2002 NAC 111 State of Oregon, Employment Division and Oregon Public Employees Union, SEIU, Local 503, AFL-CIO, CLC

Title: State of Oregon, Employment Division and Oregon Public Employees Union, SEIU, Local 503, AFL-CIO, CLC
Date: December 6, 2002
Arbitrator: Luella E. Nelson
Citation: 2002 NAC 111

In the Matter of a Controversy

between

OREGON PUBLIC EMPLOYEES UNION, SEIU, LOCAL 503, AFL-CIO, CLC,

and

STATE OF OREGON, EMPLOYMENT DIVISION.

RE: Grievance of Marie Kornilkin

ARBITRATOR'S

OPINION AND AWARD

This Arbitration arises pursuant to Agreement between OREGON PUBLIC EMPLOYEES UNION, SEIU, LOCAL 503, AFL-CIO, CLC ("Union"), and STATE OF OREGON, EMPLOYMENT DIVISION ("Division"), under which LUELLA E. NELSON was selected to serve as Arbitrator and under which her Award shall be final and binding upon the parties.

Hearing was held on August 14 and 15, 1989, in Salem, Oregon. The parties were afforded full opportunity for the examination and cross-examination of witnesses, the introduction of relevant exhibits, and for argument. Both parties filed post-hearing briefs on or about August 30, 1989.

Robert G. Black, Esquire, Imperati, Barnett, Sherwood & Coon, New Market West Building, 135 SW Ash Street, Suite 600, Portland, Oregon 97204-3540.

John S. Irvin, Esquire, Assistant Attorney General, 100 Justice Building, Salem, Oregon 97310.

Was the Grievant discharged for just cause under Article 20 of the collective bargaining agreement; if not, what shall be the remedy?

The principles of progressive discipline shall be used when appropriate. Discipline shall include, but not be limited to: Written reprimands; merit rating of a '3', reduction in pay; demotion; suspension; and dismissal. Discipline shall be imposed only for just cause.

Grievant was employed by the Division from 1983 until December 1988, when she was dismissed based on allegations that she intentionally underreported her earnings during October and November 1987, and thereby collected unemployment benefits to which she was not entitled. Without question, inaccurate unemployment claim forms were filed and the resulting checks were processed through Grievant's checking account. The only dispute is whether Grievant filed the claim forms and endorsed the checks, or whether instead the claim forms and check endorsements were the work of one Barbi Shirpenoff, the friend of Grievant's 17-year-old daughter, Julie.

An employee who is unemployed or working less than full-time is entitled to unemployment benefits. At the time an initial claim is filed, a maximum weekly benefit is set for any claims during the next 52 weeks. The first week of unemployment or earnings below the maximum weekly benefit is a "waiting week" during which no benefits are payable. After this week, a claimant who earns less than the maximum weekly benefit receives the difference between the maximum weekly benefit and a pro-rated portion of his/her weekly earnings, as reported in report forms showing hours and earnings ("certs") filed with the Division. The claimant files certs weekly for three weeks after making or reopening a claim, then reports every two weeks. Checks and pre-printed certs are mailed as a single perforated page; claimants can also secure blank certs at the Division's offices.

Employer reports of the hours and earnings of each employee are cross-matched by computer with claims that meet certain criteria. While the existence of computer cross-matches is widely known among employees, the specific criteria for a cross-match are not. Any discrepancy discovered by the cross-match is initially investigated by asking the employer to verify the hours and earnings for the period in question. If that inquiry does not resolve the discrepancy, the claimant is notified of the discrepancy and asked to provide an explanation. Further investigation and hearings may result, depending on the claimant's response. Any excess benefits received must be repaid by the claimant. Where the Division's investigators conclude that the discrepancy arose out of a willful misrepresentation of earnings, the claimant may be disqualified from receiving benefits for a number of weeks. Only cases involving willful receipt of more than $750 in improper benefits are criminally prosecuted.

Grievant was hired at $6.61 per hour, and received periodic pay increases up to $8.69 per hour by October 1987. A major portion of her work time was spent advising claimants on the procedure for claiming unemployment benefits. She was a reliable and competent employee, and had no history of discipline prior to her discharge. Prior to July 1988, she was a "seasonal" employee working only as work was available, and thus was entitled to unemployment benefits during some weeks.

Grievant filed an unemployment claim on August 5, 1987, and her benefits were fixed at a maximum of $166 per week. Her waiting week was denominated Week 31. Certs were filed for Weeks 31 through 37; thereafter her claim was reopened in Week 40. Certs were again filed for Weeks 40 through 44 and resulted in the issuance of benefit checks. The certs and resulting checks for Weeks 41 through 44 form the basis for Grievant's discharge. The following summarizes the hours and earnings reported in the certs, Grievant's actual hours and earnings, the benefits paid, the benefits to which she was entitled, and the excess benefits paid:

Grievant also claimed unemployment in earlier years. A cert filed on her behalf in 1986 reported 40 hours' work and $250 in earnings for a particular week, during which the Division's payroll records reflect that Grievant worked 37 hours and received three hours' sick leave. At her then-applicable rate of pay, she would have received $293.68 for her hours of work plus $22.80 for sick leave, or a total of $316.48, for the week in question.

All of the disputed checks except that for Week 41 were deposited into Grievant's bank account; the check for Week 41 was negotiated for cash at Grievant's bank. Although Grievant's account is carried at a branch of the bank near her home (the Molalla branch), each transaction involving the disputed checks occurred at a branch of her bank near the Division's offices (the Ladd and Bush branch). The check for Week 42 was deposited along with Grievant's payroll check on October 30;[1] $455.48 was taken out in cash in that transaction. The check for Week 40 bears two endorsements of Grievant's name, both of which are markedly different from her signature, but was also deposited into Grievant's account. Grievant's home is approximately an hour's drive away from the downtown Salem area where her office and the Ladd and Bush branch are located.

The first investigation of Grievant's unemployment claims involved Weeks 33 and 37, and was performed by Investigator Beverly Riggleman in early 1988. When confronted with the discrepancy for those weeks, Grievant explained that she must have miscalculated her earnings, and offered to repay the $16 overpayment. Riggleman accepted that offer, and the matter was closed upon her payment. Riggleman began investigating the discrepancy involving Weeks 41 through 44 in approximately May 1988, but later turned the investigation over to her supervisor, Tom Byerley. Grievant was cooperative and willingly provided statements, handwriting exemplars, her time sheets, and sample bank deposit slips.

In interviews with Riggleman and Byerley, Grievant reviewed her timesheets and microfiche copies[2] of her certs and checks, conceded that the signatures on the certs and checks for Weeks 41 and 42 were hers, and attributed the inaccuracy to miscalculation; she explained that she had a lot on her mind due to recent health problems in her family. Although she conceded that all of the signatures appeared to be hers, she suggested that the documents for Weeks 43 and 44 had been forged by Barbi. After examining microfiche copies, a handwriting analyst reported a "possibility" that Grievant had signed all of the documents for Weeks 41 through 44, but that she was "not identified" as the signer of the check for Week 40.[3]

Byerley found that Grievant was not entitled to certain benefits received in Weeks 41 through 44. In addition to ordering repayment of the excess benefits, he disqualified Grievant for 16 weeks of future benefits based on his conclusion that the overpayment was a result of willful misrepresentations. After a hearing, a referee found Grievant liable to repay the excess benefits paid in Weeks 32, 33, 37, and 41 through 44; he also upheld the 16-week penalty. On appeal, the Employment Appeals Board upheld the requirement that Grievant repay the overpayment, but reversed the 16-week penalty; an appeal of the Board's decision is pending.

Upon notification to the Division that a benefit investigation was ongoing, Grievant was interviewed by a supervisor in her office. The Division suspended Grievant and conducted a pre-dismissal hearing. Based on that hearing and the transcript of the unemployment hearing, and after considering the referee's decision, the Division terminated Grievant.

The Union's evidence revolves around Grievant's daughter Julie, Julie's friend Barbi, and, to a lesser extent, Grievant's daughter Jeanne. Barbi first became acquainted with the family in the spring of 1987 and lived with the family on and off beginning in the spring or summer of 1987. In early 1988, Grievant and Julie discovered that Barbi was using Grievant's credit cards and charging calls to Grievant's telephone number. They kicked Barbi out, and believe she returned to her home at an unknown location in Canada. Grievant testified that, after consulting a Legal Aid lawyer and speaking with "Dixie" at the telephone company, she ultimately paid $75 in telephone bills attributable to Barbi.

Julie testified that her father gave her $500 to deposit in Grievant's bank account, and that she discovered that the money was missing before she could deposit it. She panicked and consulted Jeanne and Barbi about the missing money. Barbi showed her a check with Grievant's name on it, which Julie now realizes was an unemployment check, and claimed that they could make up the missing money by depositing such checks. Barbi did not explain how she acquired a check made out to Grievant or how such a check would make up for the missing money. Julie agreed to the scheme, and provided Barbi with two signed deposit slips and a check guarantee card.

Julie testified at Grievant's unemployment hearing that she once saw Barbi with a form similar to a cert, but never saw Barbi fill it out. She further testified that she filled out the cert for Week 31 but could not recall where she got the information to complete it or whether it was signed at the time. At the unemployment hearing, Julie had no recollection of having completed other certs for Grievant or having seen any certs completed for Grievant by anyone else. At the arbitration hearing, Julie testified that Barbi once instructed her to fill out a form similar to a cert without explaining why she was being asked to do so.

Julie testified that she was aware of the deposit of only two checks, the latter of which was larger than the former. Julie testified at the arbitration hearing that the first check was deposited at the Molalla branch and the second check was deposited at the Ladd and Bush branch; at the unemployment hearing, her recollection was that the first check was for something over one hundred dollars, but she was unable to recall whether it was the first check or the second check that was deposited in Molalla.

During Grievant's pre-dismissal hearing, Julie described her role in the deposit of two unemployment checks, but denied having provided Barbi with any other checks or having gone to Grievant's office to secure a payroll check from her. At the unemployment hearing and the arbitration hearing, Julie testified that she and Barbi accompanied Jeanne to Grievant's office one day, and Jeanne went inside and got Grievant's payroll check from Grievant. Because Jeanne was on her way to see a lawyer, she asked Julie to deposit the payroll check for her. Julie was afraid to go in the bank and asked Barbi to deposit the check. Barbi took both the payroll check and the unemployment check into the bank, and returned with the report that she had deposited the checks. Barbi did not provide a deposit receipt following this transaction.

Grievant and Julie testified that Grievant's daughters did much of her banking and bill paying, and for this purpose she kept a supply of signed deposit slips at the house and provided her daughters with check guarantee cards. While her daughters could not write checks or use the check guarantee cards to withdraw cash, the Molalla branch honored notes from Grievant requesting payment of cash to her daughters. Although she entered checks in her check register, Grievant did not keep a running balance in her checkbook or keep records of the deposits made, and often did not review her bank statements.

Grievant denies filling out the certs for Weeks 31, 33, 36-37, and 41 through 44, and states that she is unsure whether she filled out the cert for Week 40 and the 1986 cert in evidence. While she noted that Julie had admitted filling out the cert for Week 31 at the unemployment hearing, she did not explain how that occurred. She acknowledges that she could not have inadvertently underreported her earnings in the manner shown in the various certs. She is not sure whether she claimed benefits for any of the weeks involved, and denies having cashed or deposited the benefit checks for Weeks 40, 41, 42, and 43-44.

The charges on which Grievant was dismissed are intentionally underreporting earnings for Weeks 41 through 44; knowingly collecting benefits to which she was not entitled; and unsuitability for employment, as demonstrated by this conduct. The explanations offered by Grievant and her daughter are incredible and unsupported, but the Division must still show either intentional underreporting of earnings or knowing receipt of unearned benefits. Either charge shows deceit rendering Grievant unsuitable as a representative of the agency that administers the unemployment insurance program.

The applicable burden of proof is "preponderance of the evidence." Other arbitrators have applied this standard in cases involving moral turpitude and circumstantial evidence, even where the employee was tried and acquitted of criminal charges over the same conduct that formed the basis for discharge. It is the normal burden of proof standard in civil cases, and the Arbitrator should not apply a special proof burden unless the Agreement provides otherwise.

"Beyond a reasonable doubt" applies only to criminal prosecution. "Clear and convincing evidence" is often applied by arbitrators in dismissal cases. This is illogical, not sanctioned by the bargaining contracts, and inconsistent with the legal reasons for which courts have applied that standard. The Agreement is the source of Grievant's rights, the Division's obligations, and the Arbitrator's power. Nothing in the Agreement suggests that charges involving moral turpitude require a higher burden of proof. Moreover, this is not a public trial involving claims of moral turpitude; it is an in-house dispute resolution setting involving the validity of discipline. While preponderance of the evidence applies, the clear and convincing evidence shows that Grievant submitted the certs and accepted the benefit checks for the weeks in question.

The Arbitrator is not bound by the finding of the Employment Appeals Board on Grievant's culpability for the certs and checks. The Arbitrator, rather than that agency, was selected to decide the just cause issue. Determining the facts is basic to the Arbitrator's role. Moreover, the Board's decision is patently incompetent, and its errors should not be compounded by giving it binding effect in this proceeding. In addition, the decision is not final.

Grievant's conflicting statements in this matter cannot be excused by her less than perfect command of the English language. She is bright, competent, well-liked, and reliable; speaks six languages; and was able to explain procedures and requirements to claimants. However, she did not deal honestly with her employer.

Grievant knew that she was not entitled to waiting week credit for Week 31, but received waiting week credit for that week, then submitted a cert and accepted a check for Week 32 even though she was not entitled to benefits for the week. She knew of her obligation to report earnings and of the procedure for keeping a record of her earnings, yet kept no record of her earnings. When confronted with the discrepancy for Week 37, Grievant did not bother to look at the worksheet because she already knew the earnings were underreported.

While a cheater normally would not report earnings in $50 segments, Grievant submitted obviously false figures. She filed claims for benefits and requests to reopen her claim because she was out of work and wanted to receive benefits. No evidence exists that she submitted certs other than those in evidence during the disputed weeks. Her checks were sent to her home, and in most cases the certs submitted were attached to the previous week's checks. She has not denied submitting some of the false certs in evidence. Her willingness to pay the $16 overpayment acknowledges her responsibility for that cert. The later certs are a continuation of a previous pattern of reports.

Grievant always underreported her earnings, whether in $50 increments or as no earnings, and could not have done so unintentionally or in error. Grievant must have known that a false amount of less than $166 was reported as her earnings when she or her daughter wrote that figure on her cert for Week 31. No evidence exists that a different figure was reported or that Grievant did not send in the cert as her report of earnings for the first week of her claim.

Grievant's initial admission that she filled out the certs for Weeks 41 and 42 should be credited over her later denials. She had no valid reason to admit having completed the certs if it was not true. She knew that the amounts reported could not have been a mistake, and her claim that she thought she had merely miscalculated should not be credited. She admitted filling out the certs for Weeks 41 and 42 in the hope that she could persuade the Division that her underreporting was unintentional, as she had done on the earlier overpayment. After Grievant received her pre-dismissal notice, she realized that she needed to change her story for Weeks 41 and 42. She claimed forgery of the cert and check for Weeks 43-44 because no one would believe that her false cert was merely a mistake. The bank records establish Grievant's responsibility for Weeks 43-44.

Grievant's forgery explanation should be discredited. The Barbi story surfaced long after it should have. Grievant claims not to have pressed Julie for the details, even though Grievant knew that she was in hot water, until long after she was shown the documentary evidence of her underreporting. No evidence exists that Grievant was aware of the gift of $500 from Julie's father, or that she was expecting any particular amount. It is not believable that Julie's father would give $500 in cash, or would give it to Julie instead of to Grievant. Grievant did not produce witnesses to verify the Barbi story, such as Julie's father, Jeanne, Barbi, the telephone company representative, or the attorney Grievant allegedly consulted.

Grievant did not explain why, if the cert for Week 42 was fraudulent, she did not send in a cert for that week to get the $117 in benefits to which she was entitled. It is unbelievable that she would reopen her claim on October 5, send in her cert for Week 40, either send in a cert or do nothing for Week 41, then permit $117 to go unclaimed for Week 42.

Grievant's description of the manner in which she handled her checking account was contradictory and not believable. It is incredible that Grievant would not keep track of deposits or keep a running balance of her account. Grievant at one point admitted that she checked her checks off the list on her monthly bank statement, thereby illustrating that she listed her checks in a check register; she later testified that she sometimes did not open the envelope and look at her monthly bank statements. Neither the bank statements nor the check registers were submitted in support of her claimed manner of using her account.

Julie's unquestioning acceptance of Barbi's scheme does not make sense. If Julie had believed that Barbi was already filing false certs, intercepting checks, and forging endorsements herself, she would have gone to her mother and told her what was going on. If she did not believe Barbi was already involved in this conduct, she would have asked how depositing a check that her mother was already expecting would help cover the $500 deficit. Julie gave conflicting testimony at earlier hearings and the arbitration.

Grievant's denial that the signatures on the certs and checks were hers, alone, is not proof of forgery. The signatures were grouped by the handwriting expert in the same class as the signatures Grievant admitted were hers. Grievant pointed to nothing in the disputed signatures to show why they were forgeries.

The Division bears the burden of proof. The quantum of proof varies depending on the seriousness of the discipline and the arbitrator hearing the case. Because discharge is the ultimate penalty, and because the charges against Grievant involve moral turpitude and have criminal implications, the Division must prove wrongdoing "beyond a reasonable doubt" in this case. That quantum of proof would have been applicable had the State prosecuted Grievant, and the Division would have been hard pressed to justify Grievant's discharge had she been tried and acquitted on criminal charges. Even if the Arbitrator chooses a lesser burden of proof than "beyond a reasonable doubt," the evidence demonstrates that the Division did not have just cause to discharge Grievant.

Grievant did not commit the acts alleged in the dismissal notice. Certs were improperly filed in Grievant's name, but Grievant is not responsible for those claims. Instead, Grievant was the victim of a scheme by Julie and Barbi to cover up Julie's loss of $500 and a second scheme by Barbi to defraud Grievant's family.

An indication that someone other than Grievant completed the certs is the report of either $50 or $150 in weekly earnings, at the rate of $6.25 per hour. Grievant knew that her rate of pay was higher than $6.25 at all times, and it would not make sense for her to put these amounts on her certs. However, the figures used are characteristic of a cert completed by an inexperienced teenager. Moreover, Grievant was aware of the Division's programs to identify and prosecute fraudulent claims, and would not have tried to defraud the Division.

The handwriting expert could only determine that all but one of the signatures in question were possibly Grievant's or possibly not hers, and determined that the signature on one check was not Grievant's. It is therefore likely that the signatures on other checks and certs were not Grievant's as well.

The Division placed great reliance on the referee's opinion in deciding to terminate Grievant. Since the referee's decision was later reversed by an independent Appeals Board, the Division should have reversed its decision. While the Arbitrator is not bound by the Appeals Board's decision, that decision should provide guidance, or at the very least raise a significant doubt in the Arbitrator's mind concerning the charges against Grievant.

Grievant should be reinstated to her previous position with full back pay and benefits, and should be made whole.

Absent a contractual or statutory requirement of a different standard of proof, the Arbitrator applies the standard of "clear and convincing evidence" to all discipline cases, regardless of whether the charged conduct would also constitute a crime. In the Arbitrator's view, criminal standards of proof are simply inapposite to the arbitration context. If the Division makes out a prima facie case, the Union must show either that the conduct did not occur, that a valid excuse existed, or that the penalty was inappropriate.

In ascertaining whether alleged misconduct occurred, the Arbitrator gives little weight to administrative decisions such as the various decisions concerning Grievant's unemployment benefits. While there is often some similarity between some of the issues addressed in an administrative context and those in the arbitral context, the procedures, standards, and purposes of the two forums are quite different. In any event, the administrative decision here is not final.

This factually-convoluted case boils down to the quite simple question of whether Grievant authored the certs and endorsed the checks for Weeks 41 through 44, or whether instead Barbi forged those documents. Inasmuch as the Division relied on the false claims for Weeks 41 through 44 as the basis for discharge, the certs for other weeks were considered only as they bear on the credibility of the forgery allegation.

Without question, false certs were filed, and undeserved benefits collected, on Grievant's unemployment claim. The sole defense is the allegation of forgery. As with any employee with several years of meritorious service, the initial tendency is to question the likelihood that Grievant would attempt to secure money to which she was not entitled, particularly through the submission of such blatantly false claims. However, the forgery explanation simply requires too great a leap of faith.

To accept the forgery explanation, one would have to conclude that Grievant filed a claim for unemployment and then took no steps to claim benefits and made no effort to determine whether she was receiving benefits to which she was entitled. Thus, she was entitled to claim a waiting week or benefits for Weeks 32 through 37, 40, and 42. Looking only at the reopened claim period that led to Grievant's discharge, if she did not complete the computer-generated cert for Week 42 (to which an improperly-issued benefit check for Week 41 would have been attached), then any cert that she did complete is missing from the records, and no evidence exists that she inquired into the failure to receive a benefit check for that week. The certs and checks for the earlier portion of her claim show the same absence of duplicate certs or inquiries into missing checks. Given that Grievant took the trouble to open the claim initially and reopen her claim just before Week 40, her complete inattention to the matter of her benefits thereafter is inexplicable. However, the forgery explanation does not fail on this ground alone.

The logistics also suggest that the certs and checks were handled by an adult working in downtown Salem rather than a teenager living an hour's drive away in Molalla. Stamps on the certs for Weeks 36-37 and 40 indicate that they were hand-delivered to a drop box at the Division's offices rather than mailed, and various benefit checks were negotiated at the downtown Salem bank rather than in Molalla. Unlike Julie and Barbi, Grievant worked downtown and had regular access to a car.

Normal banking practice also rules out the forgery explanation. It would not be unusual banking practice for a bank to accept a check for deposit to Grievant's account even if the endorsement was not in her handwriting (as with the check for Week 40),[4] and an inattentive teller could permit someone other than Grievant to use a pre-signed deposit slip to deposit two checks and withdraw part of the deposit as cash (as was done in the October 30 deposit involving the check for Week 42). However, it would be highly unusual banking practice for the Ladd and Bush branch to simply cash the check for Week 41 for anyone other than Grievant. The only bank with a practice of permitting cash withdrawals by Grievant's daughters was the Molalla branch, and even that branch required a written request from Grievant.

Finally, one argument in support of the forgery theory is that the figures reported in the certs at issue were simply too obviously false to be the work of an experienced employee. Both Grievant and her daughter date Barbi's arrival in the household in 1987, and thus any false certs prior to 1987 could not have been Barbi's work. Yet, a 1986 cert showed a claim in multiples of 8 hours and $50. Although the 1986 cert did not result in the payment of benefits, its use of the same multiples without reference to actual earnings pre-dates any possible forgery by Barbi, suggesting that it was Grievant who developed this practice.

Grievant was aware of her obligation to report her income accurately, advised claimants of their obligations in this regard, and was reminded of this obligation by the language of the certs themselves. If she was uncertain of her actual earnings, she had the opportunity to consult the Division's pay records. Any failure to go to the trouble of calculating or securing accurate earnings figures, knowing that the figures reported would be relied on, amounted to knowing and willful misrepresentation.

For all of the above reasons, it is concluded that Grievant knowingly and willfully underreported her earnings during Weeks 41 through 44, and received benefits as a result. This conduct was just cause for her discharge.

The Grievant was discharged for just cause under Article 20 of the collective bargaining agreement.

[1] Under the Division's normal payroll procedure, Grievant would have received that payroll check at work during the day on October 30.

[2] Under the Division's procedures, original claim forms and checks are microfilmed and then destroyed shortly after they are processed; they were thus not available at the time of the investigation.

[3] The degree of certainty arising out of a handwriting analysis can be stated as: 1) "identified;" 2) "tentatively identified" or "high probability;" 3) "possibility;" 4) "similar features;" and 5) "not identified." Because of the poor quality of microfiche copies, the handwriting analyst does not state a positive opinion stronger than "possibility" for such copies. She will state that a sample has been "identified" only when the sample is an original signature.

[4] In this regard, given the testimony that Grievant's daughters did her banking for her, the Arbitrator deems it of no moment that this check was deposited to her account with a signature that does not appear to be hers.

31	24	150	24	198.72#	Waiting Week	None	0
32	0	0	0	0	166	Waiting Week	166
33	0	0	8	66.24#	166	156	10
34	0	0	0	0	166	166	0
35	0	0	0	0	166	166	0
36+	0	0	0	0	166	166	0
37+	8	50	7.5	62.10#	166	160	6
40=	0	0	0	0	166	166	0
41*	24	150	32	278.08	71	0	71
42*	8	50	12	104.28	166	117	49
43*	0	0	32	278.08	166	0	166
44*	0	0	33	304.15	166	0	166