Despite Operton and Easterling, no change with substantial fault at DWD

The Easterling and especially Operton decisions should indicate that inadvertent — i.e., careless or unintentional mistakes — on the job should not disqualify someone from unemployment benefits.

The Department, however, is not happy with these outcomes. At the Advisory Council’s 16 March 2017 meeting, the following public comments were made about Easterling:

Ms. Knutson stated the decision in this case will provide general guidance to adjudicators and ALJs; however, cases are very fact-intensive to determine if it is truly an inadvertent error or substantial fault. Mr. Manley stated there should be a way to sharpen the definition of substantial fault to leave less gray area for interpretation and would not allow exceptions that disregard the entire rule. An employee that signed an employer policy of expectations that were not followed should not be able to claim that those policies were not followed because of a mistake to claim benefits. Mr. Manley expressed concern that the decision by the Court of Appeals is not within the spirit of what the Legislature intended to be as the definition of substantial fault. If decisions are based on this conclusion because the statute is not worded as clearly as it should be, it should be revisited.

Meeting Materials at 12.

NOTE: Both the Department and the Advisory Council have apparently forgotten that the council rejected substantial fault. Mr. Manley’s comments, moreover, ignore the basic requirements in unemployment law that employees NOT be disqualified for their unintentional, performance-related mistakes.

Inside the Department, however, the comments have not been so sanguine. In mid-May after Operton was decided, a Department insider explained to me:

The Operton decision went to the adjudication staff soon after it was issued. At a staff meeting a few days later, a supervisor said that there would be no new training on substantial fault despite the decision.

This lack of re-training in light of Operton is important. After Easterling, Ms. Knutsen simply noted that substantial fault involved a fact-intensive inquiry but provided NO explanation about what the Department would do to implement and follow Easterling. Now, a Department supervisor is indicating that there would be NO new training in how to follow the Wisconsin Supreme Court precedent in Operton. In other words, the Department is continuing to apply its pre-Operton and pre-Easterling standards for substantial fault.

A recent clinic case confirms this observation. In this case, the Department denied unemployment benefits to a teller discharged for cash-handling errors. The initial determination stated:

The employee was discharged because her performance did not meet the employer’s expectations. Her final incident was within her control; her actions do not rise to the level of misconduct. It was within the employee’s control to meet the reasonable requirements; therefore, her discharge is considered to be for substantial fault on the part of the employee.

Here, the Department is still applying its pre-Operton and pre-Easterling analysis of determining whether the employee was in control of the action in question. Under this framework, inadvertent errors only occur when employees lack control over their actions. The unintentional or accidental nature of the errors does not matter at all under this analysis.

NOTE: At the 17 November 2016 Advisory Council meeting, the Department presented a memorandum describing some misconduct and substantial fault decisions. The decisions covered in the substantial fault section of the memorandum describe only a few Commission decisions over whether the employee’s actions were major or minor infractions of company rules or involved absenteeism issues. There is no discussion of what constitutes reasonable employer expectations, what actions are reasonably in an employee’s control, what actions are inadvertent errors, and what actions are the result of an employee’s lack of skill, ability, or equipment.

Marilyn Townsend, Operton’s legal representative, took the teller’s case on and over-turned the initial denial of unemployment benefits at the hearing stage. The decision of the appeal tribunal, however, did not apply Operton despite the obvious similarities. At the hearing, there was no indication whatsoever that the teller’s errors were anything other than unintentional and accidental. Yet, the administrative law judge found that the teller essentially lacked the skills to do the work assigned her after a promotion (another exception to substantial fault) and then committed no errors after being demoted which would justify the discharge.

the record reveals that the employee requested additional training and support for her work performance issues. She did not receive the additional training and support which leads to the conclusion that she lacked the skill and ability to perform the job. The employee also struggled to perform the Phase II role and was demoted back to a Phase I role. While working in a Phase I role, the record demonstrated that the employee didn’t have any work performance matters. If she did have infractions in her Phase I role, those matters were not raised on the record by the employer.

So, there are decisions from the Court of Appeals and the state Supreme Court that explain that, pursuant to the statutory language for substantial fault, accidental or unintentional mistakes on the job are inadvertent errors and do not qualify as substantial fault. As of June 2017, however, the Department is ignoring these court decisions when applying what it believes substantial fault should or should not include.

What should claimants do? Appeal. As the Department and the Department’s administrative law judges are NOT following court precedent, claimants have to appeal initial determinations denying them unemployment benefits to appeal tribunals and then the Commission. The Commission will follow court precedent about inadvertent errors and reverse disqualifications based on accidental and unintentional errors on the job.

Operton oral argument

Today, the Wisconsin Supreme Court held oral argument in Operton about whether substantial fault disqualifies employees from receiving unemployment benefits because of their inadvertent mistakes and what standard of deferral courts owe the Labor and Industry Review Commission in deciding unemployment cases.

Substantial fault is defined in Wis. Stat. § 108.04(5g)(a) 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.

The history of this provision is described in an amicus brief I filed on behalf of the Wisconsin Employment Lawyers Association. Basically, the Unemployment Insurance Advisory Council had rejected this change in unemployment law, but the Department worked with the Joint Finance Committee to add this provision to the 2013 budget bill.

Prior to Operton, the Commission had held that substantial fault equals negligence and that the only way to avoid disqualification for a work-related mistake was for the claimant to demonstrate he or she lacked the skills or equipment to do the required work or that there was no prior warning from the employer about avoiding the mistake at issue. The claimant in Operton failed to meet this standard, according to the Commission, because her few cash-handling mistakes (eight over 20 months of employment) occurred after a warning and were not because of a lack of skill, ability, or equipment. Whether these errors qualified as inadvertent or not was never specifically addressed. The appeals court in Operton addressed exactly what is meant by an inadvertent mistake in the statute by holding that: (1) some kind of employee intent behind the mistakes at issue was necessary to show that the mistakes were more than inadvertent and (2) employer warnings did not automatically transform an inadvertent mistake into an intentional act.

Because the claimant won at the appeals court, argument started with counsel for the Commission, William Sherlin Sample. He began with an explanation about the Commission’s dispute with the appeals court over how the Commission’s prior misconduct decisions should be addressed. After a few comments or queries from the justices, that was all that was said directly about the deferral question. The rest of the oral argument featured questions about what the substantial fault disqualification meant and how to apply it.

Chief Justice Roggensack wanted to know whether the appeal tribunal held that there was no inadvertent error because the claimant was aware of the employer’s cash handling policies. In other words, did an inadvertent error turn on a lack of awareness of the employer’s job requirements? The appeal tribunal had stated:

[Operton] was aware of the employer’s policies, including the cash handling and WIC check procedures, but continued to make cash handling errors resulting in actual financial loss to the employer, after receiving multiple warnings. The record does not establish that the employee lacked the ability or skill to perform her work. As such, this appeal tribunal must find that her discharge was for substantial fault connected with her employment

The Commission disagreed with this equivalency. Simple awareness of an employer policy went to whether the employer’s job requirements were reasonable and did not address whether the actual on-the-job error was inadvertent or not.

NOTE: Indeed, to do otherwise would essentially mean that inadvertent mistakes on the job only occur when employees have no knowledge of what is required of them. It would essentially limit inadvertent errors to unreasonable job requirements and call into question why the provision for inadvertent errors existed in the first place.

In framing this question this way, Roggensack was essentially making the awareness of a rule the same as an intent to violate that rule. Awareness of an employer policy is not the same as being aware of the errors as they occur, however. Someone running a register that comes up short, for instance, may know that she should not come up short at the end of the day. But, the short register by itself does not indicate she had an intent to steal from the employer. There needs to be evidence that her intentional or grossly negligent actions were responsible for the register shortage. By equating mistake in this way with following an employer requirement, Roggensack is essentially doing what the Department has done with unemployment concealment.

Sample also explained to the justices that there was no express finding by the appeal tribunal or the Commission that the errors in question were NOT inadvertent errors. And, that explanation dovetailed with an issue that threaded through the oral argument: whether a finding that an employee’s mistake was inadvertent or not qualified as a finding of fact or a legal finding. For the Commission, this finding was strictly factual because it only touched on the “intent” of the employee when making the mistakes in question. As noted below, the justices had a different take.

Justice Kelly asked Sample about the relationship between unintentional mistakes for misconduct purposes versus inadvertent mistakes for substantial fault. While the dictionary definitions of inadvertent and unintentional rely on each other, Sample explained, the number of warnings Operton received transformed her mistakes from unintentional to intentional.

Justice Ann Bradley then tipped her hand and pointed out that Sample was making the same claim here that the court of appeals had rejected in its decision: namely that the Commission was merging the inadvertent errors provision with the infractions repeated after warning provision. For the Commission, this analysis by the appeals court did not apply because each successive warning to Operton made a claim of inadvertence less and less credible. Whereas the appeals court did not see any evidence of intent or willfulness by the employee in the appeal tribunal or Commission decision, Sample demurred, there was in actuality such evidence because a finding of no intent for misconduct purposes was NOT the same as a finding of unintentional conduct for the purposes of substantial fault.

Justice Gableman asked whether the number of errors can establish intent. Sample answered that such matters were handled on a case-by-case basis and that in Operton the “intent” in question arose from the series of errors the employee made.

Chief Justice Roggensack then pointed out that it appeared that the Commission was determining whether or not certain facts met a particular legal standard. During rebuttal, Sample again explained that there was no specific analysis of the errors as inadvertent and, that if such analysis was needed, a remand for additional evidence would be appropriate. Justice Abrahamson observed that when the facts are not in dispute — as in this case — the issue is usually whether those facts satisfy a particular legal standard. Where the facts are in dispute, she added, then the court is confronted with a mixed question of fact and law.

Marilyn Townsend represented Operton. After describing how unemployment benefits helped businesses, communities, and workers, Townsend faced questions from Justice Kelly about how to apply substantial fault. Did each mistake have to be analyzed in isolation or should they be examined as a group, he asked. Townsend answered both types of analysis could be applied, depending on the circumstances of each case. And, in Operton’s situation, she reported, each single mistake had to be examined separately from the others because of the amount of time between the mistakes and the distinct nature of the mistakes. The question was largely academic, however, as Townsend pointed out that the Commission never did an inadvertent error analysis for any of the eight errors in question.

Chief Justice Roggensack then returned to her earlier proposition concerning the portion of the appeal tribunal decision quoted above: should an awareness of a policy mean that the mistakes in violation of that policy constitute the required intent?

NOTE: Neither the parties nor the court addressed the issue that there can be degrees of intent. At present, the Commission generally requires a much higher level of intent for a finding of misconduct than it does in substantial fault cases. And, in Operton’s case, it is clear from the appeal tribunal decision and the briefing that she was unaware of the errors as they were being made. That is why the errors were inadvertent.

Justice Abrahamson asked Townsend which holding she preferred: the main holding in Operton or the holding by Justice Lundsten in his concurrence in which he observed that misconduct and substantial fault have important differences around the number of acts at issue and that each act has to be analyzed to determine whether it is something more than inadvertent. Townsend responded that, if forced to choose, she preferred the analysis in the concurrence.

Townsend also agreed with Chief Justice Roggensack that a temporal component had to be applied to each error at issue in the case.

NOTE: That is, each error had to be examined relative to other errors and what else was happening in the workplace in general.

Near the end of the oral argument, Justice Gableman observed that perhaps the case was about infractions and not inadvertent errors at all. In response, Justice Abrahamson posited that any of the three caveats to substantial fault could apply, and it was up the employee simply to show that he or she qualified for unemployment benefits under one of these three provisions.

NOTE: Gableman’s observation missed the distinction between an infraction and inadvertent error over which the appeals court hinged its decision. Infractions are acts over which a person has some control, like whether to call in when late to work, whereas inadvertent errors are accidental mistakes over which a person has no control, such as mis-dialing a phone number. Abrahamson’s response was also somewhat misleading, as it presumed that employees have to establish their eligibility for unemployment benefits rather than the employer demonstrating a disqualification.

Overall, the parties and the justices were effective in getting their points across. Probably the earliest for a decision is April 2017, and there should be a decision no later than June of next year.