SHELDON W. JORGENSEN, Complainant

HMI LIMITED, d/b/a HARDEE'S, Respondent

An Administrative Law Judge for the Equal Rights Division of the Department of Industry, Labor and Human Relations issued a decision in the above-captioned matter on March 20, 1991. Complainant filed a timely petition for review by the Commission and both parties subsequently submitted written arguments.

Based upon a review of the record in its entirety, the Labor and Industry Review Commission issues the following:

The decision of the Administrative Law Judge (copy attached) is modified as follows:

Conclusion of Law number 2 is renumbered Conclusion of Law number 3, and the following is added as Conclusion of Law number 2:

"2. The circumstances of the Complainant's conviction of grand theft are substantially related to the circumstances of his job as an assistant manager for the Respondent."

As modified, the decision of the Administrative Law Judge shall stand as the FINAL ORDER herein.

Dated and mailed October 25, 1991

/s/ Pamela I. Anderson, Chairman

/s/ Richard T. Kreul, Commissioner

The Complainant, Sheldon Jorgensen, challenges the decision of the Administrative Law Judge (ALJ) on the ground that it is illogical to find that Jorgensen was terminated by the Respondent, HMI Limited (HMI) because of his having been found guilty of grand theft, and then to conclude that there was no probable cause to believe that HMI unlawfully discriminated against Jorgensen because of his conviction record. (1)   The commission agrees. Accordingly, the Commission has remedied the apparent illogic by adding a conclusion of law that the circumstances of Jorgensen's conviction of grand theft are substantially related to the circumstances of his job as an assistant manager for HMI.

In anticipation of the Commission's amendment of the ALJ's decision, Jorgensen argues that the record does not support a conclusion that the circumstances of his conviction are substantially related to the circumstances of the assistant manager job. He also argues that HMI cannot rely on the "substantially related" exception because it never knew the exact circumstances of the conviction at the time it terminated Jorgensen's employment. Neither argument has any merit.

In both Gibson v. Transp. Comm., 106 Wis. 2d 22, 26-27, 315 N.W.2d 346 (1983), and County of Milwaukee v. LIRC, 139 Wis. 2d 805, 823-24, 407 N.W.2d 908 (1987), the court rejected an interpretation of the "substantially related" exception, sec. 111.335(1)(c), Wis. Stats., which would require a detailed inquiry into the facts of the offense and the job. In County of Milwaukee, the court stated:

"Assessing whether the tendencies and inclinations to behave in a certain way in a particular context are likely to reappear later in a related context, based on the traits revealed, is the purpose of the test. What is important in this assessment is not the factual details related to such things as the hour of the day the offense was committed, the clothes worn during the crime, whether a knife or gun was used, whether there was one victim or a dozen or whether the robber wanted money to buy drugs or to raise bail money for a friend. All of these circumstances could fit a broad interpretation of 'circumstances.' However, they are entirely irrelevant to the proper 'circumstances' inquiry required under the statute. It is the circumstances which foster criminal activity that are important, e.g., the opportunity for criminal behavior, the reaction to responsibility or the character traits of the person." 139 Wis. 2d at 823-24 (emphasis added) (footnote omitted)

In this case, Jorgensen was found guilty of grand theft. His duties as an assistant manager involved handling cash and depositing funds. An assistant manager has direct access to the keys and to the combination for the Respondent's safe. The Commission believes, as a matter of law, that the circumstances of Jorgensen's conviction for grand theft are substantially related to the circumstances of an assistant manager job. The tendency and inclination to behave in a particular way, which are evidenced by a finding of guilt for grand theft, and the likelihood that such behavior (based on the traits revealed) is likely to appear in a job which presents an opportunity for criminal behavior, supports a conclusion that the "substantially related" exception is satisfied in this case.

Specifically, the "circumstances" of the offense for which Jorgensen was convicted and the job which he held for the Respondent are similar because in both instances Jorgensen was in a position of having access to an employer's money. His conviction for grand theft indicates a propensity toward being untrustworthy when he has access to someone else's money. These traits are inconsistent with the reasonable expectation of responsibility and trustworthiness associated with managing a retail establishment. Neither the particular details of the behavior underlying the conviction (i.e., the contract dispute over Jorgensen's fees for his consulting services and the fact that he testified that "I thought I had been owed money and so wrote a check to myself. " [Hrg. Syn., p. 6]), nor the distinctions between Jorgensen's employment as a "consultant" in Florida and as an assistant manager for HMI, can alter this conclusion. County of Milwaukee, 139 Wis. 2d at 823-24, 830. (". . . the inquiry does not turn on superficial matters, such as the distinctions between an administrative job and a 'direct care' job.")

Finally, whatever the merits of Justice Abrahamson's concurrence in County of Milwaukee, 139 Wis. 2d at 831-32, which Jorgensen cites in his brief, the controlling interpretation of the "substantially related" exception is that which is set forth in the majority opinion and which the Commission has faithfully applied in this case.

Jorgensen argues, in the alternative, that even if his conviction for grand theft is "substantially related" to the circumstances of his job as an assistant manager, HMI cannot rely on the "substantially related" exception because it failed to become aware of the exact charges against him. To the extent that Jorgensen is arguing that HMI was required to conduct a detailed inquiry into the facts underlying the finding of guilt for grand theft, that argument (as noted earlier) was specifically rejected in County of Milwaukee. To the extent that Jorgensen may be arguing that HMI cannot rely on the "substantially related" exception because it did not specifically consider that exception at the time Jorgensen's employment was terminated, the Commission's response is twofold. First, the record suggests otherwise. Stacy Schmidt, the HMI Marketing Manager, testified that if Jorgensen were convicted of grand theft, he would be concerned about whether Jorgensen could deal with cash appropriately. (Hrg. Syn., p. 3) Such testimony, credited by the ALJ, is evidence that Schmidt and HMI gave specific thought to those character traits and "circumstances" which the court in County of Milwaukee set forth as relevant to the inquiry surrounding the "substantially related" exception.

Second, in Bernard Collins v. Milwaukee County Civil Service Commission, ERD Case #8822724 (LIRC, March 8, 1991), the Commission held that an employer may rely on the "substantially related" exception in defense of a complaint of conviction record discrimination, regardless of whether the employer considered such exception at the time when the employer denied employment to the complainant because of a previous felony conviction. The Commission found that the "substantially related" exception is not a test by which one measures the subjective intent of the employer at the time it makes the challenged decision; it is, rather, a test by which the legal correctness of the employer's decision is measured by the ALJ, the Commission, and the courts. The Commission relied on three supreme court decisions interpreting sec. 111.335, Law Enforcement Standards Board v. Lyndon Station, 101 Wis. 2d 472, 305 N.W.2d 89 (1981), Gibson v. Transp. Comm., supra, and County of Milwaukee v. LIRC, supra., as support for the above proposition:

"In Law Enforcement Standards Board v. Lyndon Station, there was no indication that the Law Enforcement Standards Board had made any analysis whatsoever of whether the circumstances of the convictions there involved were substantially related to the position at issue. Rather, it acted solely on the basis of a determination that the individual in question had been convicted of felonies. The supreme court was obviously not troubled by this fact. It conducted its own analysis of the "substantially related" question, 101 Wis. 2d at 492-93, and arrived at its own determination that there was a substantial relation between the circumstances of the offenses and the circumstances of the position.

In Gibson v. Transportation Commission, while the licensing agency did in fact consider and make a determination upon the question of whether the circumstances of the offense were substantially related to the circumstances of the licensed activity at the time of its decision, nothing in the supreme court's decision suggests that this fact was necessary to the result. Rather, the court again conducted its own independent analysis of the 'substantially related' question. 106 Wis. 2d at 28.

In County of Milwaukee v. LIRC and Serebin, . . . there was no indication that the county had made any determination that offense and circumstances were 'substantially related.' On the contrary, the Commission made a specific finding of fact that the complainant therein had been discharged based upon the newspaper report of his conviction and because of concerns over adverse publicity to the county connected with its employment of the complainant in view of this reported conviction, without verifying the conviction or inquiring into the surrounding circumstances. 139 Wis. 2d at 812. Rather, it reversed based on a conclusion that the Commission had misapplied the legal standard involved. As in the previous decisions, the court conducted its own analysis of and inquiry into the question of whether offense and position were substantially related. 139 Wis. 2d at 828-29.

It is evident from the language of the supreme court in Serebin that the 'substantially related' test is intended to be a legal test, applied after the fact by the reviewing tribunal, not a test of the subjective intent of the decision-maker. Defining the central issue in the case, the court stated:

'The basic question is: what is the nature of the inquiry required by sec. 111.32 (5)(h)2b? Answering this question requires that this court determine what the legislature intended when it chose to phrase the exception in terms of the "circumstances" of the offense and "circumstances" of the particular job. Depending on what meaning is ascribed to the term "circumstances," the question remains: what procedure is required in order that courts may assess the "circumstances" in the particular case?' 139 Wis. 2d at 818. (emphasis added)

Further indication that the test is one to be applied independently by reviewing tribunals is found in the court's statement that:

'Actions taken by an employer or licensing agency which might normally constitute discrimination are, by definition, deemed not to be "unlawful" if it can be shown that the circumstances of the offense substantially relate to the circumstances of the particular job or licensing activity.' 139 Wis. 2d at 820. (emphasis added)"

The use of the phrase 'if it can be shown that' clearly anticipates a showing in a subsequent trial. Thus the court did not say that actions taken by an employer which might normally constitute discrimination would, by definition, be deemed not to be 'unlawful' if the employer could show that it had concluded at the time that the circumstances of the offense substantially related to the circumstances of the particular job or licensing activity."

Collins v. Milwaukee County (LIRC, March 8, 1991).

For these reasons, the Commission is not persuaded by Jorgensen's argument that HMI failed to consider the "substantially related" exception at the time it terminated Jorgensen, or, even if that were true, that HMI is now precluded from relying on it to justify its decision.

In summary, since the circumstances of Jorgensen's finding of guilty for grand theft are substantially related to the circumstances of an assistant manager job, the Commission has affirmed the ALJ's decision that there is no probable cause to believe that HMI unlawfully discriminated against Jorgensen on the basis of his conviction record.

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(1)( Back ) Jorgensen wisely does not challenge the conclusion that there is no probable cause to believe that HMI unlawfully discriminated against him because of an arrest record. Such a challenge would be unsuccessful because HMI continued Jorgensen's employment after it became aware of the charges pending against him and did not terminate his employment until he was found guilty of grand theft.