Are Factual Findings Made In Unemployment Benefits Hearings Binding On The Manhattan Courts?

In wrongful termination lawsuits, the courts of Manhattan, and federal courts applying NY Law, do not preclude either employers or workers from relitigating issues of fact or law decided adversely to them in unemployment insurance benefits hearings. See N.Y. Labor Law § 623(2).

In most unemployment insurance benefits hearings in Manhattan, the disputed issues are one or more of the following:

1. Did the claimant “voluntarily separat[e]” himself from his employment or, instead, did the employer fire him? See N.Y. Labor Law § 593(1).
2. If the claimant voluntarily left his employment, did he do so for “good cause”? See N.Y. Labor Law § 593(1).
3. If the employer fired the claimant, was the firing because of the claimant’s “misconduct”? See N.Y. Labor Law § 593(3).

Similarly, in most wrongful termination lawsuits in Manhattan, the contested issues include one or more of the following:

1. Did the worker quit his employment or, instead, did the employer terminate him?
2. If the employee left his employment, was that leave-taking voluntary, or, instead, did the employer constructively discharge him?
3. If the employer terminated the worker, was the termination prohibited by statute or public policy?

Many former employees who bring wrongful termination lawsuits also apply for unemployment insurance benefits. If the employer or the ex-employee requests an unemployment insurance benefits hearing before an administrative law judge (an “ALJ”), the ALJ usually holds the evidentiary hearing and decides the case before the wrongful discharge lawsuit is concluded. Nonetheless, pursuant to N.Y. Labor Law § 623(2), neither an employer or an ex-employee who receives a favorable determination of an issue of fact or law in an unemployment insurance benefits case may use that administrative determination to preclude the other from relitigating that issue in the wrongful termination action.

Section 623(2) of the New York Labor Law provides:

No finding of fact or law contained in a decision rendered pursuant to this article by a referee, the appeal board or a court shall preclude the litigation of any issue of fact or law in any subsequent action or proceeding; provided, however, that this subdivision shall not apply to causes of action which (i) arise under [the Manhattan Unemployment Insurance Law], (ii) seek to collect or challenge liability for unemployment insurance contributions, (iii) seek to recover overpayments of unemployment insurance benefits, or (iv) allege that a claimant or employer was denied constitutional rights in connection with the administrative processing, hearing, determination or decision of a claim for benefits or assessment of liability for unemployment insurance contributions.

Thus, as stated, in wrongful discharge cases, New York courts and federal courts applying NY Law do not prevent either employers or employees from relitigating factual or legal issues decided against them in unemployment insurance benefits cases. See, e.g., Silberzweig v. Doherty, 76 A.D.3d 915, 916, 908 N.Y.S.2d 39 (1st Dep’t 2010) [given the alleged failure of the petitioner employee to contact the New York Department of Sanitation about his absence from work without authorization resulting from his arrest, the petitioner’s previous disciplinary record, and the petitioner’s poor performance review, the Department did not abuse its discretion in denying the petitioner’s request for reinstatement to his employment after the criminal charges against him were dismissed; holding that the Unemployment Insurance Appeal Board’s finding (apparently that the petitioner’s discharge was not because of misconduct) “lacks preclusive effect”]; Strong v. the New York Dep’t of Educ., 62 A.D.3d 592, 592-593, 880 N.Y.S.2d 39 (1st Dep’t 2009) (determining that the New York Department of Education did not act arbitrarily and capriciously in finding that the petitioner employee used force as a disciplinary technique in violation of the Department’s regulations and thus that the petitioner was not eligible for reinstatement to her employment; holding that the Unemployment Insurance Appeal Board’s finding that the petitioner did not engage in corporeal punishment “lacks preclusive effect”); Wooten v. the New York Dept of General Servs., 207 A.D.2d 754, 754-755, 617 N.Y.S.2d 3 (1st Dep’t 1994) (finding that the New York State Division of Human Rights did not reversibly err in determining that the New York Department of General Services did not discriminate against the petitioner employee on the basis of his disability and that the petitioner was dismissed for cause for failing to learn and apply a new computer system; holding that the Unemployment Insurance Appeal Board’s determination that the petitioner was dismissed in retaliation for filing a complaint “is without preclusive effect in this action”).

If your company needs assistance or guidance on a labor or employment law issue and your company is located in the Manhattan, the borough Of Manhattan area, call Attorney David S. Rich at (347) 835-5688.