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


SHARON M RATHSACK, Employe

THE QUEEN BEE, Employer

UNEMPLOYMENT INSURANCE DECISION
Hearing No. 95401613AP


An administrative law judge (ALJ) for the Division of Unemployment Insurance of the Department of Industry, Labor and Human Relations 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 the applicable law, records and evidence in this case, the commission makes the following : 

FINDINGS OF FACT AND CONCLUSIONS OF LAW

The employe worked about four and one-half years as a waitress for the employer, a restaurant. Her last day of work was May 2, 1994, (week 19).

The current owner took over the restaurant in October of 1990. The employe had worked for the previous owner and continued to work for the current owner. As a waitress, the employe reported tips to the employer.

In the summer of 1993, the employer's accountant informed the employer that, based on the employe's reported tips, she had not been paid minimum wage since October of 1990. The bookkeeper determined that the employer owed the employe $3,500. Seven checks were issued to the employe in the amount of $500 each, in the third quarter of 1993, to remedy the alleged problem. The employe signed each of the checks back to the employer.

On October 12, 1993, the owner certified to the department on a quarterly contribution/wage report for the third quarter of 1993 that the employe's quarterly wages were $6,188.50. This included the $3,500 of "back pay." The employe's 1993 W-2 form lists her "wages, tips, other compensation" as $13,304.63. This also includes the $3,500.

During the week ending May 7, 1994 (week 19), the employe filed an application for unemployment compensation benefits. Her base period was determined to be calendar year 1993. Using the wages reported by the employer on the quarterly contribution/wage reports, the department determined the employe's base period wages to be $13,304.63, with a high quarter of $6,188.50. This resulted in a weekly benefit rate of $243 for week 19 of 1994, and $247 thereafter.

The department mailed monetary computations to both parties listing the quarterly wages, total wages, and benefit rate.

On May 12, 1994, a benefit check in the amount of $243 was sent to the employe. Between May 19 and August 22, 1994, benefit checks in the amount of $247 per week were sent to the employe for weeks 20 through 34 of 1994.

On August 24, 1994, the owner reported to a local unemployment office and informed department personnel that it believed the correct wages for the third quarter of 1993, were $2,688.50, not $6,188.50. It believed the $3,500 should not have been included in the wages in that quarter.

On September 2, 1994, an initial determination was issued finding that the employe's wages for the third quarter of 1993 was $2,688.50 and her total base period wages to be $9,804.63. Her benefit rate was recomputed as $107. This resulted in an overpayment of benefits of $2,236, which she was required to repay.

The employe appealed the initial determination. On October 28, 1994, an appeal tribunal decision was issued finding that because the $3,500 was "back pay," it was included as wages in the employe's third quarter. Therefore, her third quarter wages were $6,188.50 and her total base period wages were $13,304.63. Her benefit rate for week 19 of 1994 was $243 and $247 thereafter. No overpayment was found.

The employer appealed the appeal tribunal decision. On July 5, 1995, the commission issued a decision finding that the appeal tribunal was incorrect in applying the law. It found that the payments made in the third quarter of 1993, were made well outside of the 104 week period required to find back pay under sec. 108.05 (6), Stats. Accordingly, the employe's third quarter wages were reduced to $2,688.50, resulting in a weekly benefit rate of $107. This also resulted in an overpayment of benefits.

The first issue to be decided is whether benefits were improperly paid to the employe for weeks 19 through 34 of 1994 because the employer failed to file one or more quarterly wage reports completely and correctly and, whether the employe is required to repay those benefits.

Section 108.04 (13)(c), Stats., provides, in part : 

(c) If an employer, after notice of a benefit claim, fails to file an objection to the claim under sec. 108.09 (1), any benefits allowable under any resulting benefit computation shall, unless the department applies a provision of this chapter to disqualify the claimant, be promptly paid. Except as otherwise provided in this paragraph, any eligibility question in objection to the claim raised by the employer after benefit payments to the claimant are commenced does not affect benefits paid prior to the end of the week in which a determination is issued as to the eligibility question unless the benefits are erroneously paid without fault on the part of the employer. . .

Section 108.04 (13)(f), Stats., provides, in part, as follows : 

(f) If benefits are erroneously paid because the employer fails to file a report required by this chapter, fails to provide correct and complete information on the report, fails to object to the benefit claim under sec. 108.09 (1) or aids and abets the claimant in an act of concealment as provided in sub. (11), the employer is at fault. . .

The administrative law judge found that the employer was liable for benefits overpaid to the employe for weeks 19 through 34 of 1994 because such overpayment resulted from the employer's inaccurate quarterly wage report. The commission agrees. The employer incorrectly included the $3,500 payment to the employe as wages in the third quarter of 1993 resulting in an increased weekly benefit rate for the employe. As noted by the administrative law judge, the department correctly computed the employe's benefit rate based on the wages reported by the employer. Further, the employe was not at fault as she was under no obligation to question the wages reported by the employer. Accordingly, the employer's account remains charged for benefits paid for weeks 19 through 34 and there is no overpayment with respect to benefits paid in those weeks.

The second issue to be decided is whether waiver of benefit recovery is required for weeks 35 through 42 of 1994 because benefits were paid due to department error.

Section 108.22 (8)(c), Stats., provides that, effective with benefits paid in week 19 of 1994 and thereafter, the department shall waive recovery of benefits that were erroneously paid if the overpayment was a result of departmental error, whether or not the employer is also at fault under sec. 108.04 (13)(f), Stats., and the overpayment did not result from the fault of the claimant.

Section 108.02 (10e), Stats., provides : 

DEPARTMENTAL ERROR. "Departmental error" means an error made by the department in computing or paying benefits which results from : 

(a) A mathematical mistake, miscalculation, misapplication or misinterpretation of the law or mistake of evidentiary fact, whether by commission or omission; or

(b) Misinformation provided to a claimant by the department, on which the claimant relied."

A commission decision issued on July 12, 1995, found that the original appeal tribunal decision erred in finding that third quarter payments constituted back pay. There was no dispute that the payments were made more than 104 weeks after the start of the earliest week for which the payment was made. Therefore, misapplication of the law triggered the benefit payments for weeks 35 through 42 of 1994. There was no employe error. Accordingly, recovery of overpaid benefits for those weeks is waived.

The commission therefore finds that pursuant to sec. 108.04 (13)(f), Stats., benefits were improperly paid to the employe for weeks 19 through 34 due to the employer's fault because the employer failed to file a correct and complete quarterly wage report and pursuant to sec. 108.04 (13)(c), Stats., benefits paid for those weeks remain charged to the employer's account.

The commission further finds that the employe was paid benefits for weeks 35 through 42 of 1994 in the amount of $1,505.00, for which the employe was not eligible and to which the employe was not entitled, within the meaning of sec. 108.03 (1), Stats. The commission further finds that waiver of benefit recovery is required under sec. 108.22 (8)(c), Stats., because the overpayment was the result of a departmental error, and the overpayment did not result from the fault of the employe as provided in sec. 108.04 (13)(f), Stats.

DECISION

The decision of the administrative law judge is modified to conform with the forgoing findings and affirmed. Accordingly, benefits paid to the employe for weeks 19 through 34 remain charged to the employer's account and there is no overpayment with respect to benefits paid in those weeks. Recovery of the overpaid benefit for weeks 35 through 42 of 1994, in the amount of $1,505.00 is waived. The employe is not required to repay the department, nor will the overpaid benefit be recovered by any other means.

Dated and mailed :  April 11, 1996
rathssh.urr : 132 : 8 BR 319.1  BR 335.01  UW 925

/s/ Pamela I. Anderson, Chairman

/s/ Richard T. Kreul, Commissioner

/s/ David B. Falstad, Commissioner

MEMORANDUM OPINION

The employer has petitioned for commission review of the adverse appeal tribunal decision which found that the employer's account would remain charged for benefits paid to the employe in weeks 19 through 34 of 1994, because the employer failed to submit an accurate quarterly wage report.

The employer made three main arguments at the hearing. First, that the employe was not in fact reporting all her tips. However, whether the employe accurately reported her tips did not impact on how the employer reported payments made to the employe to the department. Second, the employer maintained that it actually called the department in May of June of 1993, but was told that nothing could be done. However, the employer's August 24, 1994, written statement to the department states that the employer did not have time to contact the department regarding the benefit rate because of a shortage of workers and that "I tried to call the Dept. a couple of times and could never get in touch with Karen. I was told that she was handling the claim." The objection letter is closer in time to the actual events and indicates that the employer did not speak with anyone regarding the matter, but only determined who it should speak to if it were able to find the time to get a hold of that individual. Third, the employer argued that the department should have questioned the employe's third quarter wages as they were substantially higher than her wages in any other quarter. However, as noted by the administrative law judge, the department was under no such obligation.

The administrative law judge correctly found that in weeks 35 through 42 of 1994 the employe was paid benefits based on department error and therefore waiver of benefit recovery was required. The administrative law judge who initially found the payment constituted back pay misapplied the law. The payments were not "back pay," useable as base period wages because the payments were not received within 104 weeks of the earliest week to which the payments applied.

Finally, the commission notes that it has rewritten the appeal tribunal decision to incorporate changes made in an amended appeal tribunal decision and to clarify the appropriate weeks at issue and year at issue.

cc :  ATTORNEY PAUL M CORNETT
VAN HOOF VAN HOOF & CORNETT

ATTORNEY JACK W LEMKE
HERRLING CLARK HARTZHEIM & SIDDALL LTD


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