Wis.LIRC ER Decision: Cintron, Garza - April 29, 1996 - Back pay - cut-off of back pay liability based on offer of reinstatement or cessation of business of employer

STATE OF WISCONSIN
LABOR AND INDUSTRY REVIEW COMMISSION
P O BOX 8126, MADISON, WI 53708-8126 (608/266-9850)

LISA CINTRON, Complainant

LISA GARZA, Complainant

PHIL WROBBEL SERVICE CORP, Respondent A

PHIL WROBBEL, Respondent B

FAIR EMPLOYMENT DECISION
ERD Case No. 9351463, EEOC Case No. 26G931288
ERD Case No. 9351467, EEOC Case No. 26G931290

An administrative law judge (ALJ) for the Equal Rights Division of the Department of Industry, Labor and Human Relations issued a decision in this matter. A timely petition for review was filed.

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 agrees with the decision of the ALJ, and it adopts the findings and conclusion in that decision as its own, except that it makes the following modifications:

1. In paragraph 3 of the FINDINGS OF FACT, the date "March 13" is deleted and the date "March 15" is substituted therefor.

2. In paragraph 8 of the FINDINGS OF FACT, the phrase "in January 1993" is inserted between the words "employment" and "because."

3. Paragraphs 3,4 and 5 of the ORDER are deleted and the following paragraph is substituted therefor:

That the respondents shall make Lisa Cintron whole for all losses in pay and benefits that she suffered by reason of the respondents' unlawful conduct by paying her the sum she would have earned as an employe from March 15, 1993, when she quit her employment, through June 1984 when her employment would have ended. That the respondents make Lisa Garza whole for all losses in pay and benefits that she suffered by reason of the respondents' unlawful conduct by paying her the sum she would have earned as an employe from January 1993 when she quit her employment, through April 15, 1994. The back pay for the complainants shall be computed on a calendar quarterly basis with an offset for interim earnings during each calendar quarter. Any unemployment insurance or welfare benefits received by the complainants during the above stated periods shall not reduce the amount of back pay otherwise allowable, but shall be withheld by the respondent and paid to the Unemployment Insurance Reserve Fund or to the applicable welfare agency. (Reimbursement for unemployment insurance should be in the form of a check and note the complainant's name and social security number.) Additionally, the amount payable to the complainants after all statutory set-offs shall be increased by interest at the rate of 12% simple. Interest shall be computed as follows: For each calendar quarter in the back pay period, the amount of back pay due for that quarter, after statutory set-offs, shall be computed. Interest shall be computed for each amount from the last day of each such calendar quarter to the day of payment. Pending any and all appeals from this order, the total back pay due will be the total of all such amounts."

4. The amount of attorney's fees and costs listed as required to be paid in both paragraphs 6 and 7 of the ORDER are modified as follows: Attorney's fees and costs are $7,137.57, which includes $7,064.58 for attorney's fees and $72.99 for costs.

5. Paragraph 8 of the ORDER is deleted and the following paragraph is substituted therefor:

"Within 30 days of the expiration of time within which an appeal may be taken herein, the respondent shall submit a compliance report detailing the specific action taken to comply with the commission's decision. The compliance report shall be directed to the attention of Kendra DePrey, Labor and Industry Review Commission, P.O. Box 8126, Madison, Wisconsin."

DECISION

The decision of the administrative law judge (copy attached), as modified, is affirmed.

Dated and mailed: April 29, 1996
lisalis.rmd : 125 : 9

Pamela I. Anderson, Chairman

Richard T. Kreul, Commissioner

David B. Falstad, Commissioner

MEMORANDUM OPINION

On appeal the respondents argue that certain events that occurred after the complainants terminated their employment acted to "cut off" the running of the back pay owed to the complainants. First, citing Anderson v. LIRC, 111 Wis.2d 245, 330 N.W.2d 594 (1983), the respondent argues that subsequent to the complainants' quitting the respondent made several valid offers of reinstatement to both complainants which tolled its liability for back pay. While the court in Anderson did hold that a valid offer of reinstatement ends the accrual of back pay, the court also held that one of the requirements that must be established in order to constitute a valid offer of reinstatement is that "the offer of reinstatement must be unconditional." Id. at 256. In the instant case Respondent Wrobbel's offers were not unconditional as he concedes that his offers were made "with the condition that (the complainants) drop their suits." (Summary, p.3) Thus, the offers of reinstatement made by Wrobbel would not end accrual of the complainants' back pay.

Alternatively, the respondents argue that the complainants' back pay period should be cut off at least as of the August 8, 1994 hearing date since Wrobbel testified without contradiction that the business was no longer in operation and that he was no longer personally performing any accounting functions. Under Title VII case law back pay has been held to terminate as of the time that the plaintiff's former position is abolished for legitimate reasons, or where the employer went out of business. See for example, Levendos v. Stern Entertainment, 51 FEP Cases 1763, 723 F.Supp. 1104 (D.C. W.Pa. 1989); Archabault v. United Computing Systems, Inc., 40 FEP Cases 1050, 786 F.2d 1507 (11th Cir. 1986); and Richardson v. Restaurant Marketing Assoc., 31 FEP Cases 1562, 527 F.Supp. 690 (D.C. Calif. 1981).

The complainants and respondents both cite Buehler v. Schlueter Investment Co., (LIRC, 6/5/87) as support for their respective positions. In Buehler, it was held that the owners of a restaurant could not escape liability for back pay owing after the date on which they sold their interest in the restaurant because the evidence showed that most, if not all, of the former employes were hired by the new owners and continued working there, and the respondents could not show that the new owners would not have hired the complainant had she still been employed.

The complainants herein argue that Wrobbel's offers of reinstatement indicate continued operation of his business, and then they cite Buehler for the proposition that Wrobbel as owner of the business cannot escape liability for back pay owing after the date he sold his interest in the business where Wrobbel failed to meet his burden to prove that the complainants would not have continued to receive income from employment at the firm even after he sold his interest. The difficulty with the complainants' argument, however, is that the record shows that Wrobbel's testimony at the hearing on August 8, 1994 was that "the business is no longer in operation," not that it had been sold. (Summary, p. 3) Wrobbel's offers of reinstatement to the complainants were obviously made before August 8, 1994. Absent evidence that the business was continued, there was no employment for the complainants to have possibly continued in.

Under the circumstances, it would be proper to find that the back pay period ends as of August 8, 1994. In fact, the ALJ does mention that the business was no longer in operation as of the date of the hearing in the footnote appearing on page three. Further, it appears that he did not intend that the back pay period extend beyond August, 1984, except that a reading of paragraph 3 of his order seems to indicate otherwise. In any case, based on the amount of the "total back wages" that the ALJ calculates as being owed to each of the complainants, it appears that their back pay did not extend beyond August 8, 1994. The ALJ determined that Lisa Cintron's back wages were $8,200.30. Based on its calculations using Cintron's rate of pay and hours of work per week, the commission finds that this amount covers the period from her termination through June 1994. This would be the correct back pay period for her since her employment ended in June each year. The ALJ determined that Lisa Garza's back wages equal $22,984. Similarly, based on its calculations using Garza's rate of pay and hours of work (including overtime), the commission finds the $22,984 amount to be appropriate for her. Garza obtained other employment in March 1994 that paid $7.50 per hour, a rate of pay greater than what she had received at the respondents. Further, it appears that the $22,984 amount includes consideration of the fact she would have received pay at time and a half for overtime for the respondents until the end of the "tax season" on April 15. Since Garza would have been earning a higher wage at her subsequent employment after April 15, 1994, this was appropriate reason to end her back pay period at that point.

NOTE: The commission has modified the ALJ's decision to make the findings better conform with the evidence, to clarify when the back pay periods for the complainant's end and to include an additional award of attorney's fees and costs incurred subsequent to the ALJ's decision.

cc:
ALAN C. OLSON
SHELLY A. RANUS

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