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


DAVID S LEISCHER, Employe

EQUITABLE RESERVE ASSN, Employer

UNEMPLOYMENT INSURANCE DECISION
Hearing No. 98003370WR


On August 1, 1998, the Department of Workforce Development issued an initial determination in the above-captioned matter which held that the employe quit, but not for a reason permitting the immediate payment of benefits. The employe filed a timely appeal and a hearing was held before an appeal tribunal. On November 6, 1998, the appeal tribunal issued a decision which affirmed the initial determination. The employe filed a timely petition for commission review of the 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 the employer, a fraternal benefit society that markets life insurance and annuities, for approximately three months as an insurance salesman. His last day of work for the employer was on or about July 1, 1998 (week 27).

When the employe began working for the employer on April 1, 1998, he signed a contract placing him on a "New Agent Financial Assistance Program (FAP)," under which he would be able to receive a draw against commissions during his first three years with the employer. In order to qualify for the FAP, the employe had to sign an agreement indicating that, starting in his ninth week of employment, he would meet certain cumulative commission requirements, which increased in each pay period, or risk being dropped from the FAP. The employe had no previous experience selling insurance.

While under the FAP, the employe received $1,000 in bi-weekly base pay from the employer. In the pay period ending June 10, 1998, the tenth week in his employment, the employe realized only $155.86 in commissions, approximately half of what was expected of him. On June 15, 1998, the employer sent the employe a letter warning him that he had failed to achieve the desired sales levels during the last pay period and that if he continued to fall short of those requirements the employer would consider taking him off the FAP.

On June 24, 1998, the employer sent the employe a letter notifying him that he had fallen short of plan requirements and that it was discontinuing his "financial assistance." The employe was told that he was being placed on commissions only and that if he did not produce a minimum of $1,800 in commissions during the month of July his contract with the employer would be terminated.

When the employe received the June 24 letter he stopped reporting to work for the employer and canceled his scheduled sales calls. On July 13 the employer wrote the employe a letter indicating that his contracts with it had been terminated. As of the writing of that letter the employe had realized a total of $224.64 in commissions during his entire period of employment for the employer.

The first issue to decide is whether the employe quit or was discharged.

The employe had reason to believe that the employer was going to discharge him at the end of July, given the extreme unlikelihood that he would be able to earn the $1,800 in commissions necessary to retain his employment with the employer. However, as of the time the employe stopped reporting for work, he still had the option of continuing to perform services for the employer. It was the employe's choice to sever the employment relationship by failing to report to the office or make any further contact with the employer. Consequently, the commission concludes that the separation from employment is best characterized as a voluntary quit.

The next issue to resolve is whether the employe's quitting was for any reason permitting the immediate payment of benefits. Under Wis. Stat. § 108.04(7)(a), an employe who voluntarily terminates employment with an employer is ineligible for benefits unless the quitting falls within a statutory exception permitting the immediate payment of benefits. One such exception is Wis. Stat. § 108.04(7)(b), which provides that, if an employe voluntarily terminates employment with good cause attributable to the employing unit, he or she is eligible for the immediate payment of unemployment benefits. Good cause attributable to the employer means that the employe's resignation is caused by some act or omission by the employer which justifies the employe's decision to quit. It involves some fault on the employer's part and must be real and substantial. Kessler v. Industrial Comm., 27 Wis. 2d 398, 134 N.W.2d 412 (1965); Hanmer v. DILHR, 92 Wis. 2d 90, 98, 284 N.W.2d 587 (1979).

The commission believes that the employe had good cause attributable to the employer for quitting. The employer removed the employe's $1,000 bi-weekly base pay and placed him on commissions only. This constituted a drastic pay cut, and considering that in his entire 3-month employment with the employer he had earned only $224 in commissions, the employe could hardly be expected to survive financially on commissions alone. The employer acknowledged this fact and indicated that most new agents in the employe's position "seek career opportunities elsewhere" once they are removed from the FAP. The commission believes that the employer's actions in removing the employe's base salary, knowing that continued employment under these conditions would be financially untenable, were intended to induce the employe to quit and that they provided him with good cause for doing so.

In arriving at this conclusion, the commission is cognizant of the fact that the removal of the FAP was a contingency provided for in the employe's contract with the employer. However, the commission does not believe that the existence of the contract mandates a different outcome in this case. The employe did not negotiate for the provision in the contract which enabled the employer to remove him from the FAP if he failed to perform and, to the contrary, the provision appears to be standard language in a contract prepared by the employer and designed to protect the employer's interests. Clearly the employe accepted the contract with the belief that he would be able to succeed in meeting the employer's sales goals, and he should not be penalized for his willingness to attempt employment under potentially unfavorable conditions. Further, while the contract gave the employer the right to take the employe off the FAP if he failed to generate sufficient sales, it did not require the employer to do so. The employer's decision to remove all of the wages from a new and inexperienced employe, knowing that it would probably force him to quit his employment, was so unreasonable as to provide the employe with good cause attributable to the employer for quitting.

The commission, therefore, finds that in week 27 of 1998 the employe voluntarily terminated his work with the employer, and that his quitting was with good cause attributable to the employer, within the meaning of Wis. Stat. § 108.04(7)(b).

DECISION

The appeal tribunal decision is reversed. Accordingly, the employe is eligible for benefits beginning in week 27 of 1998, provided he is otherwise qualified. There is no overpayment with respect to this issue.

Dated and mailed: January 22, 1999
leiscda.urr : 164 : 6  VL 1059.20

/s/ David B. Falstad, Chairman

/s/ James A. Rutkowski, Commissioner

NOTE: The commission's decision to reverse the appeal tribunal decision did not involve an assessment of the credibility of the witnesses in this case. Rather, the commission has reached a different result when applying the law to essentially the same set of facts as that found by the appeal tribunal.

 

Pamela I. Anderson, Commissioner (Dissenting):

I am unable to agree with the result reached by the majority herein and I dissent. I have difficulty finding good cause attributable especially when the employe made no effort after the employer discontinued the draw. The employe even canceled appointments so did not even make a good faith attempt earn any commissions. The employe was aware at the time of hire that the employer could remove the draw if his performance was below standards.

Therefore I would agree with the administrative law judge and affirm the appeal tribunal decision.

Pamela I. Anderson, Commissioner


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