Wis.LIRC UC Decision: Froelichs On Main - September 30, 1993 - PC 770 - Procedure - Miscellaneous, PC 749 LIRC Review, Miscellaneous - issue preclusion ('collateral estoppel') - previous, final LID on employee service company issue had collateral estoppel effect

In the matter of the contribution liability,
or status, under Chapter 108, Stats., of

Pursuant to the timely petition for review filed in the above-captioned matter, the commission has considered the petition and ail relief requested. The commission has reviewed the applicable records and finds that the appeal tribunal's findings of fact and conclusions of law are supported thereby. The commission therefore adopts the findings and conclusions of the appeal tribunal as its own.

The decisions of the appeal tribunal are affirmed. Accordingly, the employer is liable for certain unemployment compensation contributions, interest, and late filing fees, as more particularly set forth in the initial determination.

The commission has reviewed the entire record of December 7, 1992, hearing, including the statements and testimony taken. The commission concludes that the administrative law judge correctly applied the doctrine of collateral estoppel and that the employer-appellant was not denied due process.

Hearing No. S9200783GB In the matter of: FROELICHS ON MAIN, Employer DANIEL R FROELICH, Account No. 321259,
Administrative Law Judge: Laura E. Nick	Dated and Mailed: February 5, 1993

A DEPARTMENT DEPUTY'S FIRST INITIAL DETERMINATION, ISSUED ON SEPTEMBER 30, 1985 HELD: that Daniel R. Froelich, dba Froelich's On Main, was liable for contributions, late filing fees, and interest in the amount of $667.76 based on estimated payroll for the second quarter of 1985.

A DEPARTMENT DEPUTY'S SECOND INITIAL DETERMINATION, ISSUED ON JANUARY 18, 1986 HELD: that the employer was liable for contributions, late filing fees, and interest in the amount of $674.16 based on estimated payroll for the third quarter of 1985.

A DEPARTMENT DEPUTY'S THIRD INITIAL DETERMINATION, ISSUED ON JANUARY 19, 1986: increased the payroll estimate of the initial determinations issued on September 30, 1985 and January 18, 1986 to show a net liability to the employer for contributions, late filing fees and. interest in the total amount of $1,651.90 based on actual payroll for the second and third quarters of 1985.

Based on the applicable records and evidence in this case, the appeal tribunal makes the following

The employer, along with other employing units, attempted to establish an employe leasing arrangement with TWG, Inc. Initial determinations were issued holding that the clients (Froelich's and the other business entities) were the employers of the employes leased to each for unemployment compensation purposes. The matter was eventually appealed to a circuit court. The circuit court decision of April 22, 1988 "affirmed on review in all respects" under the law in existence at the time the cases were appealed, the Labor and Industry Review Commission decision which affirmed the appeal tribunal decision. The circuit court remanded the matter to the Labor and Industry Review Commission to determine whether TWG, Inc., its predecessor, or their clients met the definition of an employe service company under sections 108.02(l2)m and 108.06(5) of the Wisconsin statutes, effective as of April 21, 1988. An initial determination was issued on September 15, 1988 holding that for the time period covered by the matter before the circuit court (the four quarters of 1985), neither TWG, Inc. nor its predecessor, TSG, Inc., met the definition of an employe service company and they were therefore not the employers of the employes leased to the clients, for unemployment compensation purposes. TWG, Inc. initially appealed the decision but subsequently withdrew. After a further audit by the department, in which it was found that TWG, Inc. subsequently changed its client agreements and other procedures, an initial determination was issued on July 11, 1991. That determination held that TWG, Inc. met the definition of an employe service company beginning October 1, 1985 and was, therefore, the employer of the leased employes assigned to clients subsequent to that date.

In the instant case, the appellant, Froelich's, asserted that it was not the employer of the "leased employes" in the second and third quarters of 1985. While the circuit court's holding regarding Froelich's, at first glance, appears to apply exclusively to the fourth quarter of 1985, a review on the merits as to the second and third quarters of 1985 is barred by collateral estoppel. The appeal tribunal decision of November 25, 1986, which was affirmed by the Labor and Industry Review Commission and again, "in all respects" by the circuit court, found that the workers performing services for the employers (including Froelich's) in 1985 were the employes of the respective clients. The appeal tribunal is persuaded that the circuit court's decision applied to the four quarters of 1985 for all of the clients of TWG (including Froelich's) and that the appellant in this case had its judgment on the merits regarding the identity of the employer, for unemployment compensation purposes, in that decision. In applying collateral estoppel to this case, the appeal tribunal notes that the circuit court decision was a final judgment on the merits, that Froelich's was a party to that action, that the burden of proof in both cases would be the same, that the matter in that case and the instant case arose from the same set of facts, and that Froelich's had a full and fair opportunity to present its case throughout the entire administrative and court proceedings.

Froelich's now attempts to open the matter of its status for unemployment compensation purposes for the second and third quarters of 1985. However, the initial determination of September 15, 1988, which found, in part, that TWG, Inc. did not meet the definition of an employe service company and therefore, was not the employer of the employes leased to the clients for the period which was covered by the litigation (emphasis added.) The appeal tribunal believes that period includes the quarters in issue in the instant case. TWG subsequently withdrew its appeal to that determination and the matter became final with the issuance of a withdrawal decision on February 16, 1989. The pursuit of further retroactive application of sections l08.02(12m) and 108.065 of the Wisconsin statutes would constitute relitigation of the same findings as to any of the named client employers. Accordingly, the appeal tribunal limits the scope of this decision only to Froelich's payroll, contribution liability, interest and late filing fees for the second and third quarters of 1985.

Chapters ILHR 101 and 110 of the Wisconsin Administrative Code require any employing unit which had employed one or more individuals in Wisconsin at any time to file a report with the division as to its employment. It is the responsibility of the employer to file such reports ("contribution reports") of total employment or wages or both on a quarterly basis. Section 108.22 of the Wisconsin statutes imposes the obligation to pay interest on any delinquent payments and a penalty for late filing fees in the amount of l5.00 for each delinquent report or payment.

The issues to be decided are the appellant's payroll amount for the second and third quarters of 1985, and whether the appellant failed to timely file contribution reports for those quarters. If not, the issue is to determine whether the late reporting was for a reason beyond its control.

The appellant asserted that the payroll amounts indicated on the initial determinations at issue should be zero and that its late wage reporting was justified because it was not the employer of the workers to whom those monies were paid. Its argument is without merit. That matter has already been decided adversely to the appellant as the appeal tribunal has already indicated. The appellant provided no alternate payroll information to dispute the department's findings. Under the circumstances, the appeal tribunal can only conclude that the employer contribution reports for the second and third quarters of 1985 were filed late due to a conscious decision by Froelich's and that the payroll amount indicated in the initial determination issued on January 19, 1986 is correct.

The appeal tribunal therefore finds that the employer, Froelich's on Main, paid wages subject to the contribution provisions of chapter 108 of the Wisconsin statutes and has defined payroll based on such wages for the second and third quarters of 1985 in the amounts stated in the initial determination issued on January 19, 1986, within the meaning of sections 108.02(21), 108.02(26), 108.17, and 108.18 of the Wisconsin statutes.

The appeal tribunal further finds that the employer, Froelich's on Main, is liable for past due and. delinquent interest and late filing fees, as set forth in the initial determination issued January 19, 1986, within the meaning of section 108.22 of the statutes and chapter ILHR 101 and 110 of the Wisconsin Administrative Code.

The department deputy's initial determinations issued on January 18, 1986 and September 30, 1985 are amended as to the defined taxable payroll amounts for unemployment compensation purposes, contributions, late filing fees, and interest to comport with the amounts set forth in the initial determination issued on January 19, 1986, and as amended, are affirmed. The department deputy's initial determination of January 19, 1986 is affirmed. Accordingly, the employer is liable for certain unemployment compensation contributions, interest, and late filing fees, as more particularly set forth in the initial determination.