The SCOW docket: Arrest-record discrimination includes terminations based on municipal charges

Note: We are crunching Supreme Court of Wisconsin decisions down to size. The rule for this is that no justice gets more than 10 paragraphs as written in the actual decision. The “upshot” and “background” sections do not count as part of the 10 paragraphs because of their summary and necessary nature. We’ve also removed citations from the opinion for ease of reading but have linked to important cases cited or information about them. Italics indicate WJI insertions except for case names, which are also italicized.

Dallet

The Case: Oconomowoc Area School District v. Gregory L. Cota

Majority: Justice Rebecca Frank Dallet (15 pages), joined by Justices Ann Walsh Bradley, Brian Hagedorn, Jill Karofsky, and Janet Protasiewicz.

Concurrence: Protasiewicz (6 pages)

Dissent: Chief Justice Annette Kingsland Ziegler (3 pages)

Dissent: Justice Rebecca Grassl Bradley (7 pages), joined by Ziegler
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Upshot

This case raises two questions. First, does the Wisconsin Fair Employment Act’s definition of arrest record—specifically the phrase “any . . . other offense”—include non-criminal offenses, like municipal theft? Second, if so, did the Labor and Industry Review Commission (LIRC) correctly conclude that the Oconomowoc Area School District engaged in arrest-record discrimination when it terminated the Cotas? We answer “yes” to both questions and thus reverse the court of appeals’ contrary decision.

Background

Gregory and Jeffrey Cota were members of the District’s grounds crew and, as part of their duties, recycled scrap metal for the District. The Cotas, along with coworker Garret Loehrer, brought scrap metal to a local processor, which paid with cash or checks made out to “cash.” The person who received the money from the processor would give it to Gregory, who would then pass it along to his supervisor, Matt Newman. 

Between 2012 and 2014, the Cotas made multiple complaints about Loehrer’s work performance to supervisors. . . . On one such occasion, Jeffrey Cota asked a supervisor if Loehrer had turned in money from a recent scrap-metal delivery. The money had been turned in, but the supervisor reported the inquiry to Loehrer. In response, Loehrer accused the Cotas of retaining some of the District’s scrap money. Loehrer asserted that, approximately two years prior, he and the Cotas had delivered scrap metal to the processor but had kept the payment and split the money among themselves.

The District’s Director of Human Resources, Pam Casey, began a formal investigation into the allegations. Casey interviewed employees and reviewed documents related to the scrap-metal transactions. She determined that $5,683.81 originally paid to Loehrer and the Cotas had not been received by the District. But conflicting accounts given by Loehrer, the Cotas, and other employees prevented Casey from determining who was responsible for the missing funds. . . . Accordingly, Casey recommended turning over the investigation to local police, explaining that “[e]mployment-related disciplinary decisions can be better made following the conclusion of any criminal investigation.” The District took no other investigatory action after turning the matter over to the police.

The Town of Oconomowoc Police Department opened its own investigation into the missing funds. . . . Despite investigating for 11 months, however, the police did not discover any new information related to the Cotas. Even so, the Cotas were cited for municipal theft. The investigating detective explained in her report that she based the citations exclusively on Loehrer’s allegation that the Cotas had split scrap money with him on one occasion—the same allegation that had given rise to the District’s investigation. The detective’s report further stated that she was unable to prove any additional allegations against the Cotas.

Approximately one year after the Cotas were cited for theft, the assistant city attorney informed the District that he believed he could obtain convictions and that he also believed the case could be settled. The Cotas did not agree to settle. The next day, the District terminated the Cotas’ employment. The District sent the Cotas termination letters, drafted by Casey, stating that the District had “learned” that the Cotas “were, in fact, guilty of theft of funds from the School District” and that they had lied about this during the District’s internal investigation. The municipal citations against the Cotas were ultimately dismissed. The Cotas never pleaded guilty to or were convicted of municipal theft. 

The Cotas filed claims of arrest-record discrimination with the Department of Workforce Development, Equal Rights Division (DWD). Following an evidentiary hearing, an administrative law judge found that the Cotas failed to establish that the District had unlawfully discriminated against them. The Cotas appealed to LIRC, which reversed, concluding that the District terminated the Cotas’ employment because of their arrest records in violation of the Act.

The circuit court affirmed LIRC's decision, but the court of appeals disagreed and reversed.

Guts

An employer generally may not terminate an employee because of the employee’s arrest record. "Arrest record" is defined as including "information indicating that an individual has been questioned, apprehended, taken into custody or detention, held for investigation, arrested, charged with, indicted or tried for any felony, misdemeanor or other offense pursuant to any law enforcement or military authority." 

To understand the parties’ arguments, we begin by explaining the distinction between criminal and non-criminal offenses. Under Wisconsin law, offenses punishable by fine, imprisonment, or both are crimes, while offenses punishable only by a forfeiture are non-criminal. Non-criminal offenses range from minor infractions, like failing to use a turn signal, to more serious violations, like a first operating-while-intoxicated (OWI) offense. Additionally, in Wisconsin, all crimes are classified as either felonies or misdemeanors. Some other jurisdictions, however, do not classify crimes in this way. 

The District argues that the phrase “any . . . other offense” in the arrest record definition refers only to criminal offenses under the laws of jurisdictions that do not classify crimes as either felonies or misdemeanors. Under this interpretation, the Cotas are not protected by the Act, since they were cited for a non-criminal offense. By contrast, the Cotas and LIRC assert that “any . . . other offense” includes both criminal offenses from jurisdictions that do not classify crimes as either felonies or misdemeanors and non-criminal offenses under Wisconsin law. 

We agree with the Cotas and LIRC. The ordinary meaning of the phrase “any . . . other offense” includes violations of both criminal and non-criminal laws. Indeed, this is how the term “offense” is consistently used throughout our statutes, and nothing in the structure or remaining text of the statute at issue suggests a narrower meaning. Furthermore, interpreting “any . . . other offense” to include non-criminal offenses serves the Act’s express statutory purpose of “protect[ing] by law the rights of all individuals to obtain gainful employment and to enjoy privileges free from employment discrimination because of . . . arrest record. . . .” Finally, the exceptions to the Act’s general prohibition against arrest-record discrimination provide additional support for our interpretation.

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The District focuses narrowly on the exceptions applicable only to criminal charges, arguing that we should infer from them that the general prohibition on arrest-record discrimination similarly applies only to criminal offenses. But we must read statutes in context, “not in isolation but as part of a whole. . . .” Taken together, these exceptions demonstrate that “any . . . other offense” includes both criminal and non-criminal offenses. . . .

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Because we hold that “any . . . other offense” in the statute at issue includes non-criminal offenses, we turn to the second issue before us: whether LIRC correctly concluded that the District terminated the Cotas because of their arrest records, in violation of the Act. The answer to this question turns on the District’s motivation for terminating the Cotas, which is an issue of fact.

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Substantial evidence supports LIRC’s conclusion that the District was not motivated to act by its internal investigation, despite Casey’s testimony before DWD that she formed a personal belief in the Cotas’ guilt during the investigation. Indeed, Casey’s report summarizing the results of the investigation stated that the District was not able to determine who was responsible due to conflicting allegations, and Casey testified before DWD that those same conflicting allegations prevented her from making final employment decisions at the close of the investigation. When referring the matter to the police for further investigation, the District’s attorney told the investigator that the District could not conclude who was responsible, and Casey testified before DWD that this was a true statement. Finally, Casey also testified that while she was suspicious of the Cotas during the internal investigation, she was not suspicious enough to fire them.

Substantial evidence likewise supports LIRC’s conclusion that the District’s decision to terminate the Cotas was motivated by arrest-record information. Before DWD, Casey testified that three new pieces of information came to her attention between the close of her internal investigation—when she was not ready to fire the Cotas—and her decision to fire them nearly two years later. That new information included: (1) that the Cotas were cited for municipal theft, (2) that the assistant city attorney told Casey he believed he could convict the Cotas and (3) that the assistant city attorney told Casey he anticipated reaching a settlement with the Cotas that included restitution. And Casey admitted that these three pieces of information caused her to terminate the Cotas. All three are components of the Cotas’ arrest records. Accordingly, substantial evidence supports LIRC’s conclusion that the District was motivated by arrest-record information when it terminated the Cotas.

The District nevertheless argues that it is protected by a legal defense recognized in a prior case because its decision to terminate the Cotas was motivated at least in part by Casey’s belief in the Cotas’ guilt formed during the internal investigation. According to the District, caselaw permits employers to terminate employees because of their arrest records as long as the employer also concludes from an internal investigation that the employee engaged in unacceptable conduct. In other words, the District argues that as long as it did not terminate the Cotas exclusively because of their arrest records, it did not violate the Act. 

We reject this argument for two reasons. First, the District mischaracterizes the holding of the cited case, in which an employer effectively discharged an employee after the employee admitted, in response to a question posed by the employer, that he had committed an offense. . . . The case holds simply that an employer who does not rely on arrest-record information when making a discharge decision does not discriminate against an employee because of their arrest record.

Second, the case does not apply because LIRC found that the District did rely on arrest-record information when making its discharge decision, and we must accept this finding because it is supported by substantial evidence. This remains true even though the District argues that Casey’s testimony about her personal belief in the Cotas’ guilt supports a different conclusion about the District’s motive. LIRC weighed the evidence relevant to the District’s motive and found that the District was motivated by the Cotas’ arrest records. This finding is supported by substantial evidence, and therefore must be accepted.

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Protasiewicz

Concurrence

In today’s decision, the court follows the law where it leads, but we arrive at a strange result. I write separately to call attention to the oddity of this outcome and to recommend that our statutes better accommodate employers who are victims.

I agree with the majority that the statute at issue includes non-criminal offenses and that LIRC correctly concluded the District fired the Cotas because of their arrest records. But as a result of today’s decision, the District may not fire employees who it suspects stole from the District. That is no way to treat the victim of an offense.

In the Wisconsin Fair Employment Act (“the Act”), the legislature balances a couple of interests. Surely, the legislature seeks to protect employees. To that end, the Act prevents “employment discrimination because of” arrest record or conviction record, among other things. 

But the legislature also protects employers’ interests in some instances. The legislature created exceptions that allow employers to sometimes take employment action in the context of an employee’s arrest record or conviction. For example, an employer may suspend an employee when the employee is subject to a “pending criminal charge” if “the circumstances of the charge substantially relate to the circumstances of the particular job.” In another example, an employer may fire an employee who “has been convicted” of an offense under “circumstances . . . which substantially relate to the circumstances of the particular job.”

This case calls for another exception to protect employers when an employer is a victim. Here, the District was a victim, which makes this case different than many cases of arrest record discrimination.

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. . . We are left with a strange result. The District was the victim of an offense and suspected its employees did it. It could have fired the employees, but instead asked law enforcement to investigate. Because law enforcement investigated, the employees had an arrest record which limited the District’s ability to fire the employees. In the end, under today’s decision, the District may not fire the employees that it believes stole from the District.

Our statutes should not hamstring employers who are victims that way. An employer should be allowed to take employment action when it is the victim of an offense and suspects an employee did it, even when it relies on information from law enforcement.

Nevertheless, I must follow the law as it stands, and I agree with the majority. The text of the statute at issue includes non-criminal offenses, and LIRC correctly concluded that the District fired the Cotas because of their arrest records. But this case highlights how our statutory scheme breaks down when an employer is the victim of an offense and seeks law enforcement intervention. I urge the legislature to address this unjust situation.

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Ziegler

Ziegler dissent
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The court’s decision sends a message to employers across the state: If the employer believes one of its employees may have committed a crime—say, stealing from that employer—based upon its own internal investigation, it should quickly fire the employee rather than have its suspicions confirmed by a full investigation by law enforcement. The court’s decision forecloses an employer from firing such an employee even when the employer’s suspicions about the employee’s conduct are confirmed by law enforcement’s investigation. Maybe this case is an example of the “old adage” that “bad facts make bad law,” but the upshot of the court’s decision is directly at odds with the legislatively enacted purpose of the statutes at issue. These statutes were enacted to protect employees from unwarranted termination. But today’s opinion will ensure the opposite: Employers can no longer give their employees the benefit of the doubt, allowing law enforcement to confirm their suspicions, because that could mean the employer will risk liability under the law. Accordingly, I dissent.

The Wisconsin Fair Employment Act (the Act) bars employers from engaging in certain forms of employment discrimination. With some exceptions, an employer may not “discriminat[e]” against an individual “on the basis of . . . arrest record[s].” The statute provides that discrimination includes “terminat[ing] from employment . . . any individual . . . because of” an individual’s arrest record. In turn, “arrest record” is statutorily defined as including, but not being limited to, “information indicating that an individual has been questioned, apprehended, taken into custody or detention, held for investigation, arrested, charged with, indicted or tried for any felony, misdemeanor or other offense pursuant to any law enforcement or military authority.”

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The legislature affirmatively and expressly declared the purpose and policy of the Act; it is to protect employees from termination under a variety of circumstances, including when an employer wishes to terminate an employee because that employee has an arrest record. . . . The court’s decision contravenes the legislatively stated purpose of the Act. Here, had the employer not given the employees the benefit of the doubt and asked law enforcement to investigate that which the employer had already determined, and instead fired the employees before law enforcement determined the employees should be charged, the employer would not be liable. If the employer fired the employees earlier, no liability would have attached because no arrest records would have existed. Simply stated, waiting to have law enforcement confirm the employer’s suspicions meant that the employer was liable. So, instead of protecting the employment of employees, the Act, as the court interprets and applies it, promotes the premature firing of employees suspected of committing offenses. Stated otherwise, the court renders the Act self-defeating in factual situations like these. 

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The wrongful deference the majority gives to LIRC’s factual findings in this case demonstrates the unlikelihood that courts will reverse a finding by LIRC that an employer terminated an employee because of the employee’s arrest record. Here, the facts demonstrate that the employees were terminated because they stole from the employer, not because they had arrest records. But the majority upholds LIRC’s erroneous finding all the same.

While the court might be technically correct that merely having an arrest record is insufficient to trigger liability under the Act, under circumstances presented in a case like this one, the mere existence of an arrest record seems to be sufficient for LIRC to find an employer liable. Employers will act accordingly and fire their employees after an internal investigation, even if the investigation is inconclusive, before law enforcement gets involved. Employers cannot risk the possibility that LIRC will make the inference—which after today’s opinion will be all too easy to make—that the employer fired its employee because of the employee’s arrest record, not the employer’s prior internal investigation.

No doubt, the court’s decision is a victory for Gregory and Jeffrey Cota. But the decision may ultimately prove to be a defeat for employees across Wisconsin. The stated purpose of the Act is to protect employees from unwarranted termination. Here, the employees were terminated because they stole from their employer. Yet, according to the majority, the employer’s hands were tied when it came to terminating them. Had the employer terminated the two employees sooner, there would be no arrest records and the employer would face no liability. The outcome of this case turns the stated purpose of the Act upside down— pushing employers to terminate employees as quickly as possible to avoid the risk of liability under the Act. The legislature did not intend the statute to operate in this manner.

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Grassl Bradley

Grassl Bradley dissent

The majority mistakes a conclusion of law for a finding of fact. Whether an employer unlawfully terminated an employee based on his arrest record is a conclusion of law, as LIRC’s Order properly denominated it. . . . Whether the facts found by an agency “fulfill a particular legal standard is a question of law, not a question of fact.” By misapprehending a question of law for one of fact, the majority sidesteps its responsibility to declare the law and effectively endorses LIRC’s misinterpretation of the governing statute to shield employees from any adverse employment consequences for their malfeasance.

Even if the issue of whether the District fired the Cotas based on their arrest records presented a factual question, no reasonable person would conclude the District fired the Cotas for any reason other than the fact the Cotas stole from their employer. It is preposterous to suggest the District fired the Cotas based on their status as persons with arrest records. Nothing in the law compels this court to reward the offenders and punish the victim. Only the majority’s tacit approval of LIRC’s crabbed reading of statutory law produces this farce.

The Wisconsin Fair Employment Act (“the Act”) prohibits employers from discriminating against individuals “on the basis of” their “arrest record,” among other bases such as race or sex. Termination of employment constitutes a discriminatory action the law prohibits if taken “on the basis of” an arrest record. LIRC concluded the District terminated the Cotas on the basis of their arrest records because the District waited to fire them until law enforcement created arrest records validating the District’s conclusions. This hyper-literal construction of the Act contradicts the statute’s textually manifest purpose and assigns the law an unsound meaning.

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Even under the majority’s misguided framework of examining the record for substantial evidence supporting LIRC’s decision, there is no evidence the District unlawfully discriminated against the Cotas. No evidence, much less substantial evidence, suggests the District fired the Cotas “solely because of” their arrest records. Nothing in the record suggests the District fired the Cotas because of the “particular class to which” the Cotas belong: individuals with arrest records. Everything in the record points to the District firing the Cotas for the obvious reason that the Cotas stole from the District.

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In this case, the arrest records came about only after Casey believed the Cotas stole from the District and then referred the matter to law enforcement. After completing her investigation, Casey concluded “there can be no question that some employment action (and perhaps criminal action) is necessary here, in view of the evidence that this investigation has produced.” Only then did the District refer the matter to law enforcement. Casey later testified “the independent police investigation . . . resulting in the issuance of the municipal theft citations, further corroborated in my mind the fact that these individuals were not forthright and had lied during our investigation and had taken proceeds from the sale of scrap metal.” The record confirms the Cotas’ arrest records merely corroborated conclusions the employer had already drawn.

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Nothing in the Act compels LIRC to penalize an employer for waiting to terminate an employee until law enforcement corroborates the employer’s conclusion that an employee stole from the employer. The Act prohibits an employer from terminating an employee “on the basis of” his arrest record, but an employer can certainly terminate an employee because he stole from the employer. The court of appeals confirmed that interpretation in a prior case and LIRC has applied it repeatedly.

In this case, LIRC adopted a new, narrow, and strict construction of the Act, ignored its context and textually expressed purpose, and rejected decades of cases interpreting the law correctly. The majority refuses to apply the obvious meaning of “on the basis of” and instead improperly defers to LIRC’s legal conclusion, mischaracterizing it as an issue of fact. While the court may be bound by LIRC’s findings of fact, it is supposed to independently interpret the law. Although the court could correct LIRC’s error of law and apply the Act’s actual meaning to the facts as found by LIRC—the most efficient disposition of this litigation—at a minimum the court should remand the matter to LIRC to decide the case under the correct interpretation of the law.

Instead, the majority carelessly embraces LIRC’s misunderstanding of a statute that prohibits categorical discrimination against individuals merely because they have an arrest record. Nothing in the text of the law protects employees accused of committing crimes against their employers. The majority’s improper deference to LIRC’s misinterpretation of the Act will perversely incentivize employers to fire employees without investigating accusations or suspicions against them, lest law enforcement’s later involvement trigger the indemnity the majority confers on employees suspected of misconduct. Nothing in the law necessitates this ludicrous situation, which is of the majority’s own making. I dissent.

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