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Wisconsin Department of Workforce Development v. Wisconsin Labor and Industry Review Commission

Court of Appeals of Wisconsin, District II

March 8, 2017

Wisconsin Department of Workforce Development, Plaintiff-Respondent,
Wisconsin Labor and Industry Review Commission, Defendant-Appellant, Valarie Beres and Mequon Jewish Campus, Inc., Defendants.

         APPEAL from an order of the circuit court for Ozaukee County: No. 2015CV358 SANDY A. WILLIAMS, Judge. Reversed.

          Before Neubauer, C.J., Reilly, P.J., and Gundrum, J.

          REILLY, P.J.

         ¶1 This case addresses eligibility for unemployment benefits when an employer has terminated an employee for misconduct due to absenteeism. The Wisconsin Department of Workforce Development (DWD) challenges the Labor and Industry Review Commission's (LIRC) interpretation of the absenteeism statute, WIS. STAT. § 108.04(5)(e) (2015-16).[1] Given our standard of review, we uphold LIRC's interpretation of § 108.04(5)(e) as reasonable and reverse the circuit court.

         ¶2 Prompted by concerns within the employer community that eligibility for unemployment benefits was too generous, the legislature, in 2013, made wholesale changes to the unemployment benefit law, [2] including modifying the absenteeism ineligibility criteria from "5 or more" absences without notice in a twelve-month period to "more than 2" absences without notice in a 120-day period, "unless otherwise specified by his or her employer in an employment manual." Compare WIS. STAT. § 108.04(5g)(c) (2011-12), with § 108.04(5)(e) (emphasis added). It is this final clause that is at the heart of the dispute.

         ¶3 DWD argues that the statute by its plain language allows an employer to have an attendance policy more restrictive than the "2 in 120" standard, whereas LIRC argues that the "2 in 120" is the default standard. According to LIRC, while employers may be more generous (i.e., utilize the former "5 in 12 month" standard), an employer may not be more restrictive than the "2 in 120" default standard. As we are required to accord deference to LIRC rather than DWD, and as we conclude that LIRC's interpretation is more reasonable given LIRC's three-step approach, we affirm LIRC's interpretation and reverse the circuit court.

         Wis. Stat. § 108.04(5)

         ¶4 As noted, in 2013, the legislature created a two-tier standard for denial of benefits: misconduct and substantial fault.[3] WIS. STAT. § 108.04(5)-(5g). "Misconduct" is defined in two parts. The first part defines misconduct as willful or wanton actions demonstrating deliberate violations; carelessness or negligence of such degree to manifest culpability, wrongful intent, or evil design; or the intentional and substantial disregard of an employer's interests. Sec. 108.04(5). In addition to these bad/intentional acts, the legislature enumerated seven specific circumstances that qualify as misconduct (i.e. no requirement to prove deliberate or bad acts on part of the employee): (1) use of drugs and alcohol, (2) theft from an employer, (3) conviction of a crime that affects the employee's ability to perform his or her job, (4) threats or harassment at work, (5) absenteeism or excessive tardiness, (6) falsifying business records, and (7) willful or deliberate violation of a written and uniformly applied government standard or regulation. Sec. 108.04(5)(a)-(g).

         ¶5 This case involves the legislature's definition of absenteeism. At the same time the legislature overhauled the unemployment insurance statute and created substantial fault, it also folded "absenteeism, " which was previously a stand-alone statutory basis for denial of benefits under WIS. STAT. § 108.04(5g) (2011-12), into discharge for misconduct. Sec. 108.04(5)(e). The legislature further modified the definition of what constitutes "absenteeism" by removing any reference to the term "excessive" and defining misconduct as including "[absenteeism by an employee on more than 2 occasions within the 120-day period before the date of the employee's termination, unless otherwise specified by his or her employer in an employment manual of which the employee has acknowledged receipt with his or her signature ... if the employee does not provide to his or her employer both notice and one or more valid reasons for the absenteeism." Id.

         Statement of Facts

         ¶6 Valarie Beres, a registered nurse, was employed by Mequon Jewish Campus (MJC) and was in her ninety-day probationary period when she did not show for work on February 23, 2015, due to "flu-like symptoms." Beres had signed MJC's written attendance policy which provided that employees in their probationary period may have their employment terminated for one instance of "No Call No Show." MJC's policy required that an employee "call in 2 hours ahead of time" if they are unable to work. Beres did not call MJC prior to her shift to inform MJC that she would be unable to work. Beres was informed on February 26, 2015, that her employment was terminated.

         ¶7 Beres filed for unemployment benefits. DWD denied benefits on the ground of "misconduct" as Beres violated MJC's "No Call No Show" attendance policy. Beres appealed to LIRC, who reversed on the grounds that employers may not be more restrictive than the "2 in 120" day standard and that Beres' actions did not meet the definitions of misconduct or substantial fault. The circuit court reversed LIRC, adopting DWD's argument that the plain language of WIS. STAT. § 108.04(5)(e) allows an employer to have its own rules as to what constitutes misconduct related to absenteeism. LIRC now appeals.

         Standard of Review

         ¶8 While DWD is the agency charged with administering the unemployment insurance program, LIRC handles all appeals of unemployment insurance claims and has final review authority of DWD's interpretations. Racine Harley-Davidson v. State Div. of Hearings & Appeals, 2006 WI 86, ¶¶32, 33, 292 Wis.2d 549, 717 N.W.2d 184; DILHR v. LIRC, 161 Wis.2d 231, 245, 467 N.W.2d 545 (1991). "Where deference to an agency decision is appropriate, we are to accord that deference to LIRC, not to the [DWD]."[4] DILHR v. LIRC, 193 Wis.2d 391, 397, 535 N.W.2d 6');">535 N.W.2d 6 (Ct. App. 1995) (citing DILHR, 161 Wis.2d at 245).

         ¶9 There are three levels of deference applicable to administrative agency interpretations: great weight, due weight, and de novo review. Harnischfeger Corp. v. LIRC, 196 Wis.2d 650, 659-60, 539 N.W.2d 98 (1995). Great weight deference, the highest level of deference, is appropriate when "(1) the agency is charged by the legislature with administering the statute at issue; (2) the interpretation of the statute is one of longstanding; (3) the agency employed its expertise or specialized knowledge in forming the interpretation; and (4) the agency's interpretation will provide uniformity in the application of the statute." Milwaukee Cty. v. LIRC, 2014 WI.App. 55, ¶14, 354 Wis.2d 162, 847 N.W.2d 874 (citation omitted). Due weight deference applies "when an agency has some experience in the area but has not developed the expertise that necessarily places it in a better position than a court to interpret and apply a statute." Id., ¶15 (citation omitted). De novo review is applied if the "issue before the agency is one of first impression or when an agency's position on an issue provides no real guidance." Id., ¶16 (citation omitted).

         ¶10 LIRC argues for great weight deference as it asserts all four conditions are met, most notably that it has issued at least fifty uniform decisions applying Wis. STAT. § 108.04(5)(e) since the statute was amended. DWD argues for de novo review as this case ...

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