Matter of Horesco, 87 N.Y.2d 486 (1996)
A felony is considered to be “in connection with” employment, thereby disqualifying a claimant from unemployment benefits under Labor Law § 593(4), if it results in the breach of a duty, whether express or implied, that the claimant owes to the employer.
Summary
An attorney, serving as Chief Title Counsel for a title abstract company, was convicted of mail fraud for submitting a false insurance claim. Following his conviction and subsequent termination, he applied for unemployment insurance benefits, which were denied based on Labor Law § 593(4), which disallows benefits for one year after a claimant loses employment due to a felony “in connection with” that employment. The court held that the felony was indeed in connection with his employment because it resulted in the breach of duties he owed his employer, including maintaining his professional qualifications and not tarnishing the company’s reputation. This decision emphasizes that “in connection with” is broader than actions directly against the employer and encompasses any felony impacting the employee’s duties.
Facts
The claimant, an attorney, worked for Allied American Abstract Corp. as Chief Title Counsel for approximately 10 years.
In July 1994, he was indicted and subsequently convicted of mail fraud under 18 U.S.C. § 1341 for submitting a false insurance claim to Allstate Insurance Company regarding a stolen political button collection.
Following his conviction, his employment with Allied was terminated.
Procedural History
The Commissioner of Labor denied the claimant’s application for unemployment insurance benefits, citing Labor Law § 593(4).
The Administrative Law Judge sustained the Commissioner’s determination after a hearing.
The Unemployment Insurance Appeal Board affirmed the ALJ’s decision.
The Appellate Division affirmed the Board’s decision.
The New York Court of Appeals granted leave to appeal.
Issue(s)
Whether a felony conviction for conduct outside of work hours and not directly against the employer can be considered “in connection with” employment under Labor Law § 593(4), thus disqualifying the claimant from receiving unemployment insurance benefits.
Holding
Yes, because a felony is “in connection with” employment if it results in a breach of duty, express or implied, that the claimant owes to the employer, even if the felony was not committed against the employer or during work hours.
Court’s Reasoning
The Court of Appeals interpreted Labor Law § 593(4), emphasizing that the Legislature’s choice of the phrase “in connection with” was broader than alternatives like “committed against the employer” or “committed in the course of employment.” The court reasoned that the statute aims to award benefits only to those unemployed “through no fault of their own” (Labor Law § 501). The court found that the claimant’s felony conviction breached his duty to his employer in several ways:
The claimant was automatically disbarred under Judiciary Law § 90(4)(a), rendering him unqualified for his position as Chief Title Counsel. This impaired his ability to effectively perform his job.
As Chief Title Counsel, the claimant personally dealt with numerous insurance companies. His conviction for defrauding an insurance company tarnished Allied’s reputation for trustworthiness in the business community.
The court drew guidance from prior decisions construing Labor Law § 593(3), finding conduct to be disqualifying when it “evinces a willful disregard of standards of behavior which employers have the right to expect of their employees.”
The court concluded that the claimant’s actions violated a basic duty owed to his employer, which was to remain qualified for his position and to uphold the company’s reputation.