Appeals court clarifies employee quit-for-cause analysis in unemployment insurance case

By Joe Forward, Legal Writer, State Bar of Wisconsin

April 6, 2012 – An employee who voluntarily quits a job does not qualify to receive unemployment insurance benefits, unless the employee quits for good cause attributable to the employer. Recently, a state appeals court clarified the quit-for-cause analysis in certain cases involving disciplinary warnings.

The Labor and Industry Review Commission ruled that Ryan Kierstead voluntarily terminated (quit) his position at Sterling Water, Inc. when he refused to sign a disciplinary warning notice acknowledging a complaint was filed against him and was told he would be fired if he did not.

The form did not say that signing it would be an admission of wrongdoing. Kierstead did not testify that he thought signing would be an admission of guilt; he said he refused to sign because he did not believe Sterling would fire him. He thought his manager was bluffing.

A circuit court reversed the LIRC decision, concluding that Kierstead did not voluntarily quit and was entitled to receive unemployment benefits because of the discharge.

But in Kierstead v. LIRC, 2011AP938 (April 3, 2012), the District III Wisconsin Court of Appeals reversed the circuit court, concluding that Kierstead was not entitled to benefits.

Along the way, the appeals court clarified the proper analysis when disciplinary forms and “voluntary termination” claims are at issue. The court explained that failing to sign an employee disciplinary form does not always amount to a “quit without good cause.”

“This situation always requires a good cause inquiry into whether the employee knew signing would not be an admission,” wrote Judge Michael Hoover, adopting LIRC’s suggested analysis.

The appeals court noted that LIRC has developed “inconsistent” and “irreconcilable” outcomes in previous cases involving similar situations.

That is, some cases found a quit for good cause attributable to the employer when the employee refused to sign a disciplinary form believing that a signature may constitute an admission of guilt. In other cases, LIRC found a quit without good cause regardless of whether the employee believed signing it would be an admission of wrongdoing.

“We reject Kierstead’s contention that it is improper or unnecessary for employers to obtain a signature on a disciplinary warning document as a record that the employee was in fact presented with, and had an opportunity to dispute, allegations of unsatisfactory performance or conduct,” Judge Hoover wrote. “It would be similarly unreasonable to penalize employees who mistakenly believe they are being compelled to incriminate themselves.”

The court ruled that Kierstead’s refusal was a voluntary termination under Wis. Stat. section 108.04(7)(a), even though he was fired, because he refused to sign the disciplinary form knowing that termination could result. The employer was not bluffing.

In addition, the court ruled that Kierstead’s refusal to sign was not justified because he did not indicate a belief that signing was an admission of the wrongdoing alleged against him in the disciplinary warning notice. He said he didn’t sign because he didn’t believe he would be fired.