Ray-O-Vac, Division of E.S.B., Inc. v. Wisconsin Dept. of Industry, Labor and Human Relations

• Decision Date: 19 December 1975
• Docket Number: No. 600,DIVISION,RAY-O-VA,600
• Citation: 70 Wis.2d 919,236 N.W.2d 209
• Parties: , 12 Fair Empl.Prac.Cas. (BNA) 64, 10 Empl. Prac. Dec. P 10,564 OF E.S.B., INC., Respondent, v. WISCONSIN DEPARTMENT OF INDUSTRY, LABOR AND HUMAN RELATIONS, Appellant, Kristine Nordness and Sheryll Dvorak, Respondents. (1974).
• Court: Wisconsin Supreme Court

Page 209

236 N.W.2d 209

70 Wis.2d 919, 12 Fair Empl.Prac.Cas. (BNA) 64,

10 Empl. Prac. Dec. P 10,564

RAY-O-VAC, DIVISION OF E.S.B., INC., Respondent, v. WISCONSIN DEPARTMENT OF INDUSTRY, LABOR AND HUMAN RELATIONS, Appellant, Kristine Nordness and Sheryll Dvorak, Respondents.

No. 600 (1974).

Supreme Court of Wisconsin.

Dec. 19, 1975.

Rehearing Denied Feb. 27, 1975.

Bronson C. La Follette, Atty. Gen., Gordon Samuelsen, Asst. Atty. Gen., Madison, for appellant.

Priscilla Ruth MacDougall, Madison (amicus curiae for Wisconsin Education Association Council).

Axley, Brynelson, Herrick & Gehl, Madison, for respondents.

Davis, Kuelthaw, Vergeront, Stover & Leichtfuss, S.C., Milwaukee (Walter S. Davis, John P. Savage, of counsel) amicus curiae for Employers Assn., Inc., on motion for rehearing.

Foley & Lardner, Milwaukee (Herbert P. Wiedemann, Stanley S. Jaspan, Gary J. Okey, of counsel) amicus curiae for J. C. Penney Co., Inc., on motion for rehearing.

BEILFUSS, Justice.

The respondents Kristine Nordness and Sheryll Dvorak (they have not appeared in this appeal), employees of Ray-O-Vac, filed complaints with the DILHR alleging they had been discriminated against on the basis of sex because of the divergent limitations of disability payments for pregnancy and childbirth as contrasted to other disabilities.

Kristine Nordness commenced her employment with Ray-O-Vac on July 21, 1970. On or about August 30, 1972, she gave to her employer a note from her doctor which indicated that she was pregnant, that her expected delivery date was January 31, 1973, and that she could continue working according to the rules of the company with the suggestion that she not do heavy work. Nordness submitted a second note from her doctor on November 1, 1972, recommending that she be given a leave of absence beginning on November 13, 1972. Leave was granted on November 10th and she began receiving six weeks of disability benefits on that date. A child was born to Nordness by Caesarean delivery on January 24, 1973, and, upon her doctor's advice, she did not return to work until November 9, 1973. Between May 9, 1973 and November 8, 1973, she was unable to return to work due to a condition of chronic dermatitis.

Sheryll Dvorak began her employment at Ray-O-Vac on September 29, 1971. She was laid off on January 18, 1972. She became pregnant in March, 1972, while she was on a layoff status. Dvorak returned from layoff on May 1, 1972. She gave her employer a note from her doctor on May 24th certifying her pregnancy and placing her expected delivery date at November 8, 1972. A second note, submitted on October 11, 1972, changed the expected delivery date to December 15th and recommended that she suit work. She was granted a maternity leave on October 13, 1972, but was paid no disability benefits. The child was born on December 22nd and Dvorak returned to work on March 5, 1973.

William Rettie, Director of Employee Relations at Ray-O-Vac, stated at the hearing that Sheryll Dvorak was paid no disability benefits during her maternity leave because she was on layoff at the time of conception and was therefore not covered by the company's group insurance plan. Ray-O-Vac's 'Group Insurance Plan' booklet was submitted as an exhibit at the hearing. Under the heading, 'Weekly Disability Benefits For Employees,' the booklet provides:

'The plan pays you a weekly benefit for disability absences during which you are prevented from working as a result of non-occupational accidental bodily injury or disease. Your benefit will commence on the first day of disability due to injury and on the eighth day of disability due to disease and is payable for a maximum of twenty-six weeks during any one period of disability.

'. . .

'The disability absence must commence while insurance is in force.'

Under the heading, 'Maternity Benefits,' the booklet provides:

'If a disability absence is due to pregnancy, or resulting childbirth or miscarriage, the maximum period of payment is six weeks. Benefits are payable only if the pregnancy and the resulting disability absence commence while your insurance is in force.'

When employment terminates due to layoff, insurance remains in force until the end of the month of termination. Terminated employees may convert the group coverage to an individual policy upon application made within 30 days following termination. Sheryll Dvorak did not exercise this conversion privilege.

Dvorak testified that her January, 1972, layoff was against her wishes. She stated that she was given the alternative of taking a man's job at the plant but was under the impression that she would be fired if that job did not work out. She further stated that she was told by Richard Engel, the personnel manager, that she would be better off if she took the layoff. Engel testified that layoffs were connected with general cutbacks in production and that the system for layoffs was based on seniority, with the most senior employees having the right to work as long as there was work available. The company first determines which jobs will be eliminated and then lays off a corresponding number of employees with the least seniority. Senior employees whose jobs are eliminated are given the opportunity to choose from jobs available in accordance with their seniority. Engel stated that Dvorak was shown a list of available jobs and was informed that if she chose one she would be expected to perform it satisfactorily or face discharge. The union was aware of and in accord with the layoff policy.

William Rettie further testified that increasing the maximum period of benefits for disability absences due to pregnancies from six weeks to 26 weeks would be more costly.

Adopting the recommended findings of fact and conclusions of law of the examiner, DILHR concluded Ray-O-Vac's plan for temporary disability benefits which treated temporary disabilities due to pregnancy and childbirth differently than other temporary disabilities was discrimination based upon sex and unlawful under the Wisconsin Fair Employment Law (sec. 111.31 through sec. 111.37, Stats.) It further found there was not sufficient proof of business necessity permitted under sec. 111.32(5)(g) to treat temporary disability due to pregnancy and childbirth differently than other temporary disabilities.

The trial court held that there was no sex discrimination in the plan, that women were treated equally with respect to disability from injury or disease, and that providing a benefit for disability arising from pregnancy benefits rather than prejudices women employees. The trial court also stated that the department was without authority to 'order back pay.' The findings, conclusions and order of the department were set aside. DILHR appeals 'from only those portions of the final order or judgment . . . setting aside and reversing the order of the Department . . . which provided that Ray-O-Vac treat temporary disability due to pregnancy and childbirth the same as it treats other temporary disabilities in every respect; that Ray-O-Vac notify the department of its compliance within 90 days of the date of the order, but appeal is not taken from that portion of the order setting aside the department's decision that Ray-O-Vac pay sums to Kristine Nordness and Sheryll Dvorak as disability benefits.'

Ray-O-Vac contends that DILHR improperly based its decision in this case upon certain 'Sex Discrimination Guidelines' which are invalid because not adopted in accordance with ch. 227, Stats. Specifically, Ray-O-Vac argues that the guidelines, as a 'statement of general policy' under sec. 227.01(4), Stats., ¹ constituted an administrative rule which was required to be filed in accordance with sec. 227.023(1). ² The department's alleged reliance upon an invalid rule as the basis for the decision in this case is argued to have deprived Ray-O-Vac of due process of law.

The recent case of Wisconsin Telephone Co. v. ILHR Dept. (1975), 68 Wis.2d 345, 228 N.W.2d 649, concerned the validity of a department order which was based upon the same guidelines which are alleged by Ray-O-Vac to constitute the basis for the order in this case. This court there determined that the guidelines did, in fact, constitute rules which must be filed in accordance with ch. 227. However, failure to file the guidelines as a rule was held not to have deprived the department of the authority to decide the case, since the same result could be reached under the applicable statute regardless of the rule. ³ The court remanded the case to the department for a determination based on the statute only.

In this case it appears that the order was based not upon the invalid guidelines, but upon the provisions of sec. 111.32(5)(g) 1, Stats., ⁴ which makes it unlawful for an employer to discriminate against any individual because of sex in promotion, compensation or in terms, conditions or privileges of employment. In response to Ray-O-Vac's objection to the validity of the proceedings and the department's jurisdiction to act in the matter, the hearing examiner outlined the developments giving rise to the controversy concerning the validity of the questioned sex discrimination guidelines. Because of that controversy, the examiner stated:

'The Department takes the position, and it is important for purposes of this hearing, that the Complaint in this matter alleged a violation of the Wisconsin Fair Employment Law, Sections 111.31 to 111.37. The Fair Employment Law prohibits sex discrimination in employment. The Department takes the position that in deciding the Complaint, it is applying the Fair Employment Law, and in making a determination of whether sex discrimination had occurred, it can only look to the Fair Employment Law.'

Therefore, the question of the invalidity of the department rule is immaterial because the determinations of the DILHR were based on the statute and not the rule.

In adopting the hearing examiner's recommended conclusions of law,...