National Arbitration Center
of Oregon, Employment Division and Oregon
Public Employees Union, SEIU, Local 503, AFL-CIO, CLC
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,
On behalf of the Union:
G. Black, Esquire, Imperati, Barnett, Sherwood & Coon, New Market West
Building, 135 SW Ash Street, Suite 600, Portland, Oregon 97204-3540.
On behalf of the Division:
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?
RELEVANT SECTIONS OF AGREEMENT
ARTICLE 20 - DISCIPLINE AND DISCHARGE
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,
Unemployment Claims and Investigation Processes
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's Employment History and Unemployment Claims
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:
+Blank cert used instead of computer-generated cert;
hand-delivered to drop box
offices September 22
=Computer-generated cert hand-delivered to Division
offices October 12
*Weeks on which Grievant's discharge is based
#Reflects 2% retroactive pay raise paid in October 30,
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; $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 Division's Investigations
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 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.
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
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
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.
POSITION OF DIVISION
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
"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
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
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.
POSITION OF THE UNION
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
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),
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.
DATED: December 6, 2002
LUELLA E. NELSON - Arbitrator
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.
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.