California Supreme Court Issues Major Victory for Workers in Paratransit, Inc. v. Unemployment Insurance Appeals Board

California Supreme Court Issues Major Victory for Workers in Paratransit, Inc. v. Unemployment Insurance Appeals Board
July 7, 2014

Last week, on July 3rd, 2014, in a major victory for California’s workers, the California Supreme Court unanimously ruled that workers are not disqualified from receiving unemployment insurance benefits simply for refusing to sign disciplinary notices.  The case, Paratransit, Inc. v. Unemployment Insurance Appeals Board, threatened to gut workers’ ability to receive unemployment insurance benefits in California.

Paratransit is the first substantive interpretation of the eligibility requirements of the unemployment insurance code in 30 years.  The Court unequivocally reaffirmed that “misconduct”– which can disqualify workers from receiving unemployment benefits – should be interpreted narrowly.  The Court also emphasized that a finding of “misconduct” requires wrongful intent.  Importantly, the Court reiterated that reasonableness of a worker’s act must be evaluated from the worker’s standpoint, including the surrounding circumstances and what the worker knew or understood at the time.  In doing so, the Court confirmed that California’s Unemployment Insurance Code is to be construed liberally, in order to serve its fundamental purpose: to reduce the hardship of unemployment by providing benefits for persons unemployed through no fault of their own.

Paratransit involved a driver who refused to sign a disciplinary notice, in part, because he it was concerned for the consequences of his signature.  At issue was whether his refusal to sign was an act of deliberate disobedience and, if so, whether it rose to the level of “misconduct,” which would have disqualified him from receiving unemployment insurance benefits. 

The Court found the driver had acted reasonably, given his genuine belief that if he signed the notice he would be admitting allegations he disputed.  The Court went on to find that the driver’s belief was not so unreasonable under the circumstances as to constitute misconduct.  In conclusion, the Court stated that the driver’s so-called “disobedience” was at most a good faith error in judgment – not misconduct – and, therefore, he was eligible to receive unemployment insurance benefits.  In other words, a worker cannot be denied unemployment insurance benefits on the grounds that he or she deliberately disobeyed what was presumed to be a lawful and reasonable order. 

“The Supreme Court decision reminds us all of the humanitarian mandate underlying California’s unemployment insurance system and reaffirms the importance of unemployment insurance benefits to low-wage workers, who barely make ends meet even while employed,” reflected Carole Vigne, Staff Attorney with the Legal Aid Society – Employment Law Center.  “Unemployment insurance benefits put food on the table and keep a roof overhead: they represent more of a lifeline than a safety net for our clients.”  Ms. Vigne co-authored an amicus brief in Paratransit on behalf of organizations that advocate for low-wage workers.