In Landmark Ruling, Supreme Court Clarifies When Employers Can Lawfully Disqualify Applicants With Criminal Convictions

By: Attorneys Shane Anderson and Greg Grobe

Wisconsin employers have long struggled with trying to determine whether they can lawfully reject a job applicant due to past criminal convictions. The Wisconsin Fair Employment Act (“WFEA”) precludes employers from rejecting applicants unless the convictions are “substantially related” to the prospective job duties. However, the “substantial relationship” test is anything but a “bright line” rule. As a result, Wisconsin employers have often paid a steep price for rejecting job applicants with past criminal histories.

Fortunately, the future may have brightened just a bit for employers. On March 10, 2022, the Wisconsin Supreme Court held, in Cree, Inc. v. LIRC and Palmer, that a job applicant’s domestic violence convictions were “substantially related” to the duties of the prospective job and he was therefore lawfully disqualified from the position. The Cree decision clarified the “substantial relationship” test and provides welcome guidance for Wisconsin employers.

Dueling Public Goals Behind the “Substantial Relationship” Test

The key to understanding the “substantial relationship” test is recognizing that the test represents a delicate balance between two important, and competing, public goals. On the one hand, there is strong public interest in providing the opportunity for rehabilitation to individuals convicted of crimes who have served their sentences. A fundamental aspect of rehabilitation is the ability to be employed. Individuals with convictions who are unable to locate work create significant financial strains on government resources, are far more likely to commit additional crimes, and endure, together with their families, other negative consequences of potentially perpetual unemployment.

On the other hand, there is equally strong public interest in protecting society from crimes and criminal recidivism. In furtherance of this goal, Wisconsin employers can be held liable for “negligent hiring” when applicants with criminal histories are hired into positions where an employer knew or should have known that they would present a threat of harm to others. As a result, employers have good reason to carefully scrutinize new hires, often through use of criminal background checks.

The WFEA attempts to meet both of these public goals by generally prohibiting employers from rejecting applicants with criminal convictions, but allowing for an exception if the employer can establish that the conviction is “substantially related” to the duties of the prospective job.

Over the years, numerous courts have attempted to establish guidelines on what types of convictions are “substantially related” and what types of criteria should be used to evaluate that question. Unfortunately, the courts have often reached inconsistent conclusions and, overall, have failed to create clear guidelines, making decisions on whether to hire or reject applicants with criminal convictions very risky propositions for employers.

Background Facts in Cree

In 2015, Derrick Palmer applied for a Schematic Layout Applications Specialist position with Cree, Inc., a manufacturer of lighting products in Racine. Palmer received a conditional job offer pending a criminal background check (and Palmer truthfully disclosed on his application that he had several past convictions). The background check confirmed that Palmer had recent convictions in 2012 for strangulation/suffocation, fourth-degree sexual assault, battery and criminal damage to property, all relating to an incident with his live-in girlfriend. He also had a domestic violence conviction in 2001 for battery.

The duties of an Applications Specialist involved designing lighting plans for customer jobs. Applications Specialists worked in a cubicle within a facility employing approximately 1,000 employees. Security cameras were installed in various locations of the building. Applications Specialists occasionally visited customers’ facilities and attended trade shows requiring overnight stays. They did not supervise other employees.

Palmer, who had a Mechanical Design Certification, was offered the job as the most qualified candidate. However, Cree, Inc. revoked the offer upon receipt of Palmer’s criminal background check. Palmer then sued Cree, Inc. for unlawful conviction discrimination under the WFEA.

Cree Reaches Supreme Court After Conflicting Rulings

The difficulty in determining what convictions are “substantially related” to job duties was vividly illustrated by the conflicting rulings preceding the Supreme Court decision. First, an Equal Rights investigator found probable cause that Cree, Inc. had unlawfully discriminated against Palmer because his convictions were not “substantially related” to the job. Then, after conducting a full hearing, an Administrative Law Judge held that the convictions were “substantially related” to the job duties and, therefore, no violation of the WFEA had occurred.

That decision was appealed to the Labor & Industry Review Commission, which reversed the Administrative Law Judge’s decision and held that the convictions were not “substantially related” to the job. The Commission’s decision was then appealed to the circuit court, which held that the convictions were substantially related.

In 2020, the circuit court decision reached the Court of Appeals, which held that the convictions were not substantially related. Therefore, Cree, Inc. was back on the hook for unlawful conviction discrimination. Recognizing the obvious difficulties the lower adjudicators were having in interpreting the “substantial relationship” test, the Wisconsin Supreme Court agreed to accept the case. It reached its decision in March, 2022, seven years after Cree, Inc. had revoked Palmer’s job offer. The decision was the first Supreme Court decision in 35 years to clarify the “substantial relationship” test.

Summary of the Cree Decision

Palmer asked the Supreme Court to affirm the Court of Appeals’ decision, which held that his convictions were not substantially job related because the convictions all involved domestic conflict with his girlfriend. Courts had long held that domestic violence convictions do not necessarily relate to workplace environments because workplace environments do not usually involve interactions with a spouse or girlfriend/boyfriend, and employees are usually supervised by managers and sometimes through use of security cameras. Palmer pointed out that he would not be working directly with anyone with whom he had a personal relationship, and the possibility that he might develop a personal relationship with a coworker, and then become violent toward her, was mere conjecture. He argued that the environmental factors and opportunities present in a domestic violence setting were simply not present in the cubicle workplaces within the security-camera monitored facility at Cree, Inc.

The Supreme Court rejected Palmer’s arguments and held that the domestic violence convictions were “substantially related” to the Applications Specialist job. First, the Court firmly rejected the notion that domestic violence was different than other forms of violent acts. According to the Court, such a distinction improperly and unfairly undermines the seriousness of domestic violence. Acts of domestic violence reflect a willingness to use violence, particularly when an individual’s power and authority is threatened, which is a character trait that is not limited to a domestic environment or only to victims with whom the perpetrator has an intimate relationship. Therefore, the analysis of “substantial relationship” should not be colored by the fact that the infractions occurred in a domestic setting and not in a workplace setting.

Second, the Court held that there were opportunities for repeat acts of violence by Palmer in the prospective job at Cree, Inc. There were many areas of the facility which were not covered by security cameras, and he would not always be closely supervised in performing his duties. He would occasionally attend trade shows with overnight stays without any supervision and would visit customer locations without close supervision.

Third, the character traits reflected in his convictions indicated that he might not only resort to violence in some situations (for example, where someone challenged his job performance or skills) but very serious acts of violence (strangulation, sexual assault, battery) in certain circumstances. The Court held that employers have a right to be more cautious in evaluating convictions when the convictions reflect a willingness of the applicant to engage in such serious violent acts. Likewise, the fact that the convictions were recent, and that the combination of the older conviction and newer convictions reflected a pattern of violent tendencies, also supported a finding of “substantial relationship”.

Takeaways

Although the “substantial relationship” test will continue to be a complicated and potentially risky analysis, the Cree decision provides useful guidance to Wisconsin employers. Employers should consider the following takeaways:

• The decision implicitly recognizes the right of Wisconsin employers to conduct criminal background checks as part of the hiring process. (However, employers should continue to ensure that federal FCRA rules and state “ban the box” laws are complied with during such processes.)

• The decision makes it clear that domestic violence convictions should not be treated differently than other violent convictions and that the personality traits reflected in violent acts can be transposed from different environments and situations into workplace environments and situations.

• Employers should review the statutory elements of the crime underlying the conviction as part of the “substantial relationship” test. The age of the convictions and whether there is a pattern to the convictions are also relevant factors.

• Employers should analyze whether an opportunity exists for the applicant to engage in the same or similar type of criminal activity within the job being applied for. Factors such as the degree of supervision, location of the work being performed, nature of the work being performed and others are relevant to the inquiry.

• Due to the potential for legal challenges, employers should consider consulting an experienced employment attorney for assistance in evaluating whether a conviction is “substantially related” to the prospective duties of the job.

A copy of the Cree decision, or further information on the construction and implementation of criminal background checks within the context of the hiring process, may be obtained from the Law Firm of Conway, Olejniczak & Jerry Employment Team.

Written By:
Attorney Shane A. Anderson