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

BRIAN M BROJANAC, Employee

ACKERVILLE GARAGE INC, Employer

UNEMPLOYMENT INSURANCE DECISION
Hearing No. 03602624WB


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 15 months doing automotive repair, sales, and service for the employer, an automotive repair and towing business. He was discharged on February 14, 2003 (week 7).

The issue is whether the employee was discharged for misconduct connected with his employment.

The employer's president discharged the employee in person on February 14, 2003. He did not tell the employee the reason for the discharge because he did not want to compromise the ongoing investigation of the related criminal matter.

In December of 2002, the president discovered two invoice forms in the employee's desk, and presented these forms to his accountant upon the accountant's return to town the first or second week of January of 2003. The accountant told the president that he was concerned about them because they stated that work had been performed and billed by the employer, but no income had been received or reported as a result and no sales tax paid. These invoices (exhibits #1 and #2) state that the president performed the work, but he had not.

The vehicle upon which the invoiced services were performed was the employee's personal vehicle. The Internal Revenue Service was notified of this situation and advised the employer to contact the Washington County Sheriff's Department.

The president contacted the sheriff's department and a criminal investigation was initiated as a result.

The hourly rate the employee charged on these invoices was $90 an hour, which exceeded the $60 an hour that the employer charged for its services.

The two invoices had the same identifying number. The employer's computerized bookkeeping system, if the standard procedure is used, does not permit two invoices to be generated using the same number. The employer's system had a record of an invoice of the same number as the two invoices at issue but the record invoice related to services performed in regard to a different vehicle. The invoices at issue would have had to have been created by bypassing the employer's standard invoicing process.

The employee had purchased an extended warranty on his personal vehicle and submitted these invoices to the warranty insurer to get paid for work he himself had done to perform repairs.

The insurer paid the employee for the labor indicated on the invoices and he kept that money. The employee did not show the subject invoices to the president, and did not ask for permission to bypass the employer's invoicing process to generate these invoices or explain that he was doing so.

The administrative law judge concluded that the employer failed to prove misconduct because it didn't give the employee any reason for his discharge or any warning prior to his discharge. However, prior warning is not required if the conduct is sufficiently egregious. See, e.g., Ness v. Deli-More, UI Hearing No. 02403062GB (LIRC April 10, 2003); Hainz v. Nelson Industries, Inc., UI Hearing No. 00003095MD (LIRC Oct. 3, 2000); Marcolini v. Alma Public School, UI Hearing No. 78-20774EX (LIRC May 29, 1979). Moreover, it is the commission's role here to measure the actual reason for the discharge against the misconduct standard, regardless of whether the employer provided a different reason to the employee or no reason at all. Lepak et al. v. James River Paper Co., Inc., UI Hearing No. 93400404GB (LIRC Dec. 16, 1993). Although a due process issue would be presented if the employer failed to provide a reason for the discharge prior to hearing, or offered a reason at hearing other than that previously provided (Weinke v. Memorial Hospital of Iowa County, Inc., UI Hearing No. 95002772DV (LIRC May 13, 1996)), such is not the situation here. The employer disclosed during the department's investigation that the employee was discharged for generating invoices for work not performed by the employer. In addition, the employee had been questioned about these invoices by a law enforcement official immediately prior to his discharge and had reason to be aware as a result that his actions in this regard were viewed sufficiently unfavorably by the employer that law enforcement had been brought in to investigate.

In Boynton Cab Co. v. Neubeck & Ind. Comm., 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 employee, 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 employee'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 most plausible version of events, given the evidence of record here, is that the employee intentionally and secretively manipulated the employer's bookkeeping system to generate dummy invoices in order to create the false impression that someone other than himself had performed the warranty work. If the employee had actually believed that the insurer would reimburse him under its warranty policy for work he performed himself, he would have simply submitted a summary of the hours he had spent repairing his truck on his own form; or he would have maintained the integrity of the employer's system when he generated the invoices, noting on these invoices that he had performed the work himself, rather than creating dummy invoices, indicating someone else had performed the work, which could not be tracked on the employer's system. This is a sufficiently egregious disregard of the employer's interests to support a conclusion of misconduct even without prior warning.

The commission therefore finds that, in week 7 of 2003, the employee was discharged for misconduct connected with her employment within the meaning of Wis. Stat. § 108.04(5).

The commission further finds that the employee was paid benefits in the amount of $8,225 for which the employee was not eligible and to which the employee was not entitled, within the meaning of Wis. Stat. § 108.03(1), and that waiver of this overpayment is not merited since the initial award of benefits was not based on department error but instead on a differing interpretation of the applicable law.

DECISION

The decision of the administrative law judge is reversed. Accordingly, the employee is ineligible for benefits beginning in week 7 of 2003, and until seven weeks have elapsed since the end of the week of discharge and the employee has earned wages in covered employment performed after the week of discharge equaling at least 14 times the employee's weekly benefit rate which would have been paid had the discharge not occurred. The employee is required to repay the sum of $8,225 to the Unemployment Reserve Fund.

Dated and mailed January 7, 2004
brojabr . urr : 115 : 1  MC 630.09  MC 699.05 

/s/ David B. Falstad, Chairman

/s/ James T. Flynn, Commissioner

/s/ Robert Glaser, Commissioner


NOTE: The commission did confer with the administrative law judge before reversing his decision. The administrative law judge indicated that he had no clear recollection of the hearing witnesses. The commission's reversal is not based upon a differing view as to the credibility of witnesses or the governing facts, but instead upon a differing interpretation of the relevant law.


cc: Attonrey Daniel R. Dineene


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