Can an Unemployment Compensation Decision Hurt My Alabama Retaliatory Discharge Case?

Can an Unemployment Compensation Decision Hurt My Alabama Retaliatory Discharge Case?

You suffered an injury at work. You filed a workers’ compensation claim. Your employer later fired you and said you were terminated for misconduct, violating a company policy, excessive absences, or some other reason.

Naturally, one of the first things you may do is apply for unemployment compensation benefits, but there is something many injured Alabama workers do not realize:

What happens in your unemployment compensation case may later affect your ability to pursue a retaliatory discharge claim.

In some circumstances, an unfavorable decision in an unemployment proceeding can even prevent an employee from later arguing that the employer’s stated reason for the termination was false.  That is why an injured worker who believes he or she may have been fired because of a workers’ compensation claim should not treat an unemployment hearing as unimportant.

Why Can an Unemployment Case Affect a Retaliatory Discharge Case?

Alabama’s retaliatory discharge statute, Ala. Code §25-5-11.1, generally prohibits an employer from terminating an employee solely because the employee instituted or maintained a claim to recover workers’ compensation benefits.

In most retaliatory discharge cases, the employer says “We did not fire this employee because of the workers’ compensation claim. We fired the employee for another reason.”

Perhaps the alleged reason is attendance, misconduct, insubordination, dishonesty, violation of company policy, or failure to report to work, and that reason may become an issue in an unemployment compensation proceeding as well.

If an administrative hearing officer determines that the employee actually was discharged for the misconduct alleged by the employer, Alabama law may prevent the employee from later relitigating that same issue in a retaliatory discharge lawsuit.

The legal doctrine is called collateral estoppel.

What Is Collateral Estoppel?

The terminology sounds complicated, but the basic idea is fairly straightforward.

If an issue has already been fully litigated and decided in one proceeding, a party may sometimes be prevented from litigating that same issue again in another proceeding.

Alabama courts have held that this principle can apply to decisions made in unemployment compensation proceedings.

For collateral estoppel to apply to an issue decided in an administrative proceeding, Alabama courts generally look for five things:

1. the parties, or their privies, are the same;
2. the issue is the same;
3. the parties had an adequate opportunity to litigate the issue;
4. the issue was actually litigated and decided; and
5. deciding that issue was necessary to the administrative decision.

Why does this matter so much in a retaliatory discharge case?

Because the reason the employer fired you may be the central issue in both cases.

Wal-Mart v. Smitherman: The Employee Could Not Relitigate Why She Was Fired

An important Alabama case is Wal-Mart Stores, Inc. v. Smitherman, 743 So. 2d 442 (Ala. 1999).  Smitherman pursued unemployment compensation benefits after Wal-Mart terminated her employment. In the unemployment proceeding, an appeals referee determined that she had been discharged for making a derogatory and profane remark concerning a superior.  Smitherman did not appeal that decision, and it became final.

She also pursued a retaliatory discharge claim against Wal-Mart, contending that her termination violated Alabama’s workers’ compensation retaliatory discharge statute.

The problem was that the reason for her termination had already been litigated in the unemployment proceeding.

The Alabama Supreme Court held that Smitherman was collaterally estopped from relitigating the reason for her discharge. Because she could not relitigate that issue, she could not establish her retaliatory discharge claim.

That is a significant result.

An administrative unemployment proceeding had consequences far beyond the question of whether the employee would receive unemployment benefits.

Caton v. City of Pelham: The Alabama Supreme Court Reaffirmed the Rule

More recently, the Alabama Supreme Court addressed the issue again in Caton v. City of Pelham.

Caton alleged that the City of Pelham terminated him in retaliation for his workers’ compensation claim, but before the retaliatory discharge case was resolved, an unemployment compensation proceeding had resulted in a determination that Caton was discharged for misconduct connected with his work.  The City relied upon that determination and argued that Caton could not relitigate why he had been terminated.

The Alabama Supreme Court agreed.

The Court explained that the reason for Caton’s termination was necessary to the unemployment compensation determination. Because the administrative proceeding had determined that Caton was terminated for misconduct rather than for filing a workers’ compensation claim, collateral estoppel barred his retaliatory discharge claim.

The lesson from Caton is difficult to overstate: An unemployment compensation hearing can potentially decide an issue that is central to a later retaliatory discharge lawsuit.

Do Not Treat an Unemployment Hearing as “Just an Unemployment Hearing”

Many employees understandably view an unemployment claim as a relatively informal proceeding.  They may participate without an attorney. They may not gather all of the relevant documents. They may not subpoena witnesses. They may not realize the significance of how a question is answered. And they may focus only on whether they will receive unemployment checks.

But if the employee also believes the termination was retaliation for pursuing workers’ compensation benefits, there may be much more at stake.

Consider this example:  An employer claims an injured employee was fired for violating its attendance policy.  At the unemployment hearing, the employee may need to consider evidence showing:

• whether the absences were related to the work injury;
• whether the employer knew why the employee was absent;
• whether the employee complied with call-in requirements;
• whether medical excuses were provided;
• whether the employer followed its own attendance policy;
• whether other employees with similar attendance records were fired;
• whether the employer’s explanation has changed; and
• whether supervisors made statements connecting the discipline to the workers’ compensation claim.

Those are not merely unemployment issues; they may also be important evidence in a retaliatory discharge case.

Recommended Reading: Can My Employer Fire Me for Attendance Problems After a Workers’ Compensation Injury in Alabama? explains why attendance cases frequently require a closer examination of the employer’s policy, the employee’s medical circumstances, and how the policy was actually enforced.

What If I Lose My Unemployment Claim?

First, do not automatically assume that losing an unemployment claim means you have lost any possible retaliatory discharge case.

Collateral estoppel does not apply simply because an employee was denied unemployment benefits.  The important questions include what issue was actually litigated, what the hearing officer actually decided, whether that determination was necessary to the decision, and whether the other requirements for collateral estoppel are satisfied.

But an adverse determination concerning the reason for your termination should be taken very seriously.

If the unemployment decision says that you were discharged for misconduct, violation of a company policy, or another specific reason, that finding could potentially have significant consequences in a later retaliatory discharge case.

What If I Appeal the Unemployment Decision?

This is another area where injured employees should be careful.

In Ex parte Buffalo Rock Co., 941 So. 2d 273 (Ala. 2006), an employee received an unfavorable unemployment decision and appealed it. He later voluntarily dismissed the appeal.  The Alabama Supreme Court held that the voluntary dismissal did not prevent the employer from asserting collateral estoppel based upon the administrative determination.

In other words, simply filing an appeal and later dismissing it did not erase the potential consequences of the earlier unemployment decision.

That provides another practical lesson:

An employee who receives an unfavorable unemployment decision should consider the possible effect on other claims before deciding whether to appeal—or whether to abandon an appeal that has already been filed.

What If I Win My Unemployment Compensation Case?

Winning an unemployment compensation claim can certainly be helpful, particularly if the employer unsuccessfully argued that the employee was discharged for misconduct, but the reverse proposition should not automatically be assumed:

Winning unemployment benefits does not necessarily establish that the employer committed retaliatory discharge.

The employee still has to prove the elements of the retaliatory discharge claim under Ala. Code §25-5-11.1.

The Employer’s Stated Reason Still Matters

This issue connects directly with two subjects we have discussed throughout this series: company policies and pretext.

Suppose the employer says “We fired her because she violated our attendance policy.”

The questions should not necessarily stop there.

Did she actually violate the policy?

Did the employer follow the policy?

How had the employer treated other employees?

Was the stated reason the same at the termination meeting, the unemployment hearing, and later in litigation?

Was the employer’s explanation supported by its own records?

Did the reason change over time?

These questions can be extremely important because Alabama retaliatory discharge cases are frequently proven through circumstantial evidence rather than an admission by an employer that it fired someone because of a workers’ compensation claim.

Recommended Reading: Can My Employer Fire Me for Violating a Company Policy After I File a Workers’ Compensation Claim? discusses why an employer’s reliance upon a company rule does not necessarily end the inquiry.

Recommended Reading: What Is Pretext in an Alabama Retaliatory Discharge Case? explains how an employee may attempt to show that the reason given by the employer was not the real reason for the termination.

Preserve the Unemployment Records

If you believe your termination may have been related to your workers’ compensation claim, preserve the documents associated with your unemployment case.

That may include:

• the unemployment application;
• the employer’s response;
• notices from the Alabama Department of Workforce;
• the initial determination;
• hearing notices;
• exhibits submitted at the hearing;
• recordings or transcripts, if available;
• the hearing officer’s decision;
• appeal documents; and
• correspondence concerning the claim.

The exact language used in an unemployment decision can become very important later.

The Bottom Line

An unemployment compensation proceeding may appear to be entirely separate from an Alabama retaliatory discharge lawsuit.

It may not be.

When both proceedings require a decision about why the employee was fired, what happens in the unemployment case can potentially affect the retaliatory discharge case.  The Alabama Supreme Court’s decisions in Smitherman, Caton, and Ex parte Buffalo Rock demonstrate that an administrative unemployment determination can, under the right circumstances, prevent an employee from relitigating an issue in a later retaliatory discharge lawsuit.

That is why an injured employee who has been fired after pursuing workers’ compensation benefits should take an unemployment claim—and particularly an unemployment hearing—seriously.

If you suffered an Alabama job injury, were subsequently fired, and are applying for unemployment compensation benefits, don’t assume the unemployment proceeding has nothing to do with a possible retaliatory discharge claim.

If you have questions about how your termination or unemployment claim may affect your rights, don’t hesitate to contact and speak with one of the experienced Alabama Workers Compensation and Social Security Disability attorneys at Powell and Denny today for a free consultation. Appointments are available in person, or virtually via Zoom if more convenient.  Powell and Denny would appreciate the opportunity to help.  And remember, there is no fee unless you win.

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