BEFORE THE
STATE OF WISCONSIN
LABOR AND INDUSTRY REVIEW COMMISSION


In the matter of the
unemployment bnefit claim of

JEAN E STERNEMANN, Employe

Involving the account of

GRAPHIC RESOURCES INC, Employer

UNEMPLOYMENT INSURANCE DECISION
Hearing No. 90605151WK


The Initial Determination of the Department of Industry, Labor and Human Relations held that the employe quit her job with the employer, because she learned she was not entitled to benefits she had assumed she would receive and that her quitting was not for a reason which would allow the immediate payment of benefits. As a result, benefits were denied, pending requalification under sec. 108.04(7)(a). The employe filed a timely appeal and on August 14, 1990, a hearing was held before an Appeal Tribunal. The Appeal Tribunal affirmed the Initial Determination. The employe timely petitioned the Commission for a review of the Appeal Tribunal decision.

Based on the applicable laws, records and evidence in this case, the Commission makes the following:

FINDINGS OF FACT AND CONCLUSIONS OF LAW

The employe worked for almost three years doing clerical work for the employer, a printing business. Her last day of work for the employer was June 7, 1990 (week 23).

On May 30, 1990 (week 22), new owners acquired the employer's business. The new owners discharged all the employes but offered certain of them, including the employe, continuing employment. The employe was told that everything about the position would remain the same. The employe worked Tuesday through Thursday. On Monday, June 6, 1990, a meeting was held in the employe's absence. On Tuesday, June 7, the employe was informed that she would no longer be eligible for paid vacation and holiday, and she would no longer be able to participate in the employer's profit sharing plan because she was part-time. The employe was also informed that in order to continue her employment, she would be required to sign a confidentiality and noncompete agreement. The employe refused to sign the agreements. The employer informed her that if she did not sign the agreements she could no longer be employed by the employer. The employe still refused to sign and left the workplace.

The employe contended that the employer's refusal to allow her to continue working for it amounted to a discharge. However, an employe who acts in a manner inconsistent with continuing the employe-employer relationship thereby quits that employment. Dentici v. Industrial Commission, 264 Wis. 181 (1953). The employe's refusal to sign the agreements when she knew that if she did not sign she would no longer be employed by the employer, constituted a quitting of her employment.

The employe contends that she quit with good cause attributable to the employer because the new owner required her to sign the agreements and would no longer continue to pay her benefits. Good cause will be found if the quitting was occasioned by some act or omission on the part of the employer which gave the employe a real and substantial reason to become unemployed rather than to continue working. Kessler v. Industrial Commission, 27 Wis. 2d 398 (1965). The employe had been receiving 20 hours of paid vacation and 24 hours of paid holiday and an unspecified amount of profit share payments. While that alone may not have given the employe good cause for quitting her employment, the fact that she was ordered to sign a noncompete agreement, under the particular facts of this case, constitutes good cause attributable to the employer for quitting her employment. While the employer did not provide a copy of the agreement, it testified briefly about it:

"According to the agreement, she would be prohibited from working for another roll fed narrow web printer for six months after she separated from us. The agreement was not restricted by geographical area. All individuals working for the business were required to sign the document. It was not required by Layton Label previously as far as I know." Synopsis at p. 3.

Section 103.465 Stats. provides:

"A covenant by an assistant, servant or agent not to compete with his employer or principal during the term of the employer or agency, or thereafter, within a specified territory and during a specified time is lawful and enforceable only if the restrictions imposed are reasonably necessary for the protection of the employer or principal. Any such restrictive covenant imposing an unreasonable restraint is illegal, void and unenforceable even as to so much of the covenant or performance as would be a reasonable restraint."

Under the common law, restrictive covenants shall (a) be necessary for the protection of the employer; (b) provide a reasonable time restriction and territorial limit; (c) not be harsh or oppressive as to the employe; and (d) not be contrary to public policy. Further an employer is not entitled to be protected against legitimate and ordinary competition of the type that a stranger could give. There must be some additional special facts and circumstances which render the restrictive covenant reasonably necessary for the protection of the employer's business. Fields Foundation, Ltd. v. Christenson, 103 Wis. 2d 465 (1981).

In this case the employer provided no information as to why the agreement was necessary or reasonable. The fact that the prior owner did not require such an agreement tends to demonstrate that it was not necessary. Furthermore it was not established why it was necessary that a clerical worker should be required to sign a noncompete agreement at all.

In addition, this agreement was not limited to territory and again there was no reason given for this. A geographic territorial limit is not essential to a valid covenant not to compete. Rollins Burdick Hunter of Wisconsin, Inc. v. Hamilton, 101 Wis. 2d 460, 465 (1981). However, because there was no evidence adduced as to why it was necessary not to have a geographic limitation, it is impossible to find that such limitation is valid in this case.

Because the employer has failed to demonstrate that the agreement was reasonable or that it was in accord with sec. 103.465, and common law, combined with the fact that the employer changed the conditions of the employe's employment, the employe's quitting was for good cause attributable to the employer.

The Commission therefore finds that in week 23 of 1990, the employe terminated her work with the employing unit for good cause attributable to the employer within the meaning of sec. 108.04(7)(b) of the Statutes.

DECISION

The decision of the appeal tribunal is reversed. Accordingly, the employe is eligible for benefits beginning in week 23 of 1990, if she is otherwise qualified.

Dated and mailed October 23, 1990
145 : CD4193  VL 1005 VL 1080.05

/s/ Kevin C. Potter, Chairman

/s/ Carl W. Thompson, Commissioner

/s/ Pamela I. Anderson, Commissioner

NOTE: The Commission differs with the appeal tribunal as to the proper interpretation of sec. 108.04(7)(b), Stats.,  when applied to the facts found by theAppeal Tribunal. As there was no issue of credibility, a credibility conference with the Appeal Tribunal is unnecessary. Transamerican Ins. Co. v. ILHR Dept., 54 Wis. 2d 272, 283-84 (1972).

cc: SHEAKLEY UNISERVICE
MARK CRAWFORD 


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