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

Subject: Pilgrim Center Inc. a/k/a Pilgrim Liquor Store v. Schmechel and Schubert and DILHR (Wis. Cir. Ct., Dane Co., Nov. 17, 1976) No. 150-256

Digest Codes: MC 626   VL 1007.01   MC 691

The employer, a liquor store, decided that it wanted all of its employees bonded. Two employees voiced objections to completing the forms required to apply for bonding. There was evidence that at least one employee was told that of she did not sign the bonding application she would be let go. The employees did not complete their bonding applications by the deadline set by the employer, and they were discharged. The employees applied for UI benefits. The department's determination held they were discharged, not for misconduct, and allowed.

The appeal tribunal affirmed. The appeal tribunal noted that the bonding application required the applicant to indemnify the employer against expenses in certain situations, and found that the employes" refusal to sign the bond application was justified due to the new financial responsibility it imposed upon them which had not been required previously, and was not misconduct. With regard to the quit-or-discharge question, the appeal tribunal cited Gross v. DILHR and Globe-Union, No. 137-318 (Dane Co. Cir. Ct., Nov. 14, 1973) for the proposition that a violation of an employing unit"s work rules should not be deemed a voluntary quitting where there was no intent to quit. LIRC affirmed.

Held:  The decision of the commission is AFFIRMED.   The employees did not voluntarily quit their jobs, but were discharged.   The discharges were not for misconduct, because the employer had no legitimate interest in having the employees take on an additional liability to the bonding company, and therefore it was not unreasonable for them to refuse to sing the bonding application.

The section of the court's decision addressing the question of whether the employees were terminated or quit is as follows:

In Dentici v. Industrial Comm. (1953), 264 Wis. 181, 58 N.W. 2d 717, the Supreme Court stated (p. 186):

“When an employee shows that he intends to leave his employment and indicates such intention by word or manner of action, or by conduct inconsistent with the continuation of the employee-employer relationship, it must be held, as the Industrial Commission determined here, that the employee intended and did leave his employment voluntarily.

Therefore, in light of the Supreme Court's analysis, a necessary element of a termination of employment by an employee is the employee's actual positive intent to sever the employment relationship.

The employer's brief relies on certain testimony and on the theory of constructive termination to substantiate the employer's contention that the two employees terminated their own employment rather than having had their employment terminated by the employer as found by the appeal tribunal.

The testimony relied upon by the employer was given by Snyder and is as follows: On one occasion he asked Schubert, “What are you going to do if you don"t sign it?” and she replied, “Well, then I just have to quit.” (Tr. 16). Thereafter, shortly after 5:00 p.m. on May 15, 1975, he had a conversation with Schubert in which she requested a statement from him that she was fired, and he said “No”, that he didn"t have authority to do something like that (Tr. 24-25).

However, Snyder also testified that when he refused to give Schubert the requested statement she asked, “Well, what do we do now?” and he replied, “Well that was it, she was just terminated.” (Tr. 25).

In Schubert"s testimony she was asked these questions and gave these answers (Tr. 38):

Q: Was there anyone from the company that told you you were discharged?
A: I was let go on Friday, and on Monday I got a letter from Mr. Sobel.
Q: Did that letter say the words to the effect that you were discharged, your employment was terminated because -
A: Terminated.
Q: Did they say it was by them or by you?
A: By -- By them.”

All of the foregoing testimony when considered as a whole is credible evidence to support the finding of fact that Schubert in week 20 of 1975 did not terminate her employment within the meaning of sec. 108.04(7)(a), Stats. The appeal tribunal and the department could draw the reasonable inference from such testimony that there was no intent on Schubert"s part to sever the employment relationship.

No testimony was pointed to in plaintiff's brief which it is claimed showed any intent on Schmechel's part to sever the employment relationship other than refusal to sign the application form. It is this refusal on both employees" part upon which the employer grounds its contention of a constructive termination by the employees.

The single case cited by employer on the issue of constructive quitting by the employees is Dentici v. Industrial Comm., supra. In that case the Commission had found that the employee had left his employment voluntarily without good cause attributable to the employer within the meaning of sec. 108.04(4)(b), Stats. (now sec. 108.04(7)(b), where the employee had refused to accept a transfer to another department because of the employer's lack of business with respect to the production in the department in which he was working. The employer refused to permit the employee to work in his original department and the employee refused to work in the department to which transferred. The circuit court on review reversed on the ground there had been a discharge by the employer without just cause. The Supreme Court reversed the circuit court and directed reinstatement of the Commission's decision. Nowhere in its decision did the Supreme Court use the terminology of a constructive quitting, but stated (p. 188):

“But the facts disclosed show that it was not necessary for claimant to be without employment, that he had the alternative of accepting the job provided for by the transfer and continuing in the employ of the employer, or acting to terminate the relation on his own responsibility.”

Furthermore, in Dentici, the employer had no choice but to transfer the employee. The transfer was the only alternative to unemployment for Dentici. In the case at bar, the employer elected freely and voluntarily to have its employees bonded. One who refuses to work, in essence, refuses to continue employment. It is, in fact, a quitting. This is distinguishable from the situation of a worker who declines to abide by a rule or requirement of an employer and, as a result, loses his or her employment. The rule or requirement is not an essential quality of employment; it is ancillary. One who declines to abide by an employer"s rule or requirement does not refuse to work and does not refuse to continue in employment. The resulting loss in employment is the choice and decision of the employer, not the employee.

In the case of Martha D. Gross v. DILHR and Globe-Union, Inc., Dane County Circuit Court, Case No. 137-319, November 14, 1973, the Honorable Richard W. Bardwell presiding, the department held that the plaintiff quit her employment by absenting herself from work for more than one week without proper notice in violation of a union contract provision. The court reversed the department"s decision, holding that plaintiff did not quit but, in fact, was discharged by the employer. The decision stated:

“It would appear that the department is taking the position that voluntary refusal to follow a company rule, regardless of the reason, is tantamount to a voluntary termination or quitting on the part of the employe. We find no reported case so holding."

If the department is correct, the Neubeck rule would be abrogated. An employer could adopt detailed rules re hours, dress, etc. Any violation could be deemed a voluntary quitting, and the issue of discharge for cause would never arise. That this would be a step backward in administering the Unemployment Compensation Law is quite an understatement.”

The 'Neubeck rule' referred to by Judge Bardwell is the rule laid down in Boynton Cab Co. v. Neubeck (1941), 237 Wis. 249, 259 N.W. 636, that limits 'discharge for misconduct' within the meaning of sec. 108.04(5), Stats. to conduct evincing such wilful or wanton disregard of the employer's interests as is found in standards of behavior which the employer has the right to expect of his employee, or in carelessness or negligence of such a degree or recurrence as to manifest equal culpability.

The Court determines that this is not the proper case, if ever there be one, in which to adopt a determination of constructive quitting on the part of the two employees. Therefore sec. 108.04(5) is the proper statute to be applied in reaching the merits of this controversy and not sec 108.04(7)(b). The difference in approach between the two statutes is that under sec. 108.04(5) it is the conduct of the employee which is evaluated for possible fault while under sec. 108.04(7) it is the conduct of the employer that is so evaluated.

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

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