KAL A KERLIN, Employee

EXECUTIVE MORTGAGE LLC, Employer

An administrative law judge (ALJ) for the Division of Unemployment Insurance 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 ALJ. Based on its review, the commission makes the following:

The employee worked about 2 years, most recently as a home loan originator, for the employer, a mortgage loan business. His last day of work was August 20, 2001 (week 34). On his last day of work the employee notified the employer that he would be quitting on Saturday, August 31, 2001 (week 35). The employee informed the employer that he intended to start his own mortgage loan business in the same city in which the employer was located, dealing primarily with residential loans. He had already obtained a mortgage broker license for his business. The employer did not allow the employee to work out the notice period because it did not want him to have access to certain information that it did not want him to take with him. The employee opened his business on September 4, 2001.

The initial issue to be decided is whether the employee is eligible for benefits in weeks 34 and 35 of 2001.

The facts in this case fall under the "accelerated quit" principle. When an employee gives notice of quitting effective at a future date, and the employer accelerates the effective date of the quitting, and not for a disqualifying reason, the employee is eligible for benefits until the date originally set by the employee as the resignation date. See, Burns v. Schneider National Carriers Inc., UI Dec. Hearing No. 99402068SH (LIRC Dec. 27, 1999). The employer contends that the employee should not be eligible for benefits during the two-week notice period. The employer must establish that the employee engaged in misconduct connected with his work, or that it had good cause for suspending his employment.

In Conway v. A Touch of Country Crafts & Gift Mall Inc., UI Dec. Hearing No. 01601612MW (LIRC Nov. 28, 2001), the commission stated:

An employee owes a duty of loyalty to his or her employer that involves, among other things, not engaging in activities in direct competition with the activities of the employer. While a mere intention to become self-employed in competition with an employer is not a breach of such a duty of loyalty, the actual solicitation of the employer's customers while still employed goes beyond mere intent or planning. An employee is not entitled to solicit customers for a rival business before the end of his employment, nor can the employee properly do other similar acts in direct competition with the employer's business. Erdmann v. DILHR and Bank of Menasha, (Dane County Circuit Court, No. 157-029, November 11, 1977), accord, Wallace v. DILHR and Educational Service Programs, Inc., (Dane County Circuit Court, No. 140- 292, March 18, 1974). Engaging in direct competition with an employer is misconduct on the part of the employee engaging in the competitive activity.

The employer established that the employee had begun preparations for opening his own competing business. However, the employer did not establish that the employee was engaged in competition with the employer while employed by it. An employee is under no duty to an employer to refrain from seeking new or better employment. Citizen State Bank & Trust Co. v. Telshow & Ind. Comm., (Dane County Circuit Court, No. 114-229 December 30, 1963.) Further, the commission has reasoned that if an employee is under no duty to an employer to refrain from seeking new or better employment, an employee, likewise, is under no duty to an employer to refrain from seeking to establish himself in self-employment in order to better himself. The employer did not establish that the employee engaged in misconduct that would disqualify him from benefits during the two-week notice period.

The employer likewise did not establish that it had good cause for suspending the employee's employment. In Telford v. J B Hunt Transport Inc., UI Dec. Hearing No. 99604247MW (LIRC Sep. 9, 1999), the commission stated:

The commission has held that "good cause," while a lesser standard than misconduct, still requires that "some blameworthy conduct must be shown on the part of the employe." See, Voeltner v. Consolidated Freightways Corp., of Delaware, UI Dec. Hearing No. 91400173AP (LIRC May 5, 1992). In Mitchell v. Milwaukee Public Schools, UI Dec. Hearing No. 90604770MW (LIRC Nov. 23, 1990), the commission noted that:

'Other good cause' is a lesser standard than 'misconduct'. It can be found in cases in which there has been a single instance of negligence or poor judgment, even though in such circumstances the 'misconduct' standard might not be satisfied. However, the Commission considers that it must be interpreted as involving at least some degree of fault or blameworthy conduct on the part of the employe. If an employer has failed to prove that an employe did anything wrong, the fact that the employer may have another good reason for suspending the employe will not provide 'other good cause connected with his employment' within the meaning of the statutes.

The employer did not establish that it suspended the employee's employment due to some fault or blameworthy conduct on the part of the employee. The suspension of the employee's employment was not a disciplinary action but a preventative measure to ensure that the employee did not have access to information the employer did not wish him to take to his new business. Denying benefits in a situation such as this would only discourage an employee from giving an employer notice of an intent to voluntary terminate the employment relationship.

The second issue to be decided is whether the employee quit his employment for any reason permitting the immediate payment of unemployment insurance benefits.

The employee quit his employment for valid personal reasons. The employee did not contest his ineligibility for benefits based on his quitting. The evidence did not establish that his quitting fell within any statutory exception to the quit disqualification. The employee was willing to work to the end of week 35 of 2001. His quitting was effective in week 36 of 2001.

The commission therefore finds that in week 34 of 2001, the employee was not discharged for misconduct connected with his work within the meaning of Wis. Stat. § 108.04(5).

The commission further finds that in weeks 34 and 35 of 2001, the employee's employment was not suspended for good cause connected with his work within the meaning of Wis. Stat. § 108.04(6).

The commission further finds that in week 36 of 2001, the employee voluntarily terminated his employment within the meaning of Wis. Stat. § 108.04(7)(a), but not for any reason constituting an exception to that section.

The decision of the administrative law judge is amended as to the week of quitting and, as amended, is affirmed in part and reversed in part. Accordingly, the employee is eligible for benefits in weeks 34 and 35 of 2001. He is ineligible for benefits beginning in week 36 of 2001, and until four weeks elapse since the end of the week of quitting and the employee earns wages in covered employment equaling at least four times the weekly benefit rate that would have been paid had the quitting not occurred. There is no overpayment with respect to this issue.

Dated and mailed March 6, 2002
kerlika . urr : 132 : 1 : MC 610.04 MC 627    MC 676 

/s/ David B. Falstad, Chairman

/s/ James A. Rutkowski, Commissioner

/s/ Laurie R. McCallum, Commissioner

The commission did not discuss witness credibility and demeanor with the ALJ. The commission's partial reversal of the ALJ's decision is not based on a differing impression of witness credibility or demeanor.

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