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


KURTIS J UFFELMANN, Claimant

UNEMPLOYMENT INSURANCE DECISION
Hearing No. 98002791MD


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 the applicable law, records and evidence in this case, the commission makes the following:

FINDINGS OF FACT AND CONCLUSIONS OF LAW

The claimant worked over ten years as a drywaller for Precise Dry Wall, Inc. He last worked for Personnel Resources in the third quarter of 1996. He initiated a benefit claim in week 21 of 1997. His base period consisted of the four quarters in 1996. He had wages from Personal Resources. He also had wages from Precise Dry Wall, Inc. in the form of worker's compensation payments in the third and fourth quarter of 1996. The claimant was receiving temporary total disability/vocational rehabilitation payments. The claimant sought to initiate a new benefit claim in week 21 of 1998. His base period consisted of the third and fourth quarter of 1997 the first and second quarter of 1998. The only wages received by him since the start of his most recent benefit year consisted of temporary total disability/vocational rehabilitation payments. The claimant had not performed any actual personal services for pay since beginning his prior benefit year in week 21 of 1997.

The issue to be decided is whether the claimant had sufficient covered work and wages after the start of his most recent benefit year to begin a new benefit year.

Wis. Stat. § 108.02(4m)(d) defines base period wages as including:

"(d) For an employe who, as a result of employment for an employer, receives temporary total disability or temporary partial disability payments under ch. 102 or under any federal law which provides for payments on account of a work-related injury or illness analogous to those provided under ch. 102, all payments that the employe would have been paid during his or her base period as a result of employment for an employer, but not exceeding the amount that, when combined with other wages, the employe would have earned but for the injury or illness;"

Wis. Stat. § 108.02(4m)(d) thus includes TTD payments as wages usable as base period wages. Qualifying conditions for beginning a new benefit year are contained in Wis. Stat. § 108.04(4)(c) which provides:

"(c) An employe is not eligible to start a new benefit year unless, subsequent to the start of the employe's most recent benefit year in which benefits were to be paid to the employe, the employe has performed services and earned wages for those services equal to at least 8 times the employe's latest weekly benefit rate under s. 108.05(1) that was payable to the employe in the employe's most recent benefit year in employment or other work covered by the unemployment insurance law of any state or the federal government."

The language of Wis. Stat. § 108.04(4)(c), as set forth above, was changed by 1997 Wis. Act 39 Section 61, effective beginning with benefit years beginning on January 4, 1998. Prior to that change Wis. Stat. § 108.04(4)(c) provided:

"An employe is not eligible to start a new benefit year unless, subsequent to the start of the employe's most recent benefit year in which benefits were paid to the employe, the employe has earned wages equal to at least eight times the employe's last weekly benefit rate under s. 108.05(1) that was payable to the employe and the employe's most recent benefit year in employment or other work covered by the unemployment compensation law of any state or the federal government."

The claimant argues that prior to the change in Wis. Stat. § 108.04(4)(c) by 1997 Wis. Act 39, the claimant would have been entitled to receive unemployment compensation because there was no requirement that he perform services subsequent to the start of his most recent benefit year. The claimant further argues that since 1997 Wis. Act 39 involved a substantive change to Wis. Stat. § 108.04(4)(c), the change cannot retroactively be applied to the claimant without violating due process.

However, prior to the Act 39 change in Wis. Stat. § 108.04(4)(c), the commission read that section as requiring the actual performance of services subsequent to the claimant's most recent benefit year. That is, the commission read the requirement that the claimant have "earned" wages to mean performance of services. In Duane Lichtwalt, UI Dec. Hearing No. 93-606080MW (LIRC Feb. 25, 1994), the claimant performed no wage earning services after the start of his first benefit year. (1)    He did receive wages in the form of dismissal, vacation, and holiday pay after the start of his first benefit year. The commission found that he had not earned sufficient wages to begin a new benefit year:

". . . the applicable statute requires that the employe had earned wages equal to at least five times his weekly benefit rate in employment or other work since the start of his most recent benefit year. This section is clarified in the Federal Unemployment Tax Act at 26 USC § 33.04(sic) (a)(7) which provides that an individual who has received unemployment compensation during a benefit year is required to have had work since the beginning of such year in order to qualify for compensation in his next benefit year.

The claimant concedes he performed no services for his prior employer or any other employer after his last day of work in May 1992. The wages the claimant has after that date were not wages earned in employment or other work performed after May, 1992 and consequently do not qualify him to start a new benefit year."

This interpretation has been upheld at the circuit court level in Paul v. LIRC, No. 93-CV-2249 (Wis. Cir. Ct. Racine County Aug. 30, 1994). In Paul, the claimant tried to begin a second benefit year based on accident/sickness payments and vacation payments received since the start of his most recent benefit year. The court affirmed the commissions finding that the claimant had not "earned" wages since the start of his most recent benefit year. The court reasoned that if wages were sufficient to meet the requirements of Wis. Stat. § 108.04(4)(c), there would have been no need for the Legislature to limit wages to "earned" wages. (2)

Based on prior interpretations of Wis. Stat. § 108.04(4)(c), 1997 Wis. Act 39 did not involve a substantive law change. Further, even applying the pre Act 39 change the commission would find that the claimant was required to have performed wage earning services since the start of his most recent benefit year.

Finally, it should noted that Wis. Stat. § 108.04(4)(c) is a conformity requirement. (3) The FUTA requirement provides:

Sec. 3304. Approval of State laws

(a) Requirements. The Secretary of Labor shall approve any State law submitted to him, within 30 days of such submission, which he finds that-

7) an individual who has received compensation during his benefit year is required to have had work since the beginning of such year in order to qualify for compensation in his next benefit year. . . .

The "Interpretive Notes and Decisions" portion to 26 USCS 3304 contains a section on "purpose and intent" which states:

Purpose of amendment to 26 USCS @ 3304 requiring state unemployment compensation laws to provide that individual who has received compensation during his benefit years is required to have worked since beginning of such year to qualify for compensation in his next benefit year, was to prevent payment of unemployment benefits in 2 successive benefit years based on only one separation from employment--so-called double dip. Director of Dept. of Industrial Relations v Butler (1979, Ala App) 367 So 2d 496.

In Unemployment Insurance Program Letter (UIPL) No. 18-92, March 4, 1992, DOL clarified its interpretation of the term "work" in § 3304(a)(7):

Section 3304(a)(7) applies only to an individual who received compensation "during his benefit year." Such an individual must perform services for remuneration after the beginning of the first benefit year as a condition of receiving compensation in a second benefit year. Remuneration received after the beginning of a benefit year for service performed prior to that year may not be used to meet the requalifying requirement. Disability benefit payments, vacation pay, separation pay or back pay may not be used to satisfy the "work" requirement is not payable for services performed. Because these payments will likely be reported as wages in a wage record state, the agency must take steps to assure that the wages reported represent remuneration for services performed after the beginning of the benefit year.

UIPL No. 18-92, p. 3.

The commission therefore finds that as of week 21 of 1998, the claimant was not eligible to begin a new benefit year because the claimant had not earned wages equal to at least 8 times the applicable weekly benefit rate after the start of the claimant's most recent benefit year, within the meaning of Wis. Stat. § 108.04(4).

DECISION

The decision of the administrative law judge is modified to conform with the above findings and, as modified, is affirmed. Accordingly, as of week 21 of 1998, the claimant is not eligible to start a benefit year.

Dated and mailed: February 16, 1999
uffelku.urr : 132 : 6  BR 309

/s/ David B. Falstad, Chairman

/s/ Pamela I. Anderson, Commissioner

/s/ James A. Rutkowski, Commissioner

MEMORANDUM OPINION

In material submitted by the department with its brief, the department enclosed an Analysis of Proposed Law Change dated March 14, 1997, which addressed the department's reason for requesting a change in Wis. Stat. § 108.04(4)(c). In that analysis the department stated:

"Under current law a claimant is permitted to establish a second benefit year if the claimant has earned wages at least equal to 8 times the weekly benefit rate (WBR) since the start of the previous benefit year. In the past LIRC has interpreted this to mean that wages earned from vacation pay can be used to satisfy this requirement. As a result, a claimant could establish two consecutive benefit years based on one spell of employment and one layoff. Since that time the commission has won a circuit court case using our argument that 'earned wages equal to 8 times. . .' means that the person must have performed work subsequent to the beginning of the 1st benefit year - since you can't 'earn wages' without performing services. Nonetheless, this is an argument which continues to be raised and argued by claimants."

The claimant's attorney has made a "MOTION FOR PRODUCTION AND ADDITIONAL BRIEFING" stating "Counsel for Mr. Uffelmann has made a good faith effort to locate the cases in question without success. Given that their existence may have a material effect on this litigation, Mr. Uffelmann requests that the commission research and produce these precedent from its internal files if they can be found. Mr. Uffelmann requests an opportunity to file a supplemental brief on those authorities if they can be located." In that same motion, the claimant's attorney noted that claimant's counsel contacted both the commission's staff and the department's counsel and neither was familiar with or able to locate the referenced cases.

The commission has not been able to locate any such case(s). The department did not put a name to the case(s) referred to making it particularly difficult to find the case(s) should it/they exist. Further, the department's statement in the Analysis of Proposed Law Change does not establish that LIRC held that vacation pay alone satisfies the qualifying conditions of Wis. Stat. § 108.04(4)(c). Clearly, the department was under the impression that the commission held that vacation pay could satisfy Wis. Stat. § 108.04(4)(c), but that does not make it so. In any event, the commission was not able to come up with any such case(s). Since the case(s) has not been found the commission cannot supply counsel with the same and therefore further briefing is not necessary. (4)

Further, even if in some case or cases in the past the commission found vacation pay could be used to satisfy Wis. Stat. § 108.04(4)(c), it has issued decisions before the date of the analysis of the proposed law change, and before the Act 39 law change, holding that actual performance of wage earning services is necessary to start a new benefit year. Therefore, even if there is some aberrant case prior to March of 1997 holding to the contrary, the commission has not followed it since then.

Finally, the claimant's counsel does make an equitable argument- that denying UI to the employe penalizes him for attending school during the summer and encourages workers to take longer to obtain degrees, and thus extend payment of WC by forcing employes to work during the summer. However, whatever merit that argument has it is more appropriately addressed to the Legislature.

cc: DAVID BROCKERT

ATTORNEY JOHN C TALIS
LAWTON & CATES

GREGORY A FRIGO
BUREAU OF LEGAL AFFAIRS


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Footnotes:

(1)( Back ) Then Wis. Stat. § 108.04(4)(c) read the same as it did prior to the 1997 amendment except that an employe needed wages of five times his weekly benefit rate, rather than eight times his weekly benefit rate.

(2)( Back ) The claimant's attorney argues that the commission reached a contrary conclusion, which was upheld at the circuit court level in the case of Klein-Dickert Milwaukee, Inc. v. LIRC and Borman, No. 93-CV-007-602 (Wis. Cir. Ct. Milwaukee County Mar. 24, 1994.) The commission does not agree. Borman held that TTD could be used as base period wages notwithstanding the employer's argument that TTD was paid in error. However, Borman did not address the additional question of whether TTD alone was sufficient to meet the qualifying requirement contained in Wis. Stat. § 108.04(4)(c).

(3)( Back ) The claimant's attorney makes the technically correct argument that the State of Wisconsin, DWD and LIRC are not "required" to conform to federal law. But the state must do so if employers in this state are to maintain substantial tax credits received because the state does conform to FUTA.

(4)( Back ) The employe's attorney also seeks to strike attachments to the department's brief which include the Analysis of Proposed Law Change, a UI Trans with handbook pages, minutes from an Advisory Council meeting, and UIPL No. 18-92, March 4, 1992. The commission has looked at the Analysis of Proposed Law Change as it forms the basis of the motion to strike. The UI Trans and Advisory Council minutes have not been relied on by the commission. However, the commission deems it appropriate to look at relevant UIPLs. In UIPL No. 1-96, October 5, 1995, the DOL advised states that in its opinion the UIPLs did have legal effect. The UIPLs are directives used to set forth official agency policy. The directives state or clarify DOL's position, particularly with respect to the interpretation of minimum Federal requirements for conformity and compliance.