortgage Resource Center, Inc. (MRC). The position required successful applicants to have certain qualifications, including a 2- or 4-year undergraduate degree.

When Brianne applied for the customer service job, she indicated that she had completed 12 years of school even though she had only completed 11 years. She further stated that she had earned a GED from the Minnesota Educational Center. She signed the application and certified that her statements were “complete and true to the best of [her] knowledge and belief.”

A few weeks later, MRC offered Brianne the customer service position conditioned on her passing a background check. The background check failed to confirm that she had received a GED. Nevertheless, she began working for MRC.

In August 2014, MRC noticed that Brianne’s GED remained unverified. As a result, it sent her a letter on September 10 requesting documentation of her GED. The letter stated that if she failed to provide documentation by September 17, the company would “proceed under the assumption that the representation in her application was not accurate.”

Because Brianne was on medical leave, she didn’t respond to MRC’s letter. Consequently, MRC terminated her on September 19, in accordance with company policy, for providing false information on her employment application.

Does Lying on Job Application Constitute Employment Misconduct?

After she was terminated, Brianne applied to the Minnesota Department of Employment and Economic Development (DEED) for unemployment benefits. DEED initially deemed her eligible for benefits, finding she was discharged because of a medical condition, not because of her misrepresentations on the job application. MRC appealed DEED’s determination.

On appeal, the unemployment law judge (ULJ) determined that MRC fired Brianne “in large part” for misrepresenting that she had received a GED. Brianne appealed the ULJ’s decision to the Minnesota Court of Appeals, which reversed the judge’s findings and determined that she was eligible to receive unemployment benefits.

The court of appeals relied on common-law precedent that a misrepresentation on a job application is employment misconduct only if it is material to the position (the “materiality standard”). In other words, an employer must show that it wouldn’t have hired the employee if it had known the truth about her misrepresentation.

According to the court of appeals, MRC failed to meet its burden to establish why a GED was material to Brianne’s position. DEED appealed that decision to the Minnesota Supreme Court, which granted its petition for review.

Supreme Court Defines ‘Employment Misconduct’

The Supreme Court began its analysis by determining the proper definition of “employment misconduct.” According to the court, Minnesota Statutes Section 268.095 (which addresses ineligibility for unemployment benefits due to discharge), unambiguously defines employment misconduct as “any intentional, negligent, or indifferent conduct, on the job or off the job, that displays clearly . . . a serious violation of the standards of behavior the employer has the right to reasonably expect of the employee.”

The Supreme Court found that statutory definition of misconduct, rather than a common-law definition, should be used. The court of appeals therefore erred by applying the conflicting common-law definition of misconduct.

Although the court of appeals followed prior case law in holding that employment misconduct should be defined and analyzed under a common-law materiality standard, the Supreme Court found the materiality standard is inapplicable because it is inconsistent with the statute’s definition of employment misconduct. In support of that finding, the Supreme Court pointed to two key inconsistencies between the definitions.

First, the materiality standard wrongly requires an employer to demonstrate causation because it hinges on whether the employer would have hired the applicant but for her misrepresentation. By contrast, the statutory definition of employment misconduct doesn’t require an employer to show causation.

Second, the materiality standard incorrectly requires a subjective determination (i.e., Would the employer have hired the applicant?), while the statutory definition is an objective determination (i.e., Did the employee commit a serious violation?).

Moreover, the court explained that the statute’s express language supports its determination. Specifically, the statute states that its definition of employment misconduct is “exclusive and no other definition applies.” Further, the statute makes it clear that there is “no equitable or common[-]law denial or allowance of unemployment benefits.”

Supreme Court Holds Applicant Committed Employment Misconduct

After determining that the statutory definition of employment misconduct should be used exclusively when determining eligibility for unemployment benefits, the Supreme Court turned to whether Brianne was discharged for employment misconduct. Under the statute, if she was fired for employment misconduct—and not for a medical reason, as the DEED determined—then she would be ineligible for unemployment benefits.

The court found that Brianne was fired for employment misconduct because “when she misrepresented her educational qualifications, [she] seriously violated a standard of behavior that a reasonable employer has the right to expect.” She lied both about completing school through the 12th grade and receiving a GED. Moreover, her misconduct was intentional, and when she was presented with the opportunity to correct her misstatement, she failed to do so.

Because MRC terminated Brianne for employment misconduct, the court found she was ineligible for unemployment benefits. Wilson v. Mortgage Resource Center, Inc., A15-0435, 2016 Minn. LEXIS 825 (Minn., Dec. 28, 2016).

Bottom Line

The ultimate question in a contested unemployment case is often whether the employee engaged in employment misconduct. The Supreme Court’s decision makes it clear that the statutory definition of employment misconduct controls, and the common-law materiality standard is inapplicable. This ruling will make it easier for ULJs and the lower courts to determine whether a former employee engaged in employment misconduct. It will also make it easier for employers to demonstrate that a former employee engaged in employment misconduct.

Ryan Olson, an editor of Minnesota Employment Law Letter, can be reached at rolson@felhaber.com.