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Employee awarded unemployment benefits because employer failed to follow drug testing protocol

November 18th, 2014  |  Ron Miller

A South Carolina employer loss its challenge to an award of unemployment benefits to an employee discharged after a positive drug test because it failed to use a testing laboratory that was certified by a statutorily designated accrediting association. Although sympathetic to the employer’s position, the South Carolina Supreme Court held in Nucor Corp v. South Carolina Department of Employment and Workforce, that an administrative law court was correct to consider the laboratory’s lack of proper certification when deciding that the employee could receive unemployment benefits.

Employee fails drug test. The employee was fired from her job with a steel production company, after she tested positive for marijuana use and failed a random drug test in violation of the company’s drug policy. To administer the test, the company used a laboratory certified by the Department of Health and Human Services. However, the employee had an independent test performed at a different laboratory. That test came up negative. She applied for unemployment benefits, but the company argued that she was ineligible under S.C. Code Ann. sec. 41-35-120. That statute disqualified workers from receiving unemployment benefits if they were terminated for violating a company’s policies (subsection (2)), failing a drug test administered by a laboratory certified by one of three approved organizations (subsection (3)), or failing to comply with state or federal drug testing and use regulations (subsection (4)).

The case eventually made its way to an appellate panel at the Department of Employment and Workforce (DEW), which held that the employee was eligible for employment benefits because the independent drug test, which had come back negative, showed that she had not violated the company’s drug policy or any drug statutes, meaning that she did not fall under subsections (2) or (4). The company appealed that decision to an Administrative Law Court (ALC), which affirmed the decision of the DEW Panel as to subsections (2) and (4), but remanded the matter so that the Panel could rule on the applicability of subsection (3). After clearing a number of additional hurdles, the DEW Panel ruled that the employee had not run afoul of subsection (3), since the company’s chosen laboratory was not certified by any of the three organizations specified in the statute. The company did not appeal that ruling. Instead, it re-appealed the ALC’s original decision to the Supreme Court.

Appealability. Despite the employee’s protests, the court held that the company was not required to appeal the DEW Panel’s decision concerning subsection (3) before being allowed to appeal the ALC’s decision regarding subsections (2) and (4), although that probably would have been the more prudent course of action. The reason the company could not immediately appeal the ALC’s decision in the first place was because the ALC had remanded consideration of subsection (3) back to the DEW, meaning that its decision on subsections (2) and (4) was not yet final. By making a ruling on subsection (3), the DEW Panel had transformed the ALC’s decision on subsections (2) and (4) into a final, appealable decision.

Improperly certified laboratory. By appealing a decision based purely on subsections (2) and (4), the company tried to avoid consideration of its laboratory’s lack of statutorily required credentials. However, that fact still crept into the Supreme Court’s reasoning. The company argued that the ALC had been wrong to consider the employee’s off-site drug test in determining that she was not barred from receiving unemployment benefits. The company’s own drug tests, it argued, were all the ALC needed, and because neither subsections (2) nor (4) said anything about laboratory standards, the fact that its laboratory was not certified as required under subsection (3) did not matter. However, the only reason the company was relying on subsections (2) and (4) was because it knew that it could not rely on subsection (3), which made its laboratory’s lack of credentials relevant to all of the subsections. The ACL had been correct to consider that fact when making its decision that the employee could receive her unemployment benefits, a decision the Supreme Court affirmed.