Supreme Court Limits Reach of “Substantial Fault” Disqualifier for Unemployment Benefits

Sara Geenen

In 2015, the Wisconsin legislature amended unemployment insurance laws to make it more difficult for terminated workers to obtain unemployment benefits, disqualifying them from benefits if they were terminated for “substantial fault,” or “acts or omissions of an employee over which the employee exercised reasonable control and which violate reasonable requirements of the employee’s employer.” However, “substantial fault” does not include:

  •  One or more minor infractions of rules unless an infraction is repeated after the employer warns the employee about the infraction;
  •  One or more inadvertent errors, and
  •  Any failure of the employee to perform work because of insufficient skill, ability, or equipment.

An employee, Lela Operton, was terminated from her job as a cashier after making 8 inadvertent mistakes over the course of two years. When she applied for unemployment benefits, she was denied. The Employer and State advanced interpretations of the statue that went beyond its language and contended that she was terminated for “substantial fault” because, at some point, multiple inadvertent errors for which an employee was disciplined become “infractions.” Operton appealed. The case went to the Labor Industry Review Commission, Dane County Circuit Court, and the Wisconsin Court of Appeals.

Last week, the Supreme Court issued its decision in the case and unanimously found that Operton was improperly denied unemployment benefits, that she was not at “substantial fault” for her termination. Importantly, the Court held that the “minor infraction” and “inadvertent error” provisions are separate from one another.  By recognizing that the language of the statute creates separate and distinct exceptions to the “substantial fault” provision, the Supreme Court limited the substantial fault provisions to its plain language, limiting the Department of Workforce Development’s ability to deny benefits to some terminated workers.