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

LILLY B ARMON, Employee

TOP CARE INC, Employer

UNEMPLOYMENT INSURANCE DECISION
Hearing No. 03600226MW


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, the employee is ineligible for benefits beginning in week 33 of 2002, and until four weeks have elapsed since the end of the week of quitting and the employee has earned wages in covered employment performed after the week of quitting equaling at least four times the employee's weekly benefit rate which would have been paid had the quitting not occurred.

Dated and mailed August 27, 2003
armonli . usd : 125 : 1  ET 491  VL 1054.09 

/s/ David B. Falstad, Chairman

/s/ James T. Flynn, Commissioner

Robert Glaser, Commissioner

MEMORANDUM OPINION

The employee, who was the president and sole stockholder of the employer corporation, last worked for the employer on August 12, 2002, when the employer ceased doing business.

The employee operated a group home for senior citizen residents who were there under a contract for care with Milwaukee County. In early June 2002, Milwaukee County, her only client, provided the employee written notice that all persons under her care were to be removed from her care because they were in danger. The last resident was removed on August 12, 2002, the employee's last day of work.

In her petition for review, the employee argues that but for the decision of the corporation's sole and only customer not to do business with it she would still be working for the corporation. The employee argues that she did not quit, rather she was offered no more work after the employer had no work for her to do when the contract with the client terminated.

The employee's contentions cannot be sustained. First of all, as noted by the ALJ, "It was the employee's decision, that the business was no longer economically feasible given Milwaukee County's failure to continue in the contract to provide care, which terminated the employment relationship." Thus, her unemployment was the direct result of her own actions in ceasing to operate the business. Notwithstanding her assertion that her sole client had terminated its contract with the employer, her unemployment was voluntary precisely because, as owner, she controlled whether she would continue the business. The necessary consequence of ceasing to do business was her own unemployment. Erlien v. DILHR & Erlien's Jewelry, Inc., Cir. Ct. Case No. 133-263, October 2, 1972.

Further, Wis. Stat. § 108.04(7)(r) provides that the benefit ineligibility disqualification for voluntary termination of work under § 108.04(7)(a) does not apply "if the department determines that the employee owns or controls, directly or indirectly, an ownership interest, however designated or evidenced, in a family corporation and the employee's employment was terminated by the employer because of an involuntary cessation of the business of the corporation under one or more of the conditions specified in sub. (1)(gm). (Emphasis in italicized text added.)

Wis. Stat. § 108.04(1)(gm), in turn, sets forth the four statutory circumstances in which an involuntary cessation of the business must occur in order to avoid application of the benefit ineligibility disqualification under § 108.04(7)(a). Those circumstances are set forth as follows:

"1. Dissolution of the corporation, due to economic inviability, under ch. 180 or the analogous applicable laws of the jurisdiction in which the corporation is incorporated;

2. Filing for corporate bankruptcy;

3. Filing for personal bankruptcy by all owners who are personally liable for any of the debts of the corporation; or

4. Disposition of a total of 75% or more of the assets of the corporation using one or more of the following methods:

a. Assignment for the benefit of creditors.

b. Surrender to one or more secured creditors or lienholders.

c. Sale, due to economic inviability, if the sale does not result in ownership or control by substantially the same interests that owned or controlled the family corporation. It is presumed unless shown to the contrary that a sale, in whole or in part, to a spouse, parent or child of an individual who owned or controlled the family corporation, or to any combination of 2 or more of them, is a sale to substantially the same interests that owned or controlled the family corporation."

The employee failed to demonstrate that her employment was terminated because of involuntary cessation of the family corporation that met any of the four statutory circumstances specified in sub. 1(gm). The employee did not establish that the corporation had been dissolved, due to economic inviability, under ch. 180, she admitted that she had not filed for personal or corporate bankruptcy, and she failed to establish that she had disposed of a total of 75% or more of the assets of the corporation as set forth above.


cc: Attorney J D Thorne


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