THOMPSON v. KENTUCKY UNEMPLOYMENT INSURANCE

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Docket Number

No. 2001-CA-000422-MR.

Attorney(S)

Edward Thompson, Jr., Pro Se, Covington, Kentucky, Brief for Appellant. Jeffrey S. Schafer, Louisville, Kentucky, Brief for Appellee, Packaging Unlimited. Randall K. Justice, Assistant General Counsel, Frankfort, Kentucky, Brief for Appellee, Kentucky Unemployment Insurance Commission.

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Smart Summary

Factual and Procedural Background

Edward Thompson, Jr. was employed by Packaging Unlimited beginning in July 1994, initially as an assistant die cutter operator and later promoted to an operator position working the second shift. In January 1998, the second shift was discontinued, and Thompson was reassigned to the first shift with a reduction in pay. The second shift was reinstated in June 1998, but Thompson remained on the first shift. On August 24, 1998, Thompson left work unannounced due to dissatisfaction with his job circumstances but later apologized and was suspended for four days. Upon return, he was reassigned to the second shift with a higher pay rate.

On August 24, 1999, Thompson submitted a written resignation citing stress related to alleged racial discrimination by the plant manager, Charles Richards. Although Thompson intended his resignation to be effective after two weeks, the employer accepted the resignation but terminated his employment immediately on August 25, 1999.

Thompson filed for unemployment benefits on August 26, 1999. The Division of Unemployment Insurance denied benefits based on a finding that Thompson voluntarily quit without good cause attributable to the employment. Upon appeal, a referee granted benefits for the two-week notice period but denied benefits thereafter. The Kentucky Unemployment Insurance Commission (KUIC) affirmed the referee's decision. The Kenton Circuit Court subsequently affirmed the KUIC's ruling, leading to this appeal.

Legal Issues Presented

Whether Thompson was entitled to unemployment insurance benefits after September 5, 1999, following his resignation and immediate termination.
Whether Thompson's resignation was voluntary and without good cause attributable to his employment, specifically whether alleged racial discrimination justified quitting.
Whether the immediate termination by the employer prior to the effective date of resignation constituted a discharge entitling Thompson to benefits.

Arguments of the Parties

Appellant's Arguments

Thompson contended that racially discriminatory conditions at Packaging Unlimited forced him to quit his job.
He alleged denial of a full-time assistant while white operators received one, and that job assignments were distributed inequitably favoring white operators.
Thompson also cited the presence of ropes resembling hangman's nooses at the workplace as evidence of racial intimidation.
He argued that the employer’s immediate termination of his employment prior to the effective date of his resignation constituted a discharge entitling him to unemployment benefits from that date.

Appellees' Arguments

Packaging Unlimited asserted that the denial of a full-time assistant was based on legitimate business reasons, including the assistant’s temporary status or poor attendance record.
The employer maintained that job assignments were based on legitimate production needs and machine competency, not race.
Regarding the ropes, the employer explained the use of one rope for moving machinery and promptly removed the other, denying any racial harassment or tolerance thereof.
The company argued that Thompson voluntarily resigned and that his immediate termination did not alter the nature of his resignation or entitle him to additional benefits.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
American Beauty Homes Corp. v. Louisville Jefferson County Planning Zoning Commission, 379 S.W.2d 450 (1964)	Judicial review involves determining whether an administrative agency's decision is arbitrary.	Supported the limited scope of appellate review over agency factual findings.
Burch v. Taylor Drug Store, Inc., 965 S.W.2d 830 (1998)	Standard for judicial review of unemployment benefit decisions; deference to agency findings.	Confirmed that appellate courts must accept agency’s factual findings supported by substantial evidence.
Owens-Corning Fiberglas Corp. v. Golightly, 976 S.W.2d 409 (1998)	Definition and application of substantial evidence standard.	Reinforced the requirement that agency findings be supported by substantial evidence.
Kentucky Unemployment Insurance Commission v. Murphy, 539 S.W.2d 293 (1976)	“Good cause” for quitting employment exists only when no reasonable alternative remains.	Used to evaluate whether Thompson’s resignation was with good cause attributable to employment.
Kentucky Unemployment Insurance Commission v. Young, 389 S.W.2d 451 (1965)	“Voluntary” resignation requires free and full consent of the employee.	Applied to determine voluntariness of Thompson’s resignation.
Kentucky Unemployment Insurance Commission v. Day, 451 S.W.2d 656 (1970)	Claimant bears burden to prove not leaving voluntarily without good cause.	Supported the allocation of burden of proof to Thompson.
Barren River Mental Health-Mental Retardation Board, Inc. v. Bailey, 783 S.W.2d 886 (1990)	Clarification of unemployment benefits eligibility when claimant voluntarily quits but remains employed during notice period.	Distinguished Thompson’s case where termination was immediate, affirming separation of issues.

Court's Reasoning and Analysis

The court began by emphasizing the limited scope of appellate review over administrative decisions, requiring deference to the Kentucky Unemployment Insurance Commission’s (KUIC) factual findings if supported by substantial evidence. Substantial evidence is defined as evidence that a reasonable person would find convincing, and courts may not reweigh evidence or assess witness credibility.

The court analyzed Thompson’s claim that racial discrimination constituted good cause for quitting. The KUIC found that Thompson failed to prove discriminatory treatment sufficient to justify resignation. Evidence showed legitimate business reasons for staffing and job assignments, and the employer promptly addressed the rope incident, undermining claims of tolerated racial harassment.

Moreover, Thompson did not exhaust the company’s grievance procedures, which the court viewed as a failure to pursue reasonable alternatives before quitting. The court agreed with the KUIC that Thompson did not face circumstances so compelling as to leave no reasonable alternative but to quit.

Regarding the immediate termination prior to the effective resignation date, the court agreed with the KUIC’s separation of issues. Thompson voluntarily submitted his resignation and would have left after the notice period regardless of the employer’s early termination. Thus, benefits were properly awarded only for the notice period during which the employer effectively discharged him.

Overall, the court found the KUIC’s findings supported by substantial evidence and the law correctly applied to those facts.

Holding and Implications

The Court of Appeals of Kentucky affirmed the judgment of the Kenton Circuit Court, which had affirmed the KUIC’s denial of unemployment insurance benefits to Edward Thompson, Jr. beyond the two-week notice period following his resignation.

The direct effect of this decision is that Thompson is entitled to benefits only for the two-week notice period during which the employer terminated his employment, but not thereafter. The court did not establish any new precedent but reinforced the existing standards for reviewing administrative unemployment benefit decisions, the burden on claimants to prove good cause for quitting, and the necessity of exhausting grievance procedures before resignation.

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Edward THOMPSON, Jr., Appellant v. KENTUCKY UNEMPLOYMENT INSURANCE COMMISSION and Packaging Unlimited, Inc., Appellees.

OPINION

JOHNSON, Judge:

Edward Thompson, Jr., pro se, has appealed from a judgment of the Kenton Circuit Court entered on January 29, 2001, which affirmed a decision of the Kentucky Unemployment Insurance Commission (KUIC) which had denied Thompson unemployment insurance benefits. Having concluded that KUIC's factual findings were supported by substantial evidence and that it applied the correct law to the facts as found, we affirm.

Thompson was initially employed at Packaging Unlimited in July 1994, as an assistant die cutter operator. Approximately two and a half years later, he was promoted to an operator's position. He worked the second shift, 3:30 p.m. to 2:00 a.m., four days a week. In January 1998, Packaging Unlimited ceased operations of the second shift and Thompson was reassigned to the first shift as an assistant operator with a decrease in his hourly rate of pay. In June 1998, the second shift was reinstated but Thompson remained on the first shift. On August 24, 1998, Thompson left work unannounced, upset about the circumstances surrounding his job. However, a short time later, he contacted Charles Richards, the plant manager, and apologized. The company issued Thompson a reprimand and suspended him from work for four days. Upon his return, Thompson was reassigned to the second shift as an operator at a rate of pay that was higher than his pay prior to his transfer to the first shift. Two operators usually worked on the first shift, while only one operator was employed to work on the second shift.

On the night of August 24, 1999, Thompson gave the foreman, his immediate supervisor, a written notice of resignation "because my job is stressful working under Charles Richards['] discriminated actions." Thompson told the foreman that consistent with company policy the resignation was intended to become effective after two weeks. After Richards received Thompson's resignation letter the next day, he notified Thompson that his resignation was accepted but that his employment was being terminated immediately as of August 25, 1999.

Thompson is African-American and Richards is Caucasian.

On August 26, 1999, Thompson filed an initial claim for unemployment benefits. Following a preliminary investigation, the Division of Unemployment Insurance denied the claim under KRS 341.370(1)(c) based on a finding that Thompson had voluntarily quit work without good cause. Thompson appealed the decision to a referee, who held a hearing on December 8, 1999, at which both Thompson and Richards testified. In a written opinion, the referee modified the initial determination. The referee found that Thompson was entitled to benefits for the two-week period from August 22 to September 4, 1999, which coincided with his two-week advanced notice period, but denied Thompson any benefits after that period. The referee further found that the company's termination of Thompson prior to the effective date intended in the two-week advanced notice was not based on reasons constituting "discharge for misconduct" under KRS 341.370(6), but that Thompson had not established that his resignation was because of racial discrimination or other improper conduct by the employer. On April 11, 2000, a three-member panel of the KUIC issued an order which affirmed the referee on substantially the same grounds and rationale as expressed by the referee. Thompson appealed to the circuit court, which affirmed the KUIC's decision. This appeal followed.

Kentucky Revised Statutes.

KRS 341.420(2).

See KRS 341.430(1).

KRS 341.450.

Upon review of an administrative agency's adjudicatory decision, an appeal court's authority is somewhat limited. The judicial standard of review of an unemployment benefit decision is whether the KUIC's findings of fact were supported by substantial evidence and whether the agency correctly applied the law to the facts. Substantial evidence is defined as evidence, taken alone or in light of all the evidence, that has sufficient probative value to induce conviction in the minds of reasonable people. If there is substantial evidence to support the agency's findings, a court must defer to that finding even though there is evidence to the contrary. A court may not substitute its opinion as to the credibility of the witnesses, the weight given the evidence, or the inferences to be drawn from the evidence. A court's function in administrative matters is one of review, not reinterpretation.

See American Beauty Homes Corp. v. Louisville Jefferson County Planning Zoning Commission, Ky., 379 S.W.2d 450 (1964) (stating judicial review involves whether an administrative agency's decision is arbitrary).

Burch v. Taylor Drug Store, Inc., Ky.App., 965 S.W.2d 830, 834-35 (1998) (citing Southern Bell Telephone Telegraph Co. v. Kentucky Unemployment Insurance Commission, Ky., 437 S.W.2d 775, 778 (1969)); Kentucky Unemployment Insurance Commission v. Stirrat, Ky.App., 688 S.W.2d 750, 751-52 (1984); Tackett v. Kentucky Unemployment Insurance Commission, Ky.App., 630 S.W.2d 76, 78 (1982).

See Owens-Corning Fiberglas Corp. v. Golightly, Ky., 976 S.W.2d 409, 414 (1998); Piper v. Singer Co., Ky.App., 663 S.W.2d 761, 763 (1984); and Barren River Mental Health-Mental Retardation Board, Inc. v. Bailey, Ky.App., 783 S.W.2d 886, 888 (1990) (quoting Kentucky State Racing Commission v. Fuller, Ky., 481 S.W.2d 298, 308 (1972)).

See generally Whittaker v. Rowland, Ky., 998 S.W.2d 479, 481 (1999); and Kentucky Commission on Human Rights v. Fraser, Ky., 625 S.W.2d 852, 855 (1981).

See Burch, supra at 834; Energy Regulatory Commission v. Kentucky Power Co., Ky.App., 605 S.W.2d 46, 50 (1980); Railroad Commission v. Chesapeake Ohio Railway Co., Ky., 490 S.W.2d 763, 766 (1973).

See Kentucky Unemployment Insurance Commission v. King, Ky.App., 657 S.W.2d 250, 251 (1983); Piper, supra at 763.

Thompson contends that the KUIC erred in finding that he was not entitled to receive unemployment insurance benefits subsequent to September 5, 1999. Before the referee, Thompson argued that racially discriminatory conditions forced him to quit his job. Under KRS 314.370(1)(c):

(1) A worker shall be disqualified from receiving benefits for the duration of any period of unemployment with respect to which:

. . . .

(c) He has left his most recent suitable work . . . voluntarily without good cause attributable to the employment.

It is well-established that "good cause" for purposes of determining whether an employee voluntarily left suitable work "exists only when the worker is faced with circumstances so compelling as to leave no reasonable alternative but loss of employment." In addition, "voluntary" connotes a decision to quit that is "freely given" and "proceeding from one's own choice or full consent." A claimant bears the burden of showing that he did not leave his job voluntarily without good cause attributable to his employment.

See Kentucky Unemployment Insurance Commission v. Murphy, Ky., 539 S.W.2d 293, 294 (1976); Barren River Mental Health-Mental Retardation Board, supra; Raines v. Kentucky Unemployment Insurance Commission, Ky.App., 669 S.W.2d 928, 930 (1983); and H S Hardware v. Cecil, Ky.App., 655 S.W.2d 38, 40 (1983).

Kentucky Unemployment Insurance Commission v. Young, Ky., 389 S.W.2d 451, 453 (1965); Nichols v. Kentucky Unemployment Insurance Commission, Ky.App., 677 S.W.2d 317, 321 (1984).

Kentucky Unemployment Insurance Commission v. Day, Ky., 451 S.W.2d 656, 657 (1970); Broadway Fourth Avenue Realty Co. v. Allen, Ky., 365 S.W.2d 302, 304 (1962).

At the administrative proceeding, Thompson presented evidence of three incidents in support of his claim of discriminatory conditions that justified his leaving his job. Although there are no Kentucky cases dealing with this issue, certainly illegal acts of harassment or racial discrimination can constitute good cause to voluntarily terminate one's employment when it rises to a level "so compelling as to leave no reasonable alternative." First, Thompson stated that Richards denied his request for a full-time assistant, while providing one to the white machine operators. He alleged that Richards rejected his suggestion that either of two named individuals be assigned as his assistant. Thompson indicated that he believed one of the individuals was not appointed as his assistant because that individual also was African-American. Thompson said that he was occasionally provided assistance by unqualified persons and the lack of full-time assistance by a qualified assistant affected his ability to derive additional income from the company's incentive production bonuses.

See, e.g., Brown v. Unemployment Compensation Board of Review, 780 A.2d 885 (Pa.Commw.Ct. 2001); Taylor v. Unemployment Compensation Board of Review, 378 A.2d 829 (Pa. 1977) (race); Marz v. Department of Employment Services, 256 N.W.2d 287 (Minn. 1977); Biles v. Ohio Bureau of Employment Services, 107 Ohio App.3d 114, 667 N.E.2d 1244 (1995) (sex discrimination); and Umbarger v. Virginia Employment Commission, 12 Va. App. 431, 404 S.E.2d 380 (1991) (sex discrimination).

Richards testified that the first/day shift received priority in meeting production quotas and the second/night shift served in part to complete projects begun on the earlier shift. Richards said that the African-American individual recommended by Thompson as his assistant was not suitable as a full-time assistant because he was working through a temporary employment agency under a renewable short-term contract and the other person had a poor attendance record and was unreliable. Richards also stated that two operators worked on the first shift and served as assistant operators when only one machine was in use; whereas, only one operator worked on the second shift and an assistant was not always available or necessary.

Second, Thompson alleged that Richards distributed job assignments inequitably and the white operators were given more favorable treatment by assigning them projects that could be completed more quickly, thereby generating more production bonuses. Richards testified that the projects were assigned based on time constraints from the customer orders and the type of machine used to produce a particular order. While Thompson could operate a Flexo machine, he was more competent using the McKinley machine. Thompson testified that he complained to his immediate supervisor about the assignments and the need for a full-time assistant, but he admitted that he did not exhaust the company's grievance procedure.

Packaging Unlimited used two types of rotary die cutter machines, a McKinley and a Flexo. The McKinley was the newer machine of the two but it did not have the capability to hold, stack, and glue as did the Flexo.

The company grievance procedure provided for complaints first to the immediate supervisor, then to the plant manager or human resources manager, and finally to the company president.

Third, Thompson testified that he occasionally saw two ropes at the work site in the maintenance area and the break room that were tied in a manner resembling a hangman's noose. He viewed these ropes as signs of racial intimidation. Richards testified that the rope in the maintenance area was used to move heavy machinery. He stated that he did see such a rope in the break room on one occasion and immediately had it removed. Thompson testified that he never raised a complaint about the ropes with supervisory personnel in the company.

The KUIC found that the evidence did not show that the employer practiced racial discrimination or that Thompson was singled out for disparate treatment. The KUIC noted that the employer offered evidence that the work assignments were related to legitimate business factors. As for the ropes, the KUIC acknowledged that they could be perceived as racially motivated, but the use of one of the ropes to move machinery was justified and the quick removal of the other persuaded it that the evidence did not establish that the company knowingly promoted or tolerated racial harassment.

We agree with the KUIC that Thompson failed to satisfy his burden of proving that he had good cause attributable to his employment to justify quitting his position. As the fact-finder, the KUIC has the exclusive authority to weigh the evidence and the credibility of the witnesses. Although Thompson raised some complaints with his immediate supervisor, the KUIC noted that Thompson failed to exhaust the internal company grievance procedure concerning any of his complaints. Consequently, Thompson did not show that he was faced with circumstances so compelling that he had no reasonable alternative but to leave his employment. We hold that the KUIC's factual findings were supported by substantial evidence and that it correctly applied the law to the facts as found.

In his appellate brief, Thompson argues that Packaging Unlimited's immediate termination of his employment prior to the effective date of his resignation constituted a discharge that entitles him to unemployment benefits from that date despite his resignation. We believe the KUIC properly separated the two issues. Thompson submitted his voluntary resignation before Richards terminated him, so his unemployed status following the two-week notice period was not due to the company's action. Thompson would have left his job after September 5th, regardless of his immediate termination by Richards. The referee correctly analyzed Thompson's unemployed status during the two-week notice period as a discharge initiated by the company, and the subsequent period as a quitting initiated by Thompson.

The KUIC cited Barren River Mental Health-Mental Retardation Board, supra, which involved a situation where the court held a claimant was not entitled to benefits for a two-week period that she did not work after voluntarily quitting following being notified that she would be discharged effective two weeks later. The KUIC noted this was the reverse of Thompson's situation.

For the foregoing reasons, the judgment of the Kenton Circuit Court affirming the order of the Kentucky Unemployment Insurance Commission is affirmed.

ALL CONCUR.