GEORGE E HENDERSON, Employee

CRAIG L GRAYBAR FURNITURE  WORKS LTD, 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 agrees with the decision of the ALJ, and it adopts the findings and conclusion in that decision as its own.

The decision of the administrative law judge is affirmed. Accordingly, the employee is eligible for benefits, if otherwise qualified. There is no resulting overpayment.

Dated and mailed October 31, 2003
hendege . usd : 178 : 1   VL 1059.20

/s/ David B. Falstad, Chairman

/s/ James T. Flynn, Commissioner

/s/ Robert Glaser, Commissioner

In its petition for commission review, the employer argues that the employee was on notice that he was not meeting the employer's production standards and the employer made a necessary business decision to alter his duties and reduce his wages when it determined that the employee would not meet its expectations in the future. It further argues that the employee should not receive benefits when he elected to quit rather than accept the lower wage and altered duties.

The commission disagrees. The outcome in this case is consistent with how the commission has handled wage reduction cases in the past. For instance in Cornell v. Cloverleaf Farm Supply & Marketing Inc, U I Hearing 92400465GB (LIRC Nov. 13, 1992), the commission followed the courts analysis in Stetz v. DILHR, et. al. Case No. 136-215, Dane County Circuit Court, 2/13/73. It reasoned that the "good cause" analysis in a quit good cause case should be focused on the reaction of the employee, and not on whether the employer had good cause for the action it did which precipitated the employee quitting. Thus, regardless of the employer's financial difficulties, the employee had good cause to quit given the substantial reduction in pay. It stated "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 employee's quitting . . . ." In similar cases, a wage reduction of 11 to 30 percent has been found to provide good cause for quitting."

Here, the employee's wage reduction was 33 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 employee's quitting was with good cause attributable to the employer. While the employer correctly points out that Wisconsin is an employment-at-will state, there exists an implied contract of hire between parties which forms the parameters of the relationship. Here the employee agreed to work for the employer at a wage of $15 per hour. When the employer substantially and unilaterally altered those terms, the employee was entitled to accept or reject the new arrangement. He chose to reject it. He did not accept the job with the clear understanding that his wages would be subject to reduction based on his production. His quitting was therefore with good cause attributable.

cc: Attorney Walter W. Stern

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uploaded 2003/11/03