BEFORE THE
STATE OF WISCONSIN
LABOR AND INDUSTRY REVIEW COMMISSION

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

THOMAS BRENNER, JENNIFER WALL AND JACOB SCHWEI
BRENNER, BRENNER, WALL & SCHWEI
Account No. 381069-7

and

PAUL J. GOSSENS, S.C., Appellant
Account No. 409953-6

UNEMPLOYMENT INSURANCE CONTRIBUTION LIABILITY DECISION
Hearing Nos. 8592,S,  8593,S,  and 8719,S


Pursuant to the timely petition for review filed in the above-captioned matters, the Commission has considered the petition and all 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.

DECISION

The Decisions of the Appeal Tribunal are affirmed. Accordingly, the Department Deputy' s Initial Determination dated July 7, 1989, remains in effect.  The Department Deputy's Initial Determination dated December 14, 1989 is affirmed, and Paul J. Gossens S.C. because subject to contribution (tax) liability under ch. 108, Stats., effective January 1 , 1988.  The Department Deputy's Initial Determination dated May 16, 1989 is affirmed, and Paul J. Gossens S.C. is liable to pay the department $683.74 plus the additional interest computed to the date, or dates, of payment. June 14, 1990.

Dated and mailed  June 14, 1990
110 : CD0099   ER 451  ER 470.01  PC 711

/s/ Kevin C. Potter, Chairman

/s/ Carl W. Thompson, Commissioner

/s/ Pamela I. Anderson, Commissioner

MEMORANDUM OPINION

The three decisions before the Commission for review in this matter all relate to the coverage of petitioner Paul J. Gossens, S.C. (hereinafter "Service Corporation" or "petitioner") as an employer under the Unemployment Compensation Act and the extent of the Service Corporation's liability for unemployment compensation taxes.  The Service Corporation, which is engaged in the provision of legal services, is owned and operated by Paul J. Gossens (hereinafter , "Gossens" ) .

 

Subjectivity (Hearing No. 8592, S):

The Appeal Tribunal Decision appealed from in this matter found that the Service Corporation was subject to contribution (tax) liability under Chapter 108. Stats., retroactive to January 1, 1988.  The report filed by the Service Corporation on December 7, 1988 (Exhibit 3) establishes beyond dispute that the Service Corporation had payroll in excess of $1,500 during the third quarter of 1988.  It therefore follows, under section 108.02 (13) (e) , Stats., that the Service Corporation was subject to the provisions of the Act retroactive to January 1, 1988.   The Commission does not understand the petitioner to genuinely challenge the legal correctness of this finding.

 

Contribution Liability(Hearing No. 8593, S):

The Appeal Tribunal Decision appealed from in this case found that the Service Corporation was liable to pay the Department $683.74 plus additional interest computed to date or dates of payment, on the basis of a finding that the Service Corporation had a total rate for unemployment compensation taxes of 3.6 percent on calendar quarters in 1988 and 1989.  It is evidently the objection of petitioner, that the applicable tax rate should not be 3.6 percent, the rate applied to new employers, but a lower rate which would be in effect if the appellant were considered to be, as it asserts, the continuation of an employer that had a previous unemployment compensation tax account.

As the Appeal Tribunal found, and as established by the record of the hearing held in Hearing No. 8593, S, Initial Determinations issued in the other, related, proceedings of which the Commission takes official notice, and the uncontradicted assertions of Gossens in his testimony in the related hearings, the Service Corporation was a covered employer for unemployment compensation tax purposes from approximately November 1, 1985 through November 1, 1987.  As of that point, it had a positive account balance of almost $6, 000, and a contribution tax rate of 1.3 percent.   At that time, however, Gossens joined a partnership with a number of other attorneys, forming the partnership Brennen, Gossens, Wall and Schwei (hereinafter, "Partnership") . As a result of the filing of a request by the Partnership, the Department issued an Initial Determination on May 10, 1988 holding that there had been a total transfer of business from the Service Corporation to the Partnership effective November 1, 1987.  The effect of this was not only to transfer the positive account balance of the Service Corporation to the Partnership, but to extinguish the account of the Service Corporation as an active employer for unemployment compensation purposes.  The fact that the corporation continued to exist in legal contemplation, as a matter of corporation law, is not dispositive.  Its existence as a covered employer ended at that point.  When Gossens left the Partnership in 1988 and resumed practice of law through the Service Corporation, while there was no new corporation, there was a new employer for unemployment compensation law purposes.  It was therefore appropriate to apply the tax rate for newly covered employers.

 

Timeliness of request for hearing from Initial Determination that there was no transfer of the account from Partnership to Service Corporation , and, provisionally, the merits of that issue (Hearing No. 8719, S):

On July 7, 1989 the Department issued an Initial Determination concluding that the Service Corporation was not a successor to the unemployment compensation account of the Partnership because any such transfer would have been an optional one under section 108.16 (8) (b), Stats., and the transferee (the Service Corporation) did not file a timely application for such a transfer under section 108.16 (8)(b)14, Stats.  The last day on which a timely request for hearing could be filed from that Initial Determination was July 28, 1989.   No timely request for hearing was filed.

In point of fact, as has been noted by the Appeal Tribunal in its decision in this matter, no written request for hearing has ever been filed with respect to the Initial Determination issued on July 7, 1989.  The matter was apparently raised orally by Gossens at a hearing which was held on October 9, 1989 before Administrative Law Judge Daniel Wolter.   That hearing had been scheduled to address the appeals filed by the Service Corporation from the Department's Initial Determinations concerning the Service Corporation's subjectivity (Hearing No. 8592, S) and contribution liability (Hearing No. 8593, S).  It is evident from Administrative Law Judge Wolter's handwritten notes, however, that no testimony was taken at that hearing, because it became apparent in initial discussions between the Administrative Law Judge, the Department's attorney, and Gossens, that Gossens was objecting to the applicable tax rate based on his contention that the Service Corporation was a continuing employer.  The Administrative Law Judge, evidently concluding that the subjectivity and contribution rate issues should not be resolved unless and until the issue concerning the Service Corporation's relationship to both the partnership account and the Service Corporation's former account, were resolved, ordered that the hearing be rescheduled to another day prior to which proper notice could be issued stating the issues as including all of those matters.  Thus, notice was subsequently issued for the hearing held on December 13, 1989, indicating that the issues to be addressed would be subjectivity (Hearing No. 8592, S), contribution liability (Hearing No. 8593, S) and the timeliness of appeal from the Department's July 7, 1989 Initial Determination and provisionally the merits of that appeal (Hearing No . 8719, S).

The difficulty with this, as noted by Administrative Law Judge Lund, is that the question of the timeliness of the appeal was not appropriately before him because there had never been an appeal.   It appears that the only indication given that the Service Corporation desired a hearing with respect to the July 7, 1989 Initial Determination was one made orally by Gossens.   However, a request for hearing must be in writing; Wisconsin Administrative Code Chapter ILHR 140.02(1).

Although the decision of Administrative Law Judge Lund in this matter is technically correct on the grounds that no request for hearing has ever been filed,  the Commission notes that the Service Corporation could at any time file a written request for hearing from the Initial Determination of July 7, 1989, and that this would then present the issue of the timeliness of that request for hearing which was noticed for hearing and litigated at the hearing before Judge Lund. The Commission therefore deems it advisable to consider how that timeliness issue ought to be resolved.

Assuming without deciding that Gossens' oral expression of a desire to appeal the July 7, 1989 Initial Determination, made on the record during the course of the hearing before ALJ Wolter on October 9, 1989, was adequate to constitute a request for hearing placing the matter before the Department , the Commission considers that the Initial Determination should nevertheless remain in effect because the request for hearing was not timely and the untimeliness of the request for hearing was not for a reason beyond the appellant' s control.  The Service Corporation's principal assertion with respect to the lateness of its objections to the July 7 , 1989 Initial Determination, was that it did not receive that Initial Determination.  Tanya Jewczyk, a secretary for the Service Corporation, testified that she had not seen the July 7, 1989 Initial Determination holding that the account of the partnership would not be transferred to the Service Corporation, that it was not received at the Service Corporation's office, that she would have had the form had it been received,  and that it was not in the Service Corporation's unemployment compensation file.   She testified that no one besides her open the mail.   However, she also testified that the address for the Service Corporation appearing on the Initial Determination was the correct address for the employer.  The Commission considers that it is appropriate to find that some presumption of regularity attaches to the Department's processes of issuing determinations.   No contention has been raised, that any other document issued by the Department to the Service Corporation, was not received.   The possibility that the July 7, 1989 Initial Determination was in fact received by the Service Corporation but disregarded by it, is suggested by the fact that Gossens evidently failed to appreciate until quite recently that he would have a definite interest in obtaining an optional transfer of the Partnership account to the Service Corporation because of the fact that the prior account of the Service Corporation had been extinguished.  Considering all of these facts, the Commission does not credit the testimony that the Initial Determination was not received.   It believes that it was.   There having been no other assertion made as to a reason for the lateness of the objection to the determination, good cause has not been established, and the determination must remain in effect.

Further assuming without deciding, that the Service Corporation showed probable good cause that the reason for having failed to file a request for hearing timely was beyond its control, the Commission nevertheless concludes that the July 7, 1989 Initial Determination must be upheld. It is an absolute and unequivocal requirement of section 108.16(8)(b) that, for an optional transfer to be allowed, the Department must have received a written application from the transferee requesting that it be deemed a successor, on or before the contribution report and payment due date for the first full quarter following the date of the transfer.  It is undisputed that the Service Corporation filed no such application within the time required.  There is no "good cause" exception to the requirement of the timely filing of such an application, and even if there was, the Service Corporation has not established any such "good cause."   When Gossens left the Partnership and again began operating the Service Corporation, taking with him a number of the enployes of the partnership, the transfer of business occurred. The Service Corporation, aware that it was again actively employing persons subject to the Unemployment Compensation Act, could have included an application for optional transfer with its contribution report and payment for the first full quarter following the date of transfer, but it did not.   Because of this, there could be no optional transfer.

 

Petitioner's arguments on appeal:

In the single petition for Commission review filed with respect to all three Appeal Tribunal Decisions in this case, petitioner does not directly attack or question the correctness of any of the decisions. Rather, two points are made: That petitioner "asked the Department what should be done and the Department refused to respond," and , that the Department held an original pretrial hearing at which a record was made which was never given to petitioner nor to the new hearing examiner. The Commission finds neither of these points to warrant reversal of the Appeal Tribunal Decisions.

A claim that petitioner "asked the Department what should be done and the Department refused to respond to him" could potentially have significance, depending on what the evidence showed with respect to what information was requested of the Department and whether the Department in fact refused to provide information.  The evidence here, however, does not support the assertion.  The record made at the hearings in these matters do not establish that any inquiries made by petitioner of the Department were not appropriately responded to.  The Commission's detailed review of the file in all three cases also satisfies it that inquiries from petitioner to the Department were responded to.  The Commission sees no indication that the Department has, as petitioner asserts, taken the position that it has "no duty to answer letters or return phone calls".  Petitioner was kept advised at all times, by the issuance of appropriate notices, of the status of its account and of the actions of the Department with respect thereto. Additionally, the file reflects that, when specific inquiries were received from Gossens or the Service Corporation, representatives of the Department returned the contacts by telephone and attempted to explain to Gossens (apparently not always with success) the significance of the initial transfer of the Service Corporation' s account to the Partnership, and of the subsequent failure of the Service Corporation to obtain an optional transfer of account from the Partnership back to the Service Corporation.  The Commission finds no reversible error in the Department's handling of its communications with petitioner in this matter.

With respect to the matter of the hearing held before Administrative Law Judge Wolter on October 9, 1989, the Commission similarly finds no error.  There was no necessity for the "record" of that proceeding to be prepared or put before Administrative Law Judge Lund at the subsequent hearing.   Petitioner's  contention, that "promises were made" at the first hearing , is unsupported by any specific recitation of what those promises were. Administrative Law Judge Lund's synopsis of the hearing before him indicates that, at that hearing, Gossens was similarly vague with respect to what promises or comments were allegedly made at the hearing before Judge Wolter.   In the absence of a specific assertion of a stipulation or other agreement made on the record at an earlier proceeding which would have had an effect on the subsequent hearing,  the Commission is not inclined to find error in the failure to have some type of formal "record" of the earlier proceeding prepared. There was no other reason that the earlier hearing should have had any bearing on the subsequent hearing, since the subsequent hearing before Judge Lund was entirely de novo as to all issues. Appellant had a full opportunity, before Administrative Law Judge Lund, to litigate all of the issues in the case.  Lund was not constrained or limited in any respect by anything that occurred at the previous hearing, and it was therefore unnecessary for him to have access to the "record" of that proceeding.

 

cc:

Michael J. Mathis, Enforcements Attorney

Paul J. Gossens, S.C., President


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