VERONICA BORREGO, Applicant

GORDON ALUMINUM IND INC, Employer

The employer submitted a petition for commission review alleging error in the administrative law judge's Findings and Order issued in this matter on March 29, 2006. The applicant submitted an answer to the petition and briefs were submitted by the parties. At issue is whether the employer unreasonably refused to rehire (discharged) the applicant after she had sustained a work injury on March 14, 2002, within the meaning of Wis. Stat. § 102.35(3).

The commission has carefully reviewed the entire record in this matter and hereby substitutes its own FINDINGS OF FACT AND CONCLUSIONS OF LAW for those made by the administrative law judge, but affirms his ultimate finding of a violation of Wis. Stat. 102.35(3). The commission makes the following:

The applicant worked for about four years as a human resources assistant for the employer, an aluminum extrusion company. During the course of her employment, a business located about two miles from the employer's plant started an aluminum extrusion business of its own, in direct competition with the employer. Several of the employer's employees quit and went to work for this competitor. The applicant's father, who had been laid off from a managerial position with the employer, also found employment with the competitor.

On March 14, 2002, the applicant slipped and fell in the employer's parking lot. She hurt her back and was concerned because she had previously undergone back surgery. It is undisputed that right after she fell she told the human resources manager, Dave Mahler, that if she needed to see a doctor she would claim it on her health insurance and avoid claiming it as a worker's compensation injury. Within a week or two after the fall, the applicant was in the office of the employer's part owner and general manager, AJ Gordon. She told him about the fall and explained that she could claim it on her health insurance or claim it as a worker's compensation injury. He told her it was a "no brainier" and she should claim it on her health insurance. Gordon asserted that he had "discussed the applicant's back problems" with her, but denied that he was aware of her slip and fall until after she was discharged and had filed a worker's compensation claim. His testimony in this regard is not credible.

The employer's second shift supervisor, Jeff Sandberg, testified that on May 27, 2002, he made a comment "in passing" to the applicant about the competitor. He testified that he said to her: "Everybody else is getting a call why haven't I?" This was in reference to other workers from the employer being hired by the competitor. The applicant replied with words to the effect that "we" did not think you (Sandberg) would want to go because you were loyal to the employer. The "we" is inferred to have been in reference to the employer, not the competitor.

The following morning a manager from the competitor contacted Sandberg about coming there for an interview, and this prompted Sandberg to infer that the applicant was acting as a recruiter for the competitor. He informed the employer's part owner and plant manager Alex Gordon (AJ Gordon's brother) of his suspicions in this regard.

Alex Gordon communicated Sandberg's suspicions to AJ Gordon. AJ Gordon made the decision to discharge the applicant, and at his direction this was done on May 28, 2002. The applicant was confronted by Mahler and the employer's controller, Glen Pupp, and told she was being terminated because she had been recruiting for the competitor. The applicant was surprised and asked to confront her accuser, but Pupp refused and told her nothing she could say would make a difference.

The applicant was unemployed for about 15 months after the employer discharged her. She never sought employment with the competitor, and eventually found work elsewhere. She would like to return to work for the employer but they have indicated they will not rehire her.

Wis. Stat. § 102.35(3), provides as follows:

"102.35(3) Any employer who without reasonable cause refuses to rehire an employee who is injured in the course of employment, where suitable employment is available within the employee's physical and mental limitations upon order of the department and in addition to other benefits, has exclusive liability to pay to the employee the wages lost during the period of such refusal, not exceeding one year's wages . . ."

As background to the question of allocation of burden of proof in a claim under Wis. Stat. § 102.35(3), it is important to take note of the fundamental purpose of the statute. In West Allis School District v. DILHR, 116 Wis. 2d 410, 342, N.W.2d 415 (1984), the court stated:

It is clear from the plain words of the statute that its purpose is to prevent discrimination against employes who have previously sustained injuries and to see to it, if there are positions available and the injured employe can do the work, that the injured person goes back to work with his former employer. Id. at 422.

Given the plain wording of the statute, together with its purpose, the ultimate legal/factual question to be answered in determining whether a violation of the statute has occurred is whether the employer has demonstrated reasonable cause for the failure to rehire.

The employer asserts that in every case under the statute, the employee is required to prove as part of his/her prima facie case that the employer discharged or refused to rehire him/her "because of" the work injury. Were this true, in cases where the cause of the discharge or failure to rehire was disputed, the employer would not be required to submit any evidence. The employee would have to demonstrate that she was an employee, that she was injured on the job, that she was discharged or that she applied for rehire and was not rehired, and that the reason she was discharge or not rehired was because the employer contemplated the fact of or the effects of her work injury. This is not the law.

In Dielectric Corp. v. LIRC, 111 Wis. 2d 270, 330 N.W.2d 606 (Ct. App. 1983), the court for the first time addressed the question of allocation of burden of proof in an unreasonable-refusal-to-rehire case:

We interpret section 102.35(3), Stats., as creating a new public policy. The practical effect of this statute is that the employment at will doctrine (footnote omitted) has been modified by this statute. Normally, in an employment at will situation, the burden is on the employee to show bad faith on the part of the employer; under section 102.35(3), the burden is shifted to the employer. Under this new statute, once the employee has suffered a worker's compensation injury, the question initially becomes: does the employer have good cause not to rehire. If the employee is rehired, the rehiring cannot be a pro forma rehiring. Therefore, if there is an eventual discharge, the employer must show that there is no bad faith on its part to evade this statute and that the rehired employee was discharged with good cause. Id. at 278. (Emphasis added).

In Link Industries, Inc. v. LIRC, 141 Wis. 2d 551, 415 N.W.2d 574 (Ct. App. 1987), the court plainly stated:

Having determined that Link refused to 'rehire' Galles following his attempted return to work, the question remains whether the action was without reasonable cause. Under section 102.35(3), where there is a refusal to rehire following a work-related injury, the employer has the burden of proof to show that there was no bad faith on its part to evade the statute's rehiring requirements. Id. at 557. (Emphasis added).

Once an employee has shown that she sustained a work injury, and that she was discharged, or that she applied for rehire and was refused rehire, the burden appropriately shifts to the employer to demonstrate reasonable cause for the discharge or failure to rehire. The employer's assertion that in every case the employee additionally must show that the discharge or refusal was "because of" the work injury, is based on a misinterpretation of the court's decision in West Bend Company v. LIRC, 149 Wis. 2d 110, 438 N.W.2d 823 (1989).

In West Bend the employee developed a repetitive use injury to her wrist and thumb, and as a result was transferred to light duty and received whirlpool treatments from the employer. Shortly thereafter, she was laid off due to a plant slowdown, not because of her work injury. Her wrist and thumb healed and two months after her layoff she heard that the employer was recalling laid-off employees. She asked the employer about rehire, and the employer conceded that it told her she would not be rehired because it believed she was physically unfit for factory work. It was under these facts that the employee brought a claim for unreasonable refusal to rehire. Id. at 114-115.

The commission and the circuit court found that there had been an unreasonable refusal to rehire because the medical evidence did not support the employer's assertion that the employee was physically unable to do the work. The court of appeals reversed and concluded that the statute did not protect the employee, because she had been laid off for a reason not related to her work injury prior to the refusal to rehire. Id. at 116. The supreme court reversed in favor of the employee, holding that only the employment status at the time of the work injury is relevant under Wis. Stat. § 102.35(3). Id. at 119. It further held that the employer's asserted defense that it acted reasonably because the employee could not physically perform the factory work, or risked reinjury if she returned to it, had not been demonstrated to a reasonable medical probability. Id. at 125.

Thus, in West Bend, it was a conceded fact that the employer did not rehire the employee "because of" the work injury. This fact was characterized as part of the employee's prima facie case only because of the factual circumstances of that case. Id. at 124. The more common circumstance is that the employer denies that the work injury had anything to do with the decision to discharge or to refuse rehire. See Link Industries, Inc. v. LIRC, 141 Wis. 2d at 557; West Allis School District v. DILHR, 116 Wis. 2d at 410; Dielectric v. LIRC, 111 Wis. 2d at 274. Such is the applicant's case in the present proceeding. The employer asserts that it discharged her solely because she allegedly recruited its employees for a competing business. There was no concession or assertion by the employer that it discharged her due to the physical effects of her work injury.

In cases such as the applicant's, it would be contrary to law and common sense to state that the prima facie case involved the requirement of demonstrating that the discharge (equivalent of refusal to rehire) was "because of" the work injury. Were that fact demonstrated by the applicant, there would be no need for further proceedings because it would have been demonstrated that the discharge was unreasonable. It is the employer who has peculiar access to the knowledge and information concerning the decision to discharge. It is the employer who has the burden of producing evidence demonstrating the reason for the discharge. As the court stated in West Bend Company v. LIRC, 149 Wis. 2d at 123;

Accordingly, we conclude, based upon the findings, that Muckerheide's injury arose out of her previous employment with West Bend and that the reason asserted by West Bend for not rehiring was that she had sustained injuries while employed at West Bend. After an employe shows that she has been injured in the course of employment and subsequently is denied rehire, it becomes the burden of the employer to show reasonable cause for not rehiring the applicant. (Citations omitted) (Emphasis added).

In support of its argument the employer also cited Universal Foods Corp. v. LIRC, 161 Wis. 2d 1, 467 N.W.2d 793 (Ct. App. 1991). That case involved a factual situation nearly identical to West Bend. The employee developed a repetitive motion injury to her wrist, was subsequently laid off, and the employer asserted that because of the work injury she was thereafter medically unable to return to work. Id. at 7-8. It was within this factual context that the court described the employee's prima facie case as including the conceded fact that the employer had refused to rehire her "because of" the medical effects of the work injury. The disputed factual issue was whether these medical effects actually constituted reasonable cause.

The applicant in the case at hand established that she was an employee who sustained a work-related injury and was discharged by the employer. The burden thereupon shifted to the employer to show reasonable cause for discharging her. The employer failed to credibly carry that burden. As previously noted, it asserted that it discharged the applicant because she allegedly was helping to recruit its employees for a competitor. However, this was not shown to have been anything more than speculation. Sandberg is the one who approached the applicant, and he indicated that he only made his comments to her "in passing." Even AJ Gordon described Sandberg's comments as having been made "in jest." The applicant's response to Sandberg merely reflected her surprise that Sandberg might be interested in going to work for the competitor. The employer failed to credibly demonstrate any reason why the applicant's loyalty to her job should have been questioned. In fact, she did not attempt to go to work for the competitor after the employer fired her, and the employer concedes that she had been willing to forego a work-related injury out of a misplaced loyalty to the employer. There was no proof that it was anything beyond coincidence that the competitor contacted Sandberg the day after he made his comment to the applicant.

Additionally, the applicant credibly testified that shortly after her slip and fall in the employer's parking lot, she informed AJ Gordon that she could claim the injury on her own health insurance rather than as a work injury, and he told her it was a "no brainer" that she should claim it on her insurance. AJ Gordon denied that he even knew about the applicant's slip and fall until after she had been fired, but this denial was not credible. The applicant's testimony concerning this conversation was detailed and straightforward. The employer's human resources manager admitted that he was fully aware of the plan not to report a work injury, and he conceded that it was "possible" that within the weeks leading up to the discharge he had an ongoing conversation with the applicant concerning the medical treatment related to her fall. It is not credible that the president of this closely held business was not made aware of the plan not to report a work injury.

The employer discharged the applicant in summary fashion. She was not allowed an opportunity to defend herself against an accusation of disloyalty, an accusation based solely on unsupported suspicion. Reasonable cause for the discharge was not demonstrated and a violation of the statute has been established.

The applicant was unemployed in excess of 52 weeks subsequent to the discharged, and is therefore entitled to the maximum 52 weeks of compensation at the applicable rate of $633.20 per week, for a total of $32,926.40. Her attorney is entitled to a 20 percent fee against this amount.

Now, therefore, this

ORDER

Within 30 days from this date, the employer shall pay to the applicant the sum of Twenty-six thousand three hundred forty-one dollars and twelve cents ($26,341.12); and to her attorney, John R. Jokela, fees in the amount of Six thousand five hundred eighty-five dollars and twenty-eight cents ($6,585.28).

This order relates only to the applicant's claim pursuant to Wis. Stat. § 102.35(3).

Dated and mailed August 14, 2006
borreve . wrr : 185 : 6  ND § 7.28

/s/ James T. Flynn, Chairman

/s/ David B. Falstad, Commissioner

/s/ Robert Glaser, Commissioner

cc:
Attorney John Jokela
Attorney John Wagman

Appealed to Circuit Court.  Affirmed June 1, 2007.

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