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Tattoos, unemployment benefits and firings for misconduct

published in Oklahoma Employment Law Letter | April 1, 2011

By Charlie Plumb

Have you been frustrated in the past with employees who were fired but nonetheless received unemployment benefits? A recent Oklahoma Court of Appeals case offers insight on the uphill battle Oklahoma employers face when contesting a claim for unemployment benefits by an employee who was terminated for misconduct.

The tattoo regulator

Ted Evans was chief of the Consumer Health Service for the Oklahoma Department of Health (ODH). One of his responsibilities included regulating the state’s tattoo industry. As fate would have it, his son was a licensed tattoo artist and owned Eden Body Art, a tattoo business in Lawton.

At first, Evans was supervised by Rocky McElvaney. Later, Dr. Henry Hartsell, Jr., assumed responsibility for supervising Evans. Originally, Evans informed McElvaney that his son worked in one of the industries he regulated. Although Evans never directly informed Hartsell that his son was a tattoo business owner, he assumed he knew because it was common knowledge in the office and Evans had told McElvaney.

On November 1, 2006, an Oklahoma law took effect requiring all tattoo businesses to obtain a license from the ODH. Soon after, Evans directed a subordinate to inspect Rat Pack Tattoo Parlor (which competed with Eden Body Art) to make sure it was more than 1,000 feet away from a school or church.  Evans claims he ordered the Rat Pack inspection because his office had received a complaint from Billy Jack Charnek, one of his son’s employees.

On a different occasion, Evans sent an investigator to determine whether Generation X — another Lawton tattoo business in competition with Eden Body Art — was operating illegally on the weekends. At one point, Evans personally visited Generation X to investigate. He claimed the Generation X inspections also were triggered by Charnek making a complaint.

In March 2008, Hartsell held a meeting with department heads, including Evans, to discuss the ODH’s conflict-of-interest policy, which requires employees to disclose whether they have any potential business conflicts. Hartsell asked Evans and the other supervisors to periodically review the conflict-of-interest statements they signed. Evans signed the conflict-of-interest form, stating he had no conflicts of interest, and turned his signed form into Hartsell on April 2.

Meanwhile, things weren’t hunky-dory at Eden Body Art. Charnek, who had worked for Evans’ son and complained to Evans about competing tattoo businesses, had been fired and was angry. On his MySpace page, he posted statements indicating that he intended to get Evans fired from the ODH. Soon after, Hartsell received     e-mails from Charnek accusing Evans of wrongdoing and having a conflict of interest.

After receiving the complaints from Charnek, Hartsell relieved Evans of his tattoo enforcement duties while he investigated. After completing the investigation, the ODH fired Evans for failing to disclose his conflict of interest and for directing investigations of Lawton tattoo establishments that were in competition with his son’s business. At the time of his discharge, Evans was two months short of retirement.

Misconduct and unemployment benefits

Under the Oklahoma Employment Security Act, terminated employees are not entitled to unemployment benefits if they were discharged for misconduct. Under the Act, “misconduct” means willful or wanton disregard of the employer’s interest and / or deliberately violating the employer’s standards of behavior. On appeal, the court awarded Evans unemployment benefits, finding he was not guilty of misconduct.

The ODH encountered several problems in contesting Evans’ claim for unemployment benefits. First, it never submitted its conflict-of-interest policy or Evans’ conflict-of-interest statement as evidence.  Second, the court believed Evans’ testimony that even though he didn’t accurately complete the conflict-of-interest form, he had previously disclosed his potential conflict orally to McElvaney.  Third, the court found Evans hadn’t intentionally tried to deceive his employer but had incorrectly filled out the conflict-of-interest form as a result of “oversight or error.”

Finally, the court decided there was no evidence that Evans favored his son or treated the other Lawton tattoo establishments unfairly. Rather, it found Evans was simply carrying out his responsibilities to ensure that other Lawton tattoo businesses were complying with Oklahoma regulations. Evans v. Oklahoma Employment Security Commission and the Oklahoma State Department of Health, 2011, OK Civ. App. 9.

Bottom line

The result in this case is surprising. The court’s decision reinforces the importance of getting into evidence all the applicable policies and documentation relating to an employee’s termination when contesting unemployment benefits. If you want to defeat an unemployment claim based on an employee’s misconduct, you should be prepared to provide specific examples that show the misconduct was both deliberate and damaging.