The Oregon Court of Appeals recently ruled that an employee who filed a claim for unemployment benefits had good cause to quit her job over unpaid overtime. The court said it would have been useless or even dangerous for the employee to complain to her employer about the unpaid overtime. Further, she did not have to complain to the Oregon Bureau of Labor and Industries (BOLI) while she was employed because she risked continued nonpayment of overtime wages.
Linda Nielsen worked as an office manager for a landscaping supply company for approximately one year. The employer required her to work overtime without paying her overtime wages. Specifically, she worked more than 38 hours most weeks, but she was paid for only 38 hours. Nielsen witnessed other employees put in for overtime, but the employer refused to pay. The employer provided excuses such as "Well, I know you were sitting on the side of the road having lunch" and "I don't believe you were really . . . working that entire time."
Nielsen was afraid of the employer. She testified that she "almost [had] to call 9-1-1 because there was almost a . . . brawl" when former employees asked the employer for their full wages. Nielsen put "the hint out there" about the unpaid overtime wages to the employer. However, she never actually complained to the employer or BOLI.
Unemployment benefits denied
Nielsen quit her job and applied for unemployment benefits. An administrative law judge (ALJ) denied her claim, but the Employment Appeals Board (EAB) reversed the ALJ's decision and sent her claim back for further proceedings. The ALJ again denied Nielsen's claim based on her failure to complain about the unpaid overtime wages, stating:
To the extent [Nielsen] quit because she was not getting paid for all hours worked, [she] established that she faced a grave situation. However, [she] failed to complain to the employer about the situation or file a complaint with [BOLI]. [She] failed to pursue reasonable alternatives, and failed to establish good cause for quitting.The ALJ determined that had Nielsen had good cause to quit her job, she would have been awarded unemployment benefits. The EAB adopted the ALJ's final order, and Nielsen appealed to the Oregon Court of Appeals.
Court of appeals' decision
The court reversed the EAB's order, concluding that Nielsen had good cause to leave her job voluntarily. Under Oregon law, good cause for voluntarily leaving work "is such that a reasonable and prudent person of normal sensitivity, exercising ordinary common sense, would leave work." An employee's reason for quitting "must be of such gravity that the individual has no reasonable alternative but to leave work."
The court ruled that Nielsen had no reasonable alternative but to leave work. The court stated that it would have been "useless or even dangerous" for her to complain about the unpaid overtime because uncontested evidence showed that the employer was unwilling to pay overtime to workers who complained about their pay. The court also pointed out that she was afraid of the employer. Filing a complaint with BOLI while continuing to work for the employer was not a reasonable alternative because Nielsen would have risked continuing to be underpaid since she testified that nonpayment of overtime wages was an ongoing problem. The court noted that with each passing week, Nielsen risked never getting paid for the overtime hours she worked.
Accordingly, the court ruled that a reasonable and prudent person exercising common sense would not have complained to the employer or BOLI about the unpaid overtime. Rather, a reasonable person would have considered the circumstances sufficiently grave to give her no alternative but to resign. Nielsen v. Employment Dept., 263 Or. App. 274, ___ P.3d ___, 2014 WL 2422763 (May 29, 2014).
At first blush, the court's decision may seem to relax the standard for employees who file unemployment benefits claims to show good cause for voluntarily leaving work. The court stated that an employee need not show that she explored alternatives to leaving work. If the employee does not complain, the employer may have no knowledge that there is a problem and no opportunity to remedy it.
However, the court carefully limited its holding to this case. Indeed, an employee testifying that she nearly called 911 because a brawl almost broke out when a former staff member asked the employer for his wages is uncommon and is likely a good basis to distinguish this case from others.
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