Beres, absenteeism, and a temporary change of heart

In 2018, unemployment and absenteeism were intertwined with a legal attack on agency deference that were described in a series of five posts about three cases: Tetra Tech, Beres, and Wisconsin Bell.

• Beres/absenteeism at the Wisconsin Supreme Court, Part 1
• Beres, agency deference, and Lochnerism, Part 2
• TetraTech: Agency discretion and “process”
• Beres: Agency discretion to undo a statutory scheme
• Making factual findings subject to never-ending review: Wisconsin Bell
• Agency deference and a quick note on the briefs
• Oral arguments over agency deference

On 26 June 2018, the Wisconsin Supreme Court delivered its decision in DWD v. LIRC (Beres), 2018 WI 77, 382 Wis.2d 611, 914 N.W.2d 625. In a short and unanimous opinion, the state supreme court overturned the appeals court and accepted the argument of the Department of Workforce Development that this new misconduct provision added over the objection of the Unemployment Insurance Advisory Council allowed employers to set their own disqualification standard in regards to absenteeism for the purposes of misconduct.

an employer can opt out of the statutory definition of “misconduct” by absenteeism and set its own absenteeism policy, the violation of which will constitute statutory “misconduct.”

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We conclude that the word “unless” in the “unless otherwise specified” clause of Wis. Stat. § 108.04(5)(e) means that an employee will be considered to have been terminated for “misconduct,” and thus disqualified from obtaining unemployment compensation benefits, if the employee violates the statutory definition of absenteeism, except if the employee adheres to the employer’s absenteeism policy specified in the employment manual of which the employee acknowledged receipt with his or her signature in accordance with the statute.

Beres, 2018 WI 77 at ¶19 and ¶23.

In Stangel v. Spancrete Inc., UI Hearing No.17402720MW (20 July 2018), the Commission applied the matter-of-fact holding of Beres to find that an employee whose absences led to too many points in violation of the employer’s attendance was disqualified for misconduct. The employee’s absences led to too many points under the employer’s attendance policy (regardless of reason for that absence), the Commission found, and so the employee was disqualified from receiving unemployment benefits. The Commission explained:

it makes no sense to allow the employer to adopt its own attendance policy different from the policy set forth in the statute, as described in Beres, but then limit its ability to define the contours of that policy. As an example, it is common for employers to adopt “no-fault” attendance policies, allocating to employees a large number of occurrences intended to cover both traditionally excused absences (e.g., sick days) and unexcused absences. It would greatly undermine the logic of such policies to hold the employer and employee accountable for the number of absences defined in the policy but to then consider only the “unexcused” absences when analyzing the employee’s termination for absenteeism. Thus, when applying the misconduct standard of Wis. Stat. § 108.04(5)(e), any notice and valid reason limitations will be as defined under the employer’s policy, and so long as the termination comports with the terms of that policy the employee’s violation of the policy will constitute misconduct pursuant to Wis. Stat. § 108.04(5)(e).

Stangel.

As noted by the Commission in its briefing in Beres, this employer-determined misconduct for non-intentional absences (in both Beres and Stangel, the employees were absent because of illnesses over which they had no control) ran the risk of Wisconsin being found by the US Department of Labor to no longer be in compliance with federal requirements for unemployment. That lack of compliance could well lead to Wisconsin employers losing a tax credit and seeing their federal unemployment taxes jumping from a 0.5% to 7.0% tax rate — quite a jump.

And, it seems that this risk finally caught the Department’s attention. In January 2019, the Department petitioned for review in an absenteeism case and filed a brief in March reversing its prior position. In this new case, the employee had acquired too many points under the employer’s no-fault absenteeism policy because of injuries related to a car accident and illnesses. Now, the Department argued that because the employee had provided the employer with notice for his valid (i.e., non-intentional absences), the employer’s absenteeism policy did not completely control in determining whether misconduct had occurred.

In Miller v. FEDEX Ground Package System, Inc., UI Hearing No.18005890MD (29 March 2019), the Commission accepted the Department’s argument (footnote omitted):

The commission has come to the conclusion that its reasoning in Stangel was incorrect, because that reasoning does not comport either with the plain language or with the structure of the statute. The notice and valid reason clause addresses absenteeism without qualification; it does not distinguish between absenteeism pursuant to the statutory standard and absenteeism pursuant to an employer’s policy. As for structure, the general statutory construction rule is that qualifying or limiting clauses in a statute are to be referred to the next preceding antecedent, unless the context or plain meaning dictates otherwise. The alternative of an employer’s policy is a limiting clause immediately following the statutory standard clause, though, and so is not properly read as an independent par.(5)(e) misconduct standard that is not subject to the notice and valid reason clause. The latter clause, by contrast, without question applies to the first clause, the statutory standard, and to the third clause, excessive tardiness. There is no legitimate basis not to apply it to the second clause, employers’ attendance policies, as well.

The commission’s reasoning in Stangel also does not comport with all the other categories of “misconduct,” whether the other specific categories enumerated in Wis. Stat. § 108.04(5)(a)-(g) or the general standard of Wis. Stat. § 108.04(5)(intro.). As the department points out in its brief, all of these standards incorporate intent, recklessness, or some other willful behavior on an employee’s part. To limit the scope of notice and valid reason to how those terms are defined in an employer’s policy would allow, as the instant case shows, the denial of unemployment benefits when the employee has engaged in no culpable behavior.

While this result is laudatory for both employers (no longer facing the risk of losing their federal tax credit) and employees (no longer being disqualified for misconduct when they provide notice of their non-culpable absences), the reasoning seems to contradict the holding in Beres. After all, the Commission made similar if not identical arguments in its briefing in Beres against the Department’s claims in favor of this harsh and unforgiving application of whatever the employer’s own absenteeism and tardiness policy required. See Commission’s brief at 36-43; see also the appeals court decision in Beres, 2017 WI App 29 at ¶¶16-20, 275 Wis.2d 183, 895 N.W.2d 77 (Department’s position would lead to disqualification for innocent absenteeism, and so cannot qualify as misconduct when unemployment presumes eligibility when there is no employee fault regardless of how valid the employer policy is). Yet, the Wisconsin Supreme Court rejected that argument for the holding spelled out above (and what the Department then advocated): the employer’s absenteeism policy governs in toto once the employee acknowledges that policy.

In addition, the scope of Miller in over-turning Beres is limited. Miller only applies to the employees who give notice of their absences. Employees unable to provide notice will still be disqualified even if they are absent through no fault of their own (e.g., a car accident or illness that render them unconscious).

As previously noted, the absenteeism provision at issue here arose under suspicious circumstances. A legislative fix through the Advisory Council needs to be taken up if an actual fix for this problem is to take hold. The Commission’s decision in Miller is at most partial and temporary.