STATE OF WISCONSIN
LABOR AND INDUSTRY REVIEW COMMISSION
P O BOX 8126, MADISON, WI 53708-8126 (608/266-9850)

LILLIAN R THORSON,

THORSON INC, Employer

UNEMPLOYMENT INSURANCE DECISION
Hearing No. 01000850LX


An administrative law judge (ALJ) for the Division of Unemployment Insurance of the Department of Workforce Development issued a decision in this matter. A timely petition for review was filed.

The commission has considered the petition and the positions of the parties, and it has reviewed the evidence submitted to the ALJ. Based on its review, the commission agrees with the decision of the ALJ, and it adopts the findings and conclusion in that decision as its own.

DECISION

The decision of the administrative law judge is affirmed. Accordingly, as of week 1 of 2001, the claimant is not eligible to start a benefit year. The claimant is required to repay the sum of $1806 to the Unemployment Reserve Fund. The initial Benefit Computation (Form UCB-700), issued on January 4, 2001 is set aside. If benefit payments become payable based on other employment, a new computation will be issued as to those benefit rights.

Dated and mailed June 19, 2001
thorsli . usd : 135 : 8   UW 977

/s/ David B. Falstad, Chairman

/s/ James A. Rutkowski, Commissioner

MEMORANDUM OPINION

In her petition for commission review, the claimant explains that the "non compete agreement was the most valuable part of the agreement or covenant as far as the corporation was concerned and a very important part of her wage earning service since it helped protect the future business of the corporation and her ex-husband's position as president of the corporation." The claimant contends that the wages were not alimony or maintenance. Rather, the claimant explains that she performed the type of expert services usually associated with such covenants and that the corporation benefited greatly by her non compete agreement and that she earned her compensation by honoring it. The claimant contends that such payments have not been excluded from the definition of wages found at Wis. Stat. § 108.02(26).

The claimant is correct in stating that the ALJ noted that compensation for the observance by a former employee of a covenant not to compete may constitute wages for UI purposes. However, here the claimant had not performed the type of expert or management services usually associated with such covenants. It is clear that the corporation received no benefit for its payment to the claimant after mid-1995 at the latest, when the marital settlement was extended for an additional two years. After that time, the claimant permanently moved away from the employer's trade area. Moreover, as the ALJ noted, covenants not to compete typically do not extend for so long after the worker's regular employment by an employer. The payments in question here were received more than five years after the claimant had performed any other services for the employer.

In sum, the payments that the claimant received from the corporation, during her base period, were not compensation by the corporation for her personal services to it, despite the claimant's argument to the contrary. The appeal tribunal decision offers a thorough analysis of this complex UI issue and after reviewing the record and applying the law to the facts at hand, the commission reaches the same conclusion, the payments the claimant received do not constitute base period wages within the meaning of sections 108.02(4m) and (26) of the statutes.

cc: 
Monson Law Office
Attn: Gary T. Monson


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uploaded 2001/06/21