DIVISION OF UNEMPLOYMENT INSURANCE ‘APPEALS: 4425 N. MARKET STREET PO BOX 9950 WILMINGTON, DE 19809 CLAIMANT K DAVIES: ‘Appeal Docket Number: 41081912 |43 WASHINGTON ST Social Security No: ***-"-3855 DOVER DE 19901 Dale of Claim: 12/31/2017 Date of Appeal: 01/29/2018 oe Date of H 05/22/2018 DELWARE AUDITOR OF ACCOUNTANTS fe of Hearing: 401 FEDERAL ST Place of Hearing: DOVER DOVER DE 19901 Date Decision Mailed: 05/30/2018 Last Day to File Appeal: 06/09/2018 RIGHT OF FURTHER APPEAL Section 3318, Title 19, Delaware Code, provides that any interested party involved, the claimant, the employer, or the Claims Deputy has a right of appeal from the decision of the Referee to the Unemployment Insurance Appeal Board, and further provides the opinion of the Referee “shall be deemed to be the final decision of the Department of Labor unless within 10 days after the date of Notification or mailing of such decision further appeal is initiated .." You are, therefore, hereby Notified that if an appeal is not made within the ten-day period specified by law, all further right to appeal is lost and the case cannot be reopened, The appeal may be made at the local office or directed to Department of Labor, Division of Unemployment insurance, 4425 N. Market St, PO Box 9950, Wilmington, DE 19809. Appearances: Kathleen A. Davies, Claimant ; R.Thomas Wagner, Jr., Claimant Witness Kevin Slattery, DAG, Employer's Counsel; Adrenna Burd, Employer Representative; Deborah Kriegsch, Employer Witness Kathryn M. Gantz, Appeals Referee Claims Deputy's Determination: ‘The claimant was discharged from work for just cause in connection with the work and is disqualified from the receipt of unemployment benefits. Statutory Provision Involved: Title 19, Delaware Code, Section 3314(2) IIMPORTANTE! Este documento(s) contiene informacién importante sobre sus derechos, obligaciones ylo beneficios de compensacién por desempleo. Es muy importante que usted entienda la informacién contenida en este documento,APPEAL DOCKET NO: 41081928 FINDINGS OF FACT This tribunal finds that the Claimant was employed by the State of Delaware (Employer) by the Delaware Auditor of Accounts (Auditor) as the Chief Administrative Auditor (Claimant) from January 2010 through December 20, 2017. Claimant reported directly to the Auditor and was his “second in command”, In March of 2011, the Auditor executed a Delegation of Authority to the Claimant in order that she could handle the Department's affairs in his absence. In August of 2014, the Employer Representative, (Manager) was promoted to an Audit Manager position. The Manager was Claimant's subordinate and direct report. The Claimant's staff also included a Senior Audit Manager as well as other staff. (On Manager's first assigned engagement as an Audit Manager she disagreed with certain decisions and discretionary judgments made by the Claimant in carrying out her duties. ‘The Manager also objected to Claimant’s office practices as the Chief Administrative Auditor and in actions undertaken by the Claimant under the Auditor's Delegation of Authority. In September of 2014 the Claimant attended an AFL-CIO Union Conference in Pittsburgh Pennsylvania. Claimant's attendance at the conference was approved by the Auditor. In November of 2015, the Manager decided that instead of taking her complaints directly to the Claimant who was her immediate supervisor, or to the Auditor who was the Claimant's immediate supervisor, she would take her concerns to the Office of Management and Budget (OMB). The Manager's reasoning was that she did not know the status of the relationship between the Auditor and the Claimant. After expressing her concerns to OMB, the Manager decided she needed evidence. The Manager decided to conduct her own personal investigation of the Claimant without any authority or instruction to do so from any superior including the OMB and without the knowledge of the Claimant or the Auditor. The Manager provided the results of her investigation to the OMB alleging that Claimant violated the Generally Accepted Government Auditing Standards (“GAGAS") as well as various violations of the Office of the Auditor of Accounts (“OAOA”) in conjunction with the Statewide eSchoolPlus and Unit Count Performance Audit. (“UCPA”) On March 14, 2016 the Manager sent the Claimant an email regarding sending a draft UCPA report to the districts/charters for comment as a subject matter for their next discussion. On March 21, 2016, OMB notified the Auditor of the Manager’s allegations concerning the OAOA.On April 21, 2016 the Claimant sent the draft copy of the UCPA to Representative Williams, a member of the Education Committee of the Delaware General Assembly. On May 16, 2017 the Auditor released the final UCPA. On May 17, 2017, the Auditor notified Claimant of the allegations against her and placed her on paid leave pending a review of the issues reported by the OMB. Sometime thereafler, an independent outside firm, Grant Thorton was hired to conduct an investigation into the allegations against Claimant and the OAOA. On October 11, 2017, the Auditor issued a letter recommending termination of Claimant’s employment with OAOA citing six reasons: 1) Violation of GAGAS with regard to a Statewide eSchoolPlus and Unit Count Performance Audit, 2) Disclosure of the Unit Count Performance Audit to a member of the Delaware General Assembly 3) Withholding information about OAOA matters from the AOA, 4) Misuse of a Delegation of Authority, 5) Sclection of the accounting firm of Zelenkofske-Axelrod (ZA) to conduct the FY2015 Treasurer's Office Quarterly Bank Reconciliation Agreed Upon Procedures ( Treasury AUP) engagement and Annual Peer Review, 6) Attendance at an AFL-CIO union conference in Pittsburg, Pennsylvania in September 2014. On December 20, 2017 the Auditor discharged Claimant from the OAOA. The State of Delaware (Employer) has adopted the GAGAS standards. CONCLUSIONS OF LAW SECTION 33142), DELAWARE CODE, PROVIDES AS AN INDIVIDUAL SHALL BE DISQUALIFIED FOR BENEFITS: FOR THE WEEK IN WHICH THE INDIVIDUAL WAS DISCHARGED FROM THE INDIVIDUAL’S WORK FOR JUST CAUSE IN CONNECTION WITH THE INDIVIDUAL’S WORK AND FOR EACH WEEK THEREAFTER UNTIL THE INDIVIDUAL HAS BEEN EMPLOYED IN EACH OF 4 SUBSEQUENT WEEKS (WHETHER OR NOT CONSECUTIVE) AND HAS EARNED WAGES IN COVERED EMPLOYMENT EQUAL TO NOT LESS THAN 4 TIMES THE WEEKLY BENEFIT AMOUNT. “The issue in this case is whether the employer had sufficient just cause to discharge the claimant from her employment. In a discharge case, the employer must show by a preponderance of evidence that the claimant was discharged for just cause in connection with her work. Just cause exists where the claimant commits a willful or wanton act or engages in a willful or wanton pattern of conduct in violation of the employer's interest, her duty to the employer or her expected standard of conduct. Coleman v. Department of Labor, 288 A2d. 285 (Del. Super. 1972). Willful or wanton conduct requires a showing that one was conscious of his conduct or recklessly indifferent of its consequences. Coleman v. Department of Labor, 288 A.2d 285 (Del. Super. 1972).Here, itis undisputed that the Employer has adopted GAGAS in the performance of audits conducted by the OAOA. (Employer #1) GAGAS section 7.33 provides in pertinent part, “Providing a draft report with findings for review and comment by responsible officials of the audited entity and others helps the auditors develop a report that is fair, complete and objective.” (Employer #6) Based on the evidence presented during the hearing, this tribunal must find that Representative Williams, a member of Education Committee of the Delaware General Assembly would fall under the classification of “others”. In Addition, the OAOA Policy & Procedure Manual provides that the Claimant as Chief Administrative Auditor had the authority to approve the release of audit information. (Employer #7) Since the GAGAS standards adopted by the State permit discretionary decisions regarding whose comments should be solicited about the draft audit, and the Claimant had the authority to release audit information this tribunal must find that the Claimant's release of the draft audit to Representative Williams does not amount to misconduct, Employer Representative /Manager testified under oath that other than reporting her allegations and subsequent investigations to OMB, she had no involvement in the decision to discharge the Claimant. The Employer Representative /Manager had recently been promoted to an Audit Manager and the UCPA was her first engagement assigned to her in that capacity. The Manager also testified that she was unsure of the state of the relationship between the Auditor and the Claimant. The testimony of the Employer Representative /Manager reveals that the she was not privy to interactions and communications between the Auditor and the Claimant. Beyond that, the Employer Representative’s /Manager’s testimony was rife with hearsay, speculation and subtle misleading representations of the contents of evidentiary documents and interpretations of policies and professional standards. On March 14, 2016 the Manager sent Claimant an email: “Hi Kathleen: For our next discussion. I think we are going to have to send a draft to the districts/charters for comment:” Pasted in the body of the email were section 7.32 & 7.33 of the GAGAS. (Employer #3). ‘The tribunal finds nothing in the email to justify the representation by Manager and argument of Employer's Counsel that the email is evidence of Manager’ notification to the Claimant that the Claimant, “... was in violation of the GAGAS standards.” Nor does it substantiate the Manager’s assertion that it proves that the Claimant “instructed” the staff not to send school districts a copy of the UCPA and instructed them not to solicit comments from the school districts and not to include them in the final version of the report. From March 16, 2016 through May 9, 2016 the Claimant was copied on and engaged in email conversations with the Department of Education (DOE) regarding the draft UCPA. (Employer #5) On April 22, 2016 Employer Representative/Manager sent a draft UCPA report to a school district and copied Claimant. (Employer #3) On April 22, 2016 and May 3, 2016 the Claimant was copied on email conversations regarding school districts responses to the draft UCPA. (Employer #4) The Employer Representative/ Manager's email of April29, 2016 shows that the she did send the draft UCPA report to at least one school district and copied the Claimant. (Employer #3) A series of emails from April 22, 2016 through May 3, 2016 show that the Claimant was copied on emails regarding school district responses. (Employer #4) The Claimant was copied on and engaged in email conversations with the Department of Education (DOE) regarding the draft UCPA from March 31, 2016 and May 9, 2016. (Employer #5) This tribunal cannot base its decision on hearsay, speculation and/or misleading, testimony and therefore finds that much of the Employer Representative's/Manager’s testimony lacks credibility. The Employer's evidence presented during the hearing was confusingly out of chronological order with regard to events and often times the documents presented were incomplete documents of an event or policy and were admitted with Claimant's objections noted on the record. Claimant repeatedly noted on the record that the Employer failed to produce complete records that were the subject of an April 2, 2018 Subpoena and a subsequent April 19, 2018 decision issued by this tribunal in response to Employer's Motion to Quash the Subpoena. ‘The Employer presented no evidence regarding the Claimant's decision to hire Zelenkofske-Axelrod to conduct the FY 2015 Treasure’s Office Quarterly Bank Reconciliation and Agreed Upon Procedures (“Treasury AUP”) engagement and Annual Peer Review. The Auditor's testimony in this regard consisted of hearsay testimony and as noted above this tribunal cannot base its decision on hearsay. The Employer presented no evidence regarding the Claimant's attendance at an AFL-CIO union conference in September of 2014 other than the discharge letter. (Employer #18) It is undisputed that the Claimant attended the conference. The Employer ‘s discharge letter icates that the Claimant sought approval for her attendance at this event and the ‘Auditor approved her request. The Employer failed to provide any evidence that the Claimant misled the Auditor regarding the topic of the conference. Claimant's Witness, the Auditor!, was unable to recall pertinent information regarding the events resulting in the Claimant’s discharge. Although, he signed a six page letter on October 11, 2017 recommending the Claimant for discharge, the Auditor frequently responded, “I don’t know” to questions relating to the specifics regarding his discharge ofthe Claimant. There were times the Auditor would answer a question and then reverse his answer during an answer to a subsequent question resulting in confusing, circular testimony. This occurred repeatedly in response to questions regarding his oversight responsibilities of cash, travel and purchase card expenditures of the OAOA. The Auditor testified that his discharge of the Claimant was based on information contained in a report by Grant Thorton, The Employer was unable to produce a complete copy of the report to place into evidence. In addition, the Auditor in his letter of October 11, 2017 appears to rely more heavily on the opinions, assertions and allegations of the The Employer did not call the Auditor, as an Employer representative or witness. The Auditor appeared in response to a subpoena issued at the request of the Claimant,OAOA staff rather than on actual findings by Grant Thorton or on his own personal knowledge of events.(Employer #18) ‘The Auditor was alerted by OMB on March 21, 2016 that they had received allegations regarding the Claimant's performance of her duties. The testimony and evidence revealed that the Auditor, once he was informed of the allegations took no steps to ensure that the Claimant was performing her job according to all relevant protocols. The Employer provided no evidence of any attempts by the Auditor to question, counsel or war Claimant that her actions were violations of any policies or procedures during the two months between the March 21, 2016 notification from OMB and his letter of May 17, 2016 placing the Claimant on paid leave pending investigation, The Auditor testified that his response to learning of the allegations, was to stop communicating with the Claimant. The Auditor testified that approximately 4 weeks prior to May 17, 2017, the date he placed the Claimant on paid leave, he stopped i her altogether. The tribunal notes that the Claimant was placed on paid leave the day after the UCPA report was released. The Auditor had approximately two months prior to the issuance of the UCPA to intervene and address any allegations or concerns with the Claimant about the UCPA yet he took no action to ensure that the final report met his expectations. No evidence was provided by the Employer that the Auditor's Delegation of Authority was limited in scope or time or had been revoked. The Employer provided no testimony or evidence that the Auditor revoked his Delegation of Authority upon receiving the allegations against Claimant by OMB. The Auditor provided no evidence or testimony that the Claimant was wamed that her performance was deficient in certain areas and that if she failed to improve she would be discharged. The testimony of the Employer witness (Admin) and the Claimant revealed that in addition to formally delegating his authority to Claimant, all of the Auditor’s mail was forwarded to the Claimant for handling after being logged into the executive mail system. (Employer #17) The Auditor testified that he forwarded all his calls to the Claimant and gave her access to his email account. The Auditor’s testimony that he believed he was only giving the Claimant “read” access to his emails strains credibility in view of the Delegation of Authority to act in his absence. It is undisputed that the Auditor was frequently absent from the office. The October 11, 2017 recommendation for discharge letter notes that the Claimant, received no discipline within the last two (2) years.” (Employer #18) In addition, there was no testimony or evidence presented during the hearing that the Claimant violated any instruction, order or expectations given to her by her immediate supervisor, the Auditor. For there to be a finding of willful or wanton misconduct, a prior unequivocal warning is. required, putting the employee on clear notice that a repetition or continuation of certain behavior may lead to dismissal. The function of the warning is two-fold. First, it provides the employee with the information she needs to conform her conduct to what isrequired and thereby keep her job. Second, it permits an inference of willful or wanton misconduct if the behavior is subsequently repeated. In the absence of any evidence or testimony that a warning was provided, or that the Employer brought the Claimant's alleged shortcomings to her attention, this tribunal must find that the Claimant's behavior does not rise to willful or wanton misconduct. It should be noted that the burden is on the employer to establish willful or wanton misconduct by a preponderance of the evidence. A “Preponderance of the evidence” is the side on which greater evidence is found.” Taylor v. State, 2000 WL 313501, at #2 (Del. 2000). ‘This tribunal finds that the Employer has not met its burden to prove willful and wanton misconduct on the part of Claimant in this case. Accordingly, Employer has not demonstrated that it had sufficient just cause to discharge the Claimant from her employment to disqualify her from unemployment insurance benefits. Given there was no demonstrated just cause for the claimant's discharge, she is not disqualified for receipt. of unemployment benefits. DECISION The decision of the claims deputy is REVERSED. The claimant was discharged from work without just cause in connection with the work. Therefore, the clait is NOT | 3314(2), Title 19, Delaware Code providing that she meets tYygligibility requirements of Section 3315, Title 19, Delaware Code. APPEALS REFEREEDelaware ision of Unemployment Insurance Mailing Address Affidavit Case No: 41081912 1, Kathryn M. Gantz, hereby certify that today, 05/30/2018, I mailed a true and correct copy of the Appeals Referee decision in the above-referenced matter by first class mail: DELWARE AUDITOR OF ACCOUNTANTS 401 FEDERAL ST DOVER DE 19901, Appeals RefereeDelaware Division of Unemployment Insurance Mailing Address Affidavit Case No: 41081912 1, Kathryn M. Gantz, hereby certify that today, 05/30/2018, I mailed a true and correct copy of the Appeals Referee decision in the above-referenced matter by first class mail: K DAVIES 43 WASHINGTON ST DOVER DE 19901 ‘Appeals Referee