STATE OF WISCONSIN
LABOR AND INDUSTRY REVIEW COMMISSION

MARALYNE S MIDDOUR, Employee

AFFORDABLE HOMES OF LA CROSSE,
A1 MOBILE HOMES, Employer

UNEMPLOYMENT INSURANCE DECISION
Hearing No. 93001949LX


The Department of Industry, Labor and Human Relations issued an initial determination in the above-captioned matter which found that in week 7 of 1993, the employe terminated her work with the employing unit and that her quitting was not within any of the exceptions in the statutes which would permit immediate payment. As a result, benefits were suspended. The employe filed a timely appeal to an appeal tribunal. On May 28, 1993, the appeal tribunal issued a decision which affirmed the initial determination. The employe filed a timely petition for commission review of the adverse 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 for approximately one year as a manager for the employer, a seller of manufactured housing. Her last day of work was February 10, 1993 (week 7).

When the employe was hired she was told that, in addition to her commission, she would be eligible for a volume-bonus program which would be based upon the quality of her work performance. Subsequently, the employer received a rebate from the company which provided the mobile homes to the employer and based upon that rebate, the employer determined that the employe would be eligible for $12,400 in bonus payments. It was then agreed by the employer and the employe that she would receive four equal installments of $3,100 with the last installment due on February 10, 1993. The employe received three installments of $3,100 each as agreed upon. However, on February 10, 1993, she received a check in the amount of $600. The employer held back the rest of the money because of a problem with two of the mobile homes the employe had ordered from the manufacturer. The employer also heard that the employe was going to quit her job. The employer told the employe that if she would continue her employment, and the recent problems with the two mobile homes were taken care of, he would pay her the rest of the money. She became upset over the employer's actions and voluntarily terminated her employment.

The issue to be decided is whether the employe's quitting was with good cause attributable to the employer or for any other reason which would permit immediate benefit payment. The appeal tribunal found that the employer made a reasonable request in withholding payment until determining that her performance was satisfactory and therefore the employe's quitting did not constitute good cause attributable to the employer. The commission disagrees with the appeal tribunal's application of the facts to the law and therefore reverses the appeal tribunal decision.

The employer testified that the employe earned a bonus and that it owed the employe $12,400 which it agreed to pay her in sums of $3,100. The employer withheld $2,500 from the employe on February 10, because it alleged there were problems in mobile homes the employe ordered. The commission believes that whether there were problems in the mobile homes, and whether the problems were the employe's fault, are irrelevant in this case, because the employer was not authorized to withhold payment based on an allegation of unsatisfactory work performance.

Section 103.455, Stats., provides:

"Deductions for faulty workmanship, loss, theft or damage.

No employer shall make any deduction from the wage due or earned by any employe, who is not an independent contractor, for defective or faulty workmanship, lost or stolen property or damage to property, unless the employe authorizes the employer in writing to make such deduction or unless the employer and a representative designated by the employe shall determine that such defective or faulty work, loss or theft, or damage is due to worker's negligence, carelessness, or wilful and intentional conduct on the part of such employe, or unless the employe is found guilty or held liable in a court of competent jurisdiction by reason thereof. If any such deduction is made or credit taken by any employer, that is not in accordance with this section, the employer shall be liable for twice the amount of the deduction or credit taken in a civil action brought by said employe. Any agreement entered into between employer and the employe contrary to this section shall be void and of no force and effect. In case of a disagreement between the 2 parties, the department shall be the 3rd determining party subject to any appeal to the court. Section 111.322 (2m) applies  to discharge and other discriminatory acts arising in connection with any proceeding to recover a deduction under this section."

In Donovan v. Schlesner, 72 Wis. 2d 74, 240 N.W.2d 135 (1976), the Wisconsin Supreme Court determined whether deductions made in the employe's weekly wages violated sec. 103.455, Stats. In Donovan, the employer deducted from the employe's weekly paycheck, shortages occurring in the books the employe kept for the employer. The employe was aware at the beginning of his employment that such deductions would occur and on the back of each check the employer rubber stamped a statement to the effect that the employe agreed to be responsible for all shortages occurring in the week. The court in Donovan found that sec. 103.455, Stats., requires that a determination of employe fault precede each deduction for loss by the employer. Further, the determination of fault may be made in one of three ways under the statute: (1) a written employe admission of fault; (2) an agreement by an employe's representative that the employe was at fault; or (3) a court determination of fault. Unless such a determination precedes each deduction, the deduction is unlawful and the employer is liable for the penalty imposed by the statute.

The court in Donovan reiterated the purpose of sec. 103.455, Stats., as originally stated in Zarnott v. Timkin-Detroit Axle Co., 244 Wis. 596, 13 N.W.2d 53, (1944):

"The purpose of the statute was to require the employer to give the employe an opportunity to protect his rights on the question of whether defective parts were due to his negligence. The earnings of the employe depended upon his services properly rendered. It is considered that the purpose of the statute is to prohibit an arbitrary determination by the employer that no compensation is due the employe by reason of defective work due to his negligence."

Donovan at 79.

Finally, the Court found that the allegation of employe fault cannot be used by the employer as a defense if the employe was not given, before the deduction, the opportunity to demonstrate that he or she was not at fault:

"Allowing the fault determination to be made as a matter of defense in the employe's action to recover the amounts deducted effectively removes the protection thought to be afforded by the statute. The entire purpose of the statute is to preclude any deduction for losses until the employe had first an opportunity to show his lack of fault. An employer is not prohibited under the statute from deducting from an employe's wages those losses in business which are due to his negligence, carelessness, or wilful misconduct. However, he may only do so in accordance with one of the methods provided by the statute which are provided to protect the employe from arbitrary action."

Donovan at 82. See also Wandry v. Bull's Eve Credit, 129 Wis. 2d 37, 384 N.W.2d 325 (1986).

In this case, the employer unilaterally withheld monies it conceded the employe was due based on an allegation of unsatisfactory work performance. The employe did not, by any method authorized under section 103.455, Stats., authorize the withholding. Accordingly, the employer was not permitted to withhold her wages and the employe had good cause attributable to the employer for voluntarily terminating her employment.

The commission therefore finds that in week 7 of 1993, the employe terminated her employment with the employer with good cause attributable to the employer within the meaning of section 108.04 (7) (b), Stats.

DECISION

The appeal tribunal decision is reversed. Accordingly, the employe is eligible for benefits beginning in week 7 of 1993; if she is otherwise qualified.

Dated and mailed March 15, 1994
132 : CD00149  VL 1005.01 VL 1059.07

/s/ Pamela I. Anderson, Chairman

/s/ Richard T. Kreul, Commissioner

/s/ James R. Meier, Commissioner

MEMORANDUM OPINION

The commission did not consult with the administrative law judge regarding witness credibility or demeanor. The commission's reversal is not based on a differing assessment of witness credibility but on different legal conclusion when applying the facts of this case to the law.

 


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