DANYA FETTIG, Applicant

TOOLS INC, Employer

In July 2004, the applicant filed an application for hearing seeking compensation for an injury on December 6, 2001. The employer and its insurer conceded the occurrence of a work injury on December 6, 2001, with an average weekly wage at the time of $714.81, and paid temporary disability compensation for various periods to May 8, 2002. Certain additional issues regarding compensation were resolved by compromise. Left unresolved, however, was the applicant's claim for compensation under Wis. Stat. § 102.35(3).

An administrative law judge (ALJ) for the Worker's Compensation Division of the Department of Workforce Development heard the Wis. Stat. § 102.35(3) claim on April 4, 2006. By order dated July 6, 2006, the ALJ dismissed the claim and the applicant filed a timely petition for review.

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 makes the following:

The applicant began working for the employer in April 1999, and was a set up operator for the employer. She was injured on December 6, 2001, when she suffered a strain of her cervical and scapular muscles in overuse-type injury from using shears. She worked briefly under restrictions from December 18, 2001 to January 31, 2002, then was off work entirely until late-May 2002 when she was released to work. The employer's examining doctor (Ansari) released her without restriction, while the treating doctor (Miller) imposed minor restrictions which the employer concedes would not have affected her ability to return to work.

On May 28, 2002, the applicant faxed treating doctor Miller's restrictions to the employer's business manager, Karen Heiking. Ms. Heiking telephoned the applicant to tell her there was no work for her. According to the applicant, Ms. Heiking also told her during this conversation that the worker's compensation insurer would no longer pay her bills (presumably because Dr. Ansari had opined the applicant had reached a complete end of healing.)

At the hearing, Ms. Heiking testified that the employer had an economic downtown in 2001 and 2002. During this period, the employer terminated the employment of a number of its workers, mostly for economic reasons. Exhibit 4. Ms. Heiking testified that, among other factors, one of the employer's customers went bankrupt, costing it business and leaving it with a large bad debt.

In April 2002, alone, the employer laid off 7 workers for economic reasons, (including 5 on April 26, according to a summary document at exhibit 5 authenticated by Ms. Heiking (transcript, page 69.) While the employer was laying off workers, it also added a laser machine in an attempt to "grow a different segment of business to draw customers." Transcript, page 68.

When business manager Heiking received Dr. Ansari's report releasing the applicant to work in early May 2002, she met with the employer's owner and general manager. Ms. Heiking noted that the employer had not replaced the applicant while she was on worker's compensation leave. Ms. Heiking and the owner decided there was no job for the applicant, and that her former duties would continue to be covered by other workers. Ms. Heiking testified, however, that if the employer had had a job available, including work other than as press set up operator, it would have offered it to the applicant.

Ms. Heiking testified that when she called the applicant to tell her that her employment had been terminated, she told the applicant about the employer's situation, and encouraged her to reapply for employment in the future. Ms. Heiking then sent the applicant a letter on May 29, 2002, to confirm the discharge "effectively immediately, for lack of an open position." The letter states:

During the time you have been off work, Tools Inc. has experienced a slowdown in business. For the first time in our company's history, we had to terminate 5 employees due to lack of work. We terminated these employees last month on April 26th. In addition to those individuals, 8 others left our employ in the 6 months and were not replaced. Because of this downturn in work, we no longer have enough work to support a press set up position. There is no one performing this job. Rather other employees are performing press set-ups when they are needed. As a result, your position is no longer available. Currently, there are no open positions at Tools Inc., and we do not anticipate any in the near future. Further, depending upon the type of job that may become available, we will need to review whether you are qualified to perform it. Therefore, we are terminating your employment effective May 29, 2002.

If you are interested in being considered for future employment at Tools Inc., you must complete the included application and return it to me in the envelope provided. If we do not receive an application from you, we will not consider you for any other employment opportunities as they may become available. Upon receiving he application from you Tools Inc will consider you for appropriate positions when and if they become available for up to thirty days, which is the length of time the company considers the applications to be active.

The applicant acknowledged receiving the letter. She did not return the enclosed application because

[Heiking] told me that at that time they're not hiring, that I needed to wait until they were hiring and then I could reapply for the work, and I did not know they were hiring until I seen it in the paper."

Transcript, page 34.

After the discharge, Ms. Heiking and the applicant had two or three more conversations by phone. On at least one of the occasions, Heiking testified, she again suggested to the applicant that she reapply.

After the applicant's discharge, two workers who were doing the set-up work the applicant had formerly done, Jason and Tyson, were working 10 hour shifts. The employer also ran weekend shifts to keep the new laser machine busy.

In late July 2002, two months after the applicant's discharge in late May 2002 and three months after the other five workers were laid off in later April 2002, the applicant's business began to pick up, and the employer started adding positions. Specifically, on July 22, 2002, the employer advertised in the newspaper for a CNC machinist, press operators, and a tool and die maker. Exhibit 5. Ms. Heiking testified the applicant would have been qualified for employment as a press operator, though that job paid about half of what the applicant had been paid as set-up operator.

The applicant actually saw the employer's ad in the paper. However, she did not reapply because by the time the ad ran, she had enrolled in retraining at a vocational school, and received a grant from a state agency. She was concerned that if she withdrew from school, she would have to repay the money that she had obtained from the state agency plus a penalty.

The applicant continued in vocational school, obtaining an associates degree after two years. While at school, she worked, apparently part-time, at two jobs. After graduating, she obtained a job with another employer at $15.50 or $1.75 less than she was paid by the employer.

Wisconsin Stat. § 102.35(3), provides:

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 stated in Dielectric Corp. v. LIRC, 111 Wis. 2d 270, 278 (Ct. App. 1983), 111 Wis. 2d at 278:

Under [Wis. Stat. § 102.35(3)], 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.

This "very correct standard" set out by the court in Dielectric was adopted by the supreme court in West Bend v. LIRC, 149 Wis. 2d 110, 121 (1989). In that case, the Supreme Court stated that "after an employee 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 employee." West Bend, at 149 Wis. 2d 123.

The commission has previously held that an employer is under no duty to keep a job open for an injured worker indefinitely, but if it has suitable work when he or she ends healing, that work should be provided to him or her. Snyder v. Lakeshore Marine, WC Claim No. 95004097 (LIRC, January 30, 1998). See also Fruth v. Town of Wheatland, WC Claim No. 2003-033619 (LIRC, June 2, 2006). In other words, Wis. Stat. § 102.35(3) does not guarantee reemployment in every case. Dielectric, at 111 Wis. 2d 278, footnote 6 (stating the court "d[id] not believe the legislature intended lifetime job protection.") The statute itself uses a "reasonable cause" language, as reflected in the court of appeals holding in Ray Hutson Chevrolet, Inc., v. LIRC, 186 Wis. 2d 118, 123 (Ct. App. 1994) that:

"A business decision to reduce costs can, by itself, establish the reasonableness of the decision. Reducing costs is a form of efficiency. Inefficient businesses risk their very survival and the jobs of all their employees. Nothing in § 102.35(3), Stats., reflects a legislative intent that an employer must perpetuate an unnecessary expense by rehiring an injured employee to fill a position the employer eliminated to save costs. We conclude that if an employer shows that it refused to rehire an injured employee because the employee's position has been eliminated to reduce costs and therefore to increase efficiency, the employer has shown reasonable cause under § 102.35(3)."

The applicant has established that she was the employer's employee and was discharged following a work injury. She has made her prima facie case, shifting the burden to the employer to show reasonable cause for discharging her.

As reasonable cause, the employer cites economic circumstances, offering testimony about its financial situation, particularly after the bankruptcy of a customer, and general reduction in force that included several workers besides the applicant. Five workers were laid off only a month before the applicant. The employer cited financial concerns at the time of the discharge.

The applicant does not dispute that other workers were laid off, but notes that some workers who were retained worked overtime. However, providing overtime hours to workers who are retained after a reduction in force is not necessarily inconsistent with the assertion that the force reduction was required for economic reasons. Employers facing economic difficulties may times try to make do with less, which may mean giving a few workers overtime to do what production work remains while laying other workers off.

The commission did give careful consideration to the fact the applicant's discharge occurred when she finished healing from a work injury. This timing might raise suspicions, were it not for Ms. Heiking's uncontradicted testimony that the employer had laid off several other workers one month before the applicant's end of healing. However, Ms. Heiking's testimony concerning the economic situation facing the employer is credible, and the commission, like the ALJ, concludes the applicant was laid off upon reaching an end of healing for a reasonable cause: the employer's financial situation.

The closer issue involves the duty the employer had to offer re-employment to the applicant after it discharged her versus the duty the applicant had to reapply (or continue to reapply) following her discharge. The parties cite the two published court of appeals decisions on this point.

In L&H Wrecking Co. Inc., v. LIRC, 114 Wis. 2d 504 (Ct. App. 1983), an injured worker was fired during his healing period because the employer -- without any supporting medical expert evidence -- believed the worker's injury would prevent him from returning to work. While the commission found the employer unreasonably refused to rehire the applicant, the circuit court disagreed, holding that the applicant was required to report to the employer for work after obtaining a medical release in order to make a claim under the statute.

The court of appeals reversed the circuit court holding that:

We conclude that to require a terminated employee to report to work in order to recover under sec. 102.35(3), Stats., is an unreasonable construction of the statute. In this case, L & H terminated the employment before Brownfield received medical permission to return to work. For Brownfield to have reported for work, after termination, would have been an exercise in futility. To require such behavior as a prerequisite to recovery under sec. 102.35(3) would impose an unreasonable burden on any employee. [Italics in the original.]

L&H Wrecking Co. Inc., 114 Wis. 2d at 510.

On the other hand, in Hill v. LIRC, 184 Wis. 2d 101 (Ct. App. 1994), a worker's injury prevented him from returning to his job as a truck driver, but he never expressed an interest in returning to work with the employer in another capacity. The commission found against the employee noting:

Where an employe is released by his physician after an extended period of total disability with significant permanent restrictions that all parties agree will preclude the employe from returning to the type of work he always did for the employer, it is appropriate to impose on the employe some type of obligation of communicating to the employer the extent of his interests, if any, in returning to employment with that employer in a different capacity.

Hill, 184 Wis. 2d at 108. The court of appeals affirmed the commission's requirement that the worker express an interest in returning, stating:

The communication requirement must be placed in context. In the paragraph in which it imposes the requirement, LIRC first lists the four elements essential to the employee's prima facie case [including the requirement that an employee apply for rehire.]... LIRC then states that no affirmative reapplication would be necessary when the employee is released by a physician to return to the same position without restrictions; informing the employer of the physician's release would be sufficient. LIRC also notes that no formal application is required where the employee has been terminated while on leave. See L & H Wrecking Co. v. LIRC, 114 Wis.2d 504, 509-10, 339 N.W.2d 344, 347 (Ct. App. 1983). Finally, LIRC states that expressing to the employer the extent to which an employee is interested in working in a different capacity is necessary when the employee is precluded from returning to his or her previous job.

From the context, we conclude that instead of adding to the employee's burden, LIRC was clarifying what "applying for rehire" entails in the case where an employee cannot resume his or her previous work. This clarification ... need not take the form of a written application, but may be accomplished through informal means, e.g., a telephone conversation. Furthermore, as a matter of common sense and logic, when an employee who cannot resume his previous position applies for rehire, he at the very least implies a willingness to accept work of a different nature. Therefore, we conclude that LIRC's application of the statute and corresponding case law is reasonable and must be affirmed.

Hill, 184 Wis. 2d at 111-12.

This case does not fit neatly into the facts of either Hill or L&H Wrecking. Unlike the situation in Hill, the applicant's injury does not prevent her from returning to her old job. The employer acknowledged the applicant could still do her former job when she ended healing, but it discharged her for financial reasons. The employer further acknowledged that, after it discharged the applicant, other work which the applicant could do became available, but the employer did not contact her. This is not a case where, as in Hill, a worker must be expected to tell the employer he or she is interested in continuing in employment in another capacity upon reaching an end of healing with restrictions that prevent him or her from returning to his or her former job.

Nor, however, does this case fit the facts in L&H Wrecking, where the employer discharged the injured worker on the unjustified belief that restrictions from her work injury meant she could never return to her former job. Again, the employer in this case does not claim that restrictions from the work injury necessitated the applicant's discharge, nor was she fired before reaching an end healing. Rather, the employer contends she was discharged for purely economic reasons, and was told at the time to submit an application for re-employment should work become available. The applicant did not reapply, despite having actual knowledge of available work and having been informed by Ms. Heiking that any future job application by her would be given favorable consideration.

The commission concludes that the employer is not liable for the penalty under Wis. Stat. § 102.35(3). The commission credits Ms. Heiking's testimony, and is satisfied the employer was facing severe economic difficulties in May 2005 when it laid the applicant off for economic reasons. Further, upon laying her off, the employer encouraged her to reapply, and went so far as to include an application with the discharge letter.

Obviously, this is a different situation than occurs where, as in L&H Wrecking, a worker is discharged because the employer thinks she cannot do the job due to the work injury. In such a case, an employee might reasonably think reapplying for work is futile unless the employer steps forward affirmatively with a job offer. Here, however, the applicant had no basis to believe applying for the press operator work that came available in July 2002 would be useless or that the employer would not act favorably on her application. Again, the employer encouraged her to reapply. Thereafter, the applicant chose not to apply for work with the employer that she knew was available for what must be considered personal, albeit completely understandable, reasons.

The commission declines to conclude the employer unreasonably refused to rehire the applicant, and it is satisfied that the employer did not do so with a bad faith intent to evade the statute. See Dielectric, at 111 Wis. 2d 278-79. The application must therefore be dismissed.

The findings and order of the administrative law judge are modified to conform to the foregoing and, as modified, are affirmed. The application, as it pertains to the claim for compensation under Wis. Stat. § 102.35(3), is dismissed.

Dated and mailed February 8, 2007
fettida . wrr : 101 : 1   ND § 7.33

/s/ James T. Flynn, Chairman

/s/ David B. Falstad, Commissioner

/s/ Robert Glaser, Commissioner

cc:
Attorney Monica A. Hartl
Attorney Steven A. Burk

Appealed to Circuit Court.  Affirmed November 14, 2007.

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