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

KAREN E GARCIA, Employee

WONGS WOK, Employer

UNEMPLOYMENT INSURANCE DECISION
Hearing No. 06600085MW


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 four years in the corporate offices of the employer. Her last day of work was October 17, 2005 (week 43).

The issue is whether the separation was a quit or a discharge, and whether it occurred under circumstances which would permit the payment of benefits.

Edward Chin (Chin) is the president and chief executive officer of Chin Corporation of Wisconsin, which owns and operates several Wong's Wok restaurants. The employee is his daughter.

Chin had employed his daughter as an accountant for about four years. In November of 2004, he offered her the opportunity to purchase, on favorable terms, a Wong's Wok dealership in the Regency Mall in Racine. Apparently, unlike the standard agreements he had with his other dealers, Chin was not going to require that the employee pay commissions or royalties to the corporation.

The employee and her husband accepted this offer in January of 2005, and began arranging financing, soliciting construction bids, and negotiating a lease with the Regency Mall.

The employee does not dispute that she was aware, no later than January of 2005, that, as a condition of receiving the dealership on the favorable terms offered by her father, she would be the majority owner (at least 51%) and her husband the minority owner (no more than 49%), and that the only person her father wanted to deal with on a day-to-day basis was the employee, not her husband.

The employee and her father agreed that, by accepting the offer of the dealership, she would no longer be employed in the corporate accounting position after training her successor.

It was understood that the employee's last week of work for the corporation would be the week ending October 14, 2005.

As a result of her acceptance of her father's offer, the employee began training her brother to take over her accounting duties in the corporate office and, by September 1, 2005, he had essentially assumed these duties. Chin, however, kept the employee on the corporate office payroll through October 17, 2005. Although she spent some of her work hours between September 1 and October 17 assisting her brother, the employee spent most of this time performing duties related to the Regency Mall dealership.

In July of 2005, the employee and her father discussed the terms of the dealership. The employee and her father agreed that, if something happened to her, her ownership interest in the Regency Mall dealership would accrue to her children, and a trust should be set up for that purpose. Chin stipulated, and the employee understood, that the executor of this trust would be one of the employee's siblings. Chin suggested that the employee have her attorney draft the trust document.

On September 27, 2005, Chin presented a draft of the dealership agreement to the employee and her husband. The language of this draft reflected the oral agreements reached by Chin and the employee.

As of September 27, 2005, the employee had not yet had a trust document drafted.

As of September 27, 2005, the employee and her husband were discouraged about the dealership because they had been unable to negotiate a favorable lease with Regency Mall and they had yet to receive a construction bid from their contractor.

The employee and her husband decided, on October 9, 2005, not to go forward with the dealership. The employee acknowledges that, at that time, her corporate accounting position was no longer available because it was occupied by the person she had been paid to train for the position, her brother, as she had agreed in January of 2005.

On or after October 9, 2005, but before October 17, 2005, Chin offered the employee a management position at one of his restaurants at the same rate of pay she had been earning in her accounting position. The employee refused this offer because, although she was qualified to perform restaurant management duties, she did not want to do this type of work.

The resulting separation was a quit. The employee voluntarily relinquished her accounting position with the employer, effective October 17, 2005, in order to pursue a favorable dealership opportunity, and, after deciding not to go forward with this opportunity, declined an offer of continued employment with the employer in a position for which she was qualified and which offered the same rate of pay as her accounting position.

Wis. Stat. § 108.04(7) provides that an employee who quits her employment is ineligible for benefits until she requalifies, unless her quitting falls within a statutory exception. The only exception which could arguably apply here is set forth in Wis. Stat. § 108.04(7)(b), which provides for payment of benefits if an employee quits with "good cause attributable to the employing unit." This has been defined as a real and substantial act or omission by the employer that reasonably justifies the employee's decision to become unemployed rather than to continue working. See, Stetz v. DILHR, et al., Dane County Circuit Court, Case No. 136-215 (February 13, 1973). A necessary corollary to these considerations is that, before good cause can be shown, the employee must establish that he explored alternatives short of quitting. The employee must give the employer an opportunity to address and resolve matters that the employee finds so serious that he is considering terminating his employment because of them. See, e.g., Roth v. LIRC & Wisconsin Youth Co. Inc., Case No. 02-CV-00409 (Milw. Co. Cir. Ct. Aug. 5, 2002); Collier v. Rubbermaid & Co., UI Hearing No. 99604071RC (LIRC Oct. 14, 1999).

The employee failed to establish that there was good cause attributable to the employer for her quit. The employee was aware no later than January of 2005 that the favorable dealership terms offered by Chin were contingent upon her continuing majority ownership and control of the dealership. The employee's failure to convince her father to remove this contingency, as well as frustrations she was encountering negotiating a lease with Regency Mall and dealing with construction contractors, resulted in the failure of the dealership agreement to be effected.

Moreover, the employee had the opportunity to continue the employment relationship by accepting her father's offer of a management position in one of his restaurants at the same rate of pay, but declined this offer because, even though qualified, she did not want to do that type of work.

The commission therefore concludes that, in week 43 of 2005, the employee quit her employment with the employer, but not with good cause attributable thereto or for any other reason constituting an exception to the quit disqualification of Wis. Stat. § 108.04(7)(a).

The commission further finds that the employee was paid benefits in the amount of $5,835 for which she was not eligible and to which she was not entitled, within the meaning of Wis. Stat. § 108.03(1); and that waiver of this overpayment is not required under Wis. Stat. § 108.22(8)(c ), because, although the overpayment did not result from the fault of the employee, within the meaning of Wis. Stat. § 108.04(13)(f), the overpayment was not the result of department error. See Wis. Stat. § 108.22(8)(c).

DECISION

The decision of the administrative law judge is reversed. Accordingly, the employee is ineligible for benefits beginning in week 43 of 2005 and until four weeks have elapsed since the end of the week of quitting and she has earned wages in covered employment performed after the week of quitting equaling at least four times her weekly benefit rate which would have been paid had the quitting not occurred. The employee is required to repay the sum of $5,835 to the Unemployment Reserve Fund.

Dated and mailed May 25, 2006
garcika . urr : 115 : 8   VL 1007.01

/s/ James T. Flynn, Chairman

/s/ David B. Falstad, Commissioner

/s/ Robert Glaser, Commissioner


NOTE: The commission did confer with the administrative law judge (ALJ) before reversing her decision. The linchpin of her conclusion that Chin had reneged on a central term of the dealership agreement with the employee was her finding that, in July of 2005, Chin told the employee that the subject trust could be set up with either one of the employee's siblings, or her husband, as the executor. During the credibility conference, the ALJ did not impart any demeanor impressions upon which this finding was based but instead related her opinion as to the relative plausibility of the employee's and the employer's version of events in this regard. However, the ALJ is in no better position to assess the relative plausibility of the parties' version of events based on the evidence of record than the commission. In the commission's opinion, the fact, as acknowledged by the employee in her testimony, that her father had made it clear from the beginning that the favorable Regency Mall dealership offer was contingent upon the employee, not her husband, having majority ownership and control, supports the commission's finding that, in July of 2005, Chin would not have agreed that the employee's husband could serve as the executor of the children's trust.

cc:
UC Management Services
Attorney Neil T. Magner


[ Search UC Decisions ] - [ UC Digest - Main Index ] - [ UC Legal Resources ] - [ LIRC Home Page ]


uploaded 2006/06/05