BEFORE THE

STATE OF WISCONSIN
LABOR AND INDUSTRY REVIEW COMMISSION

In the matter of the Trade Readjustment Allowance Claim of

GILBERT M. PIOTROWSKI, Claimant

TRADE ACT DECISION
Hearing No. 77-TRA-A-64134 MS

 


On August 17, 1977, a Department of Industry, Labor and Human Relations (department) deputy issued an initial determination holding that the claimant was last employed by AMC on July 17, 1975; that the date, as specified by the Secretary of Labor in the certification under which the claimant is covered, is September 15, 1975; that to be eligible for allowances under the Trade Readjustment Act of 1974, a worker must have been totally or partially separated from adversely affected employment on or after the date as specified in the certification under which he is covered; and that under Section 231 (1)(a) of Public Law 93-618, the claimant is ineligible for allowances under the Trade Readjustment Act of 1974. The determination set aside form UC-TRA 857 (B) dated and mailed March 15, 1977, based on erroneous information from the employer. This determination resulted in an overpayment of $4,117 which the claimant was required to repay.

On August 18, 1977, the claimant filed a timely request for hearing and appeal of the department deputy's initial determination. The issues noticed for hearing were "certification and overpayment." Hearing was held on October 3, 1977. On October 7, 1977, the appeal tribunal modified and affirmed the department deputy's initial determination and held that in week 29 of 1975, the claimant was not separated on or before (sic) the date as specified in the certification under which he was covered, within the meaning of section 231 (1)(a) (sic) of the Trade Act of 1974; that the claimant does not have at least 26 weeks of employment in a 52-week period immediately preceding a separation occurring after the impact date, within the meaning of section 231 (2) of the Trade Readjustment Act of 1974; and that the claimant was paid $4,117 in Trade Readjustment Allowances, for which he was not eligible and to which he was not entitled, within the meaning of section 91.7 of the Secretary of Labor's Rules and Regulations; that pursuant to section 91.58 (b) of the Secretary of Labor's Rules and Regulations and section 108.22 (8)(a) of the Wisconsin Statutes, he is required to repay such sum to the Trade Readjustment Account.

On October 17, 1977, the claimant filed a timely petition for review of the appeal tribunal decision. On April 26, 1978, the Commission ordered that additional testimony be taken before an examiner, acting as a deputy for the Commission. Hearing was held on September 12, 1978. The issue noted for hearing was "eligibility." On November 6, 1978, the Commission ordered that additional testimony be taken before an examiner, acting as deputy for the Commission. Hearing was held on December 11, 1978.

Based on the applicable law, records and evidence in this case, the Commission makes the following

FINDINGS OF FACT AND CONCLUSIONS OF LAW

The claimant worked since about May 1959, for the employer, AMC, Milwaukee, Wisconsin Body plant, a manufacturer of automobiles.

On July 17, 1975 (week 29), the employer discharged the claimant from his job as a maintenance cleaner. Subsequently, the claimant grieved the discharge and also filed an unfair labor practice complaint with the NLRB. On May 12, 1976 (week 20), during a recess in the arbitration hearing, the employer and the union and the claimant agreed to settle the grievance dispute and agreed to authorize the arbitrator to fashion the "award." The arbitrator instructed the claimant to withdraw his unfair labor practice charge, and awarded the claimant rescission of the discharge, reinstatement "with unimpaired seniority," and a "flat sum of $3,500 in full and complete settlement of all claims, if any, against the Corporation arising out of the happenstances which culminated in his discharge on July 17, 1975." All benefits accruing to him under the original contract of hire were to be restored to him and the employment relationship continued uninterrupted nunc pro tunc.

On Thursday, May 13, 1976 (week 20), the claimant reported for work and worked until he was laid off on Friday, July 23, 1976 (week 30). He returned to work Monday, August 2, 1976 (week 32). He was laid off beginning Monday, August 9, 1976 (week 33) through Saturday, August 28, 1976 (week 35); and again beginning September 5, 1976 (week 37) through October 2, 1976 (week 40); again beginning Tuesday, October 12, 1976 (week 42) through January 8, 1977 (week 2); and again beginning March 20, 1977 (week 13). All his layoffs subsequent to his reinstatement were from his job as a Department 662--General Maintenance Department-- maintenance cleaner.

Chapter 2 of Title II of the Trade Act of 1974 (P.L. 93-618) (Act), provides for payment of allowances to workers who are totally or partially separated from their employment due to lack of work in industries that are adversely affected by foreign competition.

On November 17, 1976, the Secretary of the U.S. Department of Labor (DOL) certified that:

"All hourly and salaried workers of the American Motors Corporation, Milwaukee, Wisconsin Body plant (TA-W-997) (TA-W-923), engaged in employment related to the production of stampings and forgings and body assemblies who became totally or partially separated on or after September 15, 1975 are eligible to apply for adjustment assistance under Title II, Chapter 2 of the Trade Act of 1974; and . . ."

Subsequently the claimant applied for adjustment assistance. The department determined his appropriate week was the calendar week ending February 8, 1976 (week 9). DOL regulations, 29 CFR 91.51, require that the State agency shall determine an individual's entitlement to adjustment assistance and notify the individual in writing of any determination or redetermination as to entitlement to adjustment assistance.

The initial determination of August 17, 1977, denied allowances under section 231 (1)(A) of the Trade Act because the claimant allegedly was last employed on July 17, 1975. The appeal tribunal decision modified the initial determination and denied allowances under section 231 (1)(A) of the Trade Act.

Section 231 (1)(A) and (2) of the Act provides as follows:

"SEC. 231. QUALIFYING REQUIREMENTS FOR WORKERS.

"Payment of a trade readjustment allowance shall be made to an adversely affected worker covered by a certification under subchapter A who files an application for such allowance for any week of unemployment which begins after the date specified in such certification pursuant to section 223(a), if the following conditions are met:

"(1) Such worker's last total or partial separation before his application under this chapter, occurred--

"(A) on or after the date, as specified in the certification under which he is covered, on which total or partial separation began or threatened to begin in the adversely affected employment, and

"(2) Such worker had, in the 52 weeks immediately preceding such total or partial separation, at least 26 weeks of employment at wages of $30 or more a week in adversely affected employment with a single firm or subdivision of a firm, or, if data with respect to weeks of employment are not available, equivalent amounts of employment computed under regulations prescribed by the Secretary."

The issue presented then is whether or not the claimant's last total or partial separation before his application for allowances occurred on or after the impact date of September 15, 1975. Resolution of this issue is dependent upon whether or not the weeks for which he was paid back pay under the settlement agreement were weeks of employment.

Note that all applications under this certification were made retroactive to the date of the first layoff after September 15, 1975.

For purposes of this decision, the Commission assumes that allowances were paid to this claimant because determination was made that he performed adversely affected work; that he was an adversely affected worker; and therefore was entitled to allowances; and that this determination was made following filing of his application for allowances.

Only an "adversely affected worker" may be qualified for payment of adjustment assistance. An adversely affected worker is an individual who has been separated from adversely affected employment (section 247 (1), Act). "Adversely affected employment" is employment in a firm wherein the workers are eligible to apply for adjustment assistance (section 247 (1), Act). "Employment" is not specifically defined in the Act. Title 29, Part 91, of the Code of Federal Regulations implements the Act. Section 91.3 (a)(15), CFR defines "employment" as ". . . any service performed for an employer by an individual for wages . . ."

"Wages" is not specifically defined in the Act, but is defined in section 91.3 (a)(35) of the CFR as:

" 'Wages' means all compensation for employment for an employer including commissions, bonuses, and the cash value of all compensation in a medium other than cash."

"Service" is not defined by the Act or the CFR.

In the leading case of Social Security Board v. Nierotko (1946), 327 U.S. 358, 66 S. Ct. 637, 641, the U.S. Supreme Court defined "service" used in the definition of "employment" in the Social Security Act ("any service . . . performed . . . by an employe for his employer") to mean:

"not only work actually done but the entire employer-employe relationship for which compensation is paid to the employe by the employer."

In Nierotko, the claimant was found to have been wrongfully discharged by his employer, and was reinstated by order of the NLRB with directions for back pay. Upon receipt of the back pay, the claimant requested the Social Security Board to credit him in the sum of the back pay on his OASI account. (The request is analagous to a request that the weeks for which he was paid back pay be deemed "weeks of employment" as credit weeks for qualifying base period employment under the UC law.)

The Social Security Board refused to credit Nierotko's back pay as wages on the ground that he performed no service in employment for wages during the back pay weeks. As stated by J. Frankfurther in a concurring opinion: "The decisions of this Court leave no doubt that a man's time may, as a matter of law, be in the service of another, though he be inactive. (citations omitted). This is, practically speaking, the ordinary situation of employment in a 'stand-by' capacity. (citations omitted). The basis of a back-pay order under the National Labor Relations Act . . . is precisely that . . . . Since such compensation is in fact paid as wages, it is a plain disregard of the law for the Social Security Board not to include such payments among the employees' wages . . ."

The Supreme Court held that under the definition of "employment" under the Social Security Act Nierotko remained an employe although his employer had attempted to terminate the relationship, this in consonance with its decision in Phelps Dodge Corp. v. Labor Board, 318 U.S. 177, 61 S. Ct. 845 under the NLRA. The Court stated in response to the Social Security Board's argument that Nierotko did not perform any service:

"They admonish us against holding that 'service' can be only productive activity. We think that 'service' as used by Congress in this definitive phrase means not only work actually done but the entire employer-employee relationship for which compensation is paid to the employee by the employer."

The Court further cited other federal agencies that hold that back pay is wages under similar definitions. The Supreme Court further held that the Board must allocate the back pay as wages to the calendar quarters of the year in which the money would have been earned if the employe had not been wrongfully discharged.

Employment taxes imposed by the FUTA and the FICA are collected by the district director of internal revenue. Revenue rulings state that back pay awards are to be treated as wages by employers for purposes of FUTA and FICA. Revenue Ruling 78-176, I.R.B. 1978-79, 12, 5/8/78, contains a further clarification of back pay awards. Under this ruling amounts paid by a company in partial settlement of a suit brought under the Civil Rights Act of 1964 by job applicants who allegedly were wrongfully refused employment on the basis of racial discrimination and who suffered economic losses are wages for purposes of the FICA, FUTA and income tax withholding.

Applying Nierotko to a UC claim, the Third District California Court of Appeals in Kerin v. App. Bd., Case No. 17295, December 7, 1978, held that back pay awarded as a result of an EEO complaint filed with the Treasury Department was wages assignable for credit week purposes on a claimant's UC claim. The Court cited other cases as useful precedents, including federal cases, that have held for certain purposes, including taxation, that back pay or after-the-fact restitution of wages will be deemed a wage payment even though the person involved did not actually work during the time period involved.

Section 234 of the Act provides for the application of the state unemployment compensation (UC) law subject to the Department of Labor's regulations. Part 91 of Subtitle A of Title 29 of the CFR implements the Act and regulates adjustment assistance to workers after a certification has been issued.

One of the three purposes of Part 91 is to implement the provisions of the Act uniformly and effectively thoughout the U.S. Section 91.2, CFR, mandates that the regulations in Part 91 be interpreted and applied to achieve such purpose. Section 91.14 provides that state unemployment insurance (UI) law is applicable to each last separation of an individual for purposes of determining availability and disqualification (with certain exceptions and modifications not applicable in this case).

Section 91.51 (c) provides that as to matters not otherwise specifically provided for in the regulations or the Act, a state agency may apply the applicable state UI law except so far as the State's law is inconsistent with Part 91 of the Regulations or the Act or the purposes of Part 91 or the Act. Section 91.54 requires, for purposes of assuring uniform interpretation, that every administrative review TRA decision or TRA judicial decision be submitted to the Department of Labor.

Section 108.05 (6) of the Wisconsin Statutes provides that in determining whether or not a person is unemployed for benefit purposes (during a benefit year) a payment to an individual by an employing unit, which is in the nature of back pay (or in lieu of pay for personal services) for certain past weeks, whether made under a back-pay award or similar decision or otherwise, shall be wages but only when paid within 104 weeks after the start of the earliest such week.

In summary, the common law in Wisconsin applicable to unemployment compensation law is:

1. When an employe receives UC benefits, and is subsequently awarded back pay covering a period for he was paid UC benefits, then for benefit year purposes, he has been in an employer-employe relationship at and during the time of the unlawful discharge, in which he performed services in employment for wages and the back pay is wages. (Turner v. Ind. Comm. and Red Granite Pickle Co., Dane County Circuit Court, Case No. 110-058, December 14, 1962.)

2. If the employe attempts to claim credit weeks for the same back pay weeks, then he has not been in an employer-employe relationship during such weeks, has performed no services in an employment for wages, and the back pay is not wages. (Salerno v. John Oster Mfg. Co., (1967), 37 Wis. 2d 433.)

3. Back pay is awarded only for the period during which the worker would have worked in the absence of discrimination; back pay is not awarded for periods of an employer's economic shutdown. (Dehnhart v. Waukesha Brewing Co. (1963), 21 Wis. (2d) 583.)

4. UC benefits may be offset against wages lost in determining wage and benefit loss under an arbitration award. (Dehnhart, supra.)

5. A back pay settlement is allocable although it does not represent total wage loss for the entire period of loss. (Dillaber v. DILHR and G. E. Trucking, Inc., April 9, 1975, Dane County Circuit Court, No. 144-240.)

6. If the arbitration award specifically diminishes the amount of back pay by the UC benefits received by the employe and directs the employer to reimburse the UC fund for such amount that the employe received in the form of UC benefits, then no action lies under section 108.22 (8)(a), Wis. Stats., against the employe for repayment of the UC benefits. ( Masino v. DILHR, Dane County Circuit Court, Case No. 144-236 (December 7, 1977) (respondent's motion to modify the decision and judgment denied September 8, 1978.)

The Salerno decision is grounded on section 108.02 (21), Wis. Stats., which provides as follows:

"(21) UNDEFINED TERMS. Any word or phrase used in this chapter and not specifically defined herein shall be interpreted in accordance with the common and approved usage thereof and in accordance with other accepted rules of statutory construction. No legislative enactment shall control the meaning or interpretation of any such word or phrase, unless such enactment specifically refers to this chapter or is specifically referred to in this chapter."

A credit week is "a week of employment (of an employe by an employer) counted in computing benefits." Section 108.02 (14). A "week of employment" means "all those weeks in which the employe has performed any wage-earning services for the employer in employment subject to this chapter and, . . ." Section 108.02 (13).

In interpreting the sec. 108.02 (13) Wis. Stats. Definition of "week of employment," resort has been to the definition of "employe," section 108.02 (3), ("any individual who is or has been performing services for an employing unit, in an employment whether or not he is paid directly by such employing unit, . . ."); to the definition of "employment," section 108.02 (5)(a), ("any service . . . performed by an individual for pay"); and "wages", section 108.02 (6) ("every form of renumeration payable for a given period . . . to an individual for personal services, . . .").

Section 108.02 (5)(m) and (n) of the 1977 statutes provides exclusions from the definition of employment. These paragraphs provide in relevant part:

"(m) If the remuneration for any employment excluded under other paragraphs of this subsection is subject to, or at any time after November 1, 1977 is made subject to the federal unemployment tax act, such exclusion under this chapter shall not apply to that remuneration during any period that such remuneration is subject to the federal unemployment tax act, . . .

"(n) If any employment excluded under other paragraphs of this subsection are required by the federal unemployment tax act, the social security act, or any other federal law to be employment covered by this chapter as a condition for approval of this chapter for full tax credit against the tax imposed by the federal unemployment tax act, such exclusion shall not apply under this chapter."

Under the provisions of the Civil Rights Act of 1964, back pay is not an award of either compensatory or punitive damages and is a form of restitution. EEOC v. Detroit Edison Co., 6th Cir. 1975, 515 F. 2d 301, 308. Under federal law "back pay" is not a penalty or damages which a private individual might claim. A worker's loss, in wages and in general working conditions, is made whole by the reparation of back pay and reinstatement.

Back pay is wages for FUTA purposes on the ground that the employe is in an employer-employe relationship in which he performed services for wages in an employment. The employment is covered employment under FUTA, social security (including FICA), and the IRC. Therefore, under the Trade Act, whether state UC law or federal law (in the interests of uniformity) is determinative of this claimant's creditable weeks of employment, including wages, for qualifying purposes, the claimant's back pay weeks and wages are creditable.

The first all-plant shutdown after the impact date was the calendar week ending December 27, 1975 (week 52). The claimant, under state law would not be eligible for a back pay award for that week (see Dillaber, supra). Therefore, such week constitutes his last total separation before his application and such week is his appropriate week. All work weeks were 40 hour weeks. Working backward from his appropriate week, his hourly rate for weeks 49 through 51 of 1975 was $6.27 or $250.80 weekly for each of the three weeks, or a total of $752.40; $6.17 hourly during weeks 39 through 48 of 1975 equals $246.80 weekly for ten weeks or a total of $2,468; and $6.02 hourly during week 38 of 1975, which is $240.80.

During the 52 weeks immediately preceding week 52 of 1975, i.e., the calendar week ending December 28, 1974 (week 52) through the calendar week ending December 20, 1975 (week 51), the claimant worked beginning with week 52 of 1974 through week 24 of 1976 (25 weeks); (weeks 25 and 26 were weeks of personal leave of absence and not creditable); weeks 27 through 29 of 1975 (3 weeks); and weeks 38 through 51 of 1975 (14 weeks); for a total of 41 weeks, which is more than 26 weeks of employment at wages of $30 or more each.

The Commission therefore finds that the claimant's last total or partial separation before his application for Trade Readjustment Allowances occurred on December 27, 1975 (week 52), which was on or after the impact date of September 15, 1975, as specified in the certification under which he is covered, within the meaning of section 231 (1)(A) of Part I of Subchapter B of Chapter 2 of Title II of the Trade Act of 1974, Pub. L. 93-618, 88 Stat. 1978, 2019-2030 (19 U.S.C. 2271-2322), and sec. 91.7 (b) of Subpart B of Part 91 of Subtitle A of Title 29 of the Code of Federal Regulations.

The Commission further finds that the claimant had, in the 52 weeks immediately preceding his total separation of December 27, 1975 (week 52), at least 26 weeks of employment at wages of $30 or more a week in adversely affected employment with a single firm or subdivision of a firm, or equivalent amounts of employment computed under regulations prescribed by the Secretary, of Subchapter C of Chapter 2 of Title II of the Trade Act of 1974, Pub. L. 93-618, 88 Stat. 1978, 2019-2030 (19 U.S.C. 2271-2322), and section 91.7 (c) of Subpart B of Part 91 of Subtitle A of Title 29 of the Code of Federal Regulations.

DECISION

The decision of the appeal tribunal is reversed. Accordingly, beginning with week 52 of 1975 the claimant is eligible for adjustment assistance.

Dated and mailed March 6, 1980
115 - 032   BR 309 UW 925

/s/ Virginia B. Hart, Chairman

/s/ John R. Hayon, Commissioner

/s/ LaVerne G. Ausman, Commissioner

NOTE: No issues concerning credibility were presented. The Commission has made its decision pursuant to statutory interpretation.

cc: American Motors Corp.


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