## Facts

- Hill Air Force Base employed Dennis L. Wagstaff as a civilian jet aircraft hydraulic mechanic.
- The Air Force Office of Special Investigations investigated allegations that civilian maintenance personnel were using illegal drugs on and off base.
- Several coworkers implicated Wagstaff in illegal drug use during the investigation.
- When questioned, Wagstaff admitted that he used cocaine on one occasion at a park while he was employed by the Air Force, but he denied any other illegal drug use.
- The Air Force terminated Wagstaff’s employment based on Wagstaff’s admission and the investigative information gathered from coworkers.
- Wagstaff applied for unemployment benefits through the Utah Department of Employment Security.
- The Department denied benefits on the ground that Wagstaff was discharged for just cause.
- Wagstaff requested a formal hearing. At the hearing, he again admitted one incident of cocaine use but denied additional use.
- The Air Force offered an investigative report containing coworkers’ statements accusing Wagstaff of more than one instance of drug use; the Air Force did not produce those coworkers as witnesses at the hearing.
- The administrative law judge (ALJ) concluded the Air Force had not established just cause and reversed the Department’s denial of benefits.
- The Industrial Commission’s Board of Review reversed the ALJ and reinstated the denial of benefits.
- Wagstaff petitioned the Utah Court of Appeals for review.

## Issues

1. Whether the Board of Review could rely, in whole or in part, on an investigative report containing coworkers’ hearsay statements when the coworkers did not testify at the unemployment hearing.
2. Whether Wagstaff’s admitted illegal cocaine use while employed by the Air Force constituted “just cause” disqualifying him from unemployment benefits under Utah law.
3. Whether the Board reasonably found the required “just cause” elements—knowledge (actual or constructive), control, and culpability—based on the record.

## Decision

- The Utah Court of Appeals affirmed the Board of Review’s decision denying unemployment benefits.
- The court held that the Board did not err by considering the investigative report in the administrative proceeding where the record also contained competent evidence supporting the key findings, including Wagstaff’s own admission of illegal drug use.
- The court upheld the Board’s conclusion that Wagstaff’s conduct met Utah’s “just cause” standard and therefore disqualified him from benefits.
- The court deferred to the Board’s application of the just-cause framework as a mixed question of law and fact so long as the Board’s result was reasonable on the record.

## Legal Principles

- Utah unemployment law disqualifies a claimant discharged for “just cause,” assessed through a three-part inquiry: (1) the claimant knew or should have known the conduct was prohibited or contrary to the employer’s interests, (2) the conduct was within the claimant’s control, and (3) the conduct was sufficiently culpable to warrant disqualification.
- Whether established facts satisfy the “just cause” standard is a mixed question of law and fact reviewed with deference; the agency’s decision is upheld if it falls within the bounds of reasonableness on the evidence.
- Hearsay evidence may be admitted and weighed in administrative unemployment proceedings; however, dispositive findings must be supported by competent evidence in the record, and a claimant’s own admission can supply that support.
- Illegal drug use by an employee in a safety-sensitive maintenance environment may reasonably be treated as misconduct materially adverse to the employer’s interests and can constitute just cause for discharge and benefit disqualification.

## Conclusion

The Utah Court of Appeals affirmed the denial of unemployment benefits because the Board of Review reasonably determined that Wagstaff’s admitted cocaine use while employed by the Air Force satisfied Utah’s just-cause requirements, and the Board could consider the investigative report alongside Wagstaff’s admission when making its findings.


Wagstaff v. Department of Employment Security, 826 P.2d 1069 (1992)