In re Sierra Trading Post, Inc.

• Decision Date: 22 February 2000
• Docket Number: No. 98-35.,98-35.
• Citation: 996 P.2d 1144
• Parties: In the MATTER of the Petition for Review by SIERRA TRADING POST, INC. of the Award of Unemployment Compensation Benefits to Theresa Hinson: Sierra Trading Post, Inc., Appellant (Employer/Petitioner), v. Theresa Hinson, Appellee (Claimant/Respondent).
• Court: Wyoming Supreme Court

996 P.2d 1144

In the MATTER of the Petition for Review by SIERRA TRADING POST, INC. of the Award of Unemployment Compensation Benefits to Theresa Hinson:

Sierra Trading Post, Inc., Appellant (Employer/Petitioner), v. Theresa Hinson, Appellee (Claimant/Respondent).

No. 98-35.

Supreme Court of Wyoming.

February 22, 2000.

Representing Appellant: W. Perry Dray, Randall B. Reed, and Gregory C. Dyekman of Dray, Thomson & Dyekman, P.C., Cheyenne, Wyoming.

Representing Appellee: No appearance.

Before LEHMAN, C.J., and THOMAS, MACY, GOLDEN, and TAYLOR,¹ JJ.

THOMAS, Justice.

The question for review is whether a worker, whom the employer allowed to start work with the understanding that she must pass a pre-employment drug screening test, is entitled to unemployment benefits when the employment is terminated due to a positive drug test. We hold that she is not. The Unemployment Insurance Commission (Commission) ruled that Theresa Hinson's (Hinson) drug use was not "misconduct connected with her work" and she was eligible for benefits. Since Hinson had not satisfied the condition subsequent upon which the continuation of employment depended, we hold that she left her work "voluntarily without good cause attributable directly to [her] employment," and that she was not entitled to receive unemployment benefits. The decision of the Commission is reversed

In the Brief of Appellant, filed by Sierra Trading Post, Inc. (Sierra), the issue that is raised is:

I. The Unemployment Insurance Commission acted arbitrarily, capriciously and not in accordance with the law in allowing claimant's unemployment benefit claim because it required Sierra Trading Post Inc. to prove that claimant actually used marijuana after starting work instead of requiring proof that claimant failed her drug test after starting work.

On September 27, 1996, Sierra offered Hinson a job as a packer in its warehouse. Sierra allowed Hinson to begin work on September 30, 1996, but according to its Drug and Alcohol Policy, what Sierra termed "an offer of employment" was conditioned upon Hinson passing a pre-placement drug test. Hinson executed a form agreeing to the pre-placement drug testing, and acknowledged a provision in the Drug and Alcohol Policy which reads:

For business reasons as determined solely at the discretion of Sierra Trading Post, Inc. management an applicant may be permitted to commence working, on a conditional basis prior to receipt of the results of pre-placement testing by Sierra Trading Post, Inc. The applicant must first sign a consent to conditional employment. The conditional employment of such an applicant who tests positive for drugs shall be terminated immediately.

The Commission included in its additional findings of fact a finding that Hinson was tested later than she normally would have been under the Drug and Alcohol Policy because she was involved in a car accident and her original test was rescheduled. The Commission pointed out that normally the employer accomplished the "pre-employment" test within the first two weeks of employment. Instead, Hinson provided a urine sample for testing on October 25, 1996. The results of that test were received by Sierra on October 30, 1996, and the test was positive for marijuana. On October 31, 1996, Sierra discharged Hinson in accordance with the company policy.

Hinson then applied for, and was awarded, unemployment benefits under the Wyoming Employment Security Law, Wyo. Stat. Ann. §§ 27-3-101 through 27-3-705 (Lexis 1999). On July 9, 1997, Sierra was advised that Hinson had been found eligible for unemployment benefits and that a pro rata share would be potentially chargeable to Sierra's account unless a protest was filed within fifteen days. Sierra did protest, and on July 23, 1997, it was advised that the benefits were chargeable to its account in a Notice to Employer of Action on Claim. Again, Sierra was advised of a fifteen-day period in which to file an appeal, and Sierra did appeal. The matter was assigned to an appeals examiner, and on September 8, 1997, following a telephonic hearing, the appeals examiner reaffirmed the determination that Sierra's unemployment insurance account was chargeable with a proportionate share of Hinson's benefits.

Sierra was advised of an opportunity to file an Appeal and Petition for Review to the Commission.

Sierra did appeal, and on October 14, 1997, the decision of the Commission was entered. The essence of its decision is found in the following language:

Since the employer's policy allows it, in its sole discretion, to put an applicant to work prior to them submitting to a "pre-placement" drug and alcohol test, the employer, for employment security law purposes, also has the burden of proving that the claimant's subsequent failure of the "pre-placement" test was misconduct connected with the claimant's work.

The Commission found that Sierra had failed to meet that burden of proof. This rationale differed from that of the appeals examiner who had concluded that Sierra failed to follow its policy regarding "pre-employment" drug testing, and, therefore, had failed to demonstrate misconduct within the meaning of the statutes.

Sierra filed a petition for judicial review in the district court. The district court then certified the case to this Court pursuant to W.R.A.P. 12.09. The only appearance in this Court was on behalf of Sierra.

In a matter certified to this Court by the district court pursuant to W.R.A.P. 12.09, our review is circumscribed by our usual standards for reviewing the decision of an administrative agency. General Chemical Corp. v. Unemployment Ins. Com'n, Div. of Unemployment Ins., Dept. of Employment, 906 P.2d 380, 381 (Wyo.1995); Safety Medical Services, Inc. v. Employment Sec. Com'n of Wyoming, 724 P.2d 468, 471-72 (Wyo.1986). We will accord considerable deference to findings of fact by the agency, which will be disturbed only if they are contrary to the overwhelming weight of the evidence upon review of the entire record. Wyoming Steel & Fab, Inc. v. Robles, 882 P.2d 873, 875 (Wyo.1994). We treat differently, however, an agency's conclusions of law which will be affirmed only if they are in accord with the law. Matter of Corman, 909 P.2d 966, 970 (Wyo.1996); Employment Sec. Com'n of Wyoming v. Western Gas Processors, Ltd., 786 P.2d 866, 871 (Wyo.1990). We correct any error that the administrative agency has made in its interpretation or application of the law. Matter of Gneiting, 897 P.2d 1306, 1308 (Wyo.1995); Western Gas Processors, Ltd., 786 P.2d at 871.

The task before us in this case is capsulized by this language in General Chemical Corp., 906 P.2d at 381:

The facts in this case are not in dispute and the only issue before us is a question of law. Thus, the Commission's decision will be reversed if it constitutes an abuse of discretion or if it is not in accordance with the law. Devous v. Wyoming State Bd. of Medical Examiners, 845 P.2d 408, 414 (Wyo.1993).

We are satisfied that the Commission in this instance did not address the appropriate law relating to employment contracts. The Commission assumed that Hinson was an employee of Sierra for purposes of the application of the Wyoming Employment Security Law.

It is clear that in Wyoming, an employment relationship occurs by contract. Brodie v. General Chemical Corp., 934 P.2d 1263, 1265 (Wyo.1997); Loghry v. Unicover Corp., 927 P.2d 706, 712 (Wyo.1996). The rules relating to employment contracts were summarized in Wilder v. Cody Country Chamber of Commerce, 868 P.2d 211, 216 (Wyo.1994):

Wyoming has long recognized that the hiring of an employee by an employer occurs by contract. See, e.g., Casper Nat. Bank v. Curry, 51 Wyo. 284, 65 P.2d 1116, 1120 (1937). When reviewing the terms of a contract of employment, we apply our usual rules of contract interpretation. McDonald v. Mobil Coal Producing, Inc., 820 P.2d 986, 988 (Wyo.1991) (McDonald II). Whether a contract is ambiguous is a question of law for the reviewing court. Prudential Preferred Properties [v. J and J Ventures, Inc.], 859 P.2d [1267,] at 1271 [(Wyo.1993)].

We must look to the law of contracts in arriving at a determination as to whether Hinson and Sierra entered into an employment contract and, if so, how that contract is to be construed.

On the record brought forward from the Commission, there can be no question that the material aspect of the employment contract between Hinson and Sierra was memorialized in writing, and it is not ambiguous. The Commission had before it, and considered and quoted from, Sierra's Drug and Alcohol Policy. The critical language reads:

For business reasons as determined solely at the discretion of Sierra Trading Post, Inc. management an applicant may be permitted to commence working, on a conditional basis prior to receipt of the results of pre-placement testing by Sierra Trading Post, Inc. The applicant must first sign a consent to conditional employment. The conditional employment of such an applicant who tests positive for drugs shall be terminated immediately.

This language is clear in providing for the termination of the employment upon the occurrence of the condition, and Hinson agreed to that.

In Hillman v. Raymond, 733 P.2d 605, 606 (Wyo.1987), we spoke to the concept of a condition subsequent in this language:

"A condition subsequent is any fact the existence or occurrence of which, by agreement of the parties, operates to discharge a duty of performance after it has become absolute. * * *" Calamari & Perillo, The Law of Contracts, § 11-5, p. 385 (1977).

In Kindler v. Anderson, Wyo., 433 P.2d 268, 270-271 (1967), we stated:

"Conditions subsequent are not favored in the law and are to be strictly construed. J.M. Carey & Brother v. City of Casper, 66 Wyo. 437, 213 P.2d 263, 268 [1950]. Of course, conditions, like any other provision of a contract, are to be interpreted as the parties must have understood the conditions at the time. The true intention of

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