BEFORE THE
STATE OF WISCONSIN
LABOR AND INDUSTRY REVIEW COMMISSION


In the matter of the
unemployment benefit claim of

BRIAN K BOEHM, Employe

Involving the account of

DOWNTOWN TV, Employer

UNEMPLOYMENT INSURANCE DECISION
Hearing No. 88-402052 WU


A Department Deputy's Initial Determination held that in week 37 of 1988 the employe terminated his work with the employing unit and that his quitting was not within any of the exceptions in the statutes that would permit benefit payment. As a result, benefits were suspended as of that week. The Determination further held that the employe was eligible for benefits for weeks 34 through 36 of 1988.

The employe timely appealed the Initial Determination, and a hearing was held on October 4, 1988 and November 28, 1988 before Administrative Law Judge Janine M. Smiley, acting as an Appeal Tribunal of the Wisconsin Department of Industry, Labor and Human Relations. The Appeal Tribunal Decision, issued on December 22, 1988, reversed the Initial Determination and found the employe eligible for benefits beginning in week 37 of 1988. The employe was found to be ineligible for benefits for weeks 34 through 36 of 1988, and he was ordered to repay the sum of $600 to the Unemployment Reserve Fund.

The employer timely petitioned or review by the Wisconsin Labor and Industry Review Commission. Based on the evidence and applicable law, and having considered the arguments presented by the employer in its petition for review, the Commission makes the following:

FINDINGS OF FACT AND CONCLUSIONS OF LAW

The employe worked for about four years as a technician for the employer, a business engaged in the sales, service and installation of television satellite dishes and receiving equipment. On Friday, August 5, 1988 the employe gave the employer written notice that he was resigning his employment effective September 2, 1988 (the end of week 36). However, on Wednesday, August 10, 1988 (week 33) the employe was discharged by the employer, effective that day.

The issues for decision are whether the employe was terminated for misconduct connected with his employment in week 33 of 1988 and, if his termination was not for misconduct, whether he had good cause attributable to the employing unit to voluntarily terminate his employment as of the end of week 36 of 1988.

The employe was terminated for operating a business in competition with that of his employer while still employed by the employer. By July 29, 1988, the employe has organized a business, "B & D Satellites," with another employe of the employer, Dennis Fabian. By at least that date, the employe had had a rubber stamp of the heading "B & D Satellites," with the employe's home address, prepared for use in that business. On July 29, 1988 the employe gave a written estimate for repair of wind damage to a TV satellite dish to a person who had been a customer of the employer. This estimate was on a standard order form on which the "B & D Satellites" stamp had been applied. On August 5, 1988, the day he submitted his written resignation to the employer, the employe installed a TV satellite dish and reception equipment for another person who had been a customer or prospective customer of the employer. The employe performed this work independently, as part of his "B & D Satellites" business. The commission infers that contacts between the employe and this person relative to the installation, and activities by the employe in connection with obtaining the equipment to be installed, must have taken place prior to August 5, 1988 in order to allow the installation to take place on that day.

The Commission therefore finds that the employe was engaging in a business in direct competition with the employer while he was still employed by the employer, and in fact before he had even tendered his written resignation from employment.

An employe owes a duty of loyalty to his or her employer which involves, among other things, not engaging in activities in direct competition with the activities of the employer. While a mere intention to become self-employed in competition with an employer is not a breach of such a duty of loyalty, the actual solicitation of the employer's customers while still employed goes beyond mere intent or planning. An employe is not entitled to solicit customers for a rival business before the end of his employment, nor can he properly do other similar acts in direct competition with the employer's business. Erdmann v. DILHR and Bank of Menasha, (Dane County Circuit Court, No. 157-029, November 11, 1977), accord, Walus v. DILHR and Educational Service Programs, Inc., (Dane County Circuit Court, No. 140- 292, March 18, 1974). Engaging in direct competition with an employer is misconduct on the part of the employe engaging in the competitive activity.

The employe asserts that he had good cause to voluntarily terminate his employment because the employer allegedly refused to pay him overtime wages to which the employe was entitled under the law. However, the issue of whether the employe had good cause to voluntarily terminate his employment is not relevant where it is apparent that the employe was discharged for misconduct prior to the effective date of his resignation. If an employe gives the employer notice of his intended resignation, and sets a date for that resignation to become effective, and if the employer refuses to permit the employe to continue working up until the time that notice would have been effective, the employe will be eligible for benefits until the time that the resignation would have become effective unless there was some intervening misconduct on his part. There was such intervening misconduct here. The employer's refusal to allow the employe to work up to the effective date of his resignation was not occasioned merely by the employer's dissatisfaction over the employe's decision to voluntarily terminate his employment. Rather, the employer's decision to terminate the employe was occasioned by the employer's dissatisfaction over the employe's misconduct of engaging in direct competition with the employer while still employed by the employer. In such a case, there is an actual termination for misconduct, not a mere "accelerated quit."

The commission therefore finds that in week 33 of 1988 the employe was discharged for misconduct connected with his employment, within the meaning of section 108.04(5) of the Statutes.

The commission further finds that the employe was paid benefits in the amount of $200.00 per week for weeks 34 of 1988 through 9 of 1989 amounting to a total of $5,800.00 for which he was not eligible and to which he was not entitled, within the meaning of section 108.03(1) of the Statutes, and pursuant to section 108.22(8)(a) of the Statutes, he is required to repay such sum to the Unemployment Reserve Fund.

DECISION

The appeal tribunal decision is reversed. Accordingly, the employe is ineligible for benefits based on employment with the employer. He is also ineligible for benefits based on employment with other employers beginning in week 33 of 1988 and continuing thereafter until he has again been employed within at least seven weeks in employment covered by the Unemployment Compensation Law of any state or the federal government and has earned wages in that employment equaling at least 14 times his weekly benefit rate with the employer against whom benefits are initially chargeable. He is required to repay the sum of $5,800.00 to the Unemployment Reserve Fund. The initial benefit computation, Department form UCB-700, issue on January 19, 1989, is set aside.

Dated and mailed June 29, 1989
110 - CD1000 MC 610.04 MC 627

Kevin C. Potter, Chairman

/s/ Carl W. Thompson, Commissioner

/s/ Pamela I. Anderson, Commissioner

NOTE: The Commission agreed with the finding of the administrative law judge that the employe engaged in activities in direct competition with his employer while still employed by the employer, and that this constituted misconduct within the meaning of section 108.04(5), Stats. However, the Commission disagreed with the conclusion of the Administrative Law Judge that the action which the employer took against the employe was a "suspension."  The Administrative Law Judge evidently reasoned that the separation from employment occurring on August 10, 1988 was merely a "suspension" because the employe's resignation, tendered on August 5, 1988, already established that his employment would end as of September 2, 1988, so that the effect of the separation on August 10, 1988 was only as to a finite period of a few weeks. Apparently, the Administrative Law Judge  reasoned that, since a "suspension" is also a separation of employment for a limited and definite period, this was a "suspension." The Commission considers this conclusion to have been erroneous as a matter of law.  A conclusion that an employer has "suspended" an employe requires a finding that the employer actually intends that the employment relationship will resume at some identifiable future point which coincides with the end of the "suspension." Such an intent was obviously lacking here. The employer had no plans to have the employe back. This was a termination.

The Administrative Law Judge may have concluded that no disqualification from benefits should be imposed on the employe for the weeks following the date on which is employment would have ended by resignation, if that resignation was for good cause. However, the Commission disagrees. Although it is true in one way that the employment in this case would have ended by no later than September 2, 1988 in any event, and that the ending of the employment relationship would in one sense have been caused by the voluntary termination of employment, it is also indisputably true that there was a termination from employment for misconduct on August 10, 1988 which ended an employment relationship which otherwise would have continued after that date. Section  108.04(5), Stats., provides for a disqualification from benefits when employment is terminated because of misconduct. It provides no exception from this disqualification when the circumstances are such that the employment would have or might have ended at some point in the near future for some other cause. Thus, for example, there will be a disqualification from benefits when an employe is discharged for misconduct connected with his employment even in the case of fixed term temporary employment which would have ended at a fixed future date notwithstanding the earlier termination. The same conclusion is appropriate in the circumstances presented in this case.

The stated effects of this decision are based on the provisions of Wisconsin Statutes Chapter 108 that are in effect as of this date. If any employment affected by this decision becomes base period employment for a new claim beginning April 2, 1989 or later, the provisions of the UC law recently enacted (1987 Act 38 and 1987 Act 255) will apply.

cc:
ATTORNEY PETER P KAROBLIS


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