BEFORE THE
STATE OF WISCONSIN
LABOR AND INDUSTRY REVIEW COMMISSION

In the matter of the unemployment benefit claim of

DIANA S CORNELL, Employee

Involving the account of

CLOVERLEAF FARM SUPPLY & MARKETING INC, Employer

UNEMPLOYMENT INSURANCE DECISION
Hearing No. 92400465GB


On January 18, 1992, the Department of Industry, Labor and Human Relations (Department) issued an Initial Determination finding that the employe quit but not for any reason allowing payment of benefits. The employe timely appealed. On March 2, 1992, a hearing was held before an Administrative Law Judge. On March 27, 1992, the Administrative Law Judge issued her Appeal Tribunal Decision, affirming the Initial Determination and finding that the employe quit but not for any reason allowing payment of benefits. The employe timely petitioned the Commission for review of the Appeal Tribunal Decision.

Based on the applicable law, records and evidence in this case, the Commission makes the following:

FINDINGS OF FACT AND CONCLUSIONS OF LAW

The employe worked approximately three years in several capacities for the employer, a dairy supply distributor. The employe's last day of work was December 26, 1991 (week 52).

The employe's latest duties included bookkeeping and accounting work. The employe referred to herself as the general manager even though sometime in October or November, the owner's son, a vice-president, assumed those duties completely. In 1991, the employer's company lost money. Although the sales were the same, costs increased. In addition, the employer's owner received approximately $32,000 in disability pay, an expense item for the company. As a result, the vice-president and the owner tried to reduce the wage base. The vice-president took a reduction in pay and the owner's disability payments were also reduced. In response to the financial difficulties, the vice-president reduced the employe's salary of $26,000 ($500 per week) to $15,600 ($300 per week). The employe was expected to work between 7:00 and 1:00 p.m., five days a week at an hourly rate of $10.00 per hour. Her duties were to remain the same. Initially, the employe accepted the change. However, the employe approached the vice-president several days later and requested a pay rate of $12.50 per hour, a paid vacation, sick pay, and mileage reimbursement. The employe and vice-president discussed the new terms of employment and the vice-president told the employe that "if she did not like it she could look for another job." The employe left the premises and only returned to drop the keys off at a later date.

The initial issue to be decided is whether the employe quit her employment or whether the employer discharged the employe. If the employe quit, it must then be determined whether the employe's quitting was for any reason which would permit benefit payment. If the employe was discharged, it must then be determined whether the discharge was for misconduct connected with her employment.

The employe contends that she was discharged when the vice-president told the employe that she could look for another job if she did not like the changes. However, the employe initially accepted the change in pay and it was only in response to the vice-president's comment that she decided to leave. The statement was not a discharge and the employe's decision to leave constituted a voluntary termination.

Concluding that the employe quit, the next inquiry is whether the employe quit for any reason that would allow benefits. The most relevant statutory exception that would allow payment of benefits is section 108.04 (7)(b) which provides payment of benefits if the employe quits with good cause attributable to the employing unit.

Under Stetz v. DILHR, et. al. Case No. 136-215, Dane County Circuit Court, 2/13/73, good cause attributable to the employer can be determined if such quitting was a reasonable reaction to some act on the part of the employer. In other words, the "good cause" relates to the reaction of the employe, and not whether the employer had good cause for the action it did which precipitated the employe quitting. Thus, regardless of the employer's financial difficulties, the employe had good cause to quit given the substantial reduction in pay. Courts have held that a substantial wage decrease does constitute good cause for quitting. As stated by the court in Franke vs. DILHR and Wisconsin Mosaic and Tile Company, Case Nos. 134-237 and 134-238, Dane County Circuit Court, 3/13/72: "There undoubtedly is some point at which a decrease in compensation is so great as to constitute as a matter of law good cause for the employe's quitting . . . ."   In similar cases, a wage reduction of 11 to 30 percent has been found to provide good cause for quitting. Here, the employe's wage reduction was 40 percent, a substantial decrease in pay. The wage reduction altered the original contract of employment and under the circumstances, the substantial reduction establishes that the employe's quitting was with good cause attributable to the employer.

The Commission therefore finds that in week 52 of 1991, the employe terminated her work with good cause attributable to the employer, within the meaning of section 108.04 (7)(b) of the statutes, and accordingly is eligible for benefits, if she is otherwise qualified.

DECISION

The decision of the Appeal Tribunal is reversed. Accordingly, beginning in week 52 of 1991, the employe is eligible for benefits, if she is otherwise qualified.

Dated and mailed November 13, 1992
135 : CD8207   VL 1005.01 VL 1059.201

Pamela I. Anderson, Chairman

/s/ Richard T. Kreul, Commissioner

/s/ James R. Meier, Commissioner


NOTE: This reversal is as a matter of law. The Commission does not disagree with any credibility assessment made by the Administrative Law Judge but reaches a different legal conclusion when applying the law to the facts at hand. Under the circumstances, the Commission finds that the employe quit with good cause attributable based upon the substantial wage reduction. Although the Commission examined section 108.04(7)(f), the Commission concludes that it is inapplicable in this instance since the employe was not transferred by her employer to another job.


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