201705.18
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WI Supreme Court takes first look at 2013 law that disqualifies claimants from receiving unemployment benefits for “substantial fault.”

The May 4, 2017 Wisconsin Supreme Court decision in Lela Operton v. LIRC, 2017 WI 46, highlights the need going forward for employers denying unemployment benefits to present evidence that employee errors resulting in termination were not inadvertent.

In Lela Operton v. LIRC, 2017 WI 46,  the Court interpreted, for the first time, a 2013 law that disqualifies claimants from receiving unemployment insurance benefits for “substantial fault.”

“Substantial fault” includes those acts or omissions of an employee over which the employee exercised reasonable control and which violate reasonable requirements of the employee’s employer but does not include any of the following:

  1. One or more minor infractions of rules unless an infraction is repeated after the employer warns the employee about the infraction.
  2. One or more inadvertent errors made by the employee.
  3. Any failure of the employee to perform work because of insufficient skill, ability, or equipment.  (Wis. Stat. Section108.04 (5g))

Lela Operton worked as a full-time service clerk for Walgreens from July 17, 2012 until her termination on March 24, 2014 for multiple cash handling errors and the inability to improve despite warnings.  She averaged hundreds of cash handling transactions per day during her employment. Operton made eight (8) cash handling errors during her time with Walgreens that led to her termination on March 24, 2014.

Subsequent to her termination,  Operton filed for unemployment benefits. An Administrative Law Judge (ALJ) denied Operton unemployment benefits and concluded that she was terminated for “substantial fault.”  The Labor and Industry Review Commission (Commission) affirmed the ALJ. The Court of Appeals reversed the Commission’s finding. The Supreme Court accepted review.

The Supreme Court agreed with the Court of Appeals and remanded the matter back to the LIRC for a determination as to the amount of benefits owed. The Supreme Court did indicate that fault existed because Operton did exercise “reasonable control” over the cash handling transactions and that the employer “reasonably required” her to handle these transactions. However, the Supreme Court took issue with what it stated was the Commission’s failure to assess whether the errors were “one or more inadvertent errors,” which would preclude a finding of substantial fault.  In assessing this issue, the Court determined that the errors were inadvertent and not reckless or intentional. It noted that there was no evidence that Operton willfully disregarded the employer’s interests or that she was so careless or negligent to be guilty of misconduct. The Supreme Court thus concluded that “substantial fault” did not exist to deny benefits.

Operton shows that an employer must be prepared to present evidence countering the application of the substantial fault exceptions. Certainly counsel for employees will be keen to present evidence of inadvertence and lack of intent.

Thanks to Partner Scott McCain for bringing this new case to our attention.  Scott works out of the Chicago and Milwaukee offices of Inman and Fitzgibbons.