Employees of a cheese manufacturer decided to break into the food safety business while they were still employed by the company. The employer suspected cheese sabotage when it discovered its food safety and cheese-making manuals in the employees’ workspace and terminated their employment.
Employees Plan Move from Mozzarella to Markets
“Adalynn” and “Elise” worked as quality lab technicians for Bel Brands USA, Inc., a cheese products manufacturer. Their primary duties included performing dairy tests and entering test results in computer applications. Their job duties did not involve making decisions concerning food safety issues. If a problem was detected, their responsibility was to hold the product and notify management personnel, who ultimately made food safety decisions. Both Adalynn and Elise have advanced degrees related to food science and microbiology.
Bel Brands’ conflict-of-interest policy states that a conflict of interest occurs when an employee is in a position to influence a decision that may result in personal gain for her or a relative as a result of the company’s business dealings. The policy further states that company materials, products, designs, plans, ideas, and data are the property of Bel Brands and never should be given to outside firms or individuals without authorization.
In November 2016, Adalynn and Elise formed their own limited liability company to provide consulting services in food safety management to food manufacturers. Their initial plan was to provide consulting services to farmers’ markets, catering businesses, restaurants, and small food manufacturing companies.
They planned to eventually provide consulting services, including developing hazard analysis critical control point (HACCP) plans, to large food manufacturing companies. Adalynn and Elise did not intend to provide consulting services to manufacturers in the dairy and cheese industry. Both employees intended to continue working for Bel Brands after the business became operational.
Cheese Bibles End Up in Employees’ Workspace
Adalynn applied for a promotion at Bel Brands and believed she should learn more about the cheese-making process to increase her chances of receiving the promotion. She spoke with Bel Brands’ cheese maker, who suggested that she obtain a copy of a cheese-making manual from another employee. Adalynn obtained the manual, made a copy of it, and placed the manual in a binder in her work area.
Bel Brands has manufacturing plants in Brookings, South Dakota, and Evron, France. Both locations have HACCP plans that are unique to those facilities, but the plans are stored on a computer drive that all lab technicians shared and accessed.
When an employee cut a finger during a shift when no food safety decision makers were on duty, Elise found the HACCP plan for the Evron plant on the shared drive. She thought it would be useful to have a copy of the HACCP plan as a guideline of what to do during a food safety emergency. She placed a copy of the plan in the same binder in which Adalynn placed the cheese-making manual.
Employees Launch Nondairy Venture
From November 2016 to May 2017, the only business activities that Adalynn and Elise’s consulting company engaged in was gathering information for a website and participating in food safety training. The company did not engage in any marketing activities, have any clients, provide consulting services, or earn any income.
On May 1, 2017, Adalynn and Elise launched their consulting company’s website. They decided to inform their HR manager at Bel Brands about their consulting business. They advised the HR manager that they did not plan to provide any consulting services to dairy or cheese manufacturers and that they did not take any of Bel Brands’ materials in connection with their business.
The HR manager later found the Evron plant’s HACCP plan in Adalynn and Elise’s work area and concluded that they had used the plan in connection with their consulting business. Bel Brands discharged the employees on grounds that they violated its conflict-of-interest policy. Both employees filed claims for unemployment benefits, but they were denied.
Double Order of Benefits—No Cheese, Please
On appeal, an administrative law judge (ALJ) reversed the unemployment benefits determination, finding that Adalynn and Elise did not knowingly violate Bel Brands’ conflict-of-interest policy or intend to violate the policy in the future. Their consulting business did not provide any services or earn any income from November 2016 to May 2017, and the employees informed their employer about the business before it was operational.
The ALJ found that the evidence did not establish that Adalynn and Elise disregarded Bel Brands’ interests or policies in a way that would be tantamount to willful misconduct. Because of that, they qualified to receive unemployment benefits.
Bottom Line
When Bel Brands’ management found the HACCP plan in Adalynn and Elise’s work area, it immediately jumped to the conclusion that they were using the plan in connection with their consulting business. However, Bel Brands could not prove that the employees actually used the plan. The appearance of impropriety and the conclusions the employer reached as a result were not enough to prove willful misconduct to disqualify the employees from unemployment benefits.
Kassie McKie Shiffermiller is an editor of South Dakota Employment Law Letter and can be reached at kmckie@lynnjackson.com.