DIVORCE - DIVIDING ASSETS WHEN ONE SPOUSE COMMITS CRIME

LINDA G. v. James G., 2017 NY Slip Op 7968 - NY: Appellate Div., 1st Dept. 2017:

".......

In 2010, the husband was indicted on charges of conspiracy and insider trading. At trial, the husband maintained his innocence and claimed that a woman with whom he was having an affair stole his BlackBerry and used the information to engage in insider trading. He was found guilty and served a one year and one day sentence in federal prison from May 2010 through January 2011. The SEC investigation and criminal trial depleted the joint assets of the parties. The divorce proceedings started on January 26, 2010.
........

Section 236(B)(5)(d) of the Domestic Relations Law, which specifies the factors to be considered in making an award of equitable distribution, includes a catch-all provision that empowers a court to look at "any other factor which the court shall expressly find to be just and proper" (DRL § 236[B] [5][d][14]). However, marital fault may not be considered as "just and proper" except in "a truly exceptional situation, due to outrageous or conscience-shocking conduct on the part of one spouse, that will require the court to consider whether to adjust the equitable distribution of the assets" (Howard S. v Lillian S., 14 NY3d 431, 436 [2010] [adultery, by itself, is not egregious conduct]; Havell v Islam, 301 AD2d 339 [1st Dept 2002] [malicious assault of a spouse in the proximity of children amounts to egregious conduct]; Pierre v Pierre, 145 AD3d 586 [1st Dept 2016] [stabbing and physically assaulting wife is egregious conduct]).

Supreme Court took into account the husband's "adulterous and criminal behavior" in awarding the wife 75% of the marital home. The husband's adulterous conduct is not sufficiently egregious and shocking to the conscience to justify making an unequal distribution of the marital home. However, we hold that the impact of the husband's criminal conduct on the family may be considered in making an unequal distribution. In Kohl v Kohl (6 Misc 3d 1009[A], 2004 NY Slip Op 51759[U], *24 [Sup Ct, NY County 2004], affd 24 AD3d 219 [1st Dept 2005]), the wife sought an unequal distribution of the marital estate based on the husband's criminal conviction. The trial court denied the request as the father supported his family by borrowing money from friends and business acquaintances until such time that he was able to resume his career (id. at *25). The husband accepted a plea that allowed him to resume his career and business (id.). Within a few years after his indictment, he was earning as much income as he had prior to the criminal proceeding (id.). Also, the parties' standard of living did not change as a result of the husband's actions (id.). On that record, we affirmed the distribution of the value of the parties' residences at 50%/50% (id. at *25, 26, 27).

Unlike Kohl, the record in this case supports an unequal distribution. The parties were required to spend down their savings from 2007 through 2010 when the husband was forced to resign due to the SEC investigation. He refused to take a plea bargain and insisted on going to trial, blaming a woman with whom he had an extramarital affair for his insider trading. He was convicted of a felony and lost his license to practice law. The husband's post-incarceration earnings at the time of the trial dropped significantly to less than 20% of his prior income. His income never returned to the level he earned prior to the conviction. As a result of the husband's criminal actions, the wife, who had left a lucrative career to raise their children, was compelled to return to work after being out of the work force for almost a decade. This meant that the wife could no longer remain at home with the children. During this time, the younger son suffered from psychiatric issues and the older son from significant emotional issues.

In short, the husband's insider trading, and ensuing criminal trial, conviction and incarceration caused the family to undergo financial losses and a substantial decrease in the standard of living. These events also significantly disrupted the family's stability and well-being. Based on our review of the record, we find that a 60%/40% equitable division of the value of the marital estate is just and proper when taking into account the hardship that the husband put his family through as a result of his volitional and irresponsible behavior."

LAWYERS WHO COMMIT CRIMES

After reading the recent news of the arrest of one Long Island attorney arrested for stealing escrow funds, I came across this article from the NYLJ reprinted the the blog "Legal Ethics":

http://nylegalethics.attorney/lawyers-who-commit-crimes-disciplinary-consequences/

HIRING INDIVIDUALS WITH CRIMINAL BACKGROUNDS

A.G. Schneiderman Announces Agreement With Party City To End Discrimination In Hiring Based On Criminal Records

MORE RE: UNLICENSED HOME CONTRACTORS

One of my blog posts that has had the most views and comments is from May 28, 2010 and can be found at this link:

https://www.blogger.com/blogger.g?blogID=3717763000184349948#editor/target=post;postID=4615810626068974929;onPublishedMenu=allposts;onClosedMenu=allposts;postNum=3;src=postname

It deals with unlicensed contractors and many times I am asked by victims of unlicensed home contractors: what can I do, can I get them arrested?

It is the District Attorney that decides who to prosecute and of course the question is what motivates the DA to take action in one case as opposed to another. Earlier this month, the press reported about a Long Island man sentenced to 3 1/2 to 10 years in prison for stealing more than a half-million dollars from 13 Nassau County residents in a home-improvement scam and for putting up as collateral a property he didn't own. There were two different schemes apparently:

1.  In the first scheme in which he took money for residential and commercial improvements, the unlicensed contractor pleaded guilty to third-degree grand larceny and first-degree scheming to defraud.

2. In the second scheme, he used a property he did not own for collateral in a business deal, viz., he took $392,590 from a Long Island man, asked the victim to invest money into his business and then paid back only a small amount. There he pleaded guilty to second-degree grand larceny, also a felony.

From a reading of the article, it appeared that in the second scheme, involving one man, the defendant wrongfully obtained twice as much money as the first scheme which involved about a dozen different people.

MORE RE: EMPLOYMENT AND CRIMINAL BACKGROUND

My research found an excellent pamphlet by the NYC Bar Association on this issue and so here is the link:

http://www2.nycbar.org/pdf/report/Labor_reentry_pamphlet_employees09.pdf

Other recent articles of interest with respect to the EEOC on this issue:

http://blog.nolo.com/employment/2013/08/15/controversy-over-criminal-background-checks/

http://www.jdsupra.com/legalnews/eeoc-cracking-down-on-use-of-criminal-ba-74227/

http://www.mondaq.com/unitedstates/x/258274/Discrimination+Disability+Sexual+Harassment/EEOC+Position+On+Criminal+Background+Checks+Rejected+Again

MORE RE: EMPLOYMENT AND CRIMINAL BACKGROUND

As noted in the last blog, New York State Executive Law Section 296 (15), the New York State Human Rights Law, refers to New York State Correction Law Article 23-A. Section 751 of the Correction Law relates to applicability and the inclusions and exclusions should be noted:

 "§  751.  Applicability.  The provisions of this article shall apply to
  any application by any person for a license or employment at any  public
  or  private  employer,  who has previously been convicted of one or more
  criminal offenses in this state or in any other jurisdiction, and to any
  license or employment held by any person whose conviction of one or more
  criminal offenses in this state or in any  other  jurisdiction  preceded
  such  employment  or  granting  of  a  license, except where a mandatory
  forfeiture, disability or bar to employment is imposed by law,  and  has
  not  been  removed  by  an  executive pardon, certificate of relief from
  disabilities or certificate of good conduct.  Nothing  in  this  article
  shall be construed to affect any right an employer may have with respect
  to  an  intentional  misrepresentation in connection with an application
  for employment made by a prospective employee or previously  made  by  a
  current employee."

MORE RE: EMPLOYMENT AND CRIMINAL BACKGROUND

New York State Executive Law Section 296 (15) first refers to New York State Correction Law Article 23-A. Let us examine that statute.

There are six sections - Section 750 to 755. The first, Section 750, deals with definitions and note the definition of employment and the exclusion of law enforcement from that definition:

§  750.  Definitions.  For the purposes of this article, the following
  terms shall have the following meanings:

    (1) "Public agency" means the state or any local subdivision  thereof,
  or any state or local department, agency, board or commission.

    (2)  "Private  employer" means any person, company, corporation, labor
  organization or association which employs ten or more persons.

    (3) "Direct relationship" means that the nature  of  criminal  conduct
  for  which  the person was convicted has a direct bearing on his fitness
  or ability to perform one or more  of  the  duties  or  responsibilities
  necessarily related to the license, opportunity, or job in question.

    (4)  "License"  means  any  certificate,  license,  permit or grant of
  permission  required  by  the  laws  of  this   state,   its   political
  subdivisions or instrumentalities as a condition for the lawful practice
  of any occupation, employment, trade, vocation, business, or profession.
  Provided,  however,  that  "license" shall not, for the purposes of this
  article, include any license or permit to own, possess, carry,  or  fire
  any explosive, pistol, handgun, rifle, shotgun, or other firearm.

    (5)  "Employment" means any occupation, vocation or employment, or any
  form of vocational or  educational  training.  Provided,  however,  that
  "employment"  shall  not,  for  the  purposes  of  this article, include
  membership in any law enforcement agency."

MORE RE: EMPLOYMENT AND CRIMINAL BACKGROUND

New York's Human Rights Law should be examined in exploring this issue - N.Y. EXEC. LAW § 296 (15):

"15.  It  shall  be an unlawful discriminatory practice for any person,
  agency, bureau, corporation or association, including the state and  any
  political  subdivision thereof, to deny any license or employment to any
  individual by reason of his or her having been convicted of one or  more
  criminal  offenses,  or  by reason of a finding of a lack of "good moral
  character" which is based upon his or her having been convicted  of  one
  or  more  criminal  offenses,  when  such  denial is in violation of the
  provisions of article twenty-three-A of  the  correction  law.  Further,
  there  shall  be  a  rebuttable  presumption  in favor of excluding from
  evidence the prior incarceration or conviction of any person, in a  case
  alleging  that the employer has been negligent in hiring or retaining an
  applicant or  employee,  or  supervising  a  hiring  manager,  if  after
  learning  about  an  applicant  or  employee's  past criminal conviction
  history, such employer has evaluated the factors set  forth  in  section
  seven  hundred  fifty-two  of the correction law, and made a reasonable,
  good faith determination that such factors militate in favor of hire  or
  retention of that applicant or employee."

DWI - LEANDRA'S LAW

From the Governor:

"Last year, the Legislature and I responded to the tragic death of 11-year-old Leandra Rosado, who was killed while riding in a vehicle driven by an allegedly intoxicated driver, by enacting what we believe are the toughest anti drunk driving laws in the nation. The first part of “Leandra’s Law,” which makes it a felony to drive drunk with a child in the car, took effect last fall. The second phase – the so-called “interlock provision” – takes effect August 15.

Under this provision, when anyone is convicted of a felony or misdemeanor drunk driving offense the court will be required to impose – in addition to any fine or jail sentence – a term of probation or conditional discharge of at least six months. During this time, the offender will be required to install and maintain an ignition interlock device in any motor vehicle they own or operate. Before a vehicle’s motor can be started, the driver will have to exhale into the device and if their breath alcohol concentration is higher than a certain level, the engine will not start which will make the roads safer for all New Yorkers.

It is our goal to dramatically decrease the incidence of drunken driving, not merely catch and prosecute those who violate the law and I believe the inconvenience, expense and humiliation of having to blow into a mechanical device before starting a vehicle will have a powerful deterrent effect – when people are aware of that consequence of drunken driving.

......."

UNLICENSED HOME CONTRACTORS

I have had this experience personally: an unlicensed home improvement contractor in New York City, Nassau and Suffolk County, and other surrounding counties, cannot sue homeowners for non-payment of its bills for services rendered or file a mechanic's lien, etc. This law was enacted to protect homeowners from unscrupulous construction contractors and its solicitors. Even where the homeowner knew that the contractor was unlicensed prior to the performance of the work, courts have still prevented the contractor from suing for payment, consistently holding that contracts made by unlicensed home improvement contractors are illegal and unenforceable. To determine whether a home improvement contractor is licensed, contact your county's Department of Consumer Affairs.

But what if you paid the contractor some money upfront? I made an upfront payment and no work was performed (it was a small job, only $300 was involved, but this proves that even attorneys make foolish mistakes). Certainly, one can sue in small claims or another court for a return of payment. But what are the chances of collecting on a judgment? Defendants who operate a business illegally usually hide assets, thus making enforcement of a judgment nearly impossible. What I did was contact the District Attorney's office and filed a complaint for operating a home improvement business without a license, a misdemeanor. The Nassau County District Attorney arrested the contractor and made a plea bargain deal (this took over a year) in which the contractor agreed to return my money - which the contractor never did. In fact, I am assuming that after the plea bargain was made, the contractor moved to another location as the District Attorney, after I advised them that the plea bargain payment deal was never complied with, advised me that they could not locate the contractor. But here is a story from July 21, 2009, North County Gazette:

"NASSAU COUNTY—A five-week investigation into unlicensed contractors in Nassau County has resulted in the arrest of 42 individuals.

Four face felony charges, including third degree grand larceny for allegedly stealing thousands of dollars from homeowners for improvements that were either not finished or never even started.

Investigators also rented a home in Nassau County and called in unlicensed contractors to perform “renovations.” The two-week operation yielded 12 charges of Operating a Home Improvement Business without a License, a misdemeanor, and the contractors’ vehicles were seized under the County Forfeiture Law. Twenty-six contractors were charged with the same misdemeanor after an investigation into complaints filed with Consumer Affairs.

The arrests were part of a multi-county enforcement sweep also executed in New York City and Westchester County.

“When you hire an unlicensed contractor, you’re rolling the dice,” Rice said, adding that consumers should thoroughly research home contractors before someone is hired. “Our homes are our most valuable financial asset and it is essential we entrust them to licensed, experienced professionals. Don’t let your American Dream become a nightmare.”

Facing felony charges are:

Derek Armstrong, 47 of Hempstead, was charged with second degree criminal possession of a forged instrument, falsifying business records and first degree offering a false instrument for. District attorney Kathleen Rice said Armstrong was hired by a Baldwin homeowner to do work on his home in 2005. Armstrong submitted the architect’s plans to the Town of Hempstead to obtain a permit, but the architect refused to work with Armstrong, who then put a different architect’s name and seal on the plans. The plans were also altered. He faces up to seven years in prison.

Edward Murphy, 42, of Wantagh, was charged with third degree grand larceny. Rice said Murphy was contracted to purchase backup generators for two group homes for autistic adults in Seaford and East Meadow. Murphy was paid $28,000, but never provided the homes with the generators or a refund. He faces up to seven years in prison.

John Napolitano, 47, of Hicksville, was charged with four counts of third degree grand larceny and first degree scheme to defraud. Rice said Napolitano defrauded four different homeowners of more than $113,000. Napolitano either took money and never performed any work at all or abandoned a project halfway through. One Long Beach homeowner had her entire kitchen demolished when Napolitano stopped work and didn’t refund her any money. He faces up to seven years in prison.

James Nichols, 46, of Rosedale, was charged with third degree grand larceny. Rice said Nichols received $47,500 from a homeowner to add an addition to his Elmont home. Nichols performed no work and did not refund the money. Nichols faces up to seven years in prison.

Charged with Operating a Home Improvement Business without a License in the house sting are Roberto Dopazo, 47, of Huntington; Donald Colucci, 57, of North Babylon; Jedidiah Irons, 22, of Oceanside; James Contrino, 33, of Oceanside; Debra Kaplan, 44, of Massapequa; George Brady, 55, of Queens; Manuel Vera-Munoz, 43, of South Farmingdale; Thomas Gallo, 48, of Levittown; Ronald Hinderhofer, 49, of Oceanside; Thomas Longo, 38, of North Merrick; Muzaffer Geyikgulo, 54, of Valley Stream; and Luis Saquipulla, 36, of Corona. All face up to a year in jail.

Working in conjunction with the Nassau County Department of Consumer Affairs, the following people were charged with Operating a Home Improvement Business without a License after complaints were lodged with Consumer Affairs by homeowners:

Thomas Gironda, 40, of Port Jefferson Station; Arthur Spero, 47, of Wantagh; Lionel Toby, 51, of Long Beach; Joseph Sarno, 69, of Bayside; Bohdan Kuzminskyy, 48, of Holbrook; Joseph Samaroo, 49, of Cedarhurst; Rod Darling, 41, of Hempstead; Christopher Martino, 39, of Lynbrook; Eladio Otero, 61, of Malverne; Yojin Choi, 44, of Great Neck; George Stern, 60, of Syosset; Nicholas Spano, 46, of East Meadow; Louis Hapst, 43, of Copiague; Ramadan Nela, 46, of Dix Hills; Russell Martini, 31, of Westbury; George Lopez, 40, of Oceanside; Edward Hoffman, 46, of Islandia; Anthony Delmaro, 37, of Deer Park; John Bradford, 44, of East Rockaway; Rulx Regala, 39, of Bohemia; Larry Field, 46, of Elmont; Christopher J. Galvin, 46, of West Babylon; Thomas Heaney, 42, of Farmingdale; Adolph Ford, 63, of Hempstead; Daniel Dallolio, 43, of North Bellmore; Joseph Sceppa, 39, of Commack. All face up to a year in jail."

UNEMPLOYMENT INSURANCE - CRIMINAL PENALTIES

A recent consultation brought up this issue. This is from the DOL web site and it is in all bold:

"If you work while receiving benefits and do not report that employment, even if it is part-time work, you may be committing fraud. You must report all full-time and part-time employment to the Labor Department or you risk criminal penalties."

So if a Claimant does not report income when a Claimant should, what happens? First, let us look at the NYS Unemployment Insurance Law:

"Sec. 594. Reduction of benefits for false statement. A claimant who has wilfully made a false statement or representation to obtain any benefit under the provisions of this article shall forfeit benefits for at least the first four but not more than the first eighty effective days following discovery of such offense for which he otherwise would have been entitled to receive benefits. Such penalty shall apply only once with respect to each such offense.

For the purpose of subdivision four of section five hundred ninety of this article, the claimant shall be deemed to have received benefits for such forfeited effective days.

The penalty provided in this section shall not be confined to a single benefit year but shall no longer apply in whole or in part after the expiration of two years from the date on which the offense was committed."

A claimant shall refund all moneys received because of such false statement or representation made by him."

What if the Claimant does not refund all moneys. The UI regulations are helpful:

"§ 470.4 Overpaid unemployment insurance benefits

The Commissioner of Labor shall, as provided for in section 18 of the State Finance Law, waive the assessment of interest and late charges on debts owed which occurred as a result of overpayment of unemployment insurance benefits.

§ 470.5 Setoff against unemployment insurance benefits

Established and outstanding overpaid unemployment insurance benefits shall be collected from a claimant's weekly benefit award as a setoff.

Priority of liquidation. In the event that more than one overpayment is established against an individual claimant, setoff amounts will be debited to such overpayments in chronological order.

Willful overpayment. A setoff of 100 percent of the weekly benefit amount will apply to one or more established and outstanding overpayments attributable to an individual claimant so long as at least one of such overpayments is determined to have been willful.

Non-willful overpayment. A setoff of 50 percent of the weekly benefit amount will apply to one or more established and outstanding overpayments attributable to an individual claimant so long as none of such overpayments are determined to have been willful"

But we must also look at another relevant section of the Unemployment Insurance Law:

"Sec. 630. Penalties. Any misdemeanor defined in this title shall be punishable by a fine of not more than five hundred dollars or imprisonment for not more than one year, or both. The penalties and misdemeanors imposed by this title are in addition to those otherwise prescribed in this entire article."

That section under the Unemployment Insurance Law will lead us to the following:

"Sec. 632. False statements or representations.1. Benefits and contributions. Any person shall be guilty of a misdemeanor who wilfully makes a false statement or representation

(a) with the effect of obtaining, either for himself or for any other person, any benefit or payment under the provision of this article or of any similar law of another state or the United States in regard to which this state acted as agent pursuant to an arrangement authorized by this article...."

But other statutes are also involved. In June of 2009, 30 New York State employees from Albany to New York City were arrested and charged with unemployment fraud after they allegedly claimed unemployment benefits while actually working for the state. According to Attorney General Andrew Cuomo, the thirty defendants were charged with some variation of the crimes of Grand Larceny in the Third and Fourth Degrees, Falsifying Business Records in the First Degree, and Petit Larceny. Thus, felony charges can be involved. And if this can happen to state employees, can it happen in the private sector? Here is a press release from the Department of Labor in January of this year:

"New York State Cracks Down on Unemployment Insurance Fraud in New York City
Department of Labor Announces 2009 Fraud Investigation Results

Albany, NY (January 13, 2010) - State Labor Commissioner M. Patricia Smith today announced 159 arrests in New York City during 2009 for the theft of $800,112 from New York State's Unemployment Insurance (UI) trust fund. The State Labor Department worked with district attorneys and other law enforcement agencies to bring these people to justice. Most of those arrested had collected UI benefits while earning a paycheck. Governor David A. Paterson said, "One of the pitfalls of having so many New Yorkers collecting UI is that there will always be somebody who will try to take advantage of the system. Fortunately, we're doing a great job to keep on top of fraud and the results speak for themselves. In fact, New York's stepped-up crackdown on Unemployment Insurance fraud saved businesses large and small more than $35 million last year alone."

"It is nothing short of shameful to think that people would steal from a fund designed to help families put food on the table, gas in their cars and clothes on the backs of their children," said Commissioner Smith. "Governor Paterson has directed the Labor Department and its partners in law enforcement to remain aggressive in bringing individuals who defraud the UI system to justice. Rest assured we will do just that."

The arrests are a direct result of a Labor Department program that emphasizes better fraud detection through data matching, more proactive investigations, and better coordination with local law enforcement and prosecution agencies.

Details by county are below:

New York City Region:

Manhattan 55 arrests $261,966

Brooklyn (Kings) 35 arrests $198,254

Queens 33 arrests $198,057

Bronx 25 arrests $81,897

Richmond (Staten Island) 11 arrests $59,938

Total NYC Region: 159 arrests $800,112

The State Labor Department administers unemployment insurance benefits for the federal government. The weekly payments assist eligible workers who have lost their jobs through no fault of their own. To qualify for UI, people must be:

unemployed
ready, willing and able to work and
searching for a new job.

When applicants cheat the system by stealing from the UI Trust Fund, it has a negative effect on businesses across the state. Employers whose accounts pay for the false claims must take on a higher tax rate. For example, the average employer in New York State (with some 14 employees) that has an undetected fraudulent claim filed against it will pay over $700 more in taxes the next year. However, if the Labor Department detects the fraud, the tax increase is not charged to the employer.

"Unemployment insurance is a safety net for those who need assistance, not a jackpot for those who would game the system and cheat their neighbors," said Deputy Secretary for Public Safety Denise E. O'Donnell. "In this economic climate, when government resources are scarce and needs are high, we must be especially vigilant to discourage and punish cheating. Governor Paterson and I applaud Commissioner Smith and local law enforcement officials for their aggressive efforts to track down cheaters and recover the money they stole from honest taxpayers."

New York State Police Superintendent Harry J. Corbitt said, "The State Police stands ready to assist in investigating and apprehending those individuals willing to engage in the fraudulent use of Unemployment Insurance funds meant to assist honest workers and their families."

Manhattan District Attorney Cyrus R. Vance, Jr. said, "At a time when so many New Yorkers depend on unemployment benefits, the Manhattan DA's Office is committed to rooting out and prosecuting those who fraudulently receive these funds. Thanks to the work of the Governor's Office, the Department of Labor and state and local law enforcement agencies, through investigations like these we can ensure that unemployment benefits are directed toward those who urgently need them. I am proud that our Office was able to restore more than $250,000 to the State."

Kings County District Attorney Charles J. Hynes said, "This kind of fraud steals funds intended to help people who are in genuine need of public assistance. We continue to be vigilant about prosecuting these crimes."

Queens District Attorney Richard A. Brown said, "The payment of unemployment benefits is intended to assist out-of-work individuals and their families struggling through these tough economic times - not to subsidize the lifestyles of those who bilk the government of scarce resources through deception."

Bronx District Attorney Robert T. Johnson said, "The Labor Department is to be applauded for enhancing its data-matching and investigative ability. We will continue to stand alongside them in their efforts to put a stop to fraud."

Richmond County District Attorney Daniel M. Donovan, Jr. said, "Unemployment Insurance fraud is a crime against the taxpayers of this state and our neighbors who are out of work in this tough economy and legitimately need temporary assistance. We will continue to work with our partners in government and law enforcement to aggressively investigate and prosecute this crime."

To make an anonymous report about fraud against the Unemployment Insurance fund, call the Department of Labor's toll-free hotline at (888) 598-2077."

UNEMPLOYMENT INSURANCE - MISCONDUCT CRIMINAL ACTS

Many consultations have revealed that some Claimants have been discharged based upon alleged acts of misconduct and some of these allegations involve criminal acts. Here is the basic DOL rules on how they treat applications for benefits under these circumstances:

"Special Bulletin A-710-50 (Revised)

NEW YORK STATE DEPARTMENT OF LABOR
Unemployment Insurance Division
Adjudication Services Office
September 16, 1988
Interpretation Service-Benefit Claims
SPECIAL BULLETIN

Discharge for Arrest or Conviction

Attached is a revised page one for Special Bulletin A-710-50 dated June 28, 1977. This page should be substituted for the current page one, which should be discarded.

This revision states more accurately the exceptions to the provision that makes it an unlawful discriminatory practice to question a prospective employee about or discharge a current employee because of an arrest or criminal accusation.

The only exceptions are situations where such questions are required or permitted by another statute. Employers affected by this exception include stock brokerage firms and those such as law enforcement, guard or detective agencies when required to provide information concerning prospective or current employees pursuant to the licensing activities of governmental bodies in relation to the regulation of guns, firearms and other deadly weapons. This exception would not apply to employees such as unarmed personnel employed by these agencies.


DISCHARGE FOR ARREST OR CONVICTION

THE HUMAN RIGHTS LAW
Article 15 of the New York State Executive Law, known as "The Human Rights Law", was recently amended by adding two new subdivisions (Sections 296.14 and 296.15), making it unlawful generally to discriminate against a person because he was arrested or convicted of a crime.

This Special Bulletin discusses the effect of the new provisions in cases where a claimant has been discharged because of an arrest or conviction, or because he concealed either or both from his employer.

Cases which cannot be readily resolved may be submitted through channels to the Interpretation Section of the Adjudication Services Office for an opinion.

The new provisions

Arrest
The new provisions state that, except where required or permitted by other statutes, it is an unlawful discriminatory practice for an employer to:

Inquire on an employment application or otherwise, whether an individual has ever been arrested or accused of a crime, or

Discharge an employee because of an arrest or accusation, when such arrest or accusation terminated in favor of the accused.

(Subject of the revision): Under certain circumstances an employer may ask questions of an employee or prospective employee about prior arrests or criminal accusations. Evidence of prior arrests and/or criminal accusations could result in an employee's discharge. This would apply to such employers as:

A stock brokerage firm

or

A law enforcement agency, guard or detective agency, when required to provide information relevant to the licensing activities of governmental bodies in the regulation of guns, firearms or other deadly weapons.

Conviction
Under the new provisions, it is not unlawful for an employer to inquire whether an individual has-ever been convicted of a crime. However, it is unlawful to discharge an employee for that reason, unless either-of the following can be shown:

There is a direct relationship between the offense and the employment; that is, the nature of the criminal conduct for which the employee was convicted has a direct bearing on his fitness or ability to perform any of the duties or responsibilities of the job, or

Continuing the employment would involve an unreasonable risk to property or to the safety or welfare of any person or the general public.
The law also provides that in making & determination regarding the above, an employer must also consider the public policy of the state to encourage employment of ex-offenders, how long ago the offense occurred, the person's age at the time, the seriousness of the offense, and evidence produced by the person in regard to his rehabilitation and good conduct.

In addition, any person, who has been convicted of a crime and who has been discharged from his employment, must be furnished by the employer, if requested, a written statement setting forth the reasons for discharge.

Criminal charges pending
The new provisions are silent on the question of pending criminal charges, but the State Division of Human Rights has issued an interpretation indicating that it is not unlawful for an employer to inquire if such charges exist or to discharge an employee if they do, and he is not required to justify the discharge as in the case of convictions, outlined in IB above.

Employers covered by the new provisions
The new provision prohibiting discrimination against an individual who has been arrested or accused but cleared, applies to the state and city governments and subdivisions, and private employers.

The new provision prohibiting discrimination against a person who has been convicted of a crime (an "ex-offender") applies to the above public employers, and private employers of 10 or more persons.

Neither of the new provisions, nor the State Human Rights Law of which they are a part, apply to federal employment.

However, for the purpose of adjudicating claims for unemployment insurance, the principles set forth in this Special Bulletin should be applied to separations from all employers, public (including federal) or private, and regardless of the number of their employees.

Application of the new provisions

False statements to employer

Since it is generally unlawful to inquire whether a person has ever been arrested or accused of a crime, a false reply to such question generally is not misconduct under the unemployment insurance law. (Some exceptions where an employer may make such inquiry are given under IA).

Since it is lawful to inquire whether a person has ever been convicted of a crime or has a criminal charge pending against him, a false reply to either question is misconduct under the unemployment insurance law, and a claimant who is discharged solely because of such false answer may be subject to the statutory disqualification.

Arrest which terminated in favor of accused
Since it is generally unlawful to discharge an employee because of an arrest or accusation, when such arrest or accusation terminated in favor of the accused, a discharge under these circumstances is generally not disqualifying.

Conviction
A discharge because of a criminal conviction occurring either before or after commencement of the employment, is unlawful and therefore not disqualifying, unless either of the exceptions listed under 18 above can be shown to exist.

However, even if either exception is shown by the employer to exist, and the discharge is lawful, a disqualification for misconduct cannot be imposed unless the acts for which claimant was discharged were in connection with his employment within the meaning of the unemployment insurance law. Acts which occurred prior to commencement of the employment generally would not meet this test. On the other hand, behavior off the job may in some instances be misconduct in connection with employment: see Interpretation Service Index 1130.

Criminal charges pending
Since it is not unlawful to discharge an employee because of a criminal charge pending against him, a discharge for such reason may, be disqualifying if the acts charged were in connection with employment, within the meaning of the unemployment insurance law. As noted in the preceding paragraph, acts which occurred prior to commencement of the employment generally would not meet this test. On the other hand, behavior off the job may in some instances be misconduct in connection with employment.

Misconduct in connection with employment
The new provisions impose restrictions on the right of an employer to inquire about, or discharge an employee for, an arrest or conviction record. Except for this, they do not interfere with his right to discharge any employee who commits an act, dishonest or otherwise, in the course of his employment, which is prejudicial to the employer's interests. In such case the disqualification for misconduct under Section 593.3 of the unemployment insurance law should be imposed; and if the act also constitutes a felony, or results in criminal proceedings following an indictment, benefits should be withheld in accordance with Section 593.4, the "criminal acts" provision. (See Interpretation Service, Index 113O, 1150, and 1195; and Manual of Procedure III 6226)

The rule at Index 1150A-3 (A-750-1300) should be marked obsolete.

Illustrations

An armed guard was discharged because of a false reply to a question on his employment application as to whether he had ever been arrested. It was discovered that he had once been arrested for felonious assault but the charges were dismissed. Guard agencies are permitted by law to ask such question. Misconduct disqualification applies.

Same facts as in 1 above except that claimant was an assembler in an auto parts factory. The employer is not permitted by law to ask such question. No disqualification.

A tester in an electronics plant falsified his employment application by showing incorrect dates in his work history in order to omit a period of employment which ended in discharge for theft. He had never been arrested or prosecuted. He was discharged because of the omission. Misconduct disqualification applies.

A brokerage clerk was discharged because it was discovered he had once been convicted of possession of marijuana. Although he had denied any prior arrests or convictions on his employment application, he was not discharged for such denial. Employer was unable to show justification for the discharge as described under IB above. No disqualification.

A presser in a sportswear factory was discharged because of a pending criminal charge of rape, not connected with his employment. Although the discharge was not unlawful, no disqualification applies.

A bookkeeper for a wholesale bakery was discharged when it was discovered she had been convicted of an embezzlement charge filed by a former employer. No employment application had been required by the bakery, but it was able to show justification for the discharge as described under IB above. No disqualification applies, since there was no misconduct in connection with claimant's employment at the bakery .

A supermarket cashier was discharged for attempting to leave the premises with a can of coffee for which she had not paid. No charges were pressed by the employer. Disqualification for misconduct applies.

(The text of Sections 296.14 and 296.15 of Article 15 of the New York State Executive Law, and pertinent provisions of Article 23A of the New York State Correction Law, are attached.)

New York State Executive Law, Article 15

Section 296.14

It shall be an unlawful discriminatory practice, unless specifically required or permitted by statute, for any person, agency, bureau, corporation or association, including the state and any political subdivision thereof, to make any inquiry about, whether in any form of application or otherwise, or to act upon adversely to the individual involved, any arrest or criminal accusation of such individual not then pending against that individual which was followed by a termination of that criminal action or proceeding in favor of such individual, as defined in subdivision two of section 160.50 of the criminal procedure law, in connection with the licensing, employment or providing of credit or insurance to such individual; provided, however, that the provisions hereof shall not apply to the licensing activities of governmental bodies in relation to the regulation of guns, firearms and other deadly weapons.

Section 296.15

It shall be an unlawful discriminatory practice for any person, agency, bureau, corporation or association, including the state and any political subdivision thereof, to deny any license or employment to any individual by reason of his having been convicted of one or more criminal offenses, or by reason of a finding of a Lack of "good moral character" which is based upon his having been convicted of one or more criminal offenses, when such denial is in violation of the provisions of article twenty-three-a of the correction law.

New York State Correction Law, Article 23A

Section 752

Unfair discrimination against persons previously convicted of one or more criminal offenses prohibited

No application for any license or employment, to which the provisions of this article are applicable, shall be denied by reason of the applicant's having been previously convicted of one or more criminal offenses, or by reason of a finding of lack of "good moral character" when such finding is based upon the fact that the applicant has previously been convicted of one or more criminal offenses, unless:

there is a direct relationship between one or more of the previous criminal offenses and the specific license or employment sought; or

the issuance of the license or the granting of the employment would involve an unreasonable risk to property or to the safety or welfare of specific individuals or the general public.

Section 753

Factors to be considered concerning a previous criminal conviction; presumption

1. In making a determination pursuant to section seven hundred fifty-two of this chapter, the public agency or private employer shall consider the following factors:

The public policy of this state, as expressed in this act, to encourage the licensure and employment of persons previously convicted of one or more criminal offenses.

The specific duties and responsibilities necessarily related to the license or employment sought.

The bearing, if any, the criminal offense or offenses for which the person was previously convicted will have on his fitness or ability to perform one or more such duties or responsibilities.

The time which has elapsed since the occurrence of the criminal offense or offenses.

The age of the person at the time of occurrence of the criminal offense or offenses.

The seriousness of the offense or offenses.

Any information produced by the person, or produced on his behalf, in regard to his rehabilitation and good conduct.

The legitimate interest of the public agency or private employer in protecting property, and the safety and welfare of specific individuals or the general public.

2. In making a determination pursuant to section seven hundred fifty-two of this chapter, the public agency or private employer shall also give consideration to a certificate of relief from disabilities or a certificate of good conduct issued to the applicant, which certificate shall create a presumption of rehabilitation in regard to the offense or offenses specified therein.

Section 754

Written statement upon denial of license or employment

At the request of any person previously convicted of one or more criminal offenses who has been denied a license or employment, a public agency or private employer shall provide, within thirty days of a request, a written statement setting forth the reasons for such denial."

UNEMPLOYMENT INSURANCE - CRIMINAL ACTS

Finally, on the issue of what happens at a later union hearing on reinstatement or other hearing if the DOL first finds you innocent of misconduct we go to IN RE WHARTON v. N.Y.C. D.O.C., 0103493/2008 (8-12-2008), 2008 NY Slip Op 32289 (Sup. Ct. N.Y. August 12, 2008):

"Initially, this court finds that the DOC is not barred from arguing that it terminated petitioner in good faith, by virtue of the award petitioner obtained from the Department of Labor. New York Labor Law § 623 (2) declares that "[n]o 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[.]"[fn1] Consequently, New York courts have uniformly held that determinations of the Department of Labor concerning unemployment insurance are "without preclusive effect in [an] action" (Wooten v. New
York City Dep't of Gen. Servs., 207 AD2d 754, 754 [1st Dept 1994]; see also Matter of Watson v Bratton, 243 AD2d 295, 295 [1st Dept 1997]; Matter of Rivoli v Stern, 160 AD2d 601, 601 [1st Dept 1990]). Therefore, the Department of Labor's determination is without preclusive effect herein."

UNEMPLOYMENT INSURANCE - CRIMINAL ACTS

Another interesting case is SILBERZWEIG v. DOHERTY, 23 Misc.3d 618, 873 N.Y.S.2d 461 ( Sup. Ct. N.Y. Co. 2009), which I quote in part:

"Initially, the Department of Labor had disqualified Silberzweig from receiving benefits on the ground that his employment had been lost through misconduct because he had been absent without leave during his incarceration. The Appeals Board reversed, stating that

"There is no dispute that the claimant was absent
without leave since August 2, 2007 because of his
arrest. However, the claimant's father notified the
employer of the claimant's arrest and incarceration
within two days of the arrest, and the employer knew
of the claimant's whereabouts. . . . The claimant was
absent due to his arrest on August 1, 2007, and since
he was acquitted oh February 13, 2008, I find that the
arrest and resulting absence
was due to circumstances beyond his control. He
reasonably notified the employer of his whereabouts
and his inability to work. The claimant did not
voluntarily leave this job by these absences caused by
the arrest, and he did not commit any act of
misconduct with respect to his arrest or absences."

That rationale applies with equal force here. Since Silberzweig was acquitted of all charges, his arrest and resulting absence from work cannot be attributed to any misconduct on his part."

Notice that in this case, as opposed to the others reported in this discussion, the Claimant was aquitted of all charges: there was no plea bargain to a lesser charge.

UNEMPLOYMENT INSURANCE - CRIMINAL ACTS

Here is another recent case I found from the Appellate Division, 3rd Department on the issue of criminal acts disqualifying a Claimant from benefits:

"IN THE MATTER OF THE CLAIM OF ERIC J. CUMMINGS, Appellant. v. COMMISSIONER OF LABOR, Respondent., Appellatte Supreme Court of New York, Third Department, Decided and Entered: January 14, 2010.

Appeal from a decision of the Unemployment Insurance Appeal Board, filed on September 12, 2008, which, among other things, ruled that claimant was disqualified from receiving unemployment insurance benefits because his employment was terminated due to misconduct.

Claimant was employed as a customer field representative for a utility company. His duties included entering customers' homes to disconnect their meters, as well as accepting payments in the form of cash or check. In July 2006, claimant was arrested and charged with various crimes involving the alleged commission of insurance fraud. Claimant was suspended from his employment without pay pending the resolution of the criminal charges. In September 2006, claimant applied for unemployment insurance benefits and thereafter began receiving payments. Claimant subsequently pleaded guilty in November 2007 to the crime of attempted offering to file a false instrument, a misdemeanor, in full satisfaction of the charges. In January 2008, the employer terminated claimant's employment.

Following the termination, the Department of Labor issued a determination disqualifying claimant from receiving unemployment insurance benefits and charging him with a recoverable overpayment. After claimant failed to appear for a hearing he had requested on the matter, the determination was upheld on default. The matter was
subsequently reopened and, following a hearing, an Administrative Law Judge sustained the initial determination. The Unemployment Insurance Appeal Board affirmed, prompting this appeal.

Claimant contends that the Board's determination is not supported by substantial evidence insofar as his criminal conviction pertained to activities unrelated to his employment. We disagree. "Misconduct committed during nonworking hours, which raises serious questions as to a workers' integrity, bears a relationship to his work within the meaning of . . . section 593 of the Labor Law" (Matter of Bruggeman [Roberts], 101 AD2d 973, 973 [1984], lv denied 63 NY2d 608 [1984] [citations omitted]; accord Matter of Mora [Hartnett], 175 AD2d 442, 443 [1991]; see Matter of Kessler [Commissioner of Labor], 286 AD2d 844, 845 [2001]). Accordingly, given the nature of claimant's employment duties, including entering customers' homes and accepting cash payments, we find no reason to disturb the Board's determination that his misconduct was sufficiently connected to his employment (see Matter of Kessler
[Commissioner of Labor], 286 AD2d at 845). Regarding the Board's determination that the benefits claimant received were recoverable, we find there is substantial evidence in the record supporting the Board's factual finding that claimant made a willful misrepresentation to obtain benefits (see Matter of Bal [Commissioner of Labor], 52 AD3d 1122, 1123 [2008]; Matter of Barbera [Commissioner of Labor],
28 AD3d 973, 975 [2006])."

The lesson learned from this case is that even a crime committed off work hours may be justification for job termination and misconduct. So again, if you are innocent of charges, do not plea bargain to a reduced charge so that you can get a quick resolve of the criminal action. If you want to receive unemployment benefits when you have been arrested for an alleged crime committed during work and work related or off work, it may be deemed misconduct, so try to get an acquittal! That won't guarantee benefits as the standard of proof in a criminal case is different than the standard of proof in an administrative hearing, but a conviction or plea bargain may guarantee a denial of benefits. In this case, one should also note the determination of overpayment and the fact that the claimant was termination almost 18 months after his arrest and 2 months after his plea of guilty.

UNEMPLOYMENT INSURANCE - CRIMINAL ACTS

Here is the most recent case I found from the Appellate Division, 3rd Department on the issue of criminal acts disqualifying a Claimant from benefits. This is the court that hears all appeals from decisions of the Appeals Board. The process is as follows: first a DOL determination, then a hearing before an administrative law judge, then an appeal to the Appeals Board, then an appeal to the Appellate Division, 3rd Department.

"IN MATTER OF VELEZ v. COMMISSIONER OF LABOR, 507620 [3d Dept 2-4-2010], 2010 NY Slip Op 00765, Decided and Entered: February 4, 2010.

Appeal from a decision of the Unemployment Insurance Appeal Board,filed March 26, 2009, which ruled that claimant was disqualified from receiving unemployment insurance benefits because his employment was terminated due to misconduct.

Annette G. Hasapidis, South Salem, for appellant.

Before: Mercure, J.P., Rose, Lahtinen, Stein and Garry, JJ.

MEMORANDUM AND ORDER

Claimant worked as a respiratory therapist at a hospital for over 14 years. While claimant was administering treatment, a female patient accused him of inappropriate physical contact. A criminal charge was filed against claimant as a result. He pleaded guilty to a reduced charge of harassment in the second degree (see Penal Law § 240.26 [1]), received a conditional discharge and his file was sealed. The Unemployment Insurance Appeal Board subsequently ruled that claimant was disqualified from receiving unemployment insurance benefits because his employment was terminated due to misconduct. Claimant appeals.

We affirm. "It is well settled that offensive behavior in the workplace which is detrimental to the employer's best interest constitutes disqualifying misconduct" (Matter of Williams [Commissioner of Labor], 32 AD3d 1089, 1090 [2006][citations omitted]). Here, claimant's plea of guilty to a reduced criminal charge of harassment formed the basis for his discharge and entailed offensive physical contact that was strictly prohibited by the employer's rules and clearly adverse to the employer's interests. This provides substantial evidence supporting the Board's
finding of misconduct (Matter of Singleton [Commissioner of Labor], 60 AD3d 1230 [2009]; Matter of Bucolo [Commissioner of Labor], 6 AD3d 917 [2004]; Matter of
Daoust [Overnight Transp. Co. — Commissioner of Labor], 5 AD3d 828 [2004]). Claimant's challenge to the validity of the guilty plea and its ramifications is more properly brought in the context of the criminal proceeding. Although claimant denied engaging in any inappropriate conduct, this presented a credibility
issue for the Board to resolve (see Matter of Singleton [Commissioner of Labor], 60 AD3d at 1231; Matter of Williams [Commissioner of Labor], 32 AD3d at 1090) Consequently, we find no reason to disturb the Board's decision."

The lesson learned from this case is that if you are innocent of charges, do not plea bargain to a reduced charge so that you can get a quick resolve of the criminal action. If you want to receive unemployment benefits when you have been arrested for an alleged crime committed during work and work related, try to get an acquittal! That won't guarantee benefits as the standard of proof in a criminal case is different than the standard of proof in an administrative hearing, but a conviction or plea bargain will probably guarantee a denial of benefits.

UNEMPLOYMENT INSURANCE - CRIMINAL ACTS

Next in this discussion is a list of Appeals Board cases from the Appeals Board website:

"1195. Criminal acts (Section 593.4)

Claimant was properly disqualified for loss of employment because of a criminal act when he had signed a statement admitting the commission of an act which constitutes a felony even though he subsequently pleaded guilty to a reduced charge of a misdemeanor. (A.B. 108,554A; A-750-1607; similarly. A.B. 298,970)

A statement signed by claimant that he wrongfully took, monies from the employer is not a statement admitting a felony within the meaning of Section 593.4 if it does not show the amount involved and therefore, does not show that the monies taken reached that sum which renders the act to be a felony. (A.B. 85,225A; A-750-1577)

A document prepared by a claims examiner and signed by a claimant in connection with his claim for benefits does not represent a signed "statement admitting that he (claimant) has committed" a felony within the requirement of Subdivision four of Section 593 of the law, and a disqualification as provided in that subdivision can, therefore, not be imposed on the basis of such document. (A.B. 76,294-60; A-750-1539)

Obsolete

A postal employee commits a criminal act in connection with his employment (Section 593.4) when convicted for a felony (grand larceny) committed off the job because it is a condition of hire that postal workers subscribe to a code of ethics requiring that no employee shall engage in criminal conduce. (A.B. 281,278F)

A claimant's off duty act, in disregard of standards of behavior which an employer has a right to expect of its employees, is "in connection with" employment within the meaning of Section 593.3 (misconduct) and Section 593.4 (criminal acts) of the Labor Law. (Claimant, a fiscal analyst for a municipality, was convicted of engaging in felonious corruption of a public official, reflecting unfavorably on the integrity of the employer.) (Matter of Markowitz, 94 A.D. 2d 155; A-750-1946)

A claimant is subject to the twelve month disqualification for criminal misconduct when subsequently convicted of related acts constituting a felony if such actions occurred while engaged in the employment in question and there is a sufficient link between these acts and the reasons for the loss of employment, even if the original reason for discharge was only based on suspicion. (Matter of Powers 177 AD 2d 833; A-750-2043)"

UNEMPLOYMENT INSURANCE - CRIMINAL ACTS

I am going to begin a discussion on the issue of eligibility/disqualification of unemployment insurance for criminal acts. Let me begin by quoting from the Appeals Board website:

"In addition to the above disqualification, Section 593.4 of the (Labor) Law provides:

Criminal acts. No days of total unemployment shall be deemed to occur during a period of twelve months after a claimant loses employment as a result of an act constituting a felony in connection with such employment, provided the claimant is duly convicted thereof or has signed a statement admitting that he or she has committed such an act. Determinations regarding a benefit claim may be reviewed at any time. Any benefits paid to a claimant prior to a determination that the claimant has lost employment as a result of such act shall not be considered to have been accepted by the claimant in good faith. In addition, remuneration paid to the claimant by the affected employer prior to the claimant's loss of employment due to such criminal act may not be utilized for the purpose of establishing entitlement to a subsequent, valid original claim. The provisions of this subdivision shall apply even if the employment lost as a result of such act is not the claimant`s last employment prior to the filing of his or her claim."

UNEMPLOYMENT INSURANCE - CRIMINAL ACTS

Claimant is discharged because of an accused criminal act. Claimant is denied benefits for misconduct, and as a result, is homeless living in a shelter. Claimant requests hearing and is still denied benefits. A week after hearing, Claimant's criminal action is dismissed. Now what? Here are two Appeals Board decisions on this issue: For the sustainment of a charge of misconduct there must be clear proof that an act detrimental to employer's interests was indisputably committed by claimant. (A.B. 1008-39); Misconduct under the Law was established even though acts did not result in criminal conviction. (Ref. Dec. 532-78-39R. Principle confirmed by Matter of Colello, No.76-443 App. Div., 3rd Dept., Dec. 2, 1976, unreported).

UNEMPLOYMENT INSURANCE BENEFITS - MISCONDUCT

What if you engaged in misconduct at the request of your employer? A recent consultation revealed that the employer requested the employee to engage in a minor criminal act (resulting in no arrest but a criminal violation and fine) but then discharged the employee for misconduct. A review of a case revealed the following:

"A breach of trust resulting in termination of employment constitute misconduct, even though the impropriety (falsifying records to signify usual closing time of a store rather than an actual earlier closing) is sanctioned by claimant's immediate supervisor, who also disregards the employer's interest. (A.B. 53,843-55; A-750-1408)"

But in the consultation, the act was allegedly sanctioned by the owner - would that lead to a different result? In any event, bear in mind the following whenever an employer requests an employee to commit a criminal act. Section 593.4 of the Law provides:

"Criminal acts. No days of total unemployment shall be deemed to occur during a period of twelve months after a claimant loses employment as a result of an act constituting a felony in connection with such employment, provided the claimant is duly convicted thereof or has signed a statement admitting that he or she has committed such an act. Determinations regarding a benefit claim may be reviewed at any time. Any benefits paid to a claimant prior to a determination that the claimant has lost employment as a result of such act shall not be considered to have been accepted by the claimant in good faith. In addition, remuneration paid to the claimant by the affected employer prior to the claimant's loss of employment due to such criminal act may not be utilized for the purpose of establishing entitlement to a subsequent, valid original claim. The provisions of this subdivision shall apply even if the employment lost as a result of such act is not the claimant`s last employment prior to the filing of his or her claim."