LELA M. OPERTON, PLAINTIFF-APPELLANT,
LABOR AND INDUSTRY REVIEW COMMISSION, DEFENDANT-RESPONDENT, WALGREEN CO. ILLINOIS, DEFENDANT
on Briefs February 23, 2016.
from an order of the circuit court for Dane County: JOHN C.
ALBERT, Judge. Cir. Ct. No. 2014CV3050.
behalf of the plaintiff-appellant, the cause was submitted on
the briefs of Marilyn Townsend and Frederick B. Wade of Law
Offices of Marilyn Townsend, Madison.
behalf of the defendant-respondent, the cause was submitted
on the brief of William Sample of Labor and Industry Review
Lundsten, Brennan and Reilly, JJ. LUNDSTEN, J. (concurring).
[¶1] In 2013, our legislature enacted an
entirely new statutory ground for the denial of unemployment
benefits: " substantial fault." We are presented in
this case with an issue of first impression as to the
statutory construction and application of " substantial
fault" as that term is defined in Wis. Stat. §
108.04(5g)(a) (2013-14). We set aside the decision of the
Labor and Industry Review Commission (LIRC) as it erred in
its construction and application of " substantial
fault" to the facts presented.
[¶2] Lela Operton worked as a full-time
service clerk for Walgreens from July 17, 2012 to March 24,
2014. As a service clerk, Operton averaged hundreds of cash
handling transactions per day during her twenty months of
full-time employment, or an estimated 80,000 transactions.
Operton was well-liked by Walgreens, who described her work
and demeanor as " conscientious," " always on
time," " worked to the best of her ability,"
and willing to work on her days off. Operton participated in
Walgreens' employee training and received information on
Walgreens' policies and procedures, which included
training on processing Women, Infants, and Children (WIC)
program checks. Operton acknowledged receipt of
Walgreens' cash handling and WIC program check policies
via the " New Hire Training Checklist." Operton was
aware that employees faced " discipline" for
failing to follow the training checklist.
[¶3] Operton made eight " cash handling
errors" during her twenty months with Walgreens:
First Violation: On October 19, 2012,
Operton received a verbal warning for taking a WIC check for
more items than the check authorized resulting in a $2.89
loss to Walgreens. Operton received a verbal and written
warning that reiterated the proper procedures for taking WIC
Second Violation: On February 12, 2013,
Operton accepted a $14.46 WIC check without getting the
customer's signature which made the check invalid.
Third Violation: On March 6, 2013, Operton
handed a $16.73 WIC check back to the customer instead of
retaining it for deposit. Operton received a written warning
addressing the February 12 and March 6 cash handling errors,
which outlined the proper procedure for accepting WIC checks
and noted that " [f]urther failure to follow proper
procedure will result in further disciplinary actions to
include further write ups, suspension, and up to and
Fourth Violation: On July 24, 2013, Operton
accepted a $27.63 WIC check before the valid date for which
she received a " final" written warning that again
reiterated proper WIC check handling procedures.
Fifth Violation: On January 1, 2014, Operton
mishandled an $84.95 WIC check by inadvertently placing it in
the customer's bag. Operton received another "
final" written warning that included her
supervisor's note that " [t]his is [Operton's]
4th issue with WIC checks. She is on a final written warning
from July. Since these mistakes have been over a long period
of time, [Operton] will be given one more chance."
Sixth Violation: On January 29, 2014,
Operton accepted a $6.00 WIC check for a $6.17 purchase.
Operton testified that the customer paid the 17 cents in
cash. Operton received a " final" written warning
together with a two-day suspension.
Seventh Violation: On March 18, 2014,
Operton allowed a customer to leave the store before a $9.26
transaction was complete (PIN pad had not generated a
receipt) and received another final written warning: "
Any cash handling error, no matter the type, will lead to
Eighth Violation: On March 22, 2014, Operton
accepted a credit card for a $399.27 purchase without
checking the customer's identification to verify the card
belonged to the customer. The card was a stolen credit card.
Operton was aware of Walgreens' requirement to check the
identification when a credit card is presented for a purchase
[¶4] Despite being well-liked and a
conscientious employee, Walgreens terminated Operton's
employment on March 24, 2014, for her repeated " cash
handling errors" and " her failure to improve on
them." Walgreens' disciplinary records indicate that
it considered Operton's violations to be " cash
handling errors" or " mistakes." Walgreens
acknowledged that the cash handling errors were not
intentional nor performed with any ill will on the part of
Operton. Upon her discharge, her supervisor offered to serve
as a reference. Operton's explanation for her errors was
that she was having personal family issues during her time at
Walgreens that left her homeless for a period of time during
Operton filed for unemployment benefits. Walgreens objected
to Operton's request for benefits claiming that Operton
" was discharged for violation of a reasonable company
policy regarding excessive cash discrepancies" which was
as a result of her " incapacity to perform." The
Department of Workforce Development (DWD) initially denied
benefits on grounds of " misconduct." Operton
appealed. An administrative law judge (ALJ) held an
evidentiary hearing. The ALJ accepted Walgreens' evidence
that Operton's mistakes were " errors." The ALJ
found that Operton was aware of Walgreens' policies but
continued to make " cash handling errors" after
" receiving multiple warnings." According to the
ALJ, Operton's " discharge was not for
misconduct" as there was " no evidence that
[Operton] intentionally or willfully disregarded the
employer's interests by continuing to make cash handling
errors." The ALJ also found that Operton's actions
were not so careless or negligent as to manifest culpability
or wrongful intent. The ALJ concluded that Operton was
ineligible for unemployment benefits as her discharge was for
" substantial fault" rather than for "
misconduct." Operton appealed to LIRC.
[¶6] LIRC affirmed the ALJ's decision
and adopted the ALJ's decision as its own. LIRC also
made a finding not included within the ALJ's decision:
Operton's March 22, 2014 failure to check the
customer's identification was a " major
infraction." LIRC did not explain why the error was a
" major infraction." The circuit court affirmed
[¶7] Prompted by concerns within the
employer community that the current misconduct standard in
Wisconsin was too generous in providing benefits to employees
who should not qualify, the legislature, in 2013, enacted
amendments to Wis. Stat. § 108.04(5) and
(5g). Scott Sussman, Department of Workforce
Development, Analysis of Proposed UI Law Change Discharge for
Employee's Substantial Fault (2012),
http://dwd-uireform.vforberger.fastmail.fm/D12-01.pdf . The
amendments were expected to reduce benefit payments by
approximately $19.2 million per year and increase the
unemployment insurance trust fund, which had a deficit, by
the same amount. Id.
[¶8] The legislature created a new two-tier
standard for disqualifying claimants from receiving
unemployment insurance benefits. The first tier is "
For purposes of this subsection, " misconduct"
means one or more actions or conduct evincing such willful or
wanton disregard of an employer's interests as is found
in deliberate violations or disregard of standards of
behavior which an employer has a right to expect of his or
her employees, or in carelessness or negligence of such
degree or recurrence as to manifest culpability, wrongful
intent, or evil design of equal severity to such disregard,
or to show an intentional and substantial disregard of an
employer's interests, or an employee's duties and
obligations to his or her employer.
Wis. Stat. § 108.04(5). The legislature enumerated seven
specific employee actions that satisfy the misconduct
standard, including drug and alcohol use, theft of an
employer's property, conviction of a crime while on or
off duty that affects the employee's ability to perform
his or her job, threats or acts of harassment at work,
excessive absenteeism or tardiness, falsifying business
records, and willful or deliberate violation of a written and
uniformly applied government standard or regulation. Sec.
[¶9] The second tier is " substantial
fault." Wis. Stat. § 108.04(5g)(a). Substantial
fault did not exist as a ground for denial of benefits prior
to 2014. See Wis. Stat. § 108.04(5)-(5g)
(2011-12). The statutory definition for " substantial
fault" is as follows:
For purposes of this paragraph, " 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
Sec. 108.04(5g)(a). Unlike misconduct, in which the
legislature expressly set forth specific employee actions
that constituted " misconduct," the legislature set
forth three acts or omissions by employees ...