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

AMIR H AZARSHIN, Employee

HOM FURNITURE INC, Employer

UNEMPLOYMENT INSURANCE DECISION
Hearing No. 04202739EC

 


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.

DECISION

The decision of the administrative law judge is affirmed. Accordingly, the employee is eligible for benefits beginning in week 36 of 2004, if otherwise qualified.

Dated and mailed May 31, 2005
azarsam . usd : 115 : 2   MC 610.04

/s/ James T. Flynn, Chairman

/s/ David B. Falstad, Commissioner

/s/ Robert Glaser, Commissioner

MEMORANDUM OPINION


The employee worked less than one month as a sales associate for the employer, a retail furniture business.

The record establishes that, at the time of his hire, the employee had taken certain preliminary steps to establish a competing furniture business in Eau Claire, but this business had not yet begun operating by the time of his discharge. Although the employee testified that, at the time of his discharge, the financing for this business had fallen through, the administrative law judge did not credit this testimony and the commission finds no persuasive reason in the record for overturning this credibility determination.

The employer's policies, which the employee received at the time of his hire, state as follows, as relevant here:

...HOM Furniture requires that employees avoid engaging in the following types of activities:

...Engaging in outside employment that conflicts with the nature of the company's business, employment with a competitor of the company, employment with a company that conducts business with the company, or otherwise interferes with an employee's work performance with the company.

An employee owes a duty of loyalty which requires that he refrain from engaging in direct competition with his employer. The commission has generally held that breaching this duty through the active operation of a competing business supports a conclusion of misconduct, but that a mere intention to become self-employed in competition with the employer does not. See, Conway v. A Touch of Country Crafts & Gift Mall, Inc., UI Hearing No. 01601612MW (LIRC Nov. 28, 2001); Kerlin v. Executive Mortgage LLC, UI Hearing No. 01402871MD (LIRC March 6, 2002); Searcy v. Valley VNA Health Systems, Inc., UI Hearing No. 03403974AP (LIRC July 2, 2004).

Here, although the employee, at the time of his discharge, had taken certain preliminary steps, i.e., hiring an architect, filing a rezoning application with the city, and soliciting financing, the record does not show that the employee was actively engaged in operating a competing business at that time. For example, the employee, as of the date of discharge, had not purchased or leased business premises, acquired inventory, hired employees, or advertised or otherwise solicited customers. See, Searcy, supra.(establishment of corporate structure and existence of business telephone number, without other indicia of active business operation such as advertising, hiring employees, and soliciting clients, does not establish misconduct through breach of duty of loyalty to employer). As a result, the employer failed to sustain its burden to prove misconduct.

The employer argues that misconduct was demonstrated through the employee's violation of the conflict of interest policy set forth above. However, although it may have been prudent for the employee to have discussed his self-employment plans with the employer, since the employee was not actively engaged in operating or working for a competing business during the time period relevant here, the record does not support a conclusion that the employee violated this policy as written. See, Searcy, supra.

Finally, the employer argues that the fact that this was an at-will employment relationship prevents the award of benefits. However, in general, the unemployment insurance program is designed to provide benefits to those who find themselves out of work through no fault of their own, regardless of the structure of the underlying employment relationship. Under the circumstances present here, the existence of an at-will employment relationship is irrelevant to the resolution of the issue of misconduct and the award of benefits.

cc: HOM Furniture, Eau Claire, WI



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