Arrest and Conviction Record Discrimination and the Substantial Relationship Test

The Wisconsin Fair Employment Act (WFEA) prohibits employers from discriminating against employees or job applicants on the basis of an arrest record or conviction record, subject to certain exceptions. One significant exception involves the substantial relationship test. The Wisconsin Supreme Court interpreted the substantial relationship test in a decision last year, which provides helpful guidance to employers on the proper application of the test. Since then, the Labor and Industry Review Commission (LIRC) has also issued several decisions applying the substantial relationship test.  

Under the substantial relationship test, it is not employment discrimination because of an arrest record to refuse to employ or to suspend from employment an individual who is subject to a pending criminal charge if the circumstances of the charge substantially relate to the circumstances of the individual’s job. In addition, it is not employment discrimination because of conviction record to refuse to employ or to terminate from employment an individual who has been convicted of a felony, misdemeanor, or other offense, if the circumstances substantially relate to the circumstances of the individual’s job.

In Cree, Inc. v. Lab. & Indus. Rev. Comm’n, 2022 WI 15, 400 Wis. 2d 827, 970 N.W.2d 837, the Wisconsin Supreme Court applied the substantial relationship test and held that the employer did not unlawfully discriminate against a job applicant, Derrick Palmer, based upon his conviction record. Palmer had applied for an Applications Specialist position with Cree, Inc. The position required the performance of tasks including, but not limited to: designing and recommending lighting systems to customers, sometimes at customers’ facilities; and attending trade shows. Cree, Inc., made a conditional offer to Palmer subject to a standard background check. Cree, Inc. then rescinded the offer based upon the 2013 convictions for domestic violence.

Palmer filed a discrimination complaint with the Wisconsin Department of Workforce Development Equal Rights Division (ERD). The ERD investigator initially found probable cause to believe that discrimination occurred. After a hearing on the merits, the ERD Administrative Law Judge (ALJ) concluded that Palmer’s convictions were substantially related to the position. Upon appeal, the Wisconsin Supreme Court ruled in favor of Cree, Inc.

The Court explained 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.” With regard to domestic violence convictions, in particular, the Court explained that it is necessary to look beyond the domestic context and instead analyze the circumstances material to fostering criminal activity. The Court reasoned that “[t]he 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.”

In applying this framework to Palmer, the Court reviewed the elements of the offenses and the character traits tied to them, as well as “other relevant and readily ascertainable circumstances of the offense such as the seriousness and number of offenses, how recent the conviction is, and whether there is a pattern of behavior.” The Court stated, “[w]e consider the seriousness of the convicted offense because the more serious the offense, the less we can expect an employer to carry the risk of recidivism.” Next, the Court considered the circumstances of the job, including the facility size and layout, access to the facility, security camera coverage, as well as the independent nature of the job and work with customers.

The Court held that Cree, Inc., satisfied the substantial relationship test. According to the Court, “Palmer’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.” It further reasoned that “the absence of regular supervision creates opportunities for violent encounters.” The Court explained that “the seriousness of Palmer’s convictions would force Cree to assume the risk of Palmer repeating his conduct and threatening the safety of employees, customers, and the public. Additionally, the recentness of Palmer’s convictions—a scant two years—eliminates any favorable inference of a long-dormant conviction record. Finally, Palmer’s emerging pattern of domestic violence convictions further highlight his recidivism risk.”

Since the Wisconsin Supreme Court’s decision in Cree, Inc., LIRC has issued several decisions involving the substantial relationship test. For instance, in Geiger v. Milwaukee Area Technical College, ERD Case No. CR201602707 (LIRC April 28, 2023), LIRC found that MATC did not violate the WFEA when it suspended Geiger while a charge of embezzlement was pending. Geiger alleged that MATC discriminated against him on the basis of an arrest record because there was not a substantial relationship between the crime of embezzlement (with which he was charged) and his job as a plumbing instructor. After considering the elements of the crime of embezzlement and the circumstances of the job, LIRC concluded that MATC had satisfied the substantial relationship test.

By contrast, in Lane v. Bellin Memorial Hospital, ERD Case No. CR201801229 (LIRC March 16, 2023), LIRC concluded that Lane’s arrest for obstructing an officer, battery, criminal damage to property, domestic abuse, and disorderly conduct related to a single incident involving her spouse was not substantially related to her job as a physician specializing in pediatric care. Thus, the Hospital’s decision to suspend her while the charge was pending violated the WFEA.

In Lane, LIRC noted that the charges related to a single incident, and there was no pattern of violence or other criminal conduct. LIRC reasoned that, “[t]he record contains no evidence to indicate that there are specific opportunities in the workplace that would allow the complainant to recidivate, and the commission can see no reason to believe that the complainant, who worked for the respondent for 17 years without incident, is likely to become aggressive with a patient, a patient’s family member, or a co-worker, that she might destroy property, or that she might obstruct an investigation in the context of her work.”

In addition, based upon its prior decisions, LIRC reasoned that adverse personality traits alone cannot form the basis for a finding of a substantial relationship. However, it also stated “even assuming that adverse character traits could form the basis for a finding of substantial relationship in the absence of a concern about criminal recidivism, the commission would nonetheless be disinclined to find a substantial relationship in this case.” LIRC reasoned that “honesty, trustworthiness, and a willingness to follow rules are important components of most any job, and there is nothing about the job of a pediatric physician that is unique in this regard.” Thus, LIRC ruled in favor of Lane.

Furthermore, in Gullan v. General Mills, Inc., ERD Case No. CR201702308 (LIRC Sept. 29, 2023), which LIRC issued on September 29, 2023, LIRC held that General Mills, Inc. did not violate the WFEA when it rescinded Gullan’s offer of employment because his conviction was substantially related to the position. Gullan had been convicted of possession with intent to deliver or manufacture THC, which LIRC stated demonstrated a propensity to unlawfully possess, manufacture, and sell illegal drugs. Gullan applied for a position as a second-shift mechanic. LIRC reasoned that the circumstances of the job included a loud manufacturing environment with many other workers, minimal supervision, and significant access to private locations. Thus, there was a significant risk that Gullan would reoffend. Consequently, LIRC ruled in favor of General Mills, Inc.

While these decisions are helpful, they also demonstrate that the analysis under the substantial relationship test is often complex and nuanced. Before taking action with regard to an employee or job applicant who has a pending criminal charge or a criminal conviction on his/her record, it is important for employers to carefully analyze the circumstances of the offense and the circumstances of the specific position. It may also be wise for employers to seek legal advice to avoid complaints of arrest or conviction record discrimination.