Wisconsin’s new substantial fault standard

I just filed a brief with the Labor and Industry Review Commission about the new substantial fault standard. Here are the relevant portions:

As amended by 2013 Wis Act 20, Wis. Stat. § 108.04(5g)(a) defines substantial fault as:

those acts or omissions of an employee over which the employee exercised reasonable control and which violate reasonable requirements of the job but shall not include:

1. Minor infractions of rules unless such infractions are repeated after a warning was received by the employee,
2. inadvertent mistakes made by the employee, nor
3. Failures to perform work because of insufficient skill, ability, or equipment.

As noted previously, these three caveats mirror to a great extent the clarifications from Boynton Cab. As discussed in greater detail below, treating these caveats as exceptions or clarifications significantly affects how this new standard will be applied.

When substantial fault was initially proposed, the Department of Workforce Development (“DWD” or “Department”) explained “that the current misconduct standard within Wisconsin law was too generous in providing benefits to employees who should not qualify for benefits” and that the new substantial fault standard:

creates a lower standard for disqualifying a claimant but then places some restrictions on the applicability of the lower standard. The proposal also provides further clarification regarding what constitutes misconduct. It is hoped that this strikes the right balance over the concerns of the employer community and claimants who seek benefits.

Department Proposal D12-01 at 5 (available at http://dwd-uireform.vforberger.fastmail.fm/D12-01.pdf); see also Department’s Examples and/or Explanation for Each Proposal at 2 (examples of discharges considered to be substantial fault include an employee discourteous to a customer after warnings, an employee sleeping on the job after warning and aware of policy prohibiting sleeping when on-duty, and an employee who fails to do his or her job duties and tells the employer otherwise (available at http://dwd-uireform.vforberger.fastmail.fm/Examples%20and%20or%20Explanations%20for%20each%20Proposal.pdf). But cf. Victor Forberger, “Memorandum RE: 27 November 2012 DWD legislative proposals to Advisory Council” (13 January 2013) at 6-10 (examples and provisions examined for when substantial fault would apply are for the most part already considered under case law as disqualifications for misconduct) (available at http://dwd-uireform.vforberger.fastmail.fm/DWD-Proposals-Response.pdf), posted at “Memo on DWD proposed UI changes” (available at https://wisconsinui.wordpress.com/2013/01/14/memo-on-dwd-proposed-ui-changes/) .

The Advisory Council rejected this proposed change and instead worked out new misconduct language to clarify that longstanding disqualification. See blog posting “Advisory Council Meeting — 1 April 2013” (available at https://wisconsinui.wordpress.com/2013/04/01/advisory-council-meeting-1-april-2013/) (council declined to adopt proposed substantial fault standard but recommended adding various examples of misconduct). The Department never acted on the Advisory Council’s recommendations, however. And, on 29 May 2013 the Joint Finance Committee added the rejected substantial fault and misconduct standards to the budget bill that eventually became 2013 Wis Act 20. See blog posting “Advisory Council — 2 May 2013 meeting — and legislative actions today” (available at https://wisconsinui.wordpress.com/2013/05/29/advisory-council-2-may-2013-meeting-and-legislative-actions-today/) and blog posting “JFC UI amendments” (available at https://wisconsinui.wordpress.com/2013/05/29/jfc-ui-amendments/) (JFC motion to amend budget bill included various unemployment financing provisions and rejected substantial fault, misconduct, and quit provisions; DWD drafted bills that eventually became 2013 Wis Act 36 never included the Advisory Council’s agreed-upon misconduct and quit proposals). Accordingly, these changes to unemployment law went against the express recommendations of the Advisory Council.1

As the Commission can only act when presented with relevant cases, it has had limited opportunities to clarify how this new substantial fault standard will be applied. From the cases decided so far, it appears that the Commission has focused on the three caveats as exceptions. See, e.g., the Commission’s on-line outline of decisions that includes a general category for substantial fault decisions and then three additional categories for each of the three caveats, labeled as exceptions (available at http://dwd.wisconsin.gov/lirc/ucdg_mc_.htm#Substantial%20Fault). This categorization of substantial fault cases is a mistake as it necessarily shifts the burden of proof in these discharge cases prematurely to claimants who have to demonstrate whether the exceptions apply to them rather than first requiring employers to satisfy their burden of proof that their expectations are reasonable and that the action or inaction in question is something over which employees exercise reasonable control. Kansas City Star Co., Flambeau Paper Co. Div. v. Dep’t of Industry, Labor & Human Relations, 60 Wis.2d 591, 602, 211 N.W.2d 488 (1973) (an employee is presumed eligible for unemployment benefits, and the party resisting payment must prove disqualification), see alsoBoynton Cab, 237 Wis. at 243, 296 N.W. at __ (a challenging employer has the burden to show disqualifying misconduct). Accordingly, the Commission should instead read the caveats as clarifications of what (1) the reasonable employer expectations entail and (2) the scope the conduct over what the employee exercises reasonable control. Indeed, this reading of the statute comports with how the Commission handles misconduct cases under Boynton Cab: the clarifications to the misconduct standard in Boynton Cab are not considered as exceptions but rather as indicia of circumstances where an employer has failed to satisfy its burden of proof. Herr v. McEssy Investment Co., UI Hearing No. 10602407MW (27 August 2010) (reviewing case law to explain that finding of misconduct is more than just violation of employer policy but also requires examination of whether the employee’s actions in the circumstances at hand rise to the level of being intentional and unreasonable interference with the employer’s interests).

This shift in focus from exceptions back to clarifications can be seen in Campo v. Park Towne Management Corp., UI Hearing No. 14000528MD (27 June 2014), where the Commission found that a claimant was not disqualified for her mistakes in doing her job. For the Commission, those mistakes were not rule violations per se but either “inadvertent errors” over actions for which she had not been previously warned or performance mistakes since the claimant herself never demonstrated a level of competence to do the work in the first place. It is questionable whether many claimants will be happy with such a result, as they are essentially having to show their inability to perform a job in order to win unemployment benefits. On the other hand, if the Commission had initially determined whether the employer had first demonstrated whether its expectations were reasonable or not and whether the employee exercised reasonable control over the job duties in question, the decision would have led to the same result without having to label the claimant as lacking competence to perform her job. In Campo, the claimant’s problems existed since she was hired, so (1) there was no showing by the employer that the claimant had been presented with a clear, understandable guidelines about her job duties, and (2) the employer had failed to demonstrate that the job duties in question could be met prior to the discharge. As a result, the employer failed to meet its burden of proof either that its expectations were reasonable or that the employee had the skills, ability, and equipment to carry out those ambiguous job duties.

So, the decision to disqualify a claimant for unemployment benefits because of substantial fault turns initially on two issues: (1) whether the employer’s expectations are reasonable and (2) whether the employee has the skills, abilities, and equipment to exercise reasonable control to accomplish those job duties.

An employer’s reasonable expectations of its employees necessarily requires that those expectations not only be objectively reasonable but also known to the employee and uniformly enforced.2 An employer can satisfy this knowing requirement by either a warning to the employer or a written or oral policy presented to the employee. In Frederick v. Vista Int’l Packaging LLC, UI Hearing No. 14601230MW (30 May 2014), an employer orally informed employee three times about employer expectations that employee control his behavior and follow directions without argument, so prior warning to not argue were unnecessary for substantial fault to be found. The employer established that the employee knew and understood specifically what the employer expected of him. Id., cf. Robinson v. Scan-Pac Mfg Inc., UI Hearing No. 14601571MW (27 June 2014) (no violation of a reasonable expectation occurred when employee discharged for absenteeism because employee had previously completed forms for requesting time off and had no prior attendance warnings). Once that burden is met by the employer, only then should the burden of proof shift to the employee to show that an actual warning of some kind was still needed for substantial fault to be found (for example, an employee could indicate that a supervisor informed the employee that the employer expectation at issue would no longer apply to or count against the employee after three months and those three months had since lapsed).

The employer should also be required under its burden of proof in discharge cases to demonstrate that the employee exercises reasonable control over the action or inaction at issue. Hence, the employer must first present evidence that the employee has the skills, knowledge, ability, and equipment to exercise that reasonable control. See Rolkosky v. Marinette Marine Corp., UI Hearing No. 14401261EC (30 May 2014) (employee guilty of substantial fault after employer told employee to not sit idle and employee, when trapped in room, had the ability to yell for help or use a telephone but instead chose to wait until the door was opened by someone).3 An employee, for example, should not have the burden of proving that she was late to work because of a blizzard in order for one of the exceptions to apply. Rather, the employer should first have the burden of showing that the employee could still have arrived on-time to work because she had the ability and equipment to drive in extreme weather. If the employer then presents evidence to show that all of its other workers managed to navigate through the snow in order to arrive at work on-time or that the claimant had previously driven through similar blizzards, only then should the claimant have to demonstrate that this particular blizzard presented circumstances relating to her abilities (a broken arm prevented use of the manual transmission in her four-wheel vehicle driven during previous blizzards) or the equipment available to her (the four-wheel vehicle was at the repair shop) or that inadvertent mistakes (a slide-out onto the side of the road necessitated help from a tow truck) led to her late arrival at work.

1Counsel for Ms. CLAIMANT lacks long-term knowledge of Wisconsin’s unemployment law to know whether the legislature has ever before enacted changes to unemployment law that the Advisory Council had previously rejected (as opposed to just modifying those recommendations).

2This uniformity requirement is not currently being examined by the Department, appeal tribunals, or the Commission. Rather, employer’s policy are accepted as presented as prevalent, communicated to all, and completely understood and applied in the same way by all persons. As a result, the reasonableness of a policy is presumed without any evidence to support such a presumption. This failure to ask basic questions of employers about how their expectation has been applied in the past to other employees has led to hearing records, as demonstrated in this case, where basic information about the requirement is missing. Here, for instance, basic questions about how the wheelchair tip policy was applied by the employer generally, what training was made available, what role attendants and volunteers had relative to drivers in effectuating the policy, how the safety of other passengers mattered and was handled, and how the policy changed over time were not broached (the employer witness testified as to the importance of the wheelchair tip policy and how it was put in place two years ago, synopsis at 3, but there is no explanation of how the policy actually changed from what existed before and what the employer does to implement the policy currently). By simply having employers meet their statutory burden of proof by showing how a policy in question has been developed and applied, the Commission would gain key evidence about the mechanics and application of the policy.

3Following the shifting burden of proof being described here, Rolkosky could have over-turned a finding of substantial fault by showing that his voice was hoarse because of illness, the door was too thick for sound to travel through, or that the telephone was inoperative.

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One thought on “Wisconsin’s new substantial fault standard

  1. Pingback: Substantial fault equals negligence | Wisconsin Unemployment

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