PERRY DALE MCGRECK, Applicant
CONTEMORARY BUILDERS, Employer
In March 2003, the applicant filed an application for hearing raising, among other things, the issue of liability for an unreasonable refusal to rehire 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 unreasonable refusal to rehire issue on March 1, 2005. The ALJ issued his final decision in this matter on June 8, 2005. The applicant filed a timely petition for commission 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:
1. Background and facts.
This case poses an interesting legal issue arising under Wis. Stat. §§ 102.06 and § 102.35(3). Under Wis. Stat. § 102.35(3), an employer may be held liable for unreasonably discharging or refusing to rehire an injured worker. Under Wis. Stat. § 102.06, (1) workers injured while performing services for a subcontractor may collect workers compensation from a general contractor, if the subcontractor is not a covered employer or is uninsured.
Wisconsin Stat. § 102.06 has been in a state of suspended animation since the uninsured employer's fund was activated in July 1996. Because the applicant's injury occurred in 1990 before the fund was activated, however, Wis. Stat. § 102.06 by its terms applies to the applicant's injury.
In 1990, the applicant worked for Larry Laskowski (Laskowski), an uninsured sole-proprietor operating under the tradenames Contemporary Builders and Maple Bay Builders. At the time of his injury on April 9, 1990, the applicant was working for Laskowski on a subcontract job for which Rosenow Concrete Construction (Rosenow Construction) was the general contractor.
In March 2003, the applicant filed an application for hearing listing both Rosenow Construction and Laskowski as employers, and identifying them as "contractor-over" and "contractor-under" respectively. In this March 2003 hearing application form, the applicant marked the boxes used to claim compensation for permanent partial disability, medical expense, and transportation costs. The applicant also marked the "Other" box on the hearing application form and filled in the words "unreasonable refusal to rehire." Copies of the applications were served on Rosenow Construction, its insurer (Acuity), and Laskowski.
According to information in the file, Rosenow Construction's insurer, Acuity, responded to the hearing application by letter to the Worker's Compensation division, raising a statute of limitations defense. Acuity also stated that it had informed Rosenow Construction it would not defend him on the unreasonable refusal to rehire claim, as employers are exclusively liable under Wis. Stat. § 102.35(3).
Thereafter, the underlying disability claim was settled, apparently the result of a compromise involving the applicant and Acuity. The unreasonable refusal to rehire claim proceeded. In January 2005, hearing notices identifying the issue as "REFUSAL TO REHIRE 102.35(3)" were sent to Contemporary Builders-Larry D. Laskowski (identified as the employer) and Rosenow Construction-Ronald Rosenow (identified only as "another interested party.") Hearing was held on March 1, 2005.
At the hearing, the applicant testified that he was Laskowski's employee when injured in 1990, that he was injured while working for Laskowksi on a job where Rosenow Construction was the general contractor, that he was fired by Laskowski when he reported the injury, that he contacted Laskowski thereafter to ask about work without any success, that he averaged $765 per week in his employment with Laskowski, and that since his discharge he has been unemployed for periods aggregating over one year.
Neither Laskowski not Rosenow Construction appeared at the hearing. Thus, the applicant's testimony went rebutted.
2. Unreasonable refusal to rehire.
Wisconsin 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....
To make a prima facie case of liability under Wis. Stat. § 102.35(3), a worker must prove he or she was an employee with a compensable injury who was denied rehire or discharged. The burden then is on the employer to show that the worker was discharged with good cause. Dielectric Corp. v. LIRC, 111 Wis. 2d 270, 278 (Ct. App. 1983). 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.
In this case, the applicant has made his prima facie case for liability under Wis. Stat. § 102.35(3). Further, the applicant's prima facie case has not been rebutted by showing a reasonable cause for the discharge. Finally, the applicant has established that he has been unemployed for a period of more than 52 weeks since his discharge, resulting in lost wages reaching the maximum under Wis. Stat. § 102.35(3) of one year's wages, or $39,780. The applicant is thus entitled to payment in that amount under Wis. Stat. § 102.35(3), but the question remains: From whom?
3. Contractor over/contractor under.
As noted above, Rosenow Construction, the "contractor-over", was sent a copy of the hearing notice identifying the applicant's unreasonable refusal to rehire claim. However, the ALJ concluded the unreasonable refusal to rehire claim nonetheless had not been properly noticed as Rosenow Construction was not reasonably apprised of its substantial possible liability on the claim under the "contractor-over" theory. Consequently, while the ALJ ordered payment for the unreasonable refusal to rehire under Wis. Stat. § 102.35(3) only by Laskowski, the ALJ also reserved jurisdiction "to allow the applicant to pursue recovery against Rosenow Construction if he chooses by filing a separate application."
The applicant instead filed a petition for commission review. He argues that Rosenow Construction in fact had notice of the unreasonable refusal to rehire claim and its potential liability under the "contractor-over" statute. This triggered a response, not from Rosenow Construction, but from an attorney who had represented Rosenow Construction's worker's compensation insurer, Acuity, in the now-settled disability claim. He argues the payment under Wis. Stat. § 102.35(3) is a "penalty," not "compensation" for which Rosenow Construction as "contractor-over" may be held liable under Wis. Stat. § 102.35(3).
The commission concludes that Rosenow Construction cannot be held liable for the payment under Wis. Stat. § 102.35(3) by operation of Wis. Stat. § 102.06 under the facts of this case, regardless of how the notice and compensation-versus-penalty (2) issues are resolved. It therefore shall dismiss the application as to the unreasonable refusal rehire claim against Rosenow Construction with prejudice.
Wisconsin Stat. § 102.35(3) states that "[a]n employer who without reasonable cause refuses to rehire an employee who is injured in the course of employment... has exclusive liability to pay to the employee the wages lost during the period of such refusal, not to exceed one year's wages. [Emphasis supplied.]" The most reasonable reading of the statute is that only an employer who actually discharges the employee has liability under the statute.
The applicant was employed by Laskowski and fired by Laskowski. He specifically testified Rosenow Construction did not hire him. Laskowski paid the applicant, and following the injury the applicant took legal action against Laskowski for unpaid wages. It was Laskowski, too, that the applicant contacted about work after his injury. Because Wis. Stat. § 102.35(3) imposes "exclusive liability" on the employer who discharges or refuses to rehire a worker without reasonable cause, the commission concludes that Laskowski alone may be held liable and that liability may not be imposed on Rosenow Construction under Wis. Stat. § 102.06 on these facts.
It could be argued Wis. Stat. § 102.35(3)'s imposition of "exclusive liability" conflicts with the imposition of general contractor or "contractor-over" liability under Wis. Stat. § 102.06. However, as the more specific and more recently-enacted statute, the terms of Wis. Stat. § 102.35(3) govern. Clean Air Wis., Inc. v. PSC of Wis., Inc., 2005 Wis. 93, ¶175, 282 Wis. 2d 250, 368, 700 N.W.2d 768, 825 (holding that "where two statutes apply to the same subject, the more specific controls, and this is especially true where the more specific statute is enacted after the more general statute.") The commission notes, too, that the courts tend to limit the application of contractor-over liability under Wis. Stat. § 102.06 -- at least whenever possible -- to the role of insurer, (3) and insurers are not liable under Wis. Stat. § 102.35(3). This policy is reflected as well by Wis. Stat. § 102.81(1)(a) which provides that the uninsured employer's fund is not liable for refusal to rehire claims in these types of cases after July 1, 1996.
Accordingly, Larry D. Laskowski, doing business as Contemporary Builders and Maple Bay Builders, is liable to the applicant under Wis. Stat. § 102.35 in the total amount of $39,780. The applicant agreed to reservation of an attorney fee set under Wis. Stat. § 102.26 at twenty percent of the amount awarded or $7,956, which shall be paid within 30 days. The remainder, $31,824, shall be paid to the applicant within 30 days.
The application shall be dismissed with prejudice as it pertains to the claim under Wis. Stat. § 102.35(3) against Ronald Rosenow and Rosenow Concrete Construction.
NOW, THEREFORE, the Labor and Industry Review Commission makes this
The findings and order of the administrative law judge are modified to conform to the foregoing and, as modified, are affirmed in part and reversed in part.
Within 30 days, Larry D. Laskowski, doing business as Contemporary Builders and Maple Bay Builders, shall pay all of the following:
1. To the applicant, Perry Dale McGreck, Thirty-one thousand eight hundred twenty-four dollars and no cents ($31,824.00) as liability under Wis. Stat. § 102.35(3).
2. To the applicant's attorney, Howard J. Pitts, Seven thousand nine hundred fifty-six dollars and no cents ($7,956.00) in attorney fees.
The application is dismissed with prejudice as it pertains to the claim under Wis. Stat. § 102.35(3) against Ronald Rosenow and Rosenow Concrete Construction.
Dated and mailed November 30, 2005
mcgreck . wrr : 101 : 1 ND § 2.15 § 7.25
/s/ James T. Flynn, Chairman
David B. Falstad, Commissioner
/s/ Robert Glaser, Commissioner
The commission did not discuss witness credibility with the presiding ALJ in this case, as its modification of the ALJ's order was based purely on a question of law.
The commission acknowledges that Rosenow Construction has not asked directly to have the claim against it dismissed with prejudice -- that argument is made by Mr. Ferris who evidently does not represent a party to the refusal to rehire claim. However, given its review authority under Wis. Stat. § 102.18(3):
LIRC, not the ALJ, bears the ultimate responsibility for finding facts.... The position taken by the parties at the administrative proceedings does not control the agency's ultimate resolution of the case.... LIRC has the duty to "find the facts and determine the compensation irrespective of the presentation of the case by the attorneys. [Citations omitted.]"
UPS v. Lust, 208 Wis. 2d 306, 313-14 (Ct. App., 1997).
Attorney Howard J. Pitts
Attorney Joseph Ferris
Rosenow Construction-Ronald Rosenow
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(1)( Back ) 102.06 Joint liability of employer and contractor. An employer shall be liable for compensation to an employee of a contractor or subcontractor under the employer who is not subject to this chapter, or who has not complied with the conditions of s. 102.28 (2) in any case where such employer would have been liable for compensation if such employee had been working directly for the employer, including also work in the erection, alteration, repair or demolition of improvements or of fixtures upon premises of such employer which are used or to be used in the operations of such employer. The contractor or subcontractor, if subject to this chapter, shall also be liable for such compensation, but the employee shall not recover compensation for the same injury from more than one party. The employer who becomes liable for and pays such compensation may recover the same from such contractor, subcontractor or other employer for whom the employee was working at the time of the injury if such contractor, subcontractor or other employer was an employer as defined in s. 102.04. This section does not apply to injuries occurring on or after the first day of the first July beginning after the day that the secretary files the certificate under s. 102.80 (3) (a), except that if the secretary files the certificate under s. 102.80 (3) (ag) this section does apply to claims for compensation filed on or after the date specified in that certificate.
(2)( Back ) The commission notes in passing that the supreme court has held that Wis. Stat. § 102.35(3) is "compensatory and not penal." West Allis School Dist. v. DILHR, 116 Wis. 2d 410, 421 (1984). On the other hand, Wis. Stat. § 102.81(1)(a) provides some authority that the refusal to rehire liability under Wis. Stat. § 102.35(3) could be considered a penalty. However, Wis. Stat. §§ 102.01(1)(intro.) and (am) and 102.81(1)(a), read together, suggest that even if the refusal to rehire liability is considered a penalty it remains "compensation" except where specifically excluded from that defined term.
(3)( Back ) The supreme court has previously held:
Sec. 102.06 of the Statutes does not create the relationship of employer and employee where it does not exist as a matter of fact. The purpose of this section is to insure the payment of compensation, -- to put the defendant Pump Company in the place of an insurance carrier in case compensation insurance is not carried. The fact that the defendant Pump Company is made the insurer of compensation does not make it an employer under the statute any more than any insurance carrier is put in the relationship of an employer of an injured employee by the fact that it has insured the payment of compensation.
Cermack v. Milwaukee Air Power Pump Co., 192 Wis. 44, 49-50 (1927). The court has also stated:
The fact that sec. 102.06 of the Statutes might, under certain contingencies, place defendant in the position of insurer of any compensation that might be due from plaintiff's employer, does not make plaintiff an employee of the defendant for the reason that this provision of the statute does not create the relationship of employer and employee, but does create a relationship that is analogous to that of an insurer. Where the relationship of insurer exists, liability is based upon an independent contract between the employer and his contractor, and not upon any contract of service, either express or implied.
Clubertson v. Kieckhefer Container Company, 197 Wis. 349, 351-52 (1928). More recently, however, the court has said it "does not necessarily continue to embrace all of the principles espoused in Cermack and Culbertson" when faced with the argument that a contractor-over who pays workers compensation is not an "employer" entitled tort immunity under Wis. Stat. § 102.03(2). Wagner v. Continental Casualty Co., 143 Wis. 2d 379, 387 (1988). Still, the commission concludes that these cases establish that even under the "indirect employer" analysis employed by the majority in Wagner, Rosenow Construction cannot be required to pay the applicant for amounts for which Laskowksi is exclusively liable under Wis. Stat. § 102.35(3).