ERD Case No. 8400441

An Examiner of the Department of Industry, Labor and Human Relations issued a decision in the above-captioned matter on January 24, 1986, concluding that the Complainant had been discriminated against on the basis of an arrest record in regard to discharge in violation of the Wisconsin Fair Employment Act. The Respondent filed a Petition for Rehearing and a Petition for Review. By order dated February 4, 1986, the Examiner denied Respondent's Petition for Rehearing.

Based upon a review of the record in its entirety, the Labor and Industry Review Commission issues the following:


That the Examiner's decision (copy attached) is modified as follows:

1. Findings of Fact 8 and 9 of the Examiner's decision are deleted and the following paragraphs substituted therefor:

"8. Respondent alleged that Complainant was not terminated because of his arrest, but rather that his work was unsatisfactory. Respondent's stated reason for Complainant's discharge is a mere pretext for discrimination. Complainant was never warned that his work was unsatisfactory or that his job was in jeopardy for that reason. Less than two weeks from his discharge Complainant had received a favorable letter of recommendation from his immediate supervisor, Bausch. Only four days prior to his discharge Complainant socialized with Bausch and nothing was said about his work performance. Their is no credible evidence in the record to support Respondent's assertion that Complainant's work habits had deteriorated prior to his discharge.

9. Respondent did not have reason to believe that Complainant's arrest was for anything which substantially related to the circumstances of his job as a custodial worker."

Paragraph 8 was essentially modified to make it better conform with the evidence. Paragraph 9 was simply restructured.

2. That paragraph 2 of the Examiner's Conclusions of Law is renumbered paragraph 3 and the following inserted as paragraph 2:

"2. That the Complainant was an employe of the Respondent MATC within the meaning of the Act. However, assuming arguendo, that Complainant was not, MATC is nonetheless liable for its discriminatory conduct towards Complainant as an individual. Wis. Stats. 111.321."

3. That the following sentence shall be inserted between the first and second sentences of paragraph 2 of the Examiner's order:

"That the amount Complainant received in his settlement with Kelly Services shall be considered and deducted from the amount ordered to be paid by MATC."

4. Additional attorney's fees in the amount of $1,010.91 shall be allowed in connection with the petition for review in this matter. (This brings the total amount of attorney's fees due Complainant and his attorney to $3201.17.)

5. Respondent shall within 30 days of the expiration of time within which an appeal may be taken herein, 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 53708.

As modified, the Examiner's decision shall stand as the FINAL ORDER herein.

Dated and mailed December 19, 1986.

/s/ David A. Pearson, Chairman

/s/ Hugh C. Henderson, Commissioner

Carl W. Thompson, Commissioner


In Texas Dept. of Community Affairs v. Burdine, 450 U.S. 248, 25 FEP Cases 113 (1981), the Supreme Court reiterated that the basic allocation of burdens and order of presentation of proof in a Title VII case alleging discriminatory treatment was as follows:

First, the plaintiff has the burden of proving by the preponderance of the evidence a prima facie case of discrimination. Second, if the plaintiff succeeds in proving the prima facie case, the burden shifts to the defendant to articulate some legitimate, nondiscriminatory reason for the employee's rejection. Third, should the defendant carry this burden, the plaintiff must then have an opportunity to prove by a preponderance of the evidence that the legitimate reasons offered by the defendant were not its true reasons, but were a mere pretext for discrimination.

The fact that the Complainant was arrested, that Respondent knew about his arrest, and that he was discharged only four days after his arrest raises an inference of discrimination due to the closeness in time between the arrest and discharge. The Commission finds Respondent's articulated reason for Complainant's discharge -- that the quality of Complainant's work was poor -- to be a mere pretext for discrimination. Complainant was never warned that his work was unsatisfactory or that his job was in jeopardy for that reason. Less than two weeks from his discharge Complainant had received a favorable letter of recommendation from his immediate supervisor, Bausch. Only four days prior to his discharge Complainant socialized with Bausch and nothing was said about his work performance.

Further, the Respondent's explanation for its action lacks credibility because of certain testimony given by Knutson and Bausch. For example, (1) Knutson stated that he and Bausch decided to discharge Complainant before his arrest, but Bausch could not recollect talking with Knutson about discharging Complainant; (2) when Complainant met with Bausch on January 30, 1986, Bausch volunteered that his arrest had not caused his discharge, when Complainant had never mentioned his discharge; and (3) Bausch admitted that he probably would have said to Complainant something to the effect that "he would have to clean up his act," if he felt Complainant's job had been in jeopardy.

Respondent argues, however, that even if LIRC were to accept the fact that Complainant made a prima facie showing of discrimination, that MATC articulated a nondiscriminatory reason for the discharge and that Complainant succeeded in showing that such reason was pretextual, MATC has the final opportunity to show that Complainant would have been discharged regardless of his arrest record. Respondent cites Mt. Healthy City School Dist. Ed. of Education v. Doyle, 429 U.S. 274 (1977), as support for this position.

Mt. Healthy, a case not involving Title VII, presented the issue whether the exercise of a constitutionally protected right was the basis for a decision not to hire an untenured teacher. The employment history of the untenured teacher (Doyle), which included a stint as president of the Teachers Association, revealed a number of incidents that had resulted in tension between himself and the school board. Two of these incidents were stated in writing to be the reason for his nonrenewal: (1) Doyle's communication to a local radio station concerning the adoption of a new dress code, resulting in reports on the air that apparently were embarrassing to the board; and (2) Doyle's use of obscene gestures to two students in the school cafeteria. Doyle claimed that nonrenewal based on the radio station incident was retaliation for conduct protected under the First and Fourteenth Amendments. The district court, finding that Doyle's communication was clearly protected activity and that this factor had played a "substantial part" in the explicitly mixed-motive decision of the board, ruled that Doyle was entitled to reinstatement and backpay. However, the Supreme Court rejected the application of a "substantial part" test to determine entitlement to reinstatement and backpay and held that the defendant must be given an opportunity to establish that its decision not to renew would have been the same even if the protected activity had not been considered. The Court, per Justice Rehnquist, explained:

"A rule of causation which focuses solely on whether protected conduct played a part, 'substantial' or otherwise, in a decision not to rehire, could place an employee in a better position as a result of the exercise of constitutionally protected conduct than he would have occupied had he done nothing. The difficulty with the rule enunciated by the District Court is that it would require reinstatement in cases where a dramatic and perhaps abrasive incident is inevitably on the minds of those responsible for the decision to rehire, and does indeed play a part in that decision -- even if the same decision would have been reached had the incident not occurred."

Our Supreme Court appears to reject the Mt. Healthy analysis. Twice, the Wisconsin Supreme Court has taken the position that an employe could not be lawfully terminated if the employer was motivated .in part by prohibited conduct, even though valid reasons exist for the discharge. Muskego-Norway C.S.J.S.D. No. 9 v. WERB, 35 Wis. 2d 540, 151 N.W. 2d 617 (1967) and State of Wis. Dept. of Employment Relations v. WERC, 122 Wis. 2d 132 (1985). In any event, the credible evidence in this case does not support the contention that Complainant would have been discharged regardless of his arrest .record.

MATC further argues that even assuming, arguendo, there is evidence of discrimination, LIRC, like the Examiner, lacks jurisdiction in the case because no employment relationship existed between the Complainant and MATC.

MATC correctly argues that the definition of "employer" and "employe" under the Act provides no clear guidance for determining whether MATC is the employer and Collins the employe. Sec. 111.32(5) states "employe does not include any individual employed by his or her parents, spouse or child." Employer is defined in 111.32(6)(a) and (b) as follows:

"(a) Employer means the state and each agency of the state and, except as provided in par. (b), any other person engaging in any activity, enterprise or business employing at least one individual. In this subsection, 'agency' means an office, department, independent agency, authority, institution, association, society or other body in state government created or authorized to be created by the Constitution.

(b) 'Employer' does not include a social club or fraternal society under ch. 188 with respect to a particular job for which the club or society seeks to employ or employs a member, if the particular job is advertised only within the membership."

The argument is made, however, that a finding that MATC is Complainant's "employer" will have serious and grossly disruptive consequences throughout all aspects of employment law and regulation by DILHR because:  several of its divisions, including the office governing private employment agency licensing within the Equal Rights Division, define Kelly Services as Complainant's "employer," not MATC;  the Unemployment Compensation Division considers Complainant's employer to be Kelly Services and not MATC;  and the Worker's Compensation Division considers Complainant's employer to be Kelly Services and not MATC.  Respondent argues that it would be illogical, inconsistent and result in incongruous treatment from the Equal Rights Division to characterize MATC as Complainant's employer; that a decision by LIRC affirming the Examiner will send tremors throughout the entire department and drastically change the law and basic assumptions governing the employment relationship.  Respondent also argues (curiously) that while the Fair Employment Act applies to employment agencies, Kelly Services is not an employment agency because it does not meet requirements under sec. 105.01 (1)(b), Wis. Stats.;  that because Kelly Services does not qualify as an "employment agency," it must admit it is "the employer," and Complainant cannot have two employers. The Commission is not persuaded by these arguments.

In a case arising under Title VII, where an administrative assistant, who was paid by a temporary-help agency and assigned to work at Merrill Lynch, alleged discriminatory discharge by Merrill Lynch, the court stated:

"When an employer has the right to control the means and manner of an individual's performance, as Merrill Lynch allegedly had with regard to Amarnare, an employer-employee relationship is likely to exist. Factors other than control are then of marginal importance . . . .

That plaintiff was paid directly by Mature Temps (Complainant herein was similarly paid directly by Kelly Services) is not conclusive that she was solely its employee. That she was subject to the direction of Merrill Lynch in her work assignments, hours of service, and other usual aspects of an employee-employer relationship permits an inference that she was an employee of both Mature Temps and Merrill Lynch . . . Her status differs from that of most other Title VII plaintiffs in that her services were obtained through a temporary employment agency. At common law, the status of a person employed under such circumstances would be determined under the loaned servant doctrine, which provides that 'an employee directed or permitted to perform services for another 'special' employer may become that 'employer's employee while performing those services . . . .

. . . the plaintiff may also invoke Title VII on the alternative ground that Merrill Lynch allegedly interfered with her employment opportunities with Mature Temps. Several federal courts have held that Title VII permits suits against statutory employers 'who are neither actual nor potential direct employers of particular complainants, but who control access to such employment and who deny such access by reference to invidious criteria."

Amarnare v. Merrill Lynch, 36 FEP Cases (S.D. N.Y. 1984).

The Commission believes that even assuming no employment relationship existed between the Complainant and MATC it should not be permitted to do indirectly through Kelly what it cannot do directly and to avoid answering for its discriminatory conduct.  The argument by MATC ignores the purpose of the Act and its intended liberal instruction.   Moreover, the Act specifically states that "no employer . . . may engage in any act of employment discrimination as specified in s. 111.322 ( * ) against any individual on the basis of . . . arrest record . . ." Wis. Stats. s. 111.321. (emphasis added)

Further, Respondent argues that even assuming the Fair Employment Act applies and assuming sufficient evidence exists to find the Complainant was improperly discharged, the remedy imposed by the Examiner is inapplicable and contrary to law.   The Examiner ordered MATC to "make Complainant whole for any losses in pay and benefits that Complainant has suffered by reason of its unlawful conduct by paying Complainant the sum Complainant would have earned as an employe from January 30, 1984 until the date this order becomes final . . . (minus) interim earnings . . . (plus) interest at the rate of 12 percent simple . . . (plus) reasonable attorney's fees and costs." (Par. 2 and 3 of Examiner's Order)

Respondent contends that the issuance of an order of backpay assumes that Patrick Collins, by definition temporary help, would have been employed at MATC throughout the period of time from discharge to decision; that this is an unwarranted and unfounded assumption and clearly not true in this case. Arguing to the contrary, Complainant asserts that the evidence in the record indicates that there was almost always a temporary person employed by MATC to assist its regular staff and crew in the cleaning and maintenance of its facilities; that given MATC's earlier requests for Complainant, there is nothing to indicate that Complainant would not have continued to be employed.

The evidence shows that: (1) Subsequent to January 30, 1984, MATC hired a permanent custodian for Complainant's position in February or early March, 1985;  (2) that, nonetheless, MATC continued to call Kelly Services at times to fill a custodial position and Knutson had no recollection as to the frequency;  (3) that the permanent hire lasted in the position seven months; and  (4) MATC was probably using Kelly Services even at the time of the hearing.

The Commission believes that in order for the backpay to be cut off at any earlier date than that ordered by the Examiner, MATC must prove by a preponderance of the evidence that Complainant would have not have been employed at MATC throughout the period of time from discharge to the date of the Examiner's decision. The preponderance of the evidence does not support such a finding.

Finally, the Respondent has argued that the proceeding before the Examiner is an equity proceeding and that being an equity proceeding it is appropriate to point out that Complainant "settled" with Kelly Services for an undisclosed amount; that accordingly, the Examiner should have taken the settlement into consideration, and there is no evidence in the record that that amount of money was ever considered and deducted from the amount ordered paid by MATC. The Commission agrees. If both "employers" were to pay Complainant for his total losses, Complainant would be unjustly enriched since he would not have been entitled to "double pay" had there been no discrimination.

Lastly, the Commission has awarded additional attorney's fees and costs in the amount of $1,010.91 ($867.25 and $143.66 respectively) in connection with the petition for review in this matter. In determining a reasonable fee award in this case the Commission has given great weight to the actual billing invoices mailed the Complainant for fees and services. Except for the fee request of $1734.50 for work performed subsequent to the Examiner's decision, the Commission's fee award herein is almost entirely reflective of Complainant's counsel's billing invoices. Although the Respondent has not objected to the fee award requested by Complainant's counsel the Commission has reduced the fee claim for $1734.50 by 50 percent. In the estimation of the Commission it appears somewhat incongruous that counsel requests $2,190.26 in fees and costs for all work performed from the filing of the complaint up until the Examiner's decision about two years later, but then requests an additional $1734.50 in fees for the little time that has elapsed since the Examiner's decision. The overwhelming majority of the time expended by Complainant's counsel subsequent to the Examiner's decision went to research and brief writing. A fair amount of what was contained in Complainant's brief to the Commission also appeared in Complainant's brief to the Examiner.


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(*)( Back )  Sec. 111.322(1) To refuse to hire, employ, admit or license any individual, to bar or terminate from employment or labor organization membership any individual, or to discriminate against any individual in promotion, compensation or in terms, conditions or privileges of employment or labor organization membership because of any basis enumerated in s. 111.321.

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