Champlain Valley Equipment Inc. v. Department of Labor (Chad Heath)

VERMONT SUPREME COURT Case No. 24-AP-030
109 State Street
Montpelier VT 05609-0801
802-828-4774
www.vermontjudiciary.org

Note: In the case title, an asterisk (*) indicates an appellant and a double asterisk (**) indicates a cross-
appellant. Decisions of a three-justice panel are not to be considered as precedent before any tribunal.

ENTRY ORDER

JULY TERM, 2024

Champlain Valley Equipment Inc.* v. } APPEALED FROM:
Department of Labor (Chad Heath) }
} Employment Security Board
} CASE NO. 07-23-001-01

In the above-entitled cause, the Clerk will enter:

Employer appeals the Employment Security Board’s ruling that claimant was eligible for
unemployment compensation benefits after he was discharged by employer. We affirm.

Claimant Chad Heath applied for unemployment compensation after being discharged by
employer Champlain Valley Equipment, Inc. A claims adjudicator denied his claim on the
ground that claimant was not eligible for benefits because he was discharged for misconduct,
namely, absenteeism or tardiness and not completing tasks. Claimant appealed to an
administrative law judge (ALJ), who upheld the claims adjudicator’s decision following an
evidentiary hearing. Claimant then appealed to the Board, which reversed the ALJ’s decision.

The Board found the following facts in its decision. Claimant worked for employer for
four-and-a-half years as a mechanic and yard worker. Several times during his employment, he
had interpersonal issues with his supervisor that he reported to human resources and
management. He reported experiencing multiple instances of sexual harassment. He also
reported his direct supervisor for allegedly altering work orders. Management ignored his
reports.

On October 17, 2022, claimant was given a written warning for failing to complete jobs,
issues with shop cleanliness, improperly tracking work time with the time clock, and leaving
early without telling management. Claimant acknowledged the written warning with his
signature. After the warning, claimant and his supervisor had additional conversations about
improving his performance.
Claimant’s last day of employment was April 14, 2023. Employer provided a written
notice of termination to claimant on April 15, citing absences and tardiness and general work
performance. At the ALJ hearing, employer introduced an April 8, 2023 written warning to the
claimant citing tardiness and communication issues and an April 14 warning citing performance
issues. These warnings were not signed by claimant. Claimant denied receiving either warning
from employer.

The Board concluded that employer had not met its burden of demonstrating that
claimant was discharged for misconduct. It explained that the record did not establish that
claimant had received the written warnings in April 2023 because they were not signed by
claimant and he denied receiving them. It further reasoned that claimant offered a reasonable
alternative explanation for his discharge, which was the deterioration in his working relationship
with his supervisor after he reported sexual harassment and tampering with work orders. The
Board concluded that the deterioration in their relationship did not rise to the level of misconduct
that would disqualify claimant from benefits. It therefore held that claimant was eligible for
unemployment compensation. Employer appealed the Board’s decision to this Court.

“Our standard of review in unemployment compensation cases is clear: we are to affirm
the findings of the Board as long as there is credible evidence to support them, even if there is
substantial evidence to the contrary.” Branch v. Dep’t of Emp. Sec., 142 Vt. 609, 610 (1983)
(per curiam). We will affirm the Board’s conclusions if supported by the findings. Piper v.
Dep’t of Lab., 2011 VT 32, ¶ 7, 189 Vt. 417. “Where, as here, misconduct is the asserted ground
of disqualification for benefits, the burden of proof rests squarely on the employer.” Johnson v.
Dep’t of Emp. Sec., 138 Vt. 554, 555 (1980) (per curiam).

A claimant is disqualified from receiving unemployment compensation benefits if the
claimant is discharged “for misconduct connected with the individual’s work.” 21 V.S.A.
§ 1344(a)(1)(A). “To be disqualified from benefits, an employee’s misconduct must be in
substantial disregard of the employer’s interest, his disregard being either willful or culpably
negligent.” Favreau v. Dep’t of Emp. & Training, 151 Vt. 170, 172 (1989). “Misconduct that is
sufficient for discharge is not necessarily sufficient to require a disqualification from benefits
under the Unemployment Compensation Act.” Johnson, 138 Vt. at 556.

Employer argues that the Board erred in considering claimant’s testimony that he had
reported sexual harassment and that his supervisor was altering work orders. Employer argues
that the ALJ excluded this testimony at the evidentiary hearing, meaning that it was not part of
the record. Employer contends that the Board took additional evidence at its own hearing and
issued its decision based on that evidence, in violation of its own rules, and therefore its decision
must be reversed.

The Board’s rules state that “[e]xcept as otherwise provided in this rule all appeals to the
Board shall be heard upon evidence in the record made before the ALJ.” Rules of the
Employment Security Board, Rule 15C, Code of Vt. Rules 24 005 001,
https://labor.vermont.gov/sites/labor/files/doc_library/EmploymentSecurityBoardRules_Amende
d_Effective10.01.19_0.pdf [https://perma.cc/9YSX-FZ2B]. Failure to follow this procedure is

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grounds for a new hearing, even if the evidence supports the Board’s ultimate decision. See
Piper, 2011 VT 32, ¶ 17.

We are unpersuaded by employer’s claim that the Board violated its own procedure in
this case by considering claimant’s testimony about his reports to employer. At the ALJ hearing,
claimant testified that he reported sexual harassment multiple times and employer failed to
properly document the claims. He went on to state that his supervisor altered a work order and
made fake claims. The ALJ interrupted claimant, stating that “that’s not relevant information as
far as the reason that they would let you go for the purpose of the hearing today.” Claimant then
stated, “Right, but that’s why he terminated me because I was speaking out on those things.”
The ALJ responded, “Okay.” Claimant then reiterated that he had reported the sexual
harassment to human resources. While employer asserts that this exchange meant that claimant’s
testimony was excluded from the record, we are unable to conclude that there was an explicit
ruling to that effect. Rather, the ALJ appeared to be trying to redirect claimant’s focus to the
asserted reasons for his discharge. The testimony was therefore in the record and the Board did
not err in relying on it.

The Board did appear to rely on claimant’s statements at the subsequent Board hearing
that he never received the April 2023 written warnings. However, employer has failed to
demonstrate that the error was prejudicial. See Wheeler v. Dep’t of Emp. Sec., 139 Vt. 69, 71
(1980) (“The burden is on the excepting party to show reversible error.). Claimant stated during
the claim interview that he was not given any written or verbal warnings about the issues raised
in those warnings prior to being discharged. Claimant’s responses to the claim interview were
admitted at the ALJ hearing. Accordingly, the Board’s finding on this point was supported by
other evidence in the record.

The testimony and other evidence submitted at the ALJ hearing supports the Board’s
ultimate conclusion that employer failed to demonstrate disqualifying misconduct by claimant.
The written warnings that employer purportedly gave to claimant in April 2023, which were
admitted into evidence, were not signed by claimant, unlike the prior warning it issued in
October 2022. The Board therefore found that employer had not shown that claimant
disregarded direct warnings about the behavior for which he was purportedly discharged. Cf.
Cross v. Dep’t of Emp. & Training, 147 Vt. 634, 636 (1987) (holding that claimant engaged in
misconduct in form of insubordination where record showed that claimant disregarded direct
warning from employer about using profane language and company policy explicitly forbade
such conduct). Although the October 2022 warning involved some of the same issues, the Board
evidently did not find that warning to be close enough in time to be relevant to claimant’s
eventual discharge six months later. Further, the evidence supports the Board’s finding that
claimant offered a credible alternative explanation for his discharge, which was the deterioration
in his working relationship with his supervisor. In his unchallenged testimony before the ALJ,
claimant testified that he notified employer when he would be late and that employer did not give
him enough time to complete assigned tasks, and asserted that he was instead being retaliated
against for his reports to human resources. The Board evidently credited claimant’s testimony
over employer’s hearsay statements. We therefore see no reason to disturb its conclusion that
employer failed to prove that claimant engaged in misconduct that disqualified him from
unemployment benefits. See Mazut v. Dep’t of Emp. & Training, 151 Vt. 539, 542 (1989)

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(affirming Board’s decision that employer failed to meet burden of proving disqualifying
misconduct).

Affirmed.

BY THE COURT:

Paul L. Reiber, Chief Justice

Harold E. Eaton, Jr., Associate Justice

Karen R. Carroll, Associate Justice

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