Discharge for Misconduct under NC Unemployment Laws

Business Lawyer Asheville and WNC

As a judge hearing unemployment appeals for the past year or so, I can say that the vast majority of the cases are determined based on the “quit” or “discharge” definitions in the N.C. unemployment act. A very important distinction to keep in mind, which I think was lost on many human resources directors and business owners that I heard from in the hearings, is that the legal reasons – the standard I applied – for allowing or disallowing an award of unemployment benefits can be, and often is, wholly unrelated to what is normally considered “good cause” for discharging an employee.

Similarly, an employee may quit the job, but still be eligible for the payment of unemployment benefits. Thus it’s important to understand that North Carolina state policy regarding the awarding of unemployment benefits to a former employee is very different than the employer’s interest in having that employee off the payroll. In this post I’ll talk about “discharge” under the statute.


Let’s talk first about what we called “discharge” at the Department of Employment Security (DES), that is, a situation where the employer affirmatively takes steps to remove the employee from the payroll, for any reason or for no reason. Under the statute, “[a]n individual who the Division determines is unemployed for misconduct connected with the work is disqualified for benefits.”

What this means is that if an employee is discharged, they are automatically eligible for unemployment benefits, unless the employer argues and proves that the discharge was effected due to employee “misconduct connected with the work.”

Within that phrase, “misconduct” has a well-defined, technical meaning, which frankly is a word-salad of jargon that was often difficult to apply. “Misconduct” is defined, in part, as, “Conduct evincing carelessness or negligence of such degree or recurrence as to manifest an intentional and substantial disregard of the employer’s interests or of the employee’s duties and obligations to the employer.” Here’s the statute if you really want to read it: NCGS DISCHARGE

Examples of a “discharge”

Fortunately, the statute itself gives “examples” of what the Legislature considers to be misconduct, which covered probably 75% of the cases I heard. I won’t list them all here, but in summary they revolve around at-work drug impairment; stealing from the employer; fabricating work-related documents such as applications for employment and time submissions; violence or threats of violence; violating a written absentee provision; and refusing to perform assigned work that is within the employee’s terms of hire, or failing to adequately perform duties even after three written reprimands.

To make matters even more confusing, often I would have to determine whether or not the employee was, in fact, discharged or s/he quit (on which I will write another blog).

The statute as applied

Let’s apply these rules. The employer has a well-written absenteeism policy that allows for two “no call, no shows” before the employee is discharged for the third “no call, no show”. So he doesn’t show up for work two shifts (any shifts, they don’t have to be consecutive); gets a warning; then the third time he “NCNS” he gets discharged. The employee applies for and is awarded unemployment compensation, the employer appeals that award.

What is the information that the employer needs to present to DES (the appeals referee hearing the case, such as I was doing) in order to prevail? First, that there was a written absenteeism policy that spelled out the “NCNS” rule of allowing two; that the policy clearly stated that a discharge would occur after the third incident; and that the employee was told about the policy prior to any discipline being imposed for a “NCNS” event.

Did you see what I threw in there at the end? That the employee was told about the policy before it was applied to him. Often an employer will have a great employee handbook spelling out attendance requirements and disciplinary procedures, very professional and well-done.

Then forget to have the employee sign an acknowledgement that he was given a copy; lose the signed acknowledgement; or frankly just fail to give a copy to him.

So in this circumstance, the employee testifies that “I never was told about that policy” or “I don’t remember if I was told about the policy” and the employer can’t produce a signature of receipt of it or a witness who gave it to him, the employer would likely lose the appeal. You can see where an employee may NCNS a bunch of times, get discharged for it, but still be awarded unemployment payments.

Conclusion on employee discharge

That’s just a short explanation and example of how there are traps for the unwary HR person in these appeals; and how winning an unemployment case starts long before the hearing. In fact, there could even be a scenario such as above where I would have granted the employer’s appeal, if they argued their case differently.

I’ll do a later blog post on discharge strategies related to unemployment claims. Summary: an employee may be a bad employee, worthy of getting discharged, but North Carolina’s policy is to allow the payment of unemployment benefits unless the discharge was for “misconduct” as defined by the Legislature.

For all your businesses legal needs, call me in Asheville, Hendersonville, Fletcher, Waynesville, and all of Western North Carolina at (312) 671-6453

Email me at: palermo@palermolaw.com.

Be sure to check out my other blog posts HERE.  Be sure to listen to my podcasts with Matt Mittan at BizRadio.US