Wis.LIRC ER Decision: Larson - May 20, 1999 - Arrest record discrimination - claim that decision was based on alleged falsification of application is pretextual

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

DAVID C LARSON, Complainant

MENARDS, Respondent

FAIR EMPLOYMENT DECISION
ERD Case No. 199701527

An administrative law judge for the Equal Rights Division of the Department of Workforce Development 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 administrative law judge. Based on its review, the commission makes the following:

FINDINGS OF FACT

1. Menards (hereinafter "respondent") is a business engaged in the retail sale of home improvement products. The respondent operates stores throughout the Midwest, including three in Madison, WI.

2. David Larson (hereinafter "complainant") is the former owner of a used car dealership located in Madison, called Capitol Corvette. The complainant ran that business for 13 years until, at some point, customers began to raise accusations of misdealings, specifically including failure to pay a consignee for a car. On July 3, 1996, the complainant was arrested at his place of business and charged with theft. The complainant's arrest was highly publicized in the local news media. However, the charges against him were ultimately dropped.

3. After the events described above, the complainant found it difficult to obtain employment. He declared bankruptcy and began painting houses for a living.

4. In January of 1997 the complainant decided to apply for a job with the respondent, which was planning to open a new store on the east side of Madison. The complainant filled out an employment application on which he wrote, when asked about his most recent employment, "Self Employed About 15 Yrs." Under "next previous employer," the complainant indicated that he worked for ten years as a sales manager at Ahrens Cadillac.

5. The employment application also contained a question, "Please indicate any specific work skills you have which may not be adequately covered in review of your educational or job history. For example: Forklift operation, Typing, 10 key pad, Welding, Computer skills, Trade skills, Selling, etc." In response to that question the complainant wrote:

"Forklift, wood working, 25 yrs. sales experience, commercial artist could do all your sign work, also I am a Class A Mechanic, also have worked as a painting contractor."

6. In response to a question on page two of the application, "What is your usual occupation?" the complainant wrote "sales." In the corresponding blank for "number of years experience," he wrote "25."

7. The complainant was called for an interview with Dale Muesbeck, a store manager for the respondent. During this interview, Mr. Muesbeck asked the complainant what kind of work he did during his self-employment, and the complainant indicated he had been a painter. In his interview notes, Mr. Muesbeck wrote, "Dave ran his own painting business for the past 15 yrs."

8. Subsequent to the interview, the respondent contacted Ahrens Cadillac to verify the complainant's employment, then extended him a job offer. The complainant began working for the respondent on February 4, 1997, stocking shelves and assisting in preparation for the grand opening of the respondent's east side store, which was scheduled to occur on February 21, 1997. The complainant was assigned to work in the wallcovering department. The respondent had no complaints about his job performance.

9. On or about February 25, 1997, a few days after the grand opening of the store, Mr. Muesbeck received an anonymous telephone call, in which he was asked if he realized who he had working in his paint department. The caller asked Mr. Muesbeck if he knew who the complainant really was and advised him that there was a lot of public animosity toward the complainant. She told Mr. Muesbeck that the complainant had owned Capitol Corvette prior to working for the respondent. The assistant store manager, Guy Gullickson, received a similar call. Deborah Moore, the assistant wallcoverings manager, also received such a call, although she testified that she did not tell anyone else at the respondent about it.

10. After the anonymous telephone call, Mr. Muesbeck pulled the complainant's employment application and saw that Capitol Corvette was not listed under his work history. Mr. Muesbeck then did research on Capitol Corvette and found that the complainant was the owner.

11. When the complainant reported for work on February 27, 1997, his time card was no longer functional. The complainant wrote his time in manually and began to work. At about 4:00 p.m. Todd Keck, the manager of the wallcovering department, told the complainant that he had just received a telephone call from Mr. Muesbeck, and that they needed to go talk to him. Mr. Keck stated that he did not know what was going on, but that Mr. Muesbeck and Mr. Gullickson had been on the telephone all day. Mr. Keck walked the complainant to the front of the store, where he was escorted into a tool closet and told by Mr. Muesbeck that the respondent had not known who he was and that he was discharged for falsifying his employment application. The complainant stated he thought this was unfair, and explained that all charges against him had been dropped. The complainant asked if he could finish his shift, and was told, "No. Larry Menard wants you out of here now."

12. The complainant was not discharged for falsifying his employment application. Rather, the respondent's decision to discharge the complainant was motivated by the complainant's arrest record.

CONCLUSIONS OF LAW

1. That the respondent discriminated against the complainant based on his arrest record, within the meaning of the Wisconsin Fair Employment Act.

ORDER

1. That the respondent shall cease and desist from discriminating against the complainant because of his arrest record.

2. That the respondent shall offer the complainant reinstatement to a position substantially equivalent to the position he held prior to his discharge. This offer shall be tendered by the respondent or an authorized agent and shall allow the complainant a reasonable time to respond. Upon the complainant's acceptance of such position, the respondent shall afford him all seniority and benefits, if any, to which he would be entitled but for the respondent's unlawful discrimination, including sick leave and vacation credits.

3. That the respondent shall make the complainant whole for all losses in pay the complainant suffered by reason of its unlawful conduct by paying the complainant the sum he would have earned as an employe from the date of termination until such time as the complainant resumes employment with the respondents or would resume such employment but for his refusal of a valid offer of a substantially equivalent position. The back pay for the period shall be computed on a calendar quarterly basis with an offset for any interim earnings during each calendar quarter. Any unemployment compensation or welfare benefits received by the complainant during the above period shall not reduce the amount of back pay otherwise allowable, but shall be withheld by the respondent and paid to the Unemployment Insurance Reserve Fund or the applicable welfare agency. Additionally, the amount payable to the complainant after all statutory set-offs have been deducted shall be increased by interest at the rate of 12 percent simple. For each calendar quarter, interest on the net amount of back pay due (i.e., the amount of back pay due after set-off) shall be computed from the last day of each such calendar quarter to the day of payment. Pending any and all appeals from this Order, the total back pay will be the total of all such amounts. (1 )

4. Within 30 days of the expiration of time within which an appeal may be taken herein, the respondent shall submit a compliance report detailing the specific action taken to comply with the commission's Order. The compliance report shall be directed to the attention of Kendra DePrey, Labor and Industry Review Commission, P. O. Box 8126, Madison, Wisconsin. The statutes provide that every day during which an employer fails to observe and comply with any order of the commission shall constitute a separate and distinct violation of the order and that, for each such violation, the employer shall forfeit not less than $10 nor more than $100 for each offense. See Wis. Stat. � � 111.395, 103.005(11) and (12).

Dated and mailed May 20, 1999
larsoda.rrr : 164 : 9

/s/ David B. Falstad, Chairman

/s/ James A. Rutkowski, Commissioner

MEMORANDUM OPINION

The respondent maintains that the complainant's discharge was not related to his arrest record, but was solely because he falsified his employment application. However, based upon its independent review of the record, and after consultation with the administrative law judge, the commission does not believe that the complainant falsified his employment application, nor is it persuaded that he was discharged for that reason.

With respect to the written employment application, the complainant indicated that he had been self-employed for fifteen years, a statement which, while vague, was not incorrect. The complainant indicated elsewhere on his application that his usual occupation was sales, and that he had done that type of work for twenty- five years. In response to a separate question about his specific work skills, the complainant again noted that he had twenty-five years sales experience. Given that the only other work experience listed on his application was ten years experience as a sales manager for a Cadillac dealership, the complainant's repeated assertions that he had twenty-five years sales experience would suggest to the reader that the complainant's fifteen years of self-employment involved sales work.

The complainant's only mention of work as a painter occurred in the very last sentence of the paragraph addressing specific skills, in which he noted that his skills included:

"Forklift, wood working, 25 yrs. sales experience, commercial artist could do all your sign work, also I am a Class A Mechanic, also have worked as a painting contractor."

The manner in which the complainant referred to his work as a painting contractor, almost as an afterthought, does not suggest that he was attempting to give the false impression that painting work formed a significant portion of his fifteen years of self employment. Indeed, nothing about the written application indicates that the complainant was trying to misrepresent his painting background or convey the erroneous impression that he spent fifteen years working as a painter. (2 )

The commission is similarly unpersuaded that the complainant lied about his background during the oral interview. The complainant testified that he did not tell Mr. Muesbeck he had been painting all that time, only that painting was what he had done most recently. Given the fact that the complainant's written application does not suggest he had fifteen years experience as a painter, the commission is inclined to credit the complainant's testimony that he did not represent otherwise at the interview. Further, although Mr. Muesbeck wrote in his interview notes that the complainant ran his own painting business for the past fifteen years, Mr. Muesbeck's testimony was that he asked the complainant what kind of work he did during his fifteen years of self-employment, and that the complainant stated he was a painter. While Mr. Muesbeck may have extrapolated that the complainant was a painter for the entire fifteen years, he did not contend that the complainant actually said as much. In fact, at the hearing Mr. Muesbeck did not allege that the complainant deliberately lied during his interview, but stated that the complainant had committed a "lie of omission" by failing to volunteer information about his ownership of a car dealership. The commission has no doubt that the complainant was deliberately vague with respect to his ownership of Capitol Corvette and that he was hoping to avoid revealing that information. Indeed, one might speculate that it is the rare job applicant who voluntarily provides unflattering information about his past, as most job-seekers correctly presume that such information will decrease their chances of being offered employment. A failure to divulge unfavorable information about which one is not directly asked, if it may even be characterized as a "lie of omission," is not the same as a deliberate falsification of information, and the commission is skeptical of the respondent's suggestion that the complainant was discharged for that reason.

To the contrary, the evidence suggests that the complainant's discharge was related to his poor reputation in the community, and not because of any falsification of his application or interview responses. The only reason the respondent checked into the complainant's background was because customers complained about him and started telling the respondent "who he was." The respondent then verified the complainant's identity, at which point it immediately and unceremoniously discharged him. The respondent's employe handbook provides for disciplinary action including termination for "pleading guilty, no contest or being convicted of a crime if the act or conduct can be reasonably viewed as detrimental to the company's business, relationships, or image in the community." Thus, it is clear that the respondent was concerned about its community image and, in order to protect that image, was willing to sever its association with any employe convicted of a crime. The complainant was not eligible for discharge under that rule, since the charges against him were dismissed and there was never any criminal conviction. The commission, however, is persuaded that the respondent was motivated to discharge the complainant because he was creating a public relations problem for it and that it relied upon the falsification issue as a means to that end.

It seems unlikely that the respondent would have discharged the complainant had it learned through other less controversial means that he had failed to include a past job on his application or had failed to mention such past employment during his job interview. An employer does not generally go out of its way to look for a reason to discharge a perfectly satisfactory employe and, in fact, the complainant's supervisor testified that, in his ten years with the respondent, he had never seen anyone fired for falsification of an employment application. While the respondent did tell the complainant he was being discharged for falsifying his application, the respondent never suggested that it was upset because it believed it was hiring a person with fifteen years paint experience or that it thought the complainant lacked the requisite degree of forthrightness needed to sell wallcoverings. Rather, the respondent indicated it was firing the complainant because it had not known "who he was." Based upon all the evidence, the commission is convinced that the complainant was discharged, not because of any genuine falsification issues, but because it became clear to the respondent that he was an unpopular figure in the community, who was likely to alienate some of its customers.

Having concluded that the respondent's explanation for its decision to discharge the complainant was a pretext, the next question to decide is whether it was a pretext for discrimination based upon arrest record. The complainant has the ultimate burden of persuasion on this point, and a showing that an employer's reason is a pretext permits, but does not compel, a finding of discrimination. Kovalic v. DEC International, 186 Wis. 2d 162, 168, 469 N.W.2d 224 (Ct. App. 1994); Anderson v. Baxter Healthcare Corp. 13 F.3d 1120, 63 EPD 1016 (7th Cir. 1994). While disbelief of an employer's proffered nondiscriminatory reason for an employment decision does not compel a conclusion of discrimination, it does permit the trier-of-fact to infer the ultimate fact of intentional discrimination without additional proof. See St. Mary's Honor Center v. Hicks, 509 U.S. 502, 62 FEP Cases 96, 100 (1993).

The complainant, who proceeded pro se, failed to demonstrate the degree of the respondent's awareness of his arrest record, and did not specifically show that the complaining customers mentioned his arrest record. However, it is difficult to separate the complainant's poor reputation in the community from the fact of his arrest record, and the record permits an inference that the complainant was discharged based upon his arrest record. It is clear that the complainant's notoriety was because of his arrest record, which was a matter widely reported in the local press and on local television news, and one can presume that the customer hostility towards the complainant was based upon his reputation as a local car dealer who was arrested for allegedly swindling his customers. Further, while the respondent did not elaborate upon what type of "research" it conducted, or what this research revealed, it is inconceivable that the respondent's research into the complainant's background did not reveal any information about his recent and highly publicized arrest. Indeed, the respondent has never denied awareness of the complainant's arrest record, but has merely insisted that it did not take this factor into account when deciding to discharge him. The commission believes that the respondent has not been truthful about its real motivation for discharging the complainant, and draws the inference that the respondent was, in fact, motivated by the complainant's arrest record in its decision to discharge the complainant.

The purpose of the prohibition against arrest and conviction record discrimination is to prevent employment decisions from being made based on the stigma of an arrest or conviction record. Miller Brewing Co. v. ILHR Department, 103 Wis. 2d 496, 504, 308 N.W.2d 922 (Ct. App. 1981). Here, the respondent's customers complained about its decision to employ the complainant, who was renowned in the community based upon his much publicized arrest, and the respondent responded to these complaints by hastily sending the complainant packing, asserting that it had not known who he was. The commission considers the respondent's actions in this regard to be the epitome of arrest record discrimination and finds that they were undertaken in violation of the law.

NOTE: The commission conferred with the administrative law judge about witness credibility and demeanor. The administrative law judge indicated that he believed the complainant was "technically" telling the truth on his application and during his job interview, but that he wanted to give the impression that he had mostly worked as a painter. The administrative law judge explained that he believed the complainant's omission of his ownership of Capitol Corvette from the job application and his actions at the job interview amounted to falsification. However, for the reasons set forth in the body of the decision and in the memorandum opinion, the commission does not believe that the complainant engaged in any deliberate falsification. The administrative law judge also indicated that he believed Mr. Muesbeck's testimony that he was not motivated by the complainant's background at the time he decided to discharge him. The administrative law judge went on to explain that, had Mr. Muesbeck learned more about the complainant's situation as time went on, he may have been motivated to discharge the complainant because of those circumstances. The record indicates, however, that prior to the decision to discharge the complainant Mr. Muesbeck had begun to receive complaints from the public about the complainant and had researched the complainant's background. Consequently, the commission believes that Mr. Muesbeck already had sufficient information about the complainant's background to wish to sever his employment on that basis and that, in fact, this information provided the real motivation for the respondent's decision to terminate the complainant's employment.

PAMELA I. ANDERSON (dissenting):

I am unable to agree with the result reached by the majority herein and I dissent. The majority believes that the employe did not technically falsify his application. I agree with the administrative law judge that the employe intended to mislead the employer about his past employment. The application the employe filled out had more spaces for his previous employment but the employe did not mention working for Capitol Corvette, he only mentioned that he was self-employed for the last 15 years.

Mr. Muesbeck interviewed the complainant and recorded the following notes from the interview "No standing or lifting restrictions. Dave ran his own painting business for the past 15 years. He is tired of this and would like to grow w/ Menard." The employer verified that the employe had worked fulltime for Ahrens Cadillac for ten years prior to hiring the employe. The majority seem to believe the burden is on the employer to ask the right questions to determine the employe's past employment but the employer has no way to ask the right questions without a minimum of past employment information from the employe.

An employer is entitled to know whether an applicant has a conviction record, so that the employer can determine if the conviction record is substantially related to the applicant's prospective job duties. An employer may lawfully refuse to hire an applicant who falsifies an employment application with respect to a conviction record. Haynes v. National School Bus Service (LIRC, 01/31/92).

The Complainant failed to establish that he had been discharged by the Respondent because of conviction record where the evidence showed that the Respondent believed that the Complainant had falsified his employment application by indicating that he had no prior convictions when it received reliable evidence that he did in fact have prior convictions. Luckman v. Western- Southern Life (LIRC, 02/16/90), aff'd. sub nom. Luckman v. LIRC (Milwaukee Co. Cir. Ct., 09/04/90).

An employer has a right to know if an employe has a handicap (except to the extent that the Americans with Disabilities Act may provide otherwise) so that the employer can determine whether the handicap is reasonably related to the ability to undertake the job responsibilities. Accordingly, an employer can lawfully refuse to hire or can discharge an individual who falsifies an employment application with respect to a handicap. Haynes v. National School Bus Service (LIRC, 01/31/92).

When the complainant did not disclose his work with Capitol Corvette the employer was not in a position to evaluate whether they wanted to hire him. The record does not disclose that the people who complained to the employer mentioned that the employe had an arrest record. The employe testified that "there was a newsclip on TV that there was going to be an update on all the people who were losing their cars as a result of my forced bankruptcy." The fact that a person may have a bad reputation is not synonymous with an arrest record.

Where a Complainant was discharged because of the Respondent's reasonable, good faith belief (based upon its own investigation) that he had engaged in conduct for which he was arrested, it is immaterial whether the Complainant in fact engaged in that behavior. What matters is the question of the employer's motivation, not whether the employer was objectively correct. Here, the Complainant was eventually acquitted of the charges against him however this has no bearing on the question of whether there was unlawful arrest record discrimination. The employer came to a good faith belief based on its investigation that the Complainant had committed some type of sexual assault against a co- worker. It is irrelevant that a jury, which may have heard different evidence, and which was required to apply a stringent burden of proof, arrived at a different conclusion. Paxton v. Aurora Health Care (LIRC, 10/21/93).

This same reasoning applies to whether the employe falsified his employment record. It does not matter if that is technically correct if that is what the employer reasonably believed in good faith.

I found it very credible that the employer would be upset when the employe did not disclose his most recent long-term employment to the employer. I would find that the employer reasonably believed that the employe falsified his employment record by omission. It does not matter whether it is technically correct or not that the employe falsified his employment record. I believe that the employer believed they were mislead by his application.

The majority infers that the employer fired the employe even though he was not convicted of a crime because their handbook mentions possible disciplinary action for employes who plead guilty, no contest or are convicted of a crime if the act or conduct can reasonably be viewed as detrimental to the company's business, relationships or image in the community. Part of the problem with using this section against the employer is that it does not mention arrest and the employe could not have been discharged under this employer rule.

For all these reasons, I would agree with the administrative law judge and affirm the dismissal of the employe's case.

__________________________________________
Pamela I. Anderson, Commissioner

cc:
Valerie A. Larson
Janet M. McDonough

Appealed to Circuit Court. Reversed September 5, 2000. Appealed to Court of Appeals. Circuit Court affirmed, December 28, 2001 (unpublished).

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Footnotes:

(1)( Back ) The record contains insufficient evidence to permit a specific finding regarding the amount of backpay and interest owed the complainant, and the commission has enclosed a worksheet to assist the parties in calculating that amount. If, after the commission's decision becomes final, the parties are unable to agree on the appropriate amount of backpay and interest owed by the respondent, the commission will remand this matter to the administrative law judge for further hearing on the backpay issue.

(2)( Back ) A handwritten notation on the complainant's application in the portion addressing his self-employment says "painter." At the hearing the respondent indicated that this was written by Mr. Gullickson, based upon what the complainant told him when he first submitted his application. However, Mr. Gullickson did not appear at the hearing, and the complainant maintained that he never talked to Mr. Gullickson at any point during the interview process or prior to his employment with the respondent.