Labor & Employment Law Daily Wrap Up, DISCRIMINATION—Wis. Sup. Ct.: School district engaged in arrest-record discrimination in firing of employees cited for municipal theft, (Apr 11, 2025)

By Kathleen Kapusta, J.D.

The employees, who had been cited for a noncriminal offense, were fired after the assistant city attorney told the district that he thought he could obtain a conviction.

The Wisconsin Labor and Industry Review Commission (LIRC) correctly found that a school district engaged in arrest-record discrimination when it terminated two school district employees who had been cited by the police for municipal theft of school district money, a noncriminal offense, and after the assistant city attorney told the district he thought he could obtain a conviction. Affirming LIRC’s decision, and reversing the decision of the state appeals court, a divided state high court found that the Wisconsin Fair Employment Act’s definition of arrest record—specifically the phrase “any... other offense”—includes noncriminal offenses (Oconomowoc Area School District v. Cota, No. 2022AP1158 (Wis. Sup. Ct. Apr. 10, 2025)).

The employees, members of the district’s grounds crew, recycled scrap metal as part of their job. Over a two-year period, they made multiple complaints about a coworker who subsequently told the district that he and the two employees had delivered scrap metal to a processor but kept the payment and split the money among themselves.

Investigations. After investigating, the district’s HR director found that over $5,000 was missing but due to conflicting accounts by the employees and their coworker, she was unable to determine who was responsible. Accordingly, the district turned the investigation over to the local police. The police investigated for more than 11 months but did not discover any new information. Nevertheless, the employees were cited for municipal theft.

Termination. A year later, the city attorney told the district he believed he could obtain convictions against the employees. He also proposed dismissing the case against them in exchange for a $500 payment, which he characterized as restitution. Although the district supported the proposal, the employees did not agree. The district terminated them the next day stating that it had “learned” they “were, in fact, guilty of theft of funds from the School District” and had lied about this during the district’s internal investigation. The municipal citations against them were ultimately dismissed and they never pled guilty to or were convicted of municipal theft.

Prior proceedings. The employees filed charges of arrest-record discrimination with the Department of Workforce Development, but an administrative law judge found they failed to establish that the district had unlawfully discriminated against them. Reversing, LIRC found the district fired them because of their arrest records in violation of the Wisconsin Fair Employment Act. After the state circuit court affirmed, the court of appeals reversed, holding that the Act’s definition of “arrest record” includes only information related to criminal offenses—not the municipal offenses for which the employees were cited.

LIRC’s decision. As an initial matter, the Wisconsin Supreme Court noted that when an appeal is taken from a lower court’s decision reviewing an agency decision, it reviews the agency’s decision, not the decision of the lower court.

Arrest record. The court then explained that pursuant to the Act, an employer, subject to limited exceptions, may not terminate an employee because of the employee’s arrest record. Arrest record is defined as including, 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.”

Any other offense. According to the district, the phrase “any... other offense” in the definition of arrest record refers only to criminal offenses under the laws of jurisdictions that, unlike Wisconsin, do not classify crimes as either felonies or misdemeanors. Thus, because the employees were cited for a noncriminal offense, they were not protected ty the Act. According to the employees and LIRC, however, the ordinary meaning of the phrase “any... other offense” includes violations of both criminal and noncriminal laws.

Because the Act does not define the phrase “any... other offense,” the court looked to its ordinary meaning, noting that “offense” is generally defined as “an infraction of the law” or as “a transgression of law; a crime.” These definitions, said the court, are broad enough to include both criminal and noncriminal offenses. Thus, the court found that the ordinary meaning of the phrase “any... other offense” in the Act includes all criminal and noncriminal offenses other than felonies and misdemeanors, both of which are already referenced in the definition of “arrest record.”

Not only is this definition consistent with how the term “offense” was used in other statutes in effect at the time the Act’s definition of “arrest record” was adopted, the court found the structure and remaining text of the provision at issue further supported giving “any... other offense” its ordinary meaning. The provision states that an individual’s arrest record “includes, but is not limited to,” the types of information listed in the statute and includes within the arrest record 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... other offense pursuant to any law enforcement or military authority.”

As to the provision’s reference to an arrest, Wisconsin law, the court observed, expressly authorizes arrests in connection with noncriminal offenses and the definition of “arrest record” itself is not limited to arrests.

Express purpose. The court also found that reading “any... other offense” to include noncriminal offenses is consistent with the Act’s express purpose “to protect by law the rights of all individuals to obtain gainful employment and to enjoy privileges free from employment discrimination because of... arrest record....”

Exceptions. Finally, the court noted that the Act provides an exception allowing employers to refuse to hire “any individual who is subject to a pending criminal charge... if the circumstances of the charge substantially relate to the circumstances of the particular job....” It also provides that it is not arrest-record discrimination to request that an applicant or employee “supply information regarding... a record of a pending charge,” without requiring that the charge be criminal. If “the Act’s general prohibitions on arrest- and conviction-record discrimination applied only to criminal offenses, then there would be no reason for the legislature to enact—in two consecutive paragraphs of the same subsection—exceptions applicable to ‘a pending charge’ and ‘a pending criminal charge,’” said the court. Nor would there be any need for exceptions applicable only to noncriminal offenses at all.

District’s motivation. Turning to whether LIRC correctly concluded that the district terminated the employees because of their arrest records, the court explained that the answer turned on the district’s motivation for firing them, which was an issue of fact. Here, said the court, LIRC found that the district’s decision to terminate the employees was motivated by their municipal theft citations and by the assistant city attorney’s statements that he believed he could convict them. Further, the court stated, while LIRC found that the district “believed, as a result of its internal investigation, that [the employees] may have stolen money,” it also found that the district “was not persuaded of that conclusion to the point of being motivated to act” until it received the arrest-record information.

Substantial evidence. Despite the HR director’s testimony that she had formed a personal belief in their guilt during the investigation, the court found substantial evidence supported LIRC’s conclusion the district was not motivated to act by its internal investigation. She concluded at the end of the investigation that she was unable to determine who was responsible due to conflicting allegations and when referring the matter to the police for further investigation, the district’s attorney told the investigator that the district could not conclude who was responsible.

Substantial evidence also supported LIRC’s conclusion that the district’s decision to terminate the employees was motivated by arrest-record information. The HR director testified that she learned of three new pieces of information between the close of her internal investigation and her decision to fire them nearly two years later: the employees were cited for municipal theft; the assistant city attorney said he believed he could convict them; and the assistant city attorney said he anticipated reaching a settlement with the employees that included restitution. Not only did the HR director admit that these three pieces of information caused her to terminate the employees, all three, said the court, were components of their arrest records.

Onalaska defense. Rejecting the district’s argument it was protected by the “Onalaska defense” because its termination decision was motivated at least in part by the HR director’s belief in the their guilt formed during the internal investigation, the court explained that Onalaska “holds simply that an employer who does not rely on arrest-record information when making a discharge decision does not discriminate against an employee because of their arrest record.” Nor did the defense apply here, the court stated, because LIRC found that the district did rely on arrest-record information when making its discharge decision and the court was required to accept this finding because it was supported by substantial evidence.

Although the court affirmed LIRC’s decision that the district terminated the employees because of their arrest records in violation of the Act, clarified “that the Act does not prohibit terminating employees with arrest records. Rather, it prohibits terminating employees because of their arrest records.”

Ziegler dissent. Dissenting, Justice Ziegler argued that the “court’s decision sends a message to employers across the state: If the employer believes one of its employees may have committed a crime—say, stealing from that employer—based upon its own internal investigation, it should quickly fire the employee rather than have its suspicions confirmed by a full investigation by law enforcement.” Suggesting that “the decision may ultimately prove to be a defeat for employees across Wisconsin,” Ziegler contended that the “outcome of this case turns the stated purpose of the Act upside down—pushing employers to terminate employees as quickly as possible to avoid the risk of liability under the Act. The legislature did not intend the statute to operate in this manner.”

Bradley dissent. Justise Bradley, also dissenting, asserted that “The majority mistakes a conclusion of law for a finding of fact. Whether an employer unlawfully terminated an employee based on his arrest record is a conclusion of law, as LIRC’s Order properly denominated it.”

The case is No. 2022AP1158.

Judge: Dallet, R.

Attorneys: Oyvind Wistrom (Lindner & Marsack) for Oconomowoc Area School District. Alan C. Olson (Alan C. Olson & Associates) for Gregory L. Cota.

Companies: Oconomowoc Area School District

MainStory: TopStory Discrimination Discharge StateLawClaims WisconsinNews GCNNews