{
  "id": 8525333,
  "name": "LORI P. SMITH, Petitioner-Appellant v. SPENCE & SPENCE, ATTORNEYS, and EMPLOYMENT SECURITY COMMISSION OF NORTH CAROLINA, Respondents-Appellees",
  "name_abbreviation": "Smith v. Spence & Spence",
  "decision_date": "1986-05-20",
  "docket_number": "No. 8511SC623",
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  "provenance": {
    "date_added": "2019-08-29",
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  "casebody": {
    "judges": [
      "Judges Webb and Becton concur."
    ],
    "parties": [
      "LORI P. SMITH, Petitioner-Appellant v. SPENCE & SPENCE, ATTORNEYS, and EMPLOYMENT SECURITY COMMISSION OF NORTH CAROLINA, Respondents-Appellees"
    ],
    "opinions": [
      {
        "text": "COZORT, Judge.\nThe question presented by this appeal is whether an employee\u2019s delinquency in her personal financial affairs which caused a detrimental effect on her employer\u2019s relationship with his clients who were creditors of the employee constitutes \u201csubstantial fault on the employee\u2019s part connected with her work not rising to the level of misconduct\u201d for which the employee may be terminated. We hold the conduct of the secretary does rise to the level of substantial fault, and we affirm the superior court\u2019s Judgment upholding the Decision of the Employment Security Commission of North Carolina to disqualify the secretary from receiving unemployment benefits for a period of four weeks, pursuant to G.S. 96-14(2A). The pertinent facts and procedural history follow.\nClaimant Lori P. Smith was employed as a legal secretary for the Johnston County law firm Spence and Spence. As of 8 June 1984 she had been employed by the firm for five years and one month. Claimant had encountered personal financial difficulties the entire time of her employment. The senior partner of the law firm, Robert A. Spence, Sr. (hereinafter \u201cemployer\u201d), knew of her financial difficulties and had many times assisted her by paying her early. On one occasion, he endorsed a bank note for her for $1,000 to enable her to help straighten up her affairs. When the claimant defaulted on the note, the employer paid it off, and while he obtained about $500 from the man living with the claimant who also endorsed the note, he made no effort to get claimant to repay him the remaining $500, choosing instead to forgive her debt to him. On another occasion, the sheriffs office called on the claimant at the employer\u2019s office to collect on a judgment against claimant and her former husband. Outside of her financial difficulties, claimant was an excellent employee, one of the best secretaries the employer had employed in his 34 years of practicing law.\nOn Friday, 8 June 1984, the employer was on his way to the courthouse when he encountered Ms. Margaret Lassiter, a public accountant described by the employer as a \u201cvery close client\u201d and a business associate. Ms. Lassiter told the employer that she had rented an apartment to the claimant and that the claimant had moved out to rent a more expensive apartment, owing Ms. Lassi-ter about $1,600 in delinquent rent payments and advancements Ms. Lassiter had made to pay claimant\u2019s electric bill. When the employer returned to his office, he asked claimant about the debt to Ms. Lassiter. Claimant told employer she believed the amount she owed Ms. Lassiter was around $1,100-$1,200. The employer told claimant she had ten days to straighten up her financial affairs, or she would have to look for another job. He told her he was afraid her creditors might start taking their business elsewhere instead of dealing with the employer\u2019s law firm. The claimant worked the following Monday and Tuesday. She asked for and received vacation for Wednesday, Thursday and Friday. She attempted to arrange some financial assistance to help pay off her debts; however, her efforts were unsuccessful. On Monday, 18 June, claimant returned to the office. She was asked by Robert Spence, Jr., employer\u2019s son and partner, whether she had any prospects for a job. Upon hearing that she did not, he offered the law firm as a reference. Claimant boxed up her personal belongings, left her keys with another secretary, and left.\nClaimant registered for work and filed a claim for unemployment benefits at the Goldsboro Local Office of the North Carolina Employment Security Commission. The Claims Adjudicator for the Commission determined that claimant was disqualified from receiving benefits because her reason for leaving employment did \u201cnot constitute with good cause attributable to the employer.\u201d Claimant appealed to an Appeals Referee, who issued a decision upholding the disqualification of benefits, modified to provide that claimant was \u201cdisqualified for unemployment benefits for a period of nine weeks,\u201d because her discharge was for \u201csubstantial fault connected with the work.\u201d On appeal, the Commission affirmed the decision of the Appeals Referee, further modifying the decision to reduce the disqualification of benefits to four weeks, finding that \u201cthe claimant\u2019s conduct was not intended to harm the employer.\u201d Claimant appealed to the Superior Court of Johnston County where the presiding judge affirmed in its entirety the decision of the Commission. Claimant appeals that decision to this Court.\nClaimant presents three issues for consideration by this Court: (1) whether certain findings of fact made by the Commission are supported by competent evidence; (2) whether the Commission\u2019s decision is correct as a matter of law; and (3) whether the decision of the Commission violates the claimant\u2019s constitutionally protected right to privacy. We affirm.\nOur scope of review is:\nIn considering an appeal from a decision of the Employment Security Commission, the reviewing court must (1) determine whether there was evidence before the Commission to support its findings of fact and (2) decide whether the facts found sustain the Commission\u2019s conclusions of law and its resulting decision. Employment Security Comm. v. Jarrell, 231 N.C. 381, 57 S.E. 2d 403 (1950).\nIntercraft Industries Corp. v. Morrison, 305 N.C. 373, 376, 289 S.E. 2d 357, 359 (1982).\nIn her first assignment of error, claimant challenges four findings of fact made by the Appeals Referee, subsequently affirmed by the Commission and the trial court:\n2. Claimant was discharged from this job because her personal financial affairs adversely affected and caused em-barrasment [sic] to the employer\u2019s business.\n* * * *\n4. During this period of time, claimant has on a continuing basis experienced financial difficulties occasionally resulting in creditors contacting her at the employer\u2019s place of business. In addition, the employer had been contacted by the sheriffs department in reference to the service of a summons for the execution of a judgment.\n5. Claimant had been previously advised of the embarras-ing [sic] nature of her personal financial problems and had made attempts, though [sic] the assistance of the employer via the co-signing of a note, to straighten out her affairs.\n* * * *\n7. Claimant was substantially indebted to a client of the employer.\nAt the hearing before the Appeals Referee, the employer testified that the claimant \u201chad had financial problems throughout her employment.\u201d He testified that the sheriffs office came to his office once to collect a judgment against claimant and her former husband. He testified that he helped her borrow money from a bank by endorsing a note for her and that the banker called him because claimant defaulted on the note. The employer paid off the note, received $500 from a co-endorser, and forgave the remaining $500 claimant owed him. The employer testified that he was told by Ms. Lassiter that claimant owed her $1,600, and he further testified, \u201cI have done a lot of work with Ms. Lassiter. She did a lot of referrals.\u201d The employer further testified:\n[T]hese people called in the office, the sheriff collecting judgments in the office, and a very close client complaining about it, and knowing they had to go through Lori to get to me, so feeling that they would hesitate to even come to me anymore, they had to go through Lori, I had to have it straightened out, I asked her to have it straightened out. . . .\n* * * *\n[S]he had become indebted to so many people who were making demands through court and otherwise, and through the sheriffs office in the execution of judgments, some of the people being very close business associates, that it was reflecting upon the office, the credibility of the office, and could not be allowed to continue, and I wanted her to do something about it . . . straighten them up so there wouldn\u2019t be demands from the office, and to the office, so that the office wouldn\u2019t suffer adversely for it and the practice wouldn\u2019t suffer, and the integrity of the practice wouldn\u2019t suffer.\n* * * *\nI told her I couldn\u2019t, that we couldn\u2019t allow that. I don\u2019t know my exact wording ... I don\u2019t mean to misrepresent anything but to me she knew the relationship between Margaret Las-siter and me, I mean professional relationship, but it, it wasn\u2019t one isolated incident. This has been building up and building up and I had asked her before to get her affairs straightened out. That was one of the purposes of my signing that note, was to help her, and I was disappointed at that time, but I was told that everything would be cleared up\n* * * *\n[S]he knew . . . that Ms. Lassiter and I had a good professional relationship, and any adverse conduct on her part with Ms. Lassiter would reflect upon the relationship I had with Ms. Lassiter and that affected my firm ....\nA review of the testimony of the employer shows there was ample evidence to support each of the findings challenged here by the claimant. The claimant\u2019s first assignment of error is overruled.\nClaimant\u2019s second contention is that her conduct did not rise to the level of substantial fault connected with her work because her conduct was not in relation to her employer\u2019s interest or her duties and obligations to her employer. She argues further that there was no requirement in her job concerning the management of her personal financial affairs; thus, it was not \u201cconnected with her work.\u201d We do not agree with claimant\u2019s argument.\nClaimant was disqualified for benefits under G.S. 96-14(2A), which provides that an individual shall be disqualified for benefits\n[f]or a period of not less than four nor more than 13 weeks ... if it is determined by the Commission that such individual is, at the time the claim is filed, unemployed because he was discharged for substantial fault on his part connected with his work not rising to the level of misconduct.\nG.S. 96-14(2A) is a recent addition to the Employment Security Law of North Carolina. Subsection (2A) was added to Section 96-14 in the 1983 Session of the North Carolina General Assembly, to become effective 1 August 1983 (1983 N.C. Sess. Laws, ch. 625, Secs. 6, 17). While G.S. 96-14(2A) does not give a precise definition of or clear examples of what constitutes such \u201csubstantial fault,\u201d it offers the following guidelines:\nSubstantial fault is defined to include those acts or omissions of employees over which they exercised reasonable control and which violate reasonable requirements of the job but shall not include (1) minor infractions of rules unless such infractions are repeated after a warning was received by the employee, (2) inadvertent mistakes made by the employee, nor (3) failures to perform work because of insufficient skill, ability, or equipment. Upon a finding of discharge under this subsection, the individual shall be disqualified for a period of nine weeks unless, based on findings by the Commission of aggravating or mitigating circumstances, the period of disqualification is lengthened or shortened within the limits set out above.\nTo date there have been no decisions in the appellate courts of North Carolina construing the phrase \u201csubstantial fault on [her] part connected with [her] work not rising to the level of misconduct.\u201d\nIt is clear from the statute that the conduct can be less egregious than that necessary to constitute misconduct. Misconduct has been defined repeatedly by this Court and the Supreme Court as \u201c \u2018conduct which shows a wanton or wilful disregard for the employer\u2019s interest, a deliberate violation of the employer\u2019s rules, or a wrongful intent.\u2019 \u201d In re Miller v. Guilford County Schools, 62 N.C. App. 729, 731, 303 S.E. 2d 411, 412 (1983), quoting from Intercraft Industries Corp. v. Morrison, 305 N.C. 373, 375, 289 S.E. 2d 357, 359 (1982). We have since held that unintentional rule violations satisfy the requirements of misconduct if the actions \u201cmanifested such a degree of carelessness as to show a substantial disregard of [an] employer\u2019s interests and of [the] duty to protect those interests.\u201d Douglas v. J. C. Penney Co., 67 N.C. App. 344, 346, 313 S.E. 2d 176, 178-79 (1984). And, we have also held that the specific acts in question do not have to occur at the work site or directly in connection with the work assignments, if the resulting consequences violate a standard of behavior which the employer has a right to expect of his employee. In re Collins v. B & G Pie Co., 59 N.C. App. 341, 296 S.E. 2d 809 (1982) (claimant\u2019s failure to make restitution payments resulting in revocation of probation, incarceration for two months, and unexcused absences from work held to be misconduct connected with his work).\nReading G.S. 96-14(2A) with guidance from the \u201cmisconduct\u201d cases cited above, we hold the personal financial mismanagement of the claimant constituted substantial fault connected with her work not rising to the level of misconduct. The actions of the claimant, though unintentional and occurring primarily away from her work, had the effect of posing a serious threat to the reputation of her employer, the integrity of his practice, and his relationship with clients and associates. It is reasonable for an attorney to require of his employees that their personal affairs should be handled in such a way as to keep from damaging the reputation and integrity of the law firm. It is not necessary that the employer be able to prove an actual loss of clients, etc. The damaging effect of claimant\u2019s actions on his law practice, which is founded on trust and confidence in him and his employees, is obvious.\nClaimant\u2019s last assignment of error is that the decision violates her right to privacy. She argues that the Commission\u2019s decision had the effect of imposing its standards of conduct on claimant\u2019s handling of her personal affairs. Claimant\u2019s argument is frivolous. Any right to privacy the claimant might have been able to claim concerning her personal financial affairs was certainly waived when her management of those affairs caused those matters to come to the attention of her employer. Furthermore, it was the detrimental effect her mismanagement had on her employer\u2019s interests which became the basis for her benefits disqualification, not the mismanagement itself. This assignment of error is overruled.\nThe decision below is\nAffirmed.\nJudges Webb and Becton concur.",
        "type": "majority",
        "author": "COZORT, Judge."
      }
    ],
    "attorneys": [
      "East Central Community Legal Services by Reynauld M. Williams for petitioner appellant.",
      "Employment Security Commission of North Carolina Chief Counsel T. S. Whitaker by Staff Attorney Jane H. Dittmann for respondent appellee, Employment Security Commission."
    ],
    "corrections": "",
    "head_matter": "LORI P. SMITH, Petitioner-Appellant v. SPENCE & SPENCE, ATTORNEYS, and EMPLOYMENT SECURITY COMMISSION OF NORTH CAROLINA, Respondents-Appellees\nNo. 8511SC623\n(Filed 20 May 1986)\nMaster and Servant \u00a7 108.1\u2014 unemployment compensation \u2014 discharge based on fault not amounting to misconduct\nPlaintiff employee\u2019s delinquency in her personal financial affairs which caused a detrimental effect on her employer\u2019s relationship with his clients who were creditors of the employee constituted substantial fault on the employee\u2019s part connected with her work not rising to the level of misconduct for which the employee could be terminated, and the Employment Security Commission could therefore disqualify plaintiff secretary from receiving unemployment benefits for a period of four weeks pursuant to N.C.6.S. \u00a7 96-14(2A).\nAPPEAL by petitioner from McConnell, Judge. Judgment entered 12 February 1985 in Superior Court, JOHNSTON County. Heard in the Court of Appeals 21 November 1985.\nEast Central Community Legal Services by Reynauld M. Williams for petitioner appellant.\nEmployment Security Commission of North Carolina Chief Counsel T. S. Whitaker by Staff Attorney Jane H. Dittmann for respondent appellee, Employment Security Commission."
  },
  "file_name": "0636-01",
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  "last_page_order": 671
}
