Opinion issued December 23, 2014




                                    In The

                             Court of Appeals
                                   For The

                         First District of Texas
                           ————————————
                             NO. 01-14-00084-CV
                          ———————————
                         DAVID E. KAUP, Appellant
                                      V.
      TEXAS WORKFORCE COMMISSION, GLOBAL SECURITY
     CONSULTING, & GLOBAL SECURITY ASSOCIATES, Appellees


                   On Appeal from the 270th District Court
                            Harris County, Texas
                      Trial Court Case No. 2013-12368


                                OPINION

      David Kaup was denied unemployment benefits by the Texas Workforce

Commission upon the TWC’s finding that he was fired by his employer, Global

Securities, for misconduct. After unsuccessfully appealing that decision to the

TWC Appeal Tribunal, Kaup appealed to the district court. TWC filed a motion for
summary judgment, which the trial court granted. The trial court entered a final

judgment, holding that there was substantial evidence to support the TWC decision

and affirming that judgment.1 Kaup contends that the trial court erred by granting

TWC’s summary-judgment motion. We affirm.

                                     Background

      David Kaup has a degree in criminal justice administration and many years

of experience in law enforcement and private security. He holds multiple security-

related certifications and licenses, including a Qualified Manager’s License from

the Texas Private Security Bureau.

      Global Security hired Kaup in July 2010 as a security compliance officer to

hold the company’s Qualified Manager license, train employees, conduct

fingerprinting, and handle its employees’ state licensing applications and renewals.

The Global Securities job application asked Kaup to list all “periods of

unemployment,” to which Kaup responded: “5/6/10 – NOW.”


1
      Although Kaup’s employer, Global Security, did not move for summary judgment
      or join the TWC’s summary-judgment motion, the sole allegation in Kaup’s suit
      was that the TWC’s decision was erroneous. As such, the district court’s summary
      judgment affirming the TWC’s decision disposed of the sole claim that Kaup was
      attempting to assert against either the TWC or his employer. Because Kaup had no
      separate complaint against Global Security, the summary judgment, which states
      that the “order is final and appealable and disposes of all parties and all claims,”
      was a final, appealable order. Spicer v. Tex. Workforce Comm’n, 430 S.W.3d 526,
      532 n.3 (Tex. App.—Dallas 2014, no pet.); Smith v. Tex. Workforce Comm’n, No.
      12-11-00230-CV, 2012 WL 2026712, at *1 (Tex. App.—Tyler June 6, 2012, no
      pet.) (mem. op.); Chawla v. Tex. Workforce Comm’n, No. 03-10-00327-CV, 2012
      WL 3629460, at *1 (Tex. App.—Austin Aug. 22, 2012, pet. denied) (mem. op).
                                           2
      One year into his employment at Global Securities, the company approached

Kaup about reducing his position to part-time status; Kaup did not agree to reduce

his hours and continued working full-time.

      The following year, in March 2012, Kaup signed an “Employee Handbook

Acknowledgement Form,” affirming this statement: “I have received the

handbook, and I understand that it is my responsibility to read and comply with the

policies contained in this handbook and any revisions made to it.” The Handbook

contained the following provision:

                         Conflicts of Interest/Other Employment
      GS believes in conducting all company operations in an ethical
      manner and in compliance with federal laws and the laws of the states
      in which it does business. A conflict of interest may arise in any
      situation in which an employee’s loyalties are divided between
      business interests that, to some degree, are incompatible with the
      interests of GS. If an employee decides to seek additional
      employment, the employee must let their manager know to ensure that
      there is no conflict of interest. All such conflicts should be avoided.
      GS expects absolute integrity from all employees and will not tolerate
      any conduct that falls short of that standard. GS expects that no
      employee will knowingly place himself or herself in a position that
      would have the appearance of being, or could be construed to be, in
      conflict with the interests of the company.
      GS recognizes and respects its employees’ rights to participate in
      outside activities. However, certain activities are prohibited because
      they are considered a conflict of interest. Situations involving possible
      conflicts of interest will be evaluated on a case-by-case basis
      consistent with company policy. For questions about a potential
      conflict of interest, bring it to the attention of a manager or Human
      Resources. Where undisclosed and unapproved conflicts of interest
      occur, corrective action may result, including termination of
      employment.
                                         3
Kaup continued to work full-time at Global Securities after signing this

acknowledgement.

      On September 2, 2012, Global Securities placed an anonymous job listing on

the ziprecruiter.com website soliciting resumes for a security manager position in

Houston, Texas. The listing did not specify if the position was full-time or part-

time. There was no indication that Global Securities was the company behind the

listing. According to Global Securities Director of Human Resources &

Administration, Audrey Villani, Global Securities posted the position to find a

replacement for Kaup “in case [he] decided to leave the company . . . if [his

position] were to become part time.”

      At 9:00 in the morning on September 11, Global Securities received an

application for the position from Kaup’s personal email account. The email was

received during Kaup’s regular work hours at Global Securities. According to

Kaup’s attached resume, he had an on-going business relationship with three

separate security companies at that time. In addition to his employment with

Global Securities from July 2010 forward, Kaup disclosed that he had been a

consultant to Shelter Security since May 2009 and to GT Security Solutions since

March 2012.

      Global Securities responded by terminating Kaup’s employment one week

later. His termination letter explains that, “[i]n addition to applying for


                                        4
employment with other companies during work hours, you have obtained a

secondary employment without approval. Our employee handbook states that

secondary employment must be previously approved.” After noting that Kaup

never requested approval for the two consulting positions, the letter explains that

Kaup’s “employment with the company is terminated immediately for violating

company policies, as stated above.”

        Kaup sought unemployment benefits from TWC but was denied as a result

of “violation of company rules and policies” which “is considered misconduct

connected with the work.” Kaup appealed the decision to the TWC Appeal

Tribunal and was again denied. Kaup filed a petition with the district court seeking

judicial review of the denial of unemployment benefits. Both Kaup and the TWC

filed motions for summary judgment. The trial court granted TWC’s motion and

entered a final judgment declaring that “there is substantial evidence to support the

Texas    Workforce    Commission      decision”   and   affirming   the   denial   of

unemployment benefits. Kaup timely appeals that judgment.

                            Challenge to TWC Ruling

        Kaup argues that the TWC erred by denying his benefits and the district

court erred by granting summary judgment to TWC because Global Securities’s

restrictive policies are not enforceable and Kaup has a defense to the assertion of

employee misconduct.


                                         5
A.    Standard of review

      1.    Summary judgment

      We review a summary judgment de novo. Travelers Ins. Co. v. Joachim, 315

S.W.3d 860, 862 (Tex. 2010). We consider the evidence presented in the light most

favorable to the nonmovant, crediting evidence favorable to the nonmovant if

reasonable jurors could and disregarding evidence contrary to the nonmovant

unless reasonable jurors could not. Mann Frankfort Stein & Lipp Advisors, Inc. v.

Fielding, 289 S.W.3d 844, 848 (Tex. 2009). We indulge every reasonable

inference and resolve any doubts in the nonmovant’s favor. 20801, Inc. v. Parker,

249 S.W.3d 392, 399 (Tex. 2008).

      2.    Substantial evidence

      The applicable standard of review for a TWC decision is “trial de novo

based on the substantial evidence rule.” TEX. LAB. CODE ANN. § 212.202(a) (West

2006); Mercer v. Ross, 701 S.W.2d 830, 831 (Tex. 1986); Tex. Workforce Comm’n

v. City of Houston, 274 S.W.3d 263, 266 (Tex. App.—Houston [1st Dist.] 2008, no

pet.). A TWC decision carries a presumption of validity, and the party seeking to

set it aside has the burden to show it was not supported by substantial evidence.

City of Houston, 274 S.W.3d at 266 (citing Mercer, 701 S.W.2d at 831). Whether

TWC’s decision is supported by substantial evidence is a question of law. Id.;




                                        6
Blanchard v. Brazos Forest Prods., L.P., 353 S.W.3d 569, 572 (Tex. App.—Fort

Worth 2011, pet. denied).

      Kaup argues that the substantial evidence standard places this appellate court

“in the position of being a trier of fact” and requires us to reverse the trial court’s

judgment if the TWC fails to convince us that “a ‘reasonable person’ would not

have reached a different conclusion” than the TWC did, based on evidence

presented to it. This misstates the standard of review for TWC determinations.

      Under the substantial evidence rule, the burden is on Kaup—as the party

who seeks to set aside the TWC’s ruling—to demonstrate that less than substantial

evidence supports the decision. See City of Houston, 274 S.W.3d at 266. We do not

weigh the evidence to decide whether TWC made the correct decision but, instead,

ask “whether the evidence introduced before the trial court shows facts in existence

at the time of the [TWC’s] decision that reasonably support the decision” it

reached. Collingsworth Gen. Hosp. v. Hunnicutt, 988 S.W.2d 706, 708 (Tex.

1998); Blanchard, 353 S.W.3d at 572. If the evidence is such that reasonable

minds could have reached the same conclusion as the TWC, the agency’s decision

must be upheld. City of Houston, 274 S.W.3d at 267; Blanchard, 353 S.W.3d at

572. In other words, “[i]f substantial evidence would support either affirmative or

negative findings, we must uphold the agency decision and resolve any conflicts in

favor of the agency decision.” Farris v. Fort Bend Indep. Sch. Dist., 27 S.W.3d


                                           7
307, 312 (Tex. App.—Houston [1st Dist.] 2000, no pet.) (citing Auto Convoy v.

R.R. Comm’n, 507 S.W.2d 718, 722 (Tex. 1974)). “We may not set aside an

agency decision merely because testimony was conflicting or disputed or because

it did not compel the agency’s decision.” Scally v. Tex. State Bd. of Med. Exam’rs,

351 S.W.3d 434, 441 (Tex. App.—Austin 2011, pet. denied) (citing Firemen’s &

Policemen’s Civil Serv. Comm’n v. Brinkmeyer, 662 S.W.2d 953, 956 (Tex.

1984)). “If there is substantial evidence which supports the order, the courts are

bound to follow the discretion of the administrative body.” Brinkmeyer, 662

S.W.2d at 956. It is the agency’s function to resolve conflicts in evidence, and “it is

the aim of the substantial evidence rule to protect that function.” Id.

      “We review the trial court’s judgment by comparing the TWC decision with

the evidence presented to the trial court and the governing law.” Blanchard, 353

S.W.3d at 573. In reviewing the order granting summary judgment, we decide

whether the evidence presented to the trial court established as a matter of law that

substantial evidence existed to support the TWC decision. Id.; Lopez v. Tex.

Workforce Comm’n, No. 01-10-00849-CV, 2012 WL 4465197, at *4 (Tex. App.—

Houston [1st Dist.] Sept. 27, 2012, no pet.) (mem. op.). “Substantial evidence” is

more than a scintilla, but less than a preponderance. Blanchard, 353 S.W.3d at 572

(citing City of Houston v. Tippy, 991 S.W.2d 330, 334 (Tex. App.—Houston [1st

Dist.] 1999, no pet.)). If substantial evidence exists that supports the TWC’s


                                           8
determination, it does not affect our resolution of the case that Kaup presented

contrary evidence; we do not weigh the evidence. Farris, 27 S.W.3d at 312.

        In addition to reviewing whether substantial evidence supports the TWC

ruling, we also review whether TWC applied the correct legal standard to reach its

conclusion. City of Houston v. Morris, 23 S.W.3d 505, 508 (Tex. App.—Houston

[1st Dist.] 2000, no pet.). If the TWC denies benefits “without regard to the law or

the facts,” the denial is “unreasonable, arbitrary, or capricious” and subject to

reversal. Id.

B.      Misconduct as basis for denial of unemployment benefits

        A person is ineligible to receive unemployment compensation benefits “if

the individual was discharged for misconduct connected with the individual’s last

work.” TEX. LAB. CODE ANN. § 207.044(a) (West 2006). Misconduct is a defined

term:

        (a) “Misconduct” means mismanagement of a position of employment
        by action or inaction, neglect that jeopardizes the life or property of
        another, intentional wrongdoing or malfeasance, intentional violation
        of a law, or violation of a policy or rule adopted to ensure the orderly
        work and the safety of employees.
        (b) The term “misconduct” does not include an act in response to an
        unconscionable act of an employer or superior.

Id. § 201.012 (emphasis added).

        An employer is not required to prove intent with respect to misconduct

arising from the violation of a company policy or rule. See Mercer, 701 S.W.2d at

                                           9
831; Jimison v. Tex. Workforce Comm’n, No. 2-09-127-CV, 2010 WL 851418, at

*3 (Tex. App.—Fort Worth Mar. 11, 2010, no pet.) (mem. op.); Lairson v. Tex.

Emp’t Comm’n, 742 S.W.2d 99, 101 (Tex. App.—Fort Worth 1987, no writ).

Likewise, “[t]here is no requirement that the employer show the violation

negatively affected the employee’s work.” Murray v. Tex. Workforce Comm’n, 337

S.W.3d 522, 525 (Tex. App.—Dallas 2011, no pet.) (citing TEX. LAB. CODE ANN.

§ 201.012). “The statutory definition of ‘misconduct’ requires only that the

employee violate a rule or policy adopted to ensure orderly work or safety.” Id.

(concluding that violation of policy that allowed only five incidents of tardiness

qualified as misconduct).

C.    Whether violating Global Securities’s policy may qualify as misconduct

      Kaup makes three arguments why his failure to disclose outside employment

is not misconduct. First, he argues that the Labor Code requires employees to

adhere only to “reasonable” company policies and Global Securities’s policy was

not reasonable. Second, Kaup argues that a policy limiting an employee from

accepting secondary employment in his off-duty time does not qualify as a “rule

adopted to ensure the orderly work and the safety of employees,” and therefore

does not meet the statutory requirements of misconduct. Third, Kaup asserts that

Global Securities had to have been aware of his outside employment for months




                                       10
before firing him and, therefore, any failure to disclose was too remote to be

considered the misconduct leading to his termination. 2

      1.    Unreasonableness claim

      Failure to comply with an unreasonable company policy is not misconduct.

See Edwards v. Tex. Emp’t Comm’n, 936 S.W.2d 462, 468 (Tex. App.—Fort

Worth 1996, no writ) (citing Lairson, 742 S.W.2d at 101); Lohmuller v. Tex.

Workforce Comm’n, No. 14-00-00008-CV, 2000 WL 1862824, at *3 (Tex. App.—

Houston [14th Dist.] Dec. 21, 2000, no pet.) (mem. op, not designated for

publication) (holding that employer’s policy, which required employee to work

without pay in violation of federal law, was unreasonable and employee’s refusal

to comply was not misconduct). Kaup, as the party seeking to set aside the agency

decision, has the burden of proving that the policy is unreasonable. See Edwards,

936 S.W.2d at 468; Lairson, 742 S.W.2d at 101.

      Kaup argues that Global Securities had no right to control his leisure

activities and that the policy prohibiting him from obtaining unapproved side

employment, outside of his regular work hours, is an unconscionable attempt to


2
      Kaup makes a fourth argument that a non-compete agreement he signed with
      Global Securities is unenforceable as a matter of law. Because we conclude that
      substantial evidence exists to support the TWC’s conclusion that Kaup failed to
      disclose his outside employment in violation of the Handbook policy and that
      failure meets the definition of employee misconduct, we do not reach the
      questions whether Kaup also violated the non-complete agreement or whether that
      agreement was enforceable against him.
                                         11
control his off-duty time. He contends that this infringement on his personal time is

unreasonable.

      Employers are permitted to limit their employees’ outside employment to

avoid conflicts of interest. See Evans v. Reliant Energy, Inc., No. 01-01-00855-CV,

2002 WL 31838088, at *3–4 (Tex. App.—Houston [1st Dist.] Dec. 19, 2002, no

pet.) (mem. op., not designated for publication) (holding that employer could

enforce its business ethics policy that prohibited employees from working for

company’s customers because multiple employments could create conflict of

interest for employees). Further, the Global Securities policy does not wholly

prohibit outside employment but merely requires employees to disclose and obtain

approval of the outside employment in light of the company policy aimed at

avoiding conflicts of interest in security-sensitive positions. The TWC concluded

that this policy was enacted “to protect the employer’s assets and business

opportunities” and that it was reasonable. We conclude that Kaup has not met his

burden to establish that the policy was unreasonable.

      2.     Policy adopted to ensure orderly work

      Not every violation of company policy will trigger denial of unemployment

benefits. Tippy, 991 S.W.2d at 336. Only those policies that are adopted to ensure

orderly work or the safety of employees qualify. See id. (analyzing definition of

misconduct found in TEX. LAB. CODE ANN. § 201.012(a)).


                                         12
      Kaup disputes that a policy enacted by a security company that prohibits

security personnel from working for other security companies without disclosure

and approval of that outside employment qualifies as a policy “enacted to ensure

orderly work.”

      None of the parties have cited a case addressing whether a policy limiting

outside employment qualifies as a policy adopted to ensure orderly work; we have

not located such a case either. Nonetheless, we note that Global Securities’s use of

such a policy is not unique,3 that conflicts of interest with divided loyalties are

legitimate concerns for employers, and, most importantly, that this particular

policy did not prohibit all outside employment but, instead, required only that they

be disclosed to enable the employer an opportunity to evaluate whether a true or

3
      See Vincent DiLorenzo & Clifford R. Ennico, Basic Legal Transactions § 24:6
      (2011) (stating that typical employee handbook will require employees to avoid
      conflicts including outside employment); see, e.g., Robert J. Nobile, Guide to
      Employee Handbooks § 10:12 (2014) (providing model policy statement on
      moonlighting: “Although XYZ expects you to devote your primary efforts towards
      your duties and responsibilities with us, you may engage in outside employment
      with the prior approval of your immediate supervisor and the human resources
      department.”); Guide to HR Policies and Procedures Manuals § 7:17 (2014)
      (suggesting as model corporate policy/procedure statement: “XYZ has established
      business conduct guidelines to ensure that all Company employees conform to the
      ethical and legal standards XYZ demands in order to preserve its integrity and
      reputation. These guidelines emphasize the Company's goal of striving to attain
      the highest ethical standards when resolving potential or actual conflicts of
      interest. . . . No employee may serve as an employee, director, or officer of any
      supplier or customer without the prior written approval of the vice president of
      Human Resources or the general counsel.”).




                                         13
perceived conflict of interest might exist. With those considerations in mind, we

conclude that a policy requiring disclosure of outside employment in an effort to

avoid conflicts of interest and divided loyalties of security personnel qualifies as a

policy adopted to ensure orderly work.

      3.     Remoteness claim

      Violations of company policies that are remote from the termination of

employment will not qualify as misconduct for unemployment compensation

purposes. Morris, 23 S.W.3d at 509–10.

      Kaup asserts that Global Securities’s licensing verification process would

have ensured that Global Securities was aware of his outside employment at least

six months before it fired him and, therefore, his subsequent firing was too remote

to be linked to this allegation of misconduct. But Global Securities offered

evidence that it did not know about the outside employment as Kaup contends.

      Villani’s affidavit, which was attached to the TWC’s motion for summary

judgment, states that Global Securities “only became aware of [Kaup’s] secondary

employment when he submitted a resume to the company in response to a job

posting and listed this secondary employment on his resume.” According to

Villani, Global Securities knew about Kaup’s outside employment for only one

week before firing him. Kaup responds that Villani “committed perjury” in that the

evidence presented to the TWC established that Villani checked Kaup’s licensing


                                         14
earlier and, according to Kaup, the information that search would have elicited

includes other “qualified manager” licenses.

      The decision of the TWC Appeal specifically addresses this matter: “The

claimant violated the employer’s reasonable policies when he engaged in outside

work . . . The claimant suggests that his employer knew or should have known of

this outside employment. The appeal Tribunal does not find this argument

persuasive.”

      We do not weigh the evidence or decide issues of credibility when reviewing

a decision by the TWC to deny unemployment benefits. Farris, 27 S.W.3d at 312;

Scally, 351 S.W.3d at 441. By its ruling, the TWC rejected Kaup’s remoteness

argument. We do not decide whether the TWC reached the correct decision but,

instead, whether substantial evidence was presented to the trial court to support the

ruling. Under that standard and in light of Villani’s affidavit, we overrule Kaup’s

contention that his misconduct was too remote to form the basis for denying

unemployment benefits.

      Having rejected all three of Kaup’s arguments that Global Securities’s

policy is unenforceable against him, we address next whether there was substantial

evidence presented to the trial court that Kaup did engage in employee misconduct.




                                         15
D.    Substantial evidence of misconduct

      In support of its summary-judgment motion, the TWC presented evidence of

Kaup’s initial application for employment, on which he stated that he was

unemployed as of July 2010, and Kaup’s second application for employment

seeking his current position at Global Securities, on which he disclosed that he had

worked as a consultant to Shelter Security since 2009 and for GT Security

Solutions since March 2012. TWC also included as evidence the signature page of

Kaup’s handbook acknowledgement form, dated March 2012, by which he agreed

to disclose potential conflicts of interest, including outside employment. TWC also

included as evidence Kaup’s termination letter written by Global Securities’s HR

Director, as well as her affidavit stating that Kaup was terminated for “working on

non-business related material while on the job and having secondary employment

without telling the company and without seeking prior authorization under the

rules.” TWC argued that the evidence established, as a matter of law, that there

was substantial evidence in support of the TWC’s finding that Kaup was

disqualified for unemployment benefits because he committed misconduct as

defined by the Texas Labor Code.

      The evidence submitted by the TWC to support its conclusion that Kaup

violated a known company policy by failing to disclose his outside employment

was substantial. By signing the handbook signature page, Kaup acknowledged that


                                        16
it was his “responsibility to read and comply with the policies contained” within it,

including that he disclose efforts to obtain additional employment and conflicts of

interest, including outside employment. Although Kaup’s second job application

stated that he was working as a consultant to Shelter Securities when he initially

accepted employment at Global Securities, his initial employment application does

not disclose that position. Further, Kaup began working as a consultant to GT

Security Solutions after he signed the handbook acknowledgement form, but there

is no evidence that he told Global Securities about his GT Security employment

before he listed it on his second employment application.

      Kaup argues that the justification Global Securities gave for firing him was a

pretext; he contends he actually was fired to allow his position to be reduced to

part-time to save the company money. The TWC concluded that he was, instead,

terminated for violating company policy.

      Under the substantial evidence rule, we ask “whether the evidence

introduced before the trial court shows facts in existence at the time of the

[TWC’s] decision that reasonably support the decision” it reached. Collingsworth

Gen. Hosp., 988 S.W.2d at 708; Blanchard, 353 S.W.3d at 572. “If there is

substantial evidence which supports the order, the courts are bound to follow the

discretion of the administrative body.” Brinkmeyer, 662 S.W.2d at 956.




                                         17
      The TWC denied Kaup’s application for unemployment benefits. Implicit in

that decision is the rejection of Kaup’s argument at the TWC hearing that Global

Securities fired him for a reason other than his failure to disclose outside

employment. Our review does not include an evaluation whether the TWC reached

the correct decision whether to deny benefits. Collingsworth Gen. Hosp., 988

S.W.2d at 708; Blanchard, 353 S.W.3d at 572. Having found that substantial

evidence exists to support the TWC’s decision, we reject Kaup’s pretext argument.

      Kaup next argues that his signature on the company handbook

acknowledgement form did not represent an agreement to abide by the policies

stated in the handbook but merely an acknowledgement that he received a copy of

the handbook. The acknowledgement form signed by Kaup states, “I have received

the handbook, and I understand that it is my responsibility to read and comply with

the policies contained in this handbook and any revisions made to it.” Accordingly,

by its terms, Kaup agreed to abide by the policies contained in the handbook, and

violations of those terms can meet the definition of employee misconduct found in

the Labor Code. See TEX. LAB. CODE ANN. § 201.012 (including in “misconduct”

definition “violation of a policy or rule adopted to ensure the orderly work and the

safety of employees”).

      Kaup counters that he did not actively hide these side jobs and that Global

Securities would have seen them when it regularly reviewed his state licensing


                                        18
documents. Intent is not a required element to establish employee misconduct. See

Mercer, 701 S.W.2d at 831 (stating that employer is not required to prove intent

with respect to misconduct arising from violation of company policy or rule);

Jimison, 2010 WL 851418, at *3; Lairson, 742 S.W.2d at 101. The question is not

whether Kaup intended to hide the outside employment but, rather, whether he

violated company policy requiring him to disclose it. There is substantial evidence

that he did. Accordingly, we overrule each of Kaup’s arguments seeking to

challenge the TWC ruling.

                                   Conclusion

      We affirm the judgment of the trial court.




                                             Harvey Brown
                                             Justice

Panel consists of Justices Massengale, Brown, and Huddle.




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