Big Decisions from the Big Court: Employer Policies Determine “Misconduct” and The Inference Method of Causation Gets Tweaked

Today, the Wisconsin Supreme Court rendered two landscape-altering* decisions (*in my world). First, it held in Wisconsin DWD v. Wisconsin LIRC and Beres that if an employee violates an employer’s written absenteeism policy, that employee engages in “misconduct” and is not eligible for unemployment compensation benefits.

Second, in Wisconsin Bell, Inc. v. LIRC, the Wisconsin Supreme Court tweaked the inference method of causation. As it previously existed, this method of causation, typically utilized in disability discrimination cases, made an employer liable for discrimination when it took an adverse action (demotion, termination, suspension, etc.) based on performance deficiencies caused by an underlying disability. As it now exists, employees must establish not only that the employer knew about the individual’s disability, but also that it knew the disability caused the performance deficiencies that are the subject of the adverse action.

Let’s dig in.

Wisconsin DWD v. Wisconsin LIRC and Beres

The employer in this case had a written absenteeism policy that states that an employee can be terminated for incurring a single absence during his/her probationary period if he/she does not provide prior notice of the absence. Beres (the former employee) incurred a single absence due to “flu-like” symptoms, did not provide prior notice that she would be absent, and was fired. Thereafter, Beres filed for and was denied unemployment compensation benefits on “misconduct” grounds. There were a bunch of appeals and here we are. The question for the Wisconsin Supreme Court was what level of absenteeism constitutes “misconduct,” such that an employee is not eligible for unemployment compensation?

Wis. Stat. § 108.04(5)(e) defines absenteeism as constituting “misconduct” as:

Absenteeism by an employee on more than 2 occasions during 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, or excessive tardiness by an employee in violation of a policy of the employer that has been communicated to the employee, if the employee does not provide to his or her employer both notice and one or more valid reasons for the absenteeism or tardiness.

The Department of Workforce Development (“DWD”) argued that § 108.04(5)(e) allows an employer to make and enforce its own written rules regarding absenteeism and that an employee’s violation of those rules constitutes “misconduct,” resulting in the employee not being eligible for unemployment compensation benefits.

The counter argument from the Labor and Industry Review Commission was that in order for absenteeism to constitute “misconduct,” the employee had to violate the statutory definition of “misconduct” based on absenteeism (as defined above), and that it is not “misconduct” to violate an employer’s rules that are more strict than the statutory definition.

The Wisconsin Supreme Court agreed with the DWD that Wis. Stat. § 104.05(e) allows employers to create and enforce its own written absenteeism policy and that, if an employee acknowledges receipt of that policy and violates that written policy, that violation constitutes “misconduct.”

Employer Takeaway: Make sure you have a written employee handbook and/or written employment policies that include a written absenteeism policy. It would not hurt, in light of this decision, to include a statement in that policy that not only will so many absences or tardies result in termination, but it will also result in the employee engaging in “misconduct.” Be sure to also have written acknowledgements from your employees confirming they received, read, and understand your written handbook/policies.

Wisconsin Bell, Inc. v. LIRC

What’s the old saying? “Causation, causation, causation?” Probably not, but that’s what this case was all about.

What’s the inference method of causation you ask? Here’s the setup I like to use:

  • An employee has a disability;
  • The employer knows about the employee’s disability;
  • The employee incurs absences;
  • The employee’s absences are caused by his disability; and
  • The employer terminates the employee for those absences.

In this scenario, and under the inference method (as it existed), the employer would be found to have terminated the employee based on his disability (aka, engaged in disability discrimination) because the disability caused the absences. The phrase that was used was that the employer, “in legal effect,” terminated the employee because of his disability.

Specific to this case, Carlson (the former employee) suffers from bipolar disorder. When the symptoms of his disorder became exacerbated, he coped with those symptoms by going into a separate room, deep breathing, and communicating with others for support. Carlson worked in a call center for AT&T. As part of his job, he could make himself unavailable to take calls for various reasons. During his employment, he made himself unavailable for calls for long periods – 20 minutes on the first occasion and 38 minutes on the second occasion – to (allegedly) cope with symptoms of his bipolar disorder. AT&T fired Carlson for violating its zero tolerance policy for inappropriate use of call-blocking codes to avoid taking customer calls.

Carlson filed a claim for disability discrimination with the Equal Rights Division, which found that AT&T suspended and terminated Carlson because of his disability under the inference method. A bunch of appeals followed and now, this.

The Wisconsin Supreme Court, in finding AT&T was not liable to Carlson, tweaked the inference method to ensure that employees are still responsible for demonstrating causation between the disability and the adverse action. Specifically, it held: “an employer does not engage in intentional discrimination when it bases an adverse employment action on the employee’s conduct unless the employee proves the employer knew his disability caused his conduct.” In other words, an employer’s knowledge of the disability alone is insufficient to establish liability – employees must also prove an employer’s knowledge that the performance deficiency was caused by the disability.

Here, Carlson presented facts showing that he informed AT&T that his performance deficiencies were caused by his disability and that he provided letters from treating physicians regarding the symptoms of his bipolar disorder. However, the Court found such evidence insufficient, because none of the letters “mentioned any causal nexus between his disability and conduct,” and “an employee’s bare assertion of causality cannot be credited as authoritative.” As a result, the record only established that AT&T “knew nothing more than its employee claimed his bipolarism caused his conduct,” rather than establishing AT&T knew the deficiencies were caused by his disability.

Notably, the Court also flipped the script on some case law suggesting that information learned after the termination is relevant to liability, stating: “what Wisconsin Bell (or the ALJ or LIRC, for that matter) learned about the causal connection after the termination is of no import because only contemporaneous knowledge can account for the intent that motivates an action.” So there’s that, too.

Employer Takeaways: This case is a great example of the continuous shifting in the legal landscape of employment law that requires that you stay up to date with new developments and, of course, have a relationship with experienced employment counsel. Also, it never hurts to discuss the potential legal outcomes of a potential termination decision with counsel prior to pulling the trigger.