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

GUY RAMSTACK, Employee

COVENTRY HOMES LTD, Employer

UNEMPLOYMENT INSURANCE DECISION
Hearing No. 09601770WK


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, except that it makes the following modifications:

The final sentence in the fourth paragraph of the FINDINGS OF FACT and CONCLUSIONS OF LAW section is modified to read as follows:

The employee was given his payroll check on December 15, and his December 1 reimbursement checks on December 16, 2008.

The following sentence is added to the fifth paragraph of the FINDINGS OF FACT and CONCLUSIONS OF LAW section:

The employee received the payroll check he had been scheduled to receive on December 26, 2008, some time after January 1, 2009.

DECISION

The decision of the administrative law judge, as modified, is affirmed. Accordingly, the employee is ineligible for benefits beginning in week 2 of 2009, and until four weeks have elapsed since the end of the week of quitting and he has earned wages in covered employment performed after the week of quitting equaling at least four times his weekly benefit rate which would have been paid had the quitting not occurred.

Dated and mailed July 10, 2009
ramstgu . umd : 115 : 5 VL 1005.01  VL 1059.07

/s/ James T. Flynn, Chairperson

/s/ Robert Glaser, Commissioner

/s/ Ann L. Crump, Commissioner

MEMORANDUM OPINION

The employee worked from May 2007, until January 2009, as the Executive Vice President/Project Manager for the employer, a home builder.

The employee and Richard Schneider (Schneider), the employer's owner, negotiated a starting salary for the employee of $50,000 per year. The employee testified that he was promised an increase to $65,000 after three months. Schneider testified that he had not promised the employee a specific increase after three months but instead agreed to consider an increase, depending upon the business's financial strength and general economic conditions, after the employee had worked for the employer for a period of time. This is, in fact, what occurred. After the employee had worked for the employer for about eight months, the employee asked for an increase to $65,000, and he and the employer negotiated an increase to $60,000. The administrative law judge (ALJ) did not credit the employee's testimony that the employer had agreed to raise his salary to $65,000 after three months, and the commission found no persuasive reason to overturn this credibility determination. First of all, as Schneider testified, "the economy was starting to get shaky" at the time the employee was first hired, and it would have been unlikely for Schneider, given this uncertainty, to have committed the employer to such a significant increase. In addition, the information provided by the employee in this regard is inconsistent. At hearing, he testified that he was promised an increase to $65,000 after three months. In his petition for commission review, the employee states that he was promised this increase after one month, i.e., as of June 1, 2007.

The employee also argues that he was promised "overtime pay" by Schneider for working on several projects not directly related to work for the employer. However, as the ALJ found, the record shows that these projects were in fact employer projects; what the employee had been promised was a share of a type of bonus to be paid to the employer as buildings sold; and, since the "project didn't get running," no bonuses were paid to the employer.

Until December of 2008, the employer had always promptly paid the employee his salary and reimbursement checks. During December of 2008, the employer was moving its offices. Schneider decided that, since business was going to be interrupted until the new office was set up, he would lay off his bookkeeper and do the payroll and other bookkeeping tasks himself until the office was functioning again. For the December 12 payroll checks, Schneider mistakenly transmitted the payroll information to Payroll Express, the entity creating the checks, a day late. When he became aware that, as a result, payroll checks would not be available on Friday, December 12, as scheduled, Schneider advised his workers, including the employee, that payroll checks would be delivered on Monday, December 15, but, if they needed to be paid sooner than that, he would cut them a check on Friday, December 12, and they could pay him back on Monday when they received their payroll check. The employee did not accept this offer and received his payroll check on Monday, December 15.

The employer also presented four reimbursement checks to the employee on Tuesday, December 16.

It is not clear when the employee deposited the payroll and reimbursement checks into his bank account or when his bank presented them for payment to the employer's bank, but, according to the employee, on December 22, the employee became aware that the December 15 payroll check had been rejected for payment due to insufficient funds. The employee contacted Schneider who contacted his bank (Associated). Schneider learned that a bank staff member (Waltz), with whom he had not had any contact in his 22 years as a bank customer, had frozen the employer's $150,000 bank account because the employer was $4,000 in arrears on a construction mortgage payment. Schneider also learned that Waltz would be on vacation until some time in January and the account would be frozen until he returned.

As a result, on December 26, 2008, Schneider wrote the employee a personal check to replace the December 15 payroll check. When the employee advised Schneider the evening of December 31 that the four reimbursement checks had also bounced, Schneider wrote the employee a personal check on January 2, 2009, for the reimbursement check amounts plus checking account late fees incurred by the employee.

The employee also asserts that he did not receive his scheduled December 26, 2008, payroll check until some time in January of 2009, but was aware at and after December 26 that the employer's bank account had been frozen and Schneider was working to solve the problem.

Schneider ceased doing business with Associated in January 2009 due to this incident.

The employee submitted his resignation to Schneider on January 5, 2009, stating that he "didn't care for [Schneider's] management style...and couldn't work for him any more."

The only exception to the quit disqualification arguably applicable 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, Case No. 136-215 (Wis. Cir. Ct. Dane County February 13, 1973).

As the commission has held, employees must be able to trust their employers to timely satisfy their payroll obligations, but an isolated failure of an employer to do so does not provide good cause for an employee to quit. The commission has required that an employee show a pattern of such failures in order to demonstrate good cause attributable to the employer. See, Stallman v. Stay N Play Daycare & Preschool, UI Hearing No. 02200774EC (LIRC Aug. 2, 2002); Dornbush v. Manning Counseling Center, Inc., UI Hearing No. 03007623MD (LIRC April 30, 2004).

The employee had an opportunity to avoid receiving his December 12 payroll check late by accepting the employer's offer to "cut him a check" on December 12. The employee did not accept this offer. As a result, the employee's receipt of his paycheck on December 15 would not qualify as a failure by the employer to satisfy a payroll obligation.

In addition, the problems with insufficient funds in December 2008 should be considered an isolated incident, mitigated by the fact that the employee was a member of management and well aware of the bank error and its impact on the business. When Schneider became aware of the bounced December 15 payroll check and December 16 reimbursement checks, he took immediate action to pay the employee with his personal funds. The record regarding the December 26 payroll check is quite sketchy, but does establish that it resulted from the frozen bank account and was apparently remediated by the employer when the funds were released.

The employee cites the commission decision in Harycki v. Wiedemeyer Service Center, UI Hearing No. 91-603649 (LIRC Aug. 26, 1991), in support of his position that he had good cause for quitting his employment. The circumstances are, however, distinguishable. In Harycki, the employee, a dispatcher for a trucking company, was issued three payroll checks that bounced, in November, March, and April. The pattern established by these three clearly separate instances is not closely comparable to the situation at issue here involving what was an isolated circumstance effectively created by an entity other than the employer.


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