We previously covered the appellate court decision in Cree, Inc. v. LIRC. After our last post, the case continued to move through the legal process. The Supreme Court of Wisconsin has now weighed in on the case.
In July 2015, Cree, Inc. offered job applicant Derrick Palmer an Applications Specialist job subject to a standard background check. The background check revealed the candidate’s convictions stemming from a 2012 domestic violence incident. The candidate pled no contest to several serious crimes, including:
Cree referred the matter to its general counsel. They reviewed Palmer’s conviction record using a matrix that categorized each candidate’s convictions as a “fail.” Cree then rescinded its offer of employment.
According to the Supreme Court holding, Wisconsin law generally prohibits an employer from discriminating against prospective employees based on one’s conviction record. However, there is an exception to the general rule.
“It is not employment discrimination because of conviction record . . . [if] the individual has been convicted of any felony, misdemeanor, or other offense the circumstances of which substantially relate to the circumstances of the particular job.”
This is known as the “substantial relationship test.” However, the employer bears the burden to take advantage of the exception in these cases. They must show that the conviction substantially relates to the circumstances of the job.
Palmer filed a complaint with the Wisconsin Department of Workforce Development’s Equal Rights Division (ERD). It alleged that Cree discriminated against him based on his record, violating the Wisconsin Fair Employment Act. The ERD found probable cause to hold a hearing on the merits before an administrative law judge.
Administrative Law Judge Decision
The judge determined that Palmer’s convictions substantially related to the Applications Specialist position. Under Wisconsin law (Wis. Stat. § 111.335(3)(a)1.,8), Cree did not discriminate against Palmer when it rescinded its job offer.
Labor and Industry Review Commission Decision
Palmer appealed the ALJ’s findings to the Labor and Industry Review Commission (LIRC). LIRC reversed. They held that,
“Where assault or battery convictions stem from personal relationships and the crimes are committed at home, it cannot necessarily be assumed that the individual is likely to engage in the same conduct with co-workers or customers at the work place.”
Based on the domestic nature of Palmer’s crimes, LIRC concluded that they did not substantially relate to the Applications Specialist job.
Circuit Court & Court of Appeals Decisions
The circuit court reversed the LIRC’s decision. The court of appeals then reversed again. The appellate court upheld the LIRC’s decision that Cree failed to meet its burden. They held that the employer didn’t show a substantial relationship between Palmer’s convictions and the job.
The Wisconsin Supreme Court reviewed the LIRC’s decision. In doing so, the Supreme Court noted that “the plain language of the substantial relationship test requires that the employer show that the facts, events, and conditions surrounding the convicted offense materially relate to the facts, events, and conditions surrounding the job.”
The WI Supreme Court held, “To summarize, we apply the substantial relationship test to a domestic violence conviction the same way we would to any other conviction.”
“[W]e must look beyond any immaterial identity between circumstances——such as the domestic context of the offense or an intimate relationship with the victim——and instead examine the circumstances material to fostering criminal activity. The material circumstances are those that exist in the workplace that present opportunities for recidivism given the character traits revealed by the circumstances of a domestic violence conviction.”
The court held, “Based on the evidence Cree submitted, the circumstances of Palmer’s convictions substantially relate to the Applications Specialist position…”
“The candidate’s willingness to use violence to exert power and control over others substantially relates to the independent and interpersonal nature of a pre and post sales job like the Applications Specialist position.”
Further, “the absence of regular supervision creates opportunities for violent encounters.”
The court also noted, “several other factors also weigh in favor of finding a substantial relationship.”
Employers may want to review the court’s decision with their legal counsel and assess how this might impact their hiring decisions.