Wis.LIRC UC Decision: Hall, Cornelius - January 11, 1996 - MC 676 MC 676.2 - Disciplinary suspension - discharge "converted" to suspension where employer and union agree to reinstate

STATE OF WISCONSIN
LABOR AND INDUSTRY REVIEW COMMISSION
P O BOX 8126, MADISON, WI 53708-8126 (608/266-9850)

CORNELIUS HALL, Employe

MILWAUKEE TRANSPORT SERVICES INC, Employer

UNEMPLOYMENT COMPENSATION DECISION
Hearing No. 95603339MW

An administrative law judge (ALJ) for the Division of Unemployment Insurance of the Department of Industry, Labor and Human Relations issued a decision in this matter. A timely petition for review was filed.

The commission has considered the petition and the positions of the parties, and it has reviewed the evidence submitted to the ALJ. Based on its review, the commission agrees with the decision of the ALJ, and it adopts the findings and conclusion in that decision as its own.

DECISION

The decision of the administrative law judge is affirmed. Accordingly, the employe is ineligible for benefits in weeks 13 through 16 of 1995. Thereafter, the employe is eligible for benefits, if otherwise qualified. The employe is required to repay the sum of $266 to the Unemployment Reserve Fund.

Dated and mailed: January 11, 1996
hallco.usd : 101 : 5 MC 676 MC 676.2

Pamela I. Anderson, Chairman

Richard T. Kreul, Commissioner

David B. Falstad, Commissioner

MEMORANDUM OPINION

In its petition for review, the employer contends that a discharge under sec. 108.04 (5), Stats., occurred in this case; that the administrative law judge erred in treating the separation from employment as a suspension under sec. 108.04 (6), Stats.; and that no authority holds that a discharge should be converted into a statutory suspension simply because an employer, pursuant to an agreement with a union, subsequently rehires an employe and agrees to eventually credit him with past seniority. However, the commission cannot agree.

The supreme case has dealt with this question, at least tangentially, on three occasions. The employer cites the earliest of these cases, McGraw-Edison v. DILHR, 64 Wis. 2d 703, 713 (1974) in support of its position. However, the holding in McGraw-Edison, read in its entirety and in context with later cases, actually supports treating the separation in this case as a suspension.

McGraw-Edison was decided under former law, which allowed suspension for both "misconduct" and for "other good cause" under sec. 108.04 (6), Stats. (1 ) In that case, as here, a discharge had been converted by union grievance to a suspension with no pay for time lost, and the claimant (Willard Walker) was allowed back to work under certain conditions. Id., at 64 Wis. 2d 708. DILHR treated the separation as a suspension, and then concluded it was for "other good cause." McGraw-Edison argued Walker had committed misconduct. The supreme court agreed, and affirmed the circuit court decision finding Walker "guilty of misconduct." However, the circuit court decision expressly stated that Walker's acts constituted misconduct under sec. 108.04 (6), Stats., the "suspension" statute. (2 )

It is true the supreme court referred to sec. 108.04 (5), Stats., (the discharge for misconduct statute) in its decision, but that reference was to incorporate the definition of misconduct under that subsection in Boynton Cab Co. v. Neubeck, 237 Wis. 249, 259-60 (1941). However, the supreme court never expressly reversed the conclusion of both DILHR and the circuit court that Walker's separation was a suspension under sec. 108.04 (6), Stats., nor can such a change be fairly implied from the text of the decision. Thus, McGraw-Edison must be read as a case where a discharge was converted to a suspension for unemployment compensation purposes, and the courts disagreed with DILHR about whether it was a suspension for misconduct or a suspension for other good cause.

Similarly, in Universal Foundry v. ILHR Department, 86 Wis. 2d 582 (1978), Universal Foundry discharged Clark for participating in an unauthorized strike. Following a union grievance, Universal Foundry reinstated Clark but suspended him for 90 days without pay. After Clark applied for unemployment, DILHR and LIRC found that Clark was suspended but not for misconduct. The supreme court, again deciding the case under former law, framed the issue as whether Clark was suspended for misconduct under sec. 108.04 (6), Stats. (the suspension statute.) Id. at 583, 586-87, and 593. Although the court reversed DILHR's conclusion that Clark had not committed misconduct, it let stand DILHR and LIRC's treatment of the separation as a suspension rather than a discharge.

In Wehr Steel Co. v. ILHR Dept. 106 Wis. 2d 111 (1982), Wehr Steel discharged Breedlove, DuCharme and Purifoy for walking out of the employer's premises because they considered it too hot. The discharges were later converted by union grievance to suspensions without pay. LIRC found suspensions for actions which did not amount to misconduct. The supreme court, once again deciding the issue under former law, framed the issue as whether the record showed misconduct within the meaning of sec. 108.04 (6), Stats. Id., at 106 Wis. 2d 112. Although it remanded for the department to reconsider the case under an objective standard of misconduct, the supreme court let stand the findings that Breedlove, DuCharme and Purifoy were suspended.

In James B. Galica v. Oshkosh Truck Corporation, hearing no. 8641145FO (LIRC, September 12, 1986), Oshkosh Truck discharged Galica for "mooning" a coworker. However, one month after his discharge, Galica was reinstated under an agreement with the union that provided that the intervening month be treated as a disciplinary suspension. The administrative law judge found a discharge under sec. 108.04 (5), Stats., but no misconduct, and so allowed benefits.

The commission reversed and found a suspension for "other good cause" and denied benefits for the first 3 weeks. In reversing the ALJ's finding that Galica had been discharged, LIRC stated:

"in view of the agreement of the parties to treat the employe's unemployment between April 8 and May 8, 1986 as a period of disciplinary suspension, the commission considers it appropriate to treat the problem of the employe's benefit eligibility as one of eligibility during a period of disciplinary suspension under sec. 108.04 (6), Stats."

In short, the commission concludes that there is ample precedent and authority for "converting" the employe's discharge to a suspension based on the employer's agreement with the union to reinstate with seniority under certain conditions and to reduce his discharge to a suspension.

The employer cites Howard v. Riteway Bus Service, Inc. (LIRC, January 19, 1993). That case involved a worker who was rehired "a few weeks" after she had been discharged. The commission treated that case as a discharge rather than a suspension. However, Howard v. Riteway may be easily reconciled with Galica, Wehr Steel, Universal Foundry, and McGraw-Edison. In the later three cases, the supreme court was careful to point out that the parties had agreed to convert the discharge to the suspension with no pay. The commission also made that finding in Galica. In Howard v. Riteway, though, there apparently was no such agreement; the commission found that the claimant was simply rehired. In the case at hand, of course, the employe was not simply rehired after a discharge, but his discharge was reduced to a suspension and he was reinstated with seniority.

The commission also considered whether a different result might be required if the employe had been reinstated to a different position. In that event, it could be argued that he was not reinstated at all, but simply rehired in new work.

In this case, though, the ECS counselor specifically told the employer's EAP coordinator/employe benefits manager that the employe was not eligible for placement in one of the conditional employment positions. Even if he had been cleared for one of the positions by EDS, however, he would not have been assigned to it because more senior employes were already in those positions. Thus, the employe was never actually given any different duties or a different position. Rather, he was off work entirely until he was returned as a bus driver. Thus, the commission did not need to resolve this potential issue.

The commission also considered the arguments that this case is distinguishable from those cited above because the reinstatement was conditional, and because the suspension was not merely for "time served" but extended beyond the date of the reinstatement agreement. However, Walker's reinstatement in McGraw-Edison was conditional, Id., at 64 Wis. 2d 706, and Clark's suspension in Universal Foundry evidently extended past the date of the reinstatement agreement, Id., at 86 Wis. 2d 582. However, even if this case were factually distinguishable on these grounds, the commission does not believe the distinctions have any legal significance. For example, the fact that the employe in this case agreed to undergo counseling during his suspension as a condition of rehire indicates, if anything, that both parties expected and intended the employment relationship to continue.

The best argument against "converting" discharges to suspensions, perhaps, is that parties may not determine unemployment compensation benefit eligibility by contract. Instead, eligibility is to be determined by statute. Roberts v. Industrial Commission, 2 Wis. 2d 399, 403 (1957). Thus, the employer argues, a discharge should not be automatically converted to a suspension for unemployment compensation purposes merely because the parties agree to treat it that way.

Of course, the Roberts rule does not mean that the commission must ignore contractual agreements. Rather the commission must look at what actually happened and determine whether an employe is eligible under the statutes. In this case, what actually happened is that the parties agreed to reinstate the employe with seniority after a disciplinary suspension, and the employe actually returned to work for the employer in his old duties. Consequently, the separation in this case should be treated as a disciplinary suspension under sec. 108.04 (6), Stats. A different situation might arise if the parties had agreed that the claimant would return to work as a new employe with no seniority, but that is not the case here.

Finally, the commission appreciates that the "discharge versus suspension" issue may be more significant because of the amendment to sec. 108.04 (6), Stats., to remove the language disqualifying employes from receiving benefits from suspending employers during the entire period of "misconduct suspensions." If that language were still part of the law, some employing units in the employer's situation might not care whether the commission treated the separation as a discharge or a suspension, as long as it found misconduct. (3 ) However, the commission is not free to disregard precedent concerning the nature of such separations in prior cases because the legislature has changed the benefit disqualification provision in sec. 108.04 (6), Stats.

cc: ATTORNEY GREGG M FORMELLA
QUARLES AND BRADY

Appealed to Circuit Court. Affirmed August 21, 1996. [Court Decision Summary]

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Footnotes:

(1)( Back ) There has been considerable amendment to sec. 108.04 (6), Stats., over the years. Prior to the enactment of 1987 Wis. Act 38, an employe could be suspended either for "good cause" or "misconduct." In the event of a "good cause suspension," an employe requalified for benefits after three weeks. In cases of "misconduct suspensions," an employe was effectively prevented from recovering benefits from the account of the suspending employer during the entire suspension, but could recover from other employers (if any) in his "base period" after three weeks. 1987 Wis. Act 38 extended weeks of benefit disqualification from three to five. The act also kept the misconduct/good cause distinction in name only, by eliminating the language which prevented an employe from recovering from the suspending employer after five weeks in cases of misconduct. 1991 Wis. Act 89 eliminated the vestiges of the misconduct/good cause distinction and returned the weeks of disqualification to three, leaving the section in its present form.

(2)( Back ) McGraw-Edison v. DILHR and Willard D. Walker, Dane County Circuit Court case no. 138.105, slip op. 3. The circuit court decision is available in Cases and Materials on Briefs to the Wisconsin Supreme Court in the state law library.

(3)( Back ) Of course, treating a separation as a discharge rather than a suspension under the "old law" still had the added benefit of disqualifying the claimant from any benefits based on the "credit weeks" accrued with the discharging employe prior to separation, even if the claimant were later reemployed and subsequently laid off.