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Section 103.43 Case Analysis

Given the weakness of the case for misrepresentation, the case may not be the best candidate for review in the Supreme Court. However, whether sec 103.43 can remain limited to manual laborers, as the court held, without violating the Equal Protection Clause, is an issue that the court should address soon.

However well-meaning and necessary when enacted, the statute is something of an anachronism today.

It was primarily enacted to prohibit employers from advertising out-of-town for new workers when their own employees were on strike, without notifying the prospective workers of the strike in the advertising, or luring workers from out-of-town by advertising higher wages than would actually be paid.

In Beirsach & Neidermeyer Co. v. State, 177 Wis. 388, 188 N.W. 650, 651 (1922), the Supreme Court wrote, "Without the provisions of this statute, employers who had labor troubles could indiscriminately advertise for help without apprising the prospective employes of actual conditions, as the result of which many would leave their homes and travel long distances, only to find that a strike or lockout existed in the plant, which would make the employment uncomfortable, to say the least, and in many instances dangerous."

When Beirsach argued that the statute was unconstitutional, because it only applied to manual laborers, and not office workers, neither the State nor the Supreme Court even questioned that assumption.

On its face, the statute has no such limitation, but applies to workers "of any class or calling." Yet the State never argued that the Equal Protection Clause was misplaced as a result. It was understood that the legislature intended to address labor strife, "labor" meaning industrial labor, not service labor.

Also, at the time the statute was passed, Wisconsin did not even recognize a cause of action in tort for fraudulent inducement to an employment contract. The idea that the Legislature would have criminalized such behavior with penalties of up to a year in jail for the offense would have been unfathomable.

In today’s information age, the statute is arguably irrelevant. The only cases interpreting this statute date back 50 years or more; and it would not be feasible for an employer to lure out-of-town prospective employees to town to break strikes as they once did (the statute’s current irrelevance is amply shown by the fact that the Legislature hasn’t even raised the maximum fine in all those years).

Nevertheless, the statute remains on the books, and were an employer to violate it in a manner for which the statute was intended, the employer could and should be prosecuted for it.

In practice, however, the statute will likely come under review in a case such as the one at bar, with a white-collar professional claiming fraudulent inducement to enter an employment contract, and seeking to piggyback the statute onto that claim as a means of recovering attorney fees.

As Bellon noted (and which the court of appeals did not dispute), the statute on its face makes no distinction between manual laborers and other workers. Also, the Supreme Court has never technically held that the statute contains such a distinction; it merely assumed so, because the parties in Beirsach did.

So the court could hold that the statute means what it plainly says, and interpret the statute to permit attorney fees in any employment fraud case, without directly overruling any prior holding.

To do so, however, the court would have to disregard the plain intent of the legislature when it drafted the statute, and what was the plain meaning of the word "workmen" (since changed to "worker") at the time the statute was enacted.

The other potential scenario would be if the employee was a manual laborer, but the alleged fraud was of the modern-tort variety, and not the old-fashioned quest for strikebreakers variety.

An employer found liable for fraud could plausibly argue that, even though the employee is a manual laborer, rather than a professional, it nevertheless should not be liable for attorney’s fees. If one accepts that Beirsach remains good law, and that the purpose of the statute is to prevent the labor violence that was common 100 years ago, then the law has no application to a modern fraud in the inducement claim today, regardless of whether the employee is a manual laborer or professional.

Although the court in 1922 could reasonably hold that, given this nation’s history of labor violence, there was a rational basis for distinguishing between industrial labor and service labor, the court could not do so today where the basis of the claim is essentially one for the modern fraud claim.

Any employer of a manual laborer could make an excellent argument that the statute does not encompass fraud of the sort alleged in this case.

As noted, the modern tort did not even exist at the time the statute was enacted. Also, the statute is labeled, "Fraudulent advertising for labor." (emphasis added). Thus, a good case can be made the statute is limited to advertising.

Furthermore, the history of labor relations in this country supports such an interpretation. The goal of an employer who would have willfully violated this statute back in the early part of the 20th century would be to induce a large mass of prospective strikebreakers to show up to work (ideally from out-of-town, with no option at that point but to take whatever work is available). Advertising would be essential to accomplish that goal.

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Section 103.43 limited to manual laborers

Even if no strike or lockout were involved, but the fraud at issue were advertising higher wages than would actually be paid, advertising would be key to the fraud: workmen travel a significant distance to show up for work, thinking (based on advertising) that they will be paid X dollars per hour; the employer says it has jobs available at less than X; and the employees can either accept the fraud, or go back to wherever they came from.

Nevertheless, the plain language of the statute does not limit its scope to false advertising, but prohibits "any false or deceptive representations, false advertising or false pretenses…"

Ultimately, while the statute remains on the books, and labor difficulties will never disappear entirely, conditions have changed in the workplace and in the information available to workers, so the statute cannot be limited to manual laborers, while excluding service workers or professionals, without violating the Equal Protection Clause.

It must either be construed as intended when enacted, effectively relegating it to an anachronism, because it would only encompass fraudulent advertising for strikebreakers, turn-of-the-century style, or construed according to the plain meaning of the statute today, effectively allowing attorney fees for any successful plaintiff in any action for fraud in the inducement to an employment contract.

– David Ziemer

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David Ziemer can be reached by email.

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