Wisconsin Labor and Industry Review Commission --
Summary of Wisconsin Court Decision relating to Unemployment Insurance

Subject: Operton v. LIRC, 2017 WI 46, 375 Wis. 2d 1, 894 N.W.2d 426.

Digest Codes: MC 602.2, PC 757

Operton worked approximately 21 months as a cashier for Walgreens, during which time she completed approximately 80,000 cash-handling transactions. Over the course of her employment, Operton made 10 of what Walgreens characterized as cash-handling errors, eight of which it documented. On two occasions, she accepted a Women, Infants, and Children check for improper amounts, resulting in a total loss to Walgreens of $3.06. On one occasion, she accepted a check without the customer's signature, resulting in a loss of $14.46. On two occasions, she gave the customer's check back to the customer, resulting in a total loss of $101.68. On one occasion, she took a WIC check before it became valid, resulting in a loss of $27.63. On one occasion, she allowed a customer to leave the store before the customer completed a transaction on the pin pad, resulting in a loss of $9.26. Finally, on one occasion she failed to check the identification of a customer who was making a credit card purchase of $399.27. Her failure to do so violated the employer's policy that identification be checked for credit card purchases over $50, the credit card turned out to have been stolen, and Walgreens suffered a loss of the $399.27. Following this incident, it discharged her.

The Department of Workforce Development's initial determination held that Operton's failures were misconduct within the meaning of Wis. Stat. § 108.04(5)(intro.). A department administrative law judge disagreed, reasoning both that there was no evidence the employee intentionally or willfully disregarded the employer's interests by continuing to make cash-handling errors, and that her actions were not so careless or negligent as to manifest culpability or wrongful intent. The administrative law judge concluded, however, that Operton's failures were substantial fault. The administrative law judge reasoned that Operton did not establish that she did not have reasonable control over the failures that led to her discharge, and that she continued to make cash-handling errors after receiving multiple warnings.

The commission adopted the findings and conclusions of the administrative law judge. The commission also indicated, in its memorandum opinion, that Operton's last failure was a major infraction which, when taken together with a final warning Operton had received [four days earlier], persuaded the commission that Operton's discharge was due to substantial fault. The circuit court affirmed the commission's decision, deferring to the commission in its entirety.

The court of appeals REVERSED the circuit court.[1] First, the court held that the commission's legal conclusion of substantial fault was not entitled to any deference from a reviewing court. Substantial fault was a new statutory basis for denying unemployment benefits, and the commission's conclusion of substantial fault in Operton was inconsistent with its conclusions in other cases involving errors by employees.[2] The commission therefore did not have a longstanding or consistent history applying and construing the substantial fault statute.

With regard to the merits, the court of appeals held that Operton's errors were simply the type of unintentional mistakes that all people make at times, and that the commission erred in holding that they did not fall within the inadvertent error exclusion from the statutory substantial fault definition. The commission's having noted that Operton continued to make errors despite warnings, also reflected its having erroneously merged the warning component of the minor infraction exception with the inadvertent error exception. Even with warnings, inadvertent errors do not metamorphose into rule infractions. The court of appeals rejected the commission's argument that a series of errors which, taken individually, are not disqualifying, in their cumulative effect can become disqualifying conduct.

Held: The supreme court AFFIRMED the court of appeals in a decision authored by Chief Justice Roggensack. First, the court bypassed traditional deference analysis because the commission, in denying Operton unemployment benefits, did not provide an articulated interpretation of the statute. The commission did not reason through the three exclusions from substantial fault individually, and in particular it did not examine Operton's errors to determine whether they were inadvertent under Wis. Stat. § 108.04(5g)(a)2. The court therefore interpreted the statute de novo, using well-established principles of statutory interpretation.

The court noted that there is a strong public policy in Wisconsin's unemployment compensation statutes in favor of compensating the unemployed and that, consistent with that policy, chapter 108 is liberally construed to effect unemployment compensation coverage for workers economically dependent upon others in respect to their wage-earning status. The court noted that the statute defines substantial fault broadly: acts or omissions of an employee over which the employee exercised reasonable control and which violate reasonable requirements of the employee's employer. The statute, however, also removes from the definition conduct that suggests the employee was prone to accidental errors or simply unable to adequately perform his or her job. It also removes minor rule violations, unless the employee is warned about minor violations and nonetheless continues to commit the same violation.

The court then analyzed § 108.04(5g)(a)2., the “one or more inadvertent errors” exclusion. From various dictionary definitions of inadvertence, the court concluded that inadvertence includes careless or unintentional errors. And while a series of inadvertent errors, even when accompanied by warnings, is not substantial fault, warnings may be relevant to the issue whether the act or omission at issue was inadvertent. The court also left open the question whether there is a point beyond which a series of errors each of which, when looked at individually, is inadvertent, are not inadvertent when viewed in their totality. [If there is, Operton's failures did not reach it.]

The court then analyzed Operton's failures, and concluded as a matter of law that they were inadvertent. Under the facts of the case, Operton's errors were not so egregious as to be transformed from inadvertent acts to reckless or intentional ones. They occurred over a 21-month time period during which Operton completed approximately 80,000 cash-handling transactions. She would go months without making an error and, for the most part, she made a series of different kinds of error (as opposed to repeatedly making the same error).

Justice Abrahamson wrote a concurring opinion because of three disagreements with the court's opinion. First, the court owed no deference to the commission's legal conclusion because the commission was applying a new statute to a new concept. Second, warnings simply are not relevant under the inadvertent errors exclusion. Third, the statutory language is “one or more inadvertent errors”; it contains no numerical limits, so “if all we have is repeated . . . ‘inadvertent errors,' we do not have ‘substantial fault.'”

1.  Operton v. LIRC, 2016 WI App 37, 369 Wis. 2d 166, 880 N.W.2d 169.

2.  See Campo v. Park Towne Management Corp., UI Dec. Hearing No. 14000528MD (LIRC June 27, 2014) and Kirkendoll v. Clean Power LLC, UI Dec. Hearing No. 14603479MW (LIRC Aug. 8, 2014).

Please note that this is a summary prepared by staff of the commission, not a verbatim reproduction of the court decision.

[ Search UC Decisions ] - [ UC Digest - Main Index ] - [ UC Legal Resources ] - [ LIRC Home Page ]

[Court of Appeals Decision]  [Supreme Court Decision]