The Wisconsin Fair Employment Act (WFEA) prohibits covered employers from discriminating against individuals in employment and in certain licensed activities on the basis of 14 protected traits, which include individuals who have records of arrests or convictions.¹ Arrest and conviction record discrimination has been a difficult area for many lawyers and employers to navigate because of ambiguous statutory directives and unclear precedents.

In March 2022, the Wisconsin Supreme Court released its decision in Cree Inc. v. Labor & Industry Commission, which involved a job applicant who had a record of conviction for violent crimes. The court’s decision expanded employers’ discretion to consider an individual’s history of convictions when deciding whether to hire or terminate the individual.² Because judicial decisions interpreting arrest and conviction claims are relatively rare and because Cree Inc. marked a significant clarification in the law, lawyers, employers, employees, and job applicants should be aware of its holding.

This article addresses the scope of arrest and conviction record claims, the supreme court’s decision in Cree Inc. v. LIRC, and the practical implications for Wisconsin employees and employers.

The Scope of Arrest and Conviction Record Discrimination

When the WFEA was originally enacted in 1945, it protected only five characteristics: race, creed, color, national origin, and ancestry. In 1977, the Wisconsin Legislature amended the WFEA to prohibit employment discrimination on the basis of arrest and conviction records, subject to certain exceptions. As of 2022, there are 14 protected characteristics.

Claims for arrest or conviction discrimination typically relate to three categories of potential criminal misconduct: 1) arrests, 2) pending charges, and 3) convictions. The WFEA broadly defines records of arrests and records of convictions, and employers’ obligations differ significantly depending on which category is at issue. Although Cree Inc. involved a record of conviction, it is helpful to lay out a general overview of how each claim might be treated.

Arrest Records and Pending Charges. The WFEA broadly defines arrest record as “includ[ing], but not 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.”³ What is notable about this definition is its reference to “information.” This suggests that an employee’s arrest record likely could include information downloaded from Wisconsin’s Circuit Court Access Program (CCAP) or what someone learns about an individual’s prior arrest from other sources, such as in conversations.

With this definition in mind, employers are extremely restricted in how and when they can consider records of arrest. Generally, employers cannot use an individual’s arrest record to deny or terminate an individual’s employment unless the employer has conducted its own independent investigation of the underlying circumstances of the arrest and bases its employment decision on that independent investigation. The reason is that an arrest is not an indication that an individual is guilty or that the individual broke the law. An arrest only signifies that an individual was taken into custody by law enforcement officers.

If, however, the employer conducts an independent investigation of the circumstances surrounding the individual’s arrest and the employer is satisfied that the individual did commit misconduct, the employer can lawfully terminate or refuse to hire that individual on the basis of the independently verified misconduct. This type of investigation is often called an Onalaska investigation because the Wisconsin Court of Appeals established it in City of Onalaska v. State Labor & Industry Review Commission.⁴ The Onalaska procedure is not available when employers are concerned about an employee’s conviction record.

Pending charges are a specific subset of arrest records. As with other arrest records, an employer cannot terminate a current employee on the basis of a pending charge, unless the employer conducts an independent investigation. However, an employer can suspend that individual from employment but only if the circumstances of the pending charge are substantially related to the circumstances of the position in question. Additionally, if an applicant for employment has a pending charge, an employer can refuse to hire that individual but only if the circumstances of the position are substantially related to the applied-for position.

Conviction Records. Conviction record also has a broad definition under the WFEA; it “includes, but is not limited to, information indicating that an individual has been convicted of any felony, misdemeanor or other offense, has been adjudicated delinquent, has been less than honorably discharged, or has been placed on probation, fined, imprisoned, placed on extended supervision or paroled pursuant to any law enforcement or military authority.”⁵

Employers have more leeway to consider an employee’s record of conviction. This is because a conviction signifies a formal determination of guilt involving criminal misconduct. The general rule is that conviction records cannot be considered in making an employment decision unless “the circumstances of [the conviction] substantially relate to the circumstances of the particular job or licensed activity.”⁶ This is commonly referred to as the “substantial relationship test.”

One way to think about the substantial relationship test is to ask whether workplace circumstances would present an unacceptable level of opportunity for the employee to reoffend in the workplace. For example, a substantial relationship would likely exist between a job as a cashier and an individual who had been convicted of theft. Thus, an employer likely would be justified in not offering employment to the applicant for that job because the risk of the employee stealing money from the register would be unacceptably high. It is always the employer’s burden to prove the existence of a substantial relationship.

A Significant Watershed: Cree Inc. v. Labor & Industry Review Commission

The WFEA does not define when a substantial relationship exists. The courts and administrative agencies – especially the Labor and Industry Review Commission (LIRC) – have been tasked with defining substantial relationship and determining when substantial relationships exist. This has often meant a fact-intensive inquiry into the circumstances of the job and the conviction itself.

Cree Facts. The Wisconsin Supreme Court addressed the substantial relationship test in Cree Inc. In 2015, Derrick Palmer applied for the position of applications specialist with Cree, which at the time manufactured and marketed lighting components. The position’s duties would have included traveling to customers’ facilities for consultations, working collaboratively with customers and coworkers, and occasional travel with overnight stays in hotels. Palmer would also be working largely independently without direct supervision at facilities that were large and had some secluded areas that were not monitored by security cameras.

Cree offered Palmer a job and made the offer contingent on a successful criminal-background check. However, when the background check was run, it revealed that Palmer had been convicted in 2013 of eight violent crimes against a woman with whom he was in a romantic relationship, including sexual assault, felony strangulation and suffocation, misdemeanor battery, and criminal damage to property. Cree rescinded the job offer.

Agency and Lower Courts’ Determinations. In response, Palmer filed a complaint with the Wisconsin Department of Workforce Development’s Equal Rights Division and alleged that Cree had unlawfully discriminated against him on the basis of his prior convictions. An administrative law judge (ALJ) held that Cree did not violate the WFEA; the ALJ’s determination was based, in part, on expert testimony that Palmer’s propensity for violence in a romantic relationship indicated a propensity to be violent in the workplace. Thus, Cree was justified in refusing to hire Palmer based on concerns for workplace safety.

Palmer appealed the ALJ’s ruling to LIRC, and LIRC reversed the ALJ. LIRC held that the ALJ’s conclusions about Palmer’s propensity to be violent in the workplace were unsupported and speculative, and therefore no substantial relationship existed that would justify refusing to hire him. Cree appealed to the circuit court, which reversed LIRC’s decision because, in the circuit court’s view, LIRC’s ruling was not supported by substantial evidence. The circuit court credited the expert testimony that the ALJ had previously relied on in determining that Palmer presented a threat in the workplace. Palmer appealed to the court of appeals, which reversed the circuit court’s decision and upheld LIRC’s ruling. According to the court of appeals, Palmer’s crimes had little bearing on his propensity to be violent in the workplace, and therefore, he was not properly disqualified on those grounds.

Supreme Court’s Decision in Cree. Finally, Cree appealed to the Wisconsin Supreme Court. The supreme court reversed the court of appeals and held that Cree had met its burden of demonstrating the existence of a substantial relationship. The supreme court addressed how courts, agencies, and employers should analyze whether a substantial relationship exists between a conviction and a job moving forward.

Notably, this decision was 4-3, and the justices disagreed strongly over how to interpret the substantial relationship test. The majority opinion stressed that the relevant inquiry is whether the circumstances of the applications specialist position would have presented opportunities for Palmer to reoffend in the workplace. According to the majority, the violent nature of Palmer’s crimes showed a propensity for exerting control and dominance over people, which made him ill-suited to work with others, especially given the position’s emphasis on interpersonal relationships.

The court criticized LIRC precedent that had distinguished crimes of domestic violence from other types of crimes. Previous LIRC decisions had consistently held that domestic-violence crimes, which by definition occur within personal, intimate relationships, were not substantially related to most jobs in workplace settings. In many circumstances, therefore, denying employment to applicants with domestic-violence convictions posed legal risks.

The majority opinion eliminated that distinction and held that all cases involving convictions for domestic violence should be analyzed in the same manner as any other crime because the circumstances of a crime and the circumstances of the opportunity to reoffend do not need to be identical for there to be a substantial relationship. The court did not narrowly view the circumstances of Palmer’s convictions as only relating to personal, intimate relationships. The court also noted that the lack of regular supervision, overnight stays in hotels, and the lack of security cameras in secluded areas could present further opportunities for Palmer to reoffend.

The court reasoned that in addition to considering character traits, employers should also consider issues such as the seriousness of the offenses, the number of offenses, how recent the conviction is, and whether the individual’s criminal background indicates a pattern of behavior. If a more serious crime is at issue, according to the court, an employer should not be expected to employ that person and subject the workplace to the risk of violence. For example, the risk associated with employing someone convicted of vandalism is lower than the risk associated with employing a convicted sexual deviant who might reoffend. The supreme court specifically noted that the length of time between the conviction and the application for employment can be relevant to determining the likelihood of recidivism. This was not a factor on which courts and agencies had relied previously.

The full effect of this decision is yet to be determined, and application of the decision by courts and administrative agencies will provide further guidance to both employees and employers. What is clear now is that employers have more leeway to consider information about an individual’s prior criminal conviction history in making a determination about fitness for employment. However, Cree Inc. should not be interpreted as carte blanche authority for employers to demand a “clean” criminal history as a prerequisite for all employment. Such a requirement would almost certainly run afoul of the WFEA. Employers must still conduct a fact-intensive inquiry into whether there is a substantial relationship between a job and a prior conviction.

Conclusion

The Cree Inc. decision marks a significant milestone in conviction record jurisprudence under the WFEA and significantly expands employers’ discretion to consider information about an employee’s conviction record. This area of law is very nuanced, however, and will often involve murky areas. The see-saw nature of the appeals in Cree Inc. and the 4-3 decision by the Wisconsin Supreme Court demonstrate how even administrative agencies and courts struggle with this issue. Employers and their legal counsel should undertake each employment decision with careful scrutiny and great diligence to reduce legal risk.

Endnotes

1 Wis. Stat. § 111.321.

2 See Cree Inc. v. Labor & Indus. Rev. Comm’n, 2022 WI 15, 400 Wis. 2d 827, 970 N.W.2d 837.

3 Wis. Stat. § 111.32(1).

4 City of Onalaska v. State Lab. & Indus. Rev. Comm’n, 120 Wis. 2d 363, 354 N.W.2d 223 (Ct. App. 1984).

5 Wis. Stat. § 111.32(3).

6 Wis. Stat. § 111.335(3)(a)1.

» Cite this article: 95 Wis. Law. 14-18 (Sept. 2022).