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

RANDY G SCHULD, Employee

SPEEDWAY SUPERAMERICA LLC, Employer

UNEMPLOYMENT INSURANCE DECISION
Hearing No. 01610761MW


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:

FINDINGS OF FACT AND CONCLUSIONS OF LAW

The employee worked for the employer, a gas station and convenience store, for four and a half years, most recently as an assistant manager. His last day of work was October 26, 2001 (week 43).

The employer has a fraternization policy which provides:

"An intimate, sexual or romantic relationship between a manager and a direct or indirect subordinate is strictly prohibited. Such relationships might create a conflict of interest and may be perceived as favoritism by other associates or may even deteriorate into claims of sexual harassment, and will not be condoned. Furthermore, a direct or indirect line of supervision between individuals who are living together is prohibited, except when state laws direct otherwise. If such situations arise, it must be reported to the next highest managerial position. Notification should follow the Store operations reporting chain to a level no lower than Region Management. The Human Resources Department must also be notified, and may be contacted directly. Both associates must be willing to submit to job transfers in such an event.

Failure to report such a relationship can result in discipline up to and including termination."

EX 3, emphasis in original.

On or about October 10, 2001, the employer's store manager learned that the employee was involved in a romantic relationship with a cashier. The store manager spoke to the employee about the situation, and was told by the employee that it was basically over with and that there would not be a problem. The store manager showed the employee the policy and put an oral warning in the employee's record. The warning, which was not shown to the employee, states that the employee was told to act in a professional manner and follow the rules.

On October 26, 2001, the store manager found out that the employee's relationship with the cashier had not ended, and the employee was discharged as a result. The issue to be decided is whether the employee's discharge was due to misconduct connected with his employment.

In Boynton Cab v. Neubeck, 237 Wis. 249, 296 N.W. 636 (1941), the leading case with respect to the meaning of the term "misconduct" as applied to unemployment compensation in the United States, the court said, in part, as follows:

". . . the intended meaning of the term 'misconduct' . . . is limited to conduct evincing such wilful or wanton disregard of an employer's interests as is found in deliberate violations or disregard of standards of behavior which the employer has the right to expect of his employe, or in carelessness or negligence of such degree or recurrence as to manifest equal culpability, wrongful intent or evil design, or to show an intentional and substantial disregard of the employer's interests or of the employe's duties and obligations to his employer. On the other hand mere inefficiency, unsatisfactory conduct, failure in good performance as the result of inability or incapacity, inadvertencies or ordinary negligence in isolated instances, or good-faith errors in judgment or discretion are not to be deemed `misconduct' within the meaning of the statute."

The employee was discharged for engaging in a romantic relationship with a subordinate employee, in violation of the employer's fraternization policy. The policy was designed to protect the employer's legitimate interests in preventing conflicts of interest, favoritism and sexual harassment in the work place. Although the employee explained that, at the time he started dating the cashier, he was unaware of the policy, he continued to engage in the prohibited conduct even after the store manager made him aware of the policy. The commission believes that the employee deliberately violated the employer's reasonable policy and that his actions amounted to misconduct connected with his employment.

The commission, therefore, finds that in week 43 of 2001, the employee was discharged for misconduct connected with his employment, within the meaning of Wis. Stat. § 108.04(5).

The commission further finds that the employee was paid benefits in weeks 44 through 52 of 2001 and weeks 1 through 16 of 2002 in the total amount of $7785, for which he was not eligible and to which he was not entitled, within the meaning of Wis. Stat. § 108.03(1). Pursuant to Wis. Stat. § 108.22(8)(a), he is required to repay such sum to the Unemployment Reserve Fund.

The commission further finds that waiver of benefit recovery is not required under Wis. Stat. § 108.22(8)(c), because although the overpayment did not result from the fault of the employee as provided in Wis. Stat. § 108.04(13)(f), the overpayment was not the result of a department error. See Wis. Stat. § 108.22(8)(c)2.

DECISION

The decision of the administrative law judge is reversed. Accordingly, the employee is ineligible for benefits beginning in week 43 of 2001 and until seven weeks have elapsed since the end of the week of discharge and he has earned wages in covered employment performed after the week of discharge equaling at least 14 times his weekly benefit rate which would have been paid had the discharge not occurred. He is required to repay the sum of $7785 to the Unemployment Reserve Fund. The initial benefit computation (UCB-700) issued on November 5, 2001, is set aside. If benefits become payable based on work performed in other covered employment a new computation will be issued as to those benefit rights.

Dated and mailed April 30, 2002
schuldr . urr : 164 : 1 MC 666.01  MC 687

/s/ David B. Falstad, Chairman

/s/ James A. Rutkowski, Commissioner

/s/ Laurie R. McCallum, Commissioner


NOTE: The commission conferred with the administrative law judge about witness credibility and demeanor. The appeal tribunal indicated that he had no specific impressions of the credibility of the witnesses and that his decision was based upon an assessment of the reasonableness of the employer's policy. The commission disagrees with the appeal tribunal's conclusions regarding the reasonableness of the policy. Further, it finds the employer's version of events to be the more credible.

Repayment instructions will be mailed after this decision becomes final. The department will with hold benefits due for future weeks of unemployment in order to off set over payment of U.C. and other special benefit programs that are due to this state, an other state or to the federal government.

Contact the Unemployment Insurance Division, Collections Unit, P. O. Box 7888, Madison, WI 53707, to establish an agreement to repay the over payment.


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