Employer's failure to do its homework leads to six-figure defamation award

A Louisiana employer's allegations during a hearing about a former employee's unemployment benefits claim ― that she had engaged in fraud ― resulted in a $224,000 judgment in her favor for defamation of character. The case serves as a reminder to employers of the potential pitfalls of even a lowly unemployment claim proceeding and the risks of accusing an employee of fraud when they don't take steps to ensure the allegation is factually sound.

Setting the stage

Janice Williams worked as a cook for MMO Behavioral Health, a psychiatric hospital, for more than 14 years with no disciplinary history. In 2015, she took three weeks of approved Family and Medical Leave Act (FMLA) leave and, upon her return, asked MMO about short-term disability benefits.

Approximately one week later, Williams was written up for engaging in activities for which she had obtained permission (e.g., bringing old food home to her dogs). Soon thereafter, MMO accused her of stealing time by claiming to have worked on a day when she did not. Despite her efforts to show the accusation was false, the employer fired her.

From lowly unemployment benefits to jury trial windfall

Williams applied for unemployment benefits, which MMO contested. At the hearing, the company's HR director claimed the former employee had falsified her time card and hours worked. The administrative law judge didn't buy the argument and awarded unemployment benefits to the cook.