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

DONOVAN D FLISRAM, Employee

SAILING CLUB AT UWM LTD, Employer

UNEMPLOYMENT INSURANCE DECISION
Hearing No. 05605595MW


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 makes the following:

FINDINGS OF FACT AND CONCLUSIONS OF LAW

On October 7, 2003, the department issued a determination which held that the Sailing Club at UWM Ltd (employer) was a covered employer under Chapter 108. That determination was issued because the employer did not respond to requests to provide documentation from the IRS that they were a tax exempt organization under section 501(c)(3) of the Internal Revenue Code. On October 9, 2003, the department sent a form UCB-719 URGENT Request for Wages. It was due on October 17, 2003. However, it was not signed by the employer until December 1, 2003, and was received by the department on December 3, 2003. It therefore was not timely. The department had proceeded to pay benefits from another account based on the wage information supplied by the employee. He was paid benefits of $1,529 for weeks 3 through 21, 51 and 52 of 2003.

The issue to be resolved is whether benefits were erroneously paid from another account due to the employer's fault.

Wisconsin Statute § 108.04(13)(a) and (b) provides that the department must apply the provisions of chapter 108 even if the employer does not question the employee's eligibility and can pay benefits based on the information available. Wis. Stat. § 108.04(13)(c) and (e) provide:

(c) If an employer, after notice of a benefit claim, fails to file an objection to the claim under s. 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. If benefits are erroneously paid because the employer and the employee are at fault, the department shall charge the employer for the benefits and proceed to create an overpayment under s. 108.22(8)(a). If benefits are erroneously paid without fault on the part of the employer, regardless of whether the employee is at fault, the department shall charge the benefits as provided in par. (d), unless par. (e) applies, and proceed to create an overpayment under s. 108.22(8)(a). If benefits are erroneously paid because an employer is at fault and the department recovers the benefits erroneously paid under s. 108.22(8), the recovery does not affect benefit charges made under this paragraph.

(e) If the department erroneously pays benefits from one employer's account and a 2nd employer is at fault, the department shall credit the benefits paid to the first employer's account and charge the benefits paid to the 2nd employer's account. Filing of a tardy or corrected report or objection does not affect the 2nd employer's liability for benefits paid prior to the end of the week in which the department makes a recomputation of the benefits allowable or prior to the end of the week in which the department issues a determination concerning any eligibility question raised by the report or by the 2nd employer. If the department recovers the benefits erroneously paid under s. 108.22(8), the recovery does not affect benefit charges made under this paragraph.

The first issue to be resolved is whether benefits were erroneously paid from another account due to the employer's fault.

In this case, the employer through its agent or agents was at fault for the erroneous payment of benefits since they did not return in a timely manner the form UCB-719 URGENT Request for Wages. The employee was not at fault, since the department witness acknowledged the employee could not be expected to know the tax status of the employer.

Paragraph (c) states that if there is a late denial by the employer, due to the employer's fault, the late denial "does not affect benefits paid" except as otherwise provided in paragraph (c). It also (c) provides that if there is employer fault then the employer is charged. Paragraph (c) does not create an overpayment if the employer is at fault and the employee is not at fault.

In Bolzenthal v. Herald Times Reporter, Thomson Newspapers (Wisconsin) Inc., UI Dec. Hearing No. 90400718MN (LIRC Nov. 30, 1990), the commission interpreted the phrase "does not affect benefits paid" as meaning that no overpayment is created if the employer is at fault but the employee is not at fault. The "except for otherwise provided" language refers to when there is also employee fault, in which case benefits paid prior to the late denial are affected. The commission used the same rationale and reached the same conclusion in Rathsack v. The Queen Bee, UI Dec. Hearing No. 95401613AP (LIRC Apr. 11, 1996), and in Fleming v. Wal Mart Associates Inc, UI Hearing No. 03005241MD (LIRC Mar. 9, 2004).

Since the employer is at fault and the employee is not at fault, the erroneously paid benefits should stand as paid. No overpayment or overpayment waiver is involved. Since the employer is not a covered employer, its account cannot be charged. However, the relevant sentence only requires benefits be paid due to employer fault. The employee received benefits solely due to the employer's failure to promptly alert the department to its tax exempt status. Therefore, the commission reverses the overpayment finding and lets the benefits stand as paid.

The commission therefore finds that the employer failed to file a required report in a timely manner, within the meaning of Wis. Stat. § 108.04(13), and as a result, benefits were improperly paid to the employee from the account of another employer.

The commission further finds that the employee was erroneously paid benefits in the amount of $1,529.00 for weeks 3 through 21, 51 and 52 of 2003, due to the employer's fault as defined in Wis. Stat. § 108.04(13)(e).

The commission further finds that the aforementioned benefits remain paid to the employee and need not be repaid by the employee to the department, and that the employer remains charged for such erroneously paid benefits pursuant to Wis. Stat. § 108.04(13)(c).

DECISION

The decision of the administrative law judge is set aside and the commission decision substituted therefore. Accordingly, the employee is ineligible for benefits beginning in week 3 of 2003. There is no overpayment established in this case. The benefits erroneously paid from another employer's account would be charged to the employer's account, but the employer does not have a UI account to charge them to. On May 17, 2004, the department issued an initial determination which found that the employer was a "non-profit organization" and cancelled their account in the Wisconsin Unemployment Reserve Fund.

Dated and mailed May 12, 2006
flisrdo . urr : 178 : 8  BR 319.1

/s/ James T. Flynn, Chairman

/s/ David B. Falstad, Commissioner

Robert Glaser, Commissioner


MEMORANDUM OPINION

The commission did not consult with the ALJ regarding witness credibility. It reverses the appeal tribunal decision as a matter of law.



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uploaded 2006/05/24