An unemployment compensation hearing can be fraught with dangers for the unsuspecting or unprepared employer.  Many employers disregard such proceedings as low risk because any benefits will be paid from the state’s unemployment insurance fund to which all employers must contribute.  But the factual issues raised in unemployment compensation hearings closely relate to more significant sources of employer liability, such as the Family and Medical Leave Act of 1993 (“FMLA”), 29 U.S.C. § 2601 et seq., and the Americans with Disabilities Act of 1990 (“ADA”), 42 U.S.C. § 12101 et seq.  The recent decision of the Kentucky Court of Appeals in Hicks v. Kentucky Unemployment Insurance Commission, — S.W.3d —, No. 2014-CA-001061-MR, 2015 WL 7351398 (Ky. App. Nov. 20, 2015), illustrates the potential intersection between those seemingly distinct areas of law and the need for a forward-looking strategy to avoid future claims.

Tarsis Hicks worked as an interpreter for Fairview Community Health Center (“Fairview”).  She assisted Spanish-speaking patients in communicating with medical staff.  During her employment, Hicks received a diagnosis of breast cancer.  She then took leave from work under the FMLA to undergo chemotherapy treatments.  After exhausting her twelve weeks of FMLA leave, Hicks requested that Fairview allow her to work from home by interpreting via telephone.  Hicks’ doctor did not want her exposed to sick people in the workplace while still receiving chemotherapy.  The doctor estimated that Hicks could not return to her regular duties for six more months.  Fairview terminated Hicks’ employment the day after she requested to work from home.

Hicks subsequently applied for unemployment insurance benefits.  The Kentucky Education and Workforce Development Cabinet denied the application on the grounds that Hicks “voluntarily left work due to a health condition.”  Hicks appealed only to initially meet with discouraging results.  A hearing officer, the Kentucky Unemployment Insurance Commission (“Commission”), and the Warren Circuit Court each affirmed the denial of her application.

The Court of Appeals, however, proved more favorable to Hicks and reversed the denial of her unemployment insurance benefits.  The decision turned on the proper application of KRS 341.370(1)(c), which disqualifies a worker from receiving benefits when “[h]e has left his most recent suitable work . . . voluntarily without good cause attributable to the employment.”  The Court of Appeals relied on the hearing testimony of Hicks’ supervisor at Fairview:

Just to clarify for Ms. Hicks, Fairview has never claimed that she voluntarily quit.  That determination and that language was used by the unemployment office in their determination.  We provided her, after her twelve weeks in which it was substantiated by the medical information we received that she was not able to come back to work after twelve weeks and she was terminated because she could not come back to work after twelve weeks.

The Court of Appeals held “the Commission’s findings of voluntariness to be totally inconsistent with the facts of this case and contrary to our case law on the issue of voluntariness.”  It reasoned that “only one conclusion can be drawn from the evidence:  Hicks did not quit; Hicks was fired.”

The outcome of Hicks’ attempt to obtain unemployment insurance benefits is uncertain.  The decision of the Court of Appeals is not final and could be subject to discretionary review before the Supreme Court.

But, in any event, Hicks may have laid the groundwork for a potential case against her former employer for FMLA retaliation or failure to grant a reasonable accommodation under the ADA.  Though unemployment compensation decisions are not binding in subsequent litigation, that prohibition does not prevent the use of hearing testimony to impeach the credibility of witnesses and hold employers to their prior positions.  In any later lawsuit, Fairview could face a difficult task putting on persuasive evidence contrary to the position that Hicks was involuntarily discharged or showing that Hicks’ medical condition does not support her inability to work.  In fact, plaintiffs’ attorneys often use unemployment compensation hearings to surprise employers and obtain valuable admissions.  Employers should be aware that attending unemployment compensation hearings without legal representation or outsourcing the handling of those hearings to a company unlicensed to practice law carries substantial risks.  Indeed, the initial savings might be outweighed by those risks.