Unemployment Insurance/Compensation

Minnesota Supreme Court holds that Employee Discharged for Lying on her Job Application was Ineligible for Unemployment Benefits due to “Misconduct”

Minnesota Supreme Court holds that Employee Discharged for Lying on her Job Application was Ineligible for Unemployment Benefits due to “Misconduct”

By James B. Sherman of Wessels Sherman Joerg Liszka Laverty Seneczko P.C. posted in Unemployment Insurance/Compensation on Tuesday, March 28, 2017.

In Minnesota, as in most every state, terminated employees are not eligible for unemployment benefits if they are dismissed for misconduct. In 2003, the legislature amended the statute to define “employment misconduct” as “any intentional, negligent, or indifferent conduct, on the job or off the job that displays clearly: (1) a serious violation of the standards of behavior the employer has the right to reasonably expect of the employee, or (2) that demonstrates a substantial lack of concern for the employment.” However, despite this effort to more clearly define employee misconduct for purposes of unemployment compensation, there remains plenty of room for disagreement, depending upon the facts in each particular case. This dilemma was recently born out in Wilson v. Mortgage Resource Center, Inc. The Minnesota Supreme Court overturned an earlier decision of the Court of Appeals that had found an employee’s misrepresentations about her education on her job application, did not constitute “employment misconduct.” In disagreeing with the Court of Appeals, the Minnesota Supreme Court in effect recognized that employers have the right to reasonably expect the truth from job applicants. Still, the outcome of this case was determined by the particular facts of the case and therefore employers can learn from (and take advantage of) its lessons.

The Wilson case involved an employee, Nina Wilson, who misrepresented on a job application that she had a high school education and GED. The application was for a position at Mortgage Resource Center (MRC), which required, at minimum, a college degree or equivalent experience. Importantly, the MRC application included a notice that providing falsified information was a dischargeable offense. MRC required that applicants sign an acknowledgement of the notice, which Wilson did.

MRC offered Wilson the job, contingent upon a successful background check to verify the details of her application. When the investigation could not verify Wilson’s educational level or GED, MRC requested that she provide documentation. When Wilson failed to do so, she was terminated.

Wilson applied to the Minnesota Department of Employment and Economic Development (DEED) for unemployment benefits, but was denied by an Unemployment Law Judge (ULJ) who found that her discharge was “in large part” a result of the false statements on her application. Wilson appealed her case to the Minnesota Court of Appeals, which found in her favor. Applying a different, more stringent standard of “misconduct” than the ULJ, the Court of Appeals determined that to prevail MRC needed to prove it would not have hired Wilson had it known her true educational background.

Reversing on appeal, the Minnesota Supreme Court rejected the Court of Appeals’ definition of “employment misconduct” under the unemployment compensation statute. The Court reasoned that requiring an employer to prove it would not have hired a candidate if it knew of the false information, though supported by prior precedent, failed to acknowledge the legislature’s amendments to the statute in 2003. Applying the language of the statute as amended, the Court agreed with the DEED ULJ’s decision that, based on the facts in this particular case, Wilson’s false representations in her application about something as important as her educational level met the statutory definition of “employment misconduct.”

It is important for employers to realize that not all resume fraud or falsified statements made by applicants will automatically amount to employment misconduct for purposes of eligibility for unemployment compensation. The following facts proved important to the outcome in the case, and employers are well advised to duplicate them if the job in question warrants doing so:

1. The false statement in this case – achieved level of education – was critical to the job in question; so much so that the written job requirements specified a minimum level of education as a qualification.

2. The application explicitly warned that falsification of information would be grounds for termination. Note: presumably most employers include similar language on their applications; however, a written statement of this sort standing alone probably would not be enough to support misconduct (especially for an employer that did not uniformly enforce it).

3. MRC’s job offer specified that it was conditioned on a satisfactory background check, and although, for various reasons, some time passed between Wilson’s hiring and her discharge, there was no indication that the employer knowingly condoned her false statements on her education.

4. Before discharging Wilson, MRC gave her an opportunity to explain discrepancies between her application and the information from her background check. Of course this likely was legally required under the Fair Credit Reporting Act (FCRA), but Wilson’s failure to respond when given the chance to explain factored into the Court’s decision that her lie was intentional and her educational level was important to MRC’s job offer in the first place.

The Wilson case is highly important to employers because it reversed outdated precedent relied on by the lower courts and clarified the legislature’s intention in amending the statute to favor a more objective definition of “employment misconduct” in the context of unemployment benefits. Employers may now take advantage of this decision by clearly specifying qualifications for each job; requiring each applicant’s written acknowledgement that providing untruthful information in their resume or application, is grounds for discharge; and, of course, paying attention to the results of background checks when discrepancies are identified. Minnesota employers are well aware that if they can prevail before DEED on the “misconduct” issue for purposes of unemployment compensation, their odds are very good in the event their decision to discharge an employee is challenged in some other forum.

Questions? Contact our office at (952) 746-1700 or by email at

Related Posts: Absenteeism And Proof Of “Misconduct”, Did You Fire Them or Did They Resign?, Court Clarifies “Misconduct” and Attendance, Proving Misconduct: Winning IDES Hearings

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Unemployment Insurance/Compensation

Court Clarifies “Misconduct” and Attendance

Court Clarifies “Misconduct” and Attendance

By Alan E. Seneczko of Wessels Sherman Joerg Liszka Laverty Seneczko P.C. posted in Unemployment Insurance/Compensation on Monday, March 27, 2017.

In 2013, the Wisconsin legislature tightened the eligibility requirements for unemployment benefits as they related to discharges for attendance. Under the previous law, an employee had to have “5 or more” absences without notice in a twelve-month period in order for his/her absenteeism to rise to the level of statutorily-defined misconduct. The legislature reduced that level to “more than 2 [absences] within a 120-day period . . . unless otherwise specified by [the] employer in an employment manual. . .” Wis. Stat. § 108.04(5)(e). (The employee must also have failed to provide both notice and a valid reason for the absence.)

What if an employer’s attendance policy calls for discharge in the event of less than two absences without notice in a 120-day period? Is that still misconduct under § 108.04(5)(e)?

The Wisconsin Court of Appeals recently answered this question – in the negative. In DWD v. LIRC, 2016AP1365 (Mar. 8, 2017), the court reviewed whether a discharge pursuant to an employer’s policy that called for termination in the event of a single absence without notice in an employee’s first ninety days of employment constituted “misconduct” under § 108.04(5)(e), falling within the “unless otherwise specified” provision of the statute. Finding that it did not, the court adopted the position of the Labor and Industry Review Commission, which held that the “2 in 120” requirement is a statutory floor, and the “unless otherwise specified in an employment manual” provision was only intended to cover policies that were more generous than the “2 in 120” default standard, not more restrictive. In other words, policies that result in discharge for absences without notice on two occasions or less, in a shorter period of time, do not automatically constitute misconduct under § 108.04(5)(e).

The court noted, however, that its decision only applied to absences being considered under the statutorily-defined level of misconduct in § 108.04(5)(e). An attendance-related discharge can still constitute “misconduct” if the employer can prove that the employee’s conduct met the Boyton Cab standard (i.e., “conduct evincing such willful or wanton disregard of an employer’s interests . . .”) or constituted “substantial fault” (i.e., “acts or omissions . . . over which the employee exercised reasonable control). Thus, while it is much easier to win a case based upon the “2 in 120” standard, an attendance claim can still be won based upon the underlying conduct of the employee and the reasons for the absences.

If you have any questions about the court’s decision or unemployment compensation, attendance and/or misconduct, feel free to contact WS Attorney Alan E. Seneczko at (262) 560-9696, or .

Related Posts: Absenteeism And Proof Of “Misconduct”, Did You Fire Them or Did They Resign?, Minnesota Supreme Court holds that Employee Discharged for Lying on her Job Application was Ineligible for Unemployment Benefits due to “Misconduct”, Proving Misconduct: Winning IDES Hearings

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Illinois Department of Employment Security (IDES)

IDES Audits – Ten Questions Employers Ask

IDES Audits – Ten Questions Employers Ask

By Nancy E. Joerg of Wessels Sherman Joerg Liszka Laverty Seneczko P.C. posted in Illinois Department of Employment Security (IDES) on Monday, March 27, 2017.

Over the many years during which I have helped Illinois companies with their use of independent contractors, the most urgent call I get is from Illinois companies who have just found out they are going to be audited by the Illinois Department of Employment Security (IDES).

Receiving a letter in the mail from the IDES announcing that the IDES is going to do an audit (in the next few days or weeks!) can cause understandable panic for the recipient of the letter, especially if the company has never before been audited by the IDES.

This article is devoted to answering ten of the most common questions that I receive from such callers:

QUESTION #1: Why is the IDES auditing me?

ANSWER #1: Many callers are sure that a competitor has turned them in to the IDES. I have never found that an IDES audit was triggered because a competitor turned the company in.

In recent years, IDES audits are most frequently triggered by:

  • random selection,
  • a follow-up IDES audit because the company was previously audited years ago by the IDES (this is a recent trend),
  • one of the independent contractors filed for unemployment insurance benefits with the IDES, or
  • a lead from the IRS because the company has issued “many 1099s” (this is a recent trend).

QUESTION #2: Do I have to actively cooperate with the IDES auditor?

ANSWER #2: It is wise to cooperate with the IDES auditor. If you interact with the auditor in a cooperative fashion, you will learn what actually concerns the IDES auditor, and you will be able to address those issues.

QUESTION #3: What is the IDES auditor looking for?

ANSWER #3: The IDES auditor is going to audit you for a particular year (for example, 2015). The auditor will see if you accurately paid in all contributions (i.e., unemployment insurance taxes that the company must pay).

QUESTION #4: Where should I have the IDES audit?

ANSWER #4: Usually the IDES auditor will come to your workplace. However, if you do not have a convenient place to meet, you can suggest that the audit be in your accountant’s or attorney’s office. Sometimes the auditor will suggest that you bring the records to the auditor’s office. In recent years, I have heard that some auditors suggest that the company simply send its records electronically to the auditor, thereby eliminating the need to meet at all!

QUESTION #5: Will this be just a one year audit?

ANSWER #5: I have found that all IDES audits start with just one designated year. The year is clearly noted on page 2 of the Notice of Audit letter. The auditor will extend the audit to an additional year if the amount owed to the IDES (because of mistakes made by the company) is over $5,000, or if there are many (for example, more than 10) independent contractors found to be misclassified. Sometimes the audit will extend to a third year. This is somewhat rare.

QUESTION #6: How long will the audit last?

ANSWER #6: Some auditors meet with the company and spend many hours questioning the company and looking through records. Other auditors come in and get the records, and then quickly leave and thereafter communicate with the company representative through emails and by phone. There is no standard way that these audits are handled. I have found over the years that even the same auditor might vary his/her approach from one audit to the next.

QUESTION #7: What is the significance of the four page IDES Worker Relationship Questionnaire that the auditor gave me to complete?

ANSWER #7: The Worker Relationship Questionnaire is a tricky document. You should have an attorney well versed in the right and wrong answers review your responses carefully. It is easy to inadvertently make a mistake. You need to understand the unique legal angle that the IDES is taking in asking the questions.

QUESTION #8: Will the auditor tell me how much I will owe the IDES at the end of the audit?

ANSWER #8: There will be an “exit interview” at the end of the audit. It may occur in person or by phone. The auditor will tell the company what the auditor’s findings are in terms of what mistakes, if any, the company made. The auditor doesn’t know what the full tax bill (known as Notice of Determination and Assessment) will be in terms of dollars and cents. However, the auditor will have a rough idea of how much money the company will owe.

QUESTION #9: Can I negotiate with the IDES auditor during the audit if I’m starting to feel I have made some mistakes and I want to correct them right then and there?

ANSWER #9: No, the IDES auditor does not have the legal authority to negotiate with the company being audited.

QUESTION #10: How will I know exactly what I owe as a result of the audit?

ANSWER #10: A few weeks after the audit is completed, the IDES will mail you a Notice of Determination & Assessment which is the actual tax bill. You have only 20 days from the date on the Determination & Assessment to protest. If you miss the 20 day deadline, you will lose all rights of appeal and the money that the IDES says you owe will become a final judgment and it is due and owing.

In my opinion, it is almost always worthwhile to protest. By timely protesting the Determination & Assessment (tax bill), the company has the opportunity for a Hearing before an Administrative Law Judge. The Administrative Law Judge is a lawyer and also an employee of the IDES, but the Administrative Law Judge is charged with the legal responsibility of fairly evaluating the issues involved in the audit and making an independent and unbiased decision. It is not unusual for the Administrative Law Judge to exercise this independence and make a decision contrary to the decision of the IDES auditor.

For assistance with an IDES audit and/or Hearing or evaluating your use of Independent Contractors, contact Nancy Joerg at Wessels Sherman’s St. Charles, Illinois office: 630-377-1554 or email her at

Related Posts: Legislative Update: Key Changes to the Illinois Human Rights Act New Employee Rights and New Requirements for Employers, Don’t Fall Asleep On One Of The Most Important Due Dates Regarding Your IDES Audit!, It’s Easier for Illinois Employers to Win Before the IDES on Cases involving Misconduct, Help! I Just Found Out I Am Going To Be Audited By The IDES!

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Illinois Legislative Stupidity

Illinois Legislative Stupidity

By Walter J. Liszka of Wessels Sherman Joerg Liszka Laverty Seneczko P.C. posted in Other on Monday, March 20, 2017.

As everyone is very well aware, the State of Illinois, due to the intransigency of Governor Rauner and Speaker of the House Madigan, has been without a budget for over twenty (20) months. Both Governor Rauner and Speaker of the House Madigan are acting like two (2) little children playing in the sandbox who cannot agree and both of them have decided to “take their ball home”. If only it were that easy to get rid of both of them!

This budget roadblock is further complicated by Attorney General Madigan’s “push” to shut down Illinois Government by stopping the pay of Illinois Government Employees. She lost in St. Clair County and now wants to “bypass” the Illinois Appellate Court System and go directly to the Illinois Supreme Court. The Author must wonder if the “sandbox of Rauner/Madigan” is not being sledgehammered by this move. Certainly, Attorney General Madigan would not be attempting to help Speaker of the House Madigan “get his way”!

Even though this Budgetary Crisis marches on, a number of the Members of the House (and the Senate as well) of the State of Illinois are trying to pass Legislation that bears little, if any, logic. There is currently pending a Bill, sponsored by Representatives Wheeler and Burke, to allow children under the age of twenty-one (21) to drink alcoholic beverages in restaurants in the presence of their parents. The “justification” for this Bill is that there is similar companion Legislation in the State of Wisconsin and it doesn’t seem to create a problem there. Certainly, this is “extremely important Legislation”.

Additionally, Representative Currie wants to create a Wage Lien Act to allow for the attachment of an Employer’s personal property for the lack of payment of wages due to an Employee. House Bill 2351 is clearly sending a message to Illinois Employers that the Illinois General Assembly would rather increase liability on Employers and their ability to create jobs than to deal with the Budget Crisis.

Unfortunately, the extremely important Legislation does not stop. Representative Moeller is pushing to have passage of House Bill 2462 that would add penalties for Employer Inquiries regarding salary or wage history. These penalties would create unlimited compensatory damages, punitive damages, injunctive relief and “special damages” not to exceed $10,000. This Legislation is unnecessary because Illinois Law already prohibits Wage Discrimination, but the band marches on. Even though Federal Action on creating a new Wage Structure for bonafide Executive, Administrative and Professional Employees has been enjoined by the Federal Courts since the latter part of 2016, Representative Guzzardi is pushing House Bill 2749 that clearly follows/mimics the Federal Legislation which is now enjoined.

The Founding Fathers of our Country and all common sense thinking Citizens would be and should be incensed that Illinois Legislators concern themselves with Legislation of little to no value while an ever-growing Financial Crisis impacts the State. The Author is reminded of the Roman Fable that “Emperor Nero fiddled while Rome burned”. The Author doubts that Rauner, Madigan and many of the Representatives in the House could even play a fiddle!

Questions? Please contact Walter Liszka of Wessels Sherman’s Chicago, Illinois office at (312) 629-9300 or via email at

Related Posts: New Illinois Laws in the New Year, Illinois Changing Employment Landscape, Get Ready! All Owners of Hotels and Casinos in Illinois Must Soon Protect their Employees from Sexual Assault and Harassment with Panic Button Safety Devices!, So You Have A Whistleblower

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Union Matters

NLRB Rejects Wisconsin’s Dues Checkoff Restriction

NLRB Rejects Wisconsin’s Dues Checkoff Restriction

By Alan E. Seneczko of Wessels Sherman Joerg Liszka Laverty Seneczko P.C. posted in Union Matters on Friday, March 10, 2017.

Wisconsin’s Right-to-Work law, which became effective on March 11, 2015, prohibits employers and unions from entering into agreements which require membership in the union or the payment of dues as a condition of employment (“union security agreements”). The law also prohibits employers from deducting union dues from an employee’s wages unless the employee has signed an authorization that is revocable upon thirty days’ notice (“dues checkoff”), rather than the one-year period permitted under the National Labor Relations Act. The NLRA expressly allows states to enact Right-to-Work laws that prohibit union security agreements – but it does not contain a similar provision relating to dues checkoff. So, do the provisions of the NLRA that relate to dues checkoff supersede, or preempt, the more employee-friendly provisions of the Wisconsin law?

On March 14, 2017, an administrative law judge from the National Labor Relations Board found that it does. In Metalcraft of Mayville, Case 18-CA-178322, Metalcraft’s contract with its union renewed in June 2016, subjecting any renewed agreement to the provisions of the Wisconsin Right-to-Work law. Once it did, Metalcraft notified the union that it would no longer enforce the union security and dues checkoff provisions of the expired agreement – prompting the union to file an unfair labor practice charge contending that the cessation of the dues checkoff provision constituted an unfair labor practice, and that the state law provision that allowed it was preempted by the NLRA. The ALJ agreed.

Section 8(a)(3) of the NLRA allows employers and unions to enter into agreements that require union membership and/or the payment of agency fees for the cost of representation as conditions of employment. However, Section 14(b) of the Act allows states to enact laws that prohibit such agreements (states that choose to do so have become known as “Right-to-Work” states), but makes no mention of dues checkoff, which is addressed elsewhere in the Act, in Section 302. Section 302 authorizes the deduction of dues from an employee’s wages, provided the employer has received an authorization from the employee that “shall not be irrevocable for a period of more than a year.” In other words, it expressly allows checkoff authorizations that cannot be revoked for a year – and the Wisconsin law requires termination upon 30-days’ notice.

Relying on established precedent, including a recent decision on the Wisconsin law from the Western District of Wisconsin, see, IAM v. Allen, Case No. 16-cv-77-wmc (W.D. Wis., Dec. 28, 2016), the ALJ held that the provision of the Wisconsin law that permits revocation of a dues checkoff authorization upon 30-days’ notice was “directly at odds” with federal law and therefore preempted by the NLRA.

What does this mean to unionized employers in Wisconsin? While the state Right-to-Work law remains intact as it relates to union security agreements, prohibiting employers from entering into agreements that require membership in the union and/or the payment of dues as a condition of employment, any dues checkoff authorizations signed by employees that are not revocable for a year remain in full force and effect, despite the 30-day notice provision required under Wisconsin law.

If you have any questions about the ALJ’s decision or the Wisconsin Right-to-Work law, feel free to contact WS Attorney Alan E. Seneczko at (262) 560-9696, or

Related Posts: Merry Christmas, and Happy New Year Employers, Life Raft For Multiemployer Pension Plans, Operating Engineers Local 150 Remains One of Northern Illinois Most Active Unions, No Recording Rules-NLRB Protected?

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Union Matters

Decline of Private Sector Unions

Decline of Private Sector Unions

By Richard H. Wessels of Wessels Sherman Joerg Liszka Laverty Seneczko P.C. posted in Union Matters on Wednesday, March 8, 2017.

In my introduction, I reprinted my commentary from 2005 on why private sector unions are in such a state of decline. Those factors are true today. Here is a list of the factors without my 2005 commentary:

1. Traditional base is disappearing

2. Management is far more sophisticated in countering the threat of unions

3. Crime and corruption have devastated the public image of unions

4. Structure of labor unions makes them ineffective

5. Multi-employer bargaining is fast disappearing

6. Adversary structure of the NLRA is the wrong model for long-term union success

7. Worker protection laws have lessened the need for unions

8. Management is more responsive to employee needs than they were decades ago when it was easy for unions to organize

9. There is no one to replace the great union leaders of the “glory days”

10. Rise of management-side lawyers and consultants has made it tough on unions

The decline of private sector unions is irrefutable. Statistics paint the picture. Unions are down from a mid-1950s market share of 35% to 6.7% today. Equally telling are the statistics on NLRB organizing elections. Private sector unions are not filing as many election petitions these days. The decline is dramatic.

YearTotal number of elections for union representation

Going back further to the late 1960s and through the 1970s, unions were filing nearly 8,000 petitions a year. Compare that to today’s numbers which have leveled out at about 1,500, and you can see what’s happening. Beyond the clear picture of less and less union organizing activity, there is strong anecdotal evidence of decline. Here are a few of my observations:

· Over the last ten years most private sector local unions are down in membership in northern Illinois about 30%, many locals far more than that.

· Many local unions have been forced to merge to stay alive.

· Union business agents are stretched thin and their major focus is contract administration and negotiations. They don’t have time for organizing. It’s a vicious circle – the local doesn’t have a budget for paid organizers and because they don’t have organizers their income is going down.

· Even if a union can win an NLRB election, it is very hard for them to get that first contract. A high percentage of union election wins end with the union walking away without a contract or a decertification.

· Decertifications are up, and this includes many long standing labor contract relationships.

Organized labor thought they would get help from the Obama administration and desperately wanted card check (Employee Free Choice Act). They didn’t get it. The relatively minimal NLRB rule changes such as the new ambush election rules are too little, too late.

Private sector unions will be with us for quite a while yet. They are down but not out. Look for more aggressive political activity to further their cause with such strategies as project labor agreements, prevailing wage laws, laws to restrict management-side attorneys and consultants, and restrictive licensing. Maybe they will get their much sought-after card check legislation, and that is something that could bring them back.

Questions? Contact Attorney Richard Wessels in our St. Charles office at (630) 377-1554 or by email at

Related Posts: Merry Christmas, and Happy New Year Employers, Life Raft For Multiemployer Pension Plans, Operating Engineers Local 150 Remains One of Northern Illinois Most Active Unions, No Recording Rules-NLRB Protected?

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