State of Wisconsin

Labor and Industry Review Commission

 

 

Cynthia S. Gussert

 

Employee

Unemployment Insurance

 

Decision[1]

Springhetti's Landscaping

     & Lawn Care, Inc. 

 

Employer

 

 

Dated and Mailed:

Hearing Nos.16400598AP through 16400609AP*

 

 

January 27, 2017

 

 

The commission affirms the decisions of the administrative law judge as modified by the findings of fact and conclusions of law set forth herein. Accordingly, the employee is entitled to the unemployment insurance benefits paid to her for weeks 48 of 2009 through 1 of 2014 and for weeks 9 and 10 of 2014. There is no overpayment for those weeks. The employee was overpaid $442 for weeks 11 and 12 of 2014, but recovery of the overpayment is waived. There are no overpayment penalties or forfeitures, and the employee’s future benefit amount shall not be reduced.

 

 

By the Commission:                                                                                                   /s/

 

Laurie R. McCallum, Chairperson

 

/s/

 

David B. Falstad, Commissioner

 


Procedural Posture

This case is before the commission to consider the employee’s eligibility for unemployment insurance benefits in 2009, 2010, 2011, 2012, 2013, and 2014. The Bureau of Benefits in the Unemployment Insurance Division of the Department of Workforce Development (department) issued twelve initial determinations, finding that the employee concealed work and wages when filing claims for unemployment insurance benefits in those years. The employee requested a de novo hearing before an appeal tribunal.

 An administrative law judge (ALJ) for the department held a pre-hearing conference, an emergency motion hearing, and a full-day hearing in this matter. The ALJ issued twelve appeal tribunal decisions, reversing the department’s initial determinations and finding that the employee did not conceal, as that term is defined in Wis. Stat. § 108.04(11)(g),[2] work performed and wages earned when filing claims for unemployment insurance benefits in 2009 through 2014. The department petitioned for commission review of the appeal tribunal decisions.

 The commission has considered the department’s petition, the positions of the parties, and the briefs submitted, and the commission has conducted an independent and thorough review of the evidence submitted at the hearing. Based on its review, the commission makes the following:

 

Findings of Fact and Conclusions of Law

1.      Cynthia Gussert worked as a secretary/bookkeeper/office manager for the employer, Springhetti’s Landscaping and Lawn Care, Inc., from August 2007 through June 2015, when she was permanently laid off.

 

2.      The employer is a small business whose primary source of income is from providing seasonal landscaping services and, for a period of time, installing pools.  The employer also provides some snow removal services in the winter months. The employer has been in business since 1994. During the “in season,” which typically begins in early April and ends around Thanksgiving, the business employs about 25 workers.

 

3.      Ms. Gussert worked in the employer’s office, answering the phone, invoicing clients, paying bills, completing payroll, and performing other related tasks. She used QuickBooks, an accounting software program, to invoice clients, generate paychecks, and create payroll and quarterly tax reports.

 

4.      Ms. Gussert fielded questions from workers about when paychecks would be issued, but questions about the amount of pay and other human resources-type issues were addressed by crew supervisors or by the owner, Dan Springhetti.

 

5.      Ms. Gussert informed workers when they received their last paycheck for the season that they could apply for unemployment insurance benefits. The employer displays a poster from the department that provides information about applying for benefits. Ms. Gussert did not tell workers how to file claims or how to answer questions.

6.      Before working at Springhetti’s, Ms. Gussert was a waitress, a retail store clerk, and a stay-at-home mom. She is friends with the owner and his wife. They attend the same church.

7.      Ms. Gussert has a high school diploma. Before working at Springhetti’s, she had never filed for unemployment insurance benefits.

8.      At the request of the owner, Ms. Gussert took her work computer home over the winter layoff, so she could perform limited billing and payroll duties related to snow plowing, as needed. There was no regular payroll in the “off season.” Ms. Gussert would issue a paycheck to a worker if he plowed or shoveled snow for the employer and reported to her the number of hours that he had worked. Issuing a paycheck was a relatively perfunctory task; Ms. Gussert would input a few numbers into QuickBooks and push a button. The same was true of generating invoices.

 

9.      Ms. Gussert filed quarterly wage reports year-round. QuickBooks would create the reports. The employer utilized an outside company and a CPA for its accounting work.

10.   In the off season, in addition to limited billing, payroll, and reporting duties, Ms. Gussert purchased office supplies when running her own errands and occasionally, upon request, went to the bank or the post office for the employer. The owner and his wife went to Florida for the winter. Ms. Gussert had a company credit card for business expenses and, if she used her personal vehicle to run errands for the employer, the owner allowed her to use the credit card to purchase gas. Other workers also used Ms. Gussert’s company credit card with the consent of the owner.

11.    When Ms. Gussert was laid off for the winter, the owner told her to keep track of her time and he would “catch up with her.” It was an informal arrangement. The time it took Ms. Gussert to perform tasks for the employer during the off season ranged between 15 minutes and two hours per week. The owner paid her for her time after he received his contracts funding in the spring.

12.    It was acceptable to the owner if workers saved up their hours until they reached 40 before turning in their hours for pay. No one at Springhetti’s used the term “banking hours” to describe that practice.

13.    Ms. Gussert filed claims for unemployment insurance benefits for weeks 48 through 52 of 2009 and weeks 1, 2, 4, 6, 7, 8, 10, 12, 14 and 16 of 2010.[3]

14.    Ms. Gussert filed claims for unemployment insurance benefits for weeks 50 through 52 of 2010 and week 1 of 2011.[4]

15.    Ms. Gussert filed claims for unemployment insurance benefits for weeks 2, 4, 5, 6, 8 through 16, 49, 50, 52, and 53 of 2011.[5]

16.    Ms. Gussert filed claims for unemployment insurance benefits for weeks 1, 3 through 9, 11 and 13 of 2012.[6]

17.    Ms. Gussert filed claims for unemployment insurance benefits for weeks 52 and 53 of 2012 and week 1 of 2013.[7]

18.    Ms. Gussert filed claims for unemployment insurance benefits for weeks 2, 3, 5 through 11, and 13 through 15 of 2013.[8]

19.    Ms. Gussert filed claims for unemployment insurance benefits for week 52 of 2013 and week 1 of 2014.[9]

20.    Ms. Gussert filed claims for unemployment insurance benefits for weeks 2 through 8 of 2014.[10]

21.    Ms. Gussert filed claims for unemployment insurance benefits for weeks 9 through 12 of 2014.[11]

22.    When Ms. Gussert filed her weekly claim certifications for each week prior to week 9 of 2014, she did not report that she worked and earned wages.

23.    It “never dawned on” Ms. Gussert that she needed to report the time she spent in the off season doing things for the employer from her home as “work” on her claims for benefits. In her mind, she was laid off for the winter and did not “work.” To her, “work” meant going in to the office, 9 a.m. to 5 p.m., Monday through Friday. When she was paid by Dan Springhetti in the spring for things she did in the off season, Ms. Gussert stopped filing for unemployment insurance benefits, even if she had not yet returned to her full-time job in the employer’s office. The only exception was 2014, after it was learned that the company was under investigation. Ms. Gussert reported work and wages on her claims for weeks 9 through 12 of 2014.

 

24.   Ms. Gussert thought that she understood how to file for unemployment benefits. She did not actually “read” the department’s Handbook for Claimants in its physical or online form. At most, she “reviewed” the pamphlet initially sent to her.

 

25.    At the hearing, Ms. Gussert did not dispute that, for unemployment insurance purposes, she worked for the employer in the weeks at issue. She provided good faith estimates of the amount of time she spent performing tasks for the employer in those weeks. Her estimates are the best evidence of the work performed and the wages earned by Ms. Gussert in the employer’s off seasons.

 

26.    Ms. Gussert disputed the department’s allegation that she intentionally failed to report that she worked for the employer during the weeks at issue in an effort to receive unemployment benefits to which she was not entitled.

 

27.   As a courtesy to Dan Springhetti, Ms. Gussert did not request payment for any time she spent doing tasks for him in the off season until his cash flow improved in spring. When she received payment, Ms. Gussert stopped filing claims for unemployment benefits, even if she had not yet returned to her full-time office position, with the exception of weeks 9 through 12 of 2014. In those four weeks, Ms. Gussert reported the number of hours for which she was paid and the corresponding wages.

28.    Ms. Gussert had no pecuniary reason to withhold her work and wage information from the department during the off season, because she rarely, if ever, worked enough to earn more than the $30 offset included in the partial benefits formula, Wis. Stat. § 108.05(3).

 

29.    Ms. Gussert did not intend to mislead the department or “cheat the system.”

 

30.    Ms. Gussert worked and earned wages in the weeks at issue, but she did not conceal, as that term is defined in Wis. Stat. § 108.04(11)(g), work performed and wages earned when filing benefit claims for those weeks.

 

31.    Ms. Gussert was not part of an alleged scheme orchestrated by the employer to defraud the unemployment insurance program.

 

32.    Ms. Gussert is entitled to unemployment insurance benefits calculated pursuant to Wis. Stat. § 108.05(3)[12] for the weeks at issue as set forth below:


For Hearing No. 16400598AP:

Week of

issue

Hrs:Min

worked

Wages earned ($13/hour)

Benefits

due

Benefits

paid

 Erroneous payment

48/09

0:15

$3.25

$251

$251 + $25 FAC

$0

49/09

0:45

$6.75

$251

$251 + $25 FAC

$0

50/09

0:30

$6.50

$251

$251 + $25 FAC

$0

51/09

0:30

$6.50

$251

$251 + $25 FAC

$0

52/09

0:45

$9.75

$251

$251 + $25 FAC

$0

1/10

0:30

$6.50

$251

$251 + $25 FAC

$0

2/10

0:15

$3.25

$248

$248 + $25 FAC

$0

4/10

0:30

$6.50

$248

$248 + $25 FAC

$0

6/10

1:00

$13.00

$248

$248 + $25 FAC

$0

7/10

0:30

$6.50

$248

$248 + $25 FAC

$0

8/10

1:15

$16.25

$248

$248 + $25 FAC

$0

10/10

0:15

$3.25

$248

$248 + $25 FAC

$0

12/10

0:45

$9.75

$248

$248 + $25 FAC

$0

14/10

0:00

$0

$248

$248 + $25 FAC

$0

16/10

0:30

$6.50

$248

$248 + $25 FAC

$0

Total

 

 

 

 

$0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For Hearing No. 16400599AP:

Week of

issue

Hrs:Min

worked

Wages earned ($13/hour)

Benefits

due

Benefits

paid

 Erroneous payment

50/10

0:45

$9.75

$248

$248 + $25 FAC

$0

51/10

0:15

$3.25

$248

$248

$0

52/10

0:45

$9.75

$248

$248

$0

1/11

0:45

$9.75

$248

$248

$0

Total

 

 

 

 

$0

 

 

 

 

 

 

 

 

 

 

 For Hearing No. 16400600AP:

Week of

issue

Hrs:Min

worked

Wages earned ($13/hour)

Benefits

due

Benefits

paid

 Erroneous payment

2/11

0:30

$6.50

$255

$255

$0

4/11

1:00

$13.00

$255

$255

$0

5/11

1:00

$13.00

$255

$255

$0

6/11

1:15

$16.25

$255

$255

$0

8/11

0:30

$6.50

$255

$255

$0

9/11

1:15

$16.25

$255

$255

$0

10/11

1:15

$16.25

$255

$255

$0

11/11

0:15

$3.25

$255

$255

$0

12/11

1:00

$13.00

$255

$255

$0

13/11

0:45

$9.75

$255

$255

$0

14/11

1:00

$13.00

$255

$255

$0

15/11

0:45

$9.75

$255

$255

$0

16/11

1:00

$13.00

$255

$255

$0

49/11

0:45

$9.75

$255

$255

$0

50/11

1:15

$16.25

$255

$255

$0

52/11

0:45

$9.75

$255

$255

$0

53/11

0:45

$9.75

$255

$255

$0

Total

 

 

 

 

$0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For Hearing No. 16400600AP:

Week of

issue

Hrs:Min

worked

Wages earned ($13/hour)

Benefits

due

Benefits

paid

 Erroneous payment

1/12

0:00

$0.00

$301

$0 (waiting wk)

$0

3/12

0:30

$6.50

$301

$301

$0

4/12

1:00

$13.00

$301

$301

$0

5/12

0:45

$9.75

$301

$301

$0

6/12

1:15

$16.25

$301

$301

$0

7/12

1:00

$13.00

$301

$301

$0

8/12

0:45

$9.75

$301

$301

$0

9/12

0:45

$9.75

$301

$301

$0

11/12

1:25

$16.25

$301

$301

$0

13/12

0:30

$6.50

$301

$301

$0

Total

 

 

 

 

$0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For Hearing No. 16400603AP:

Week of

issue

Hrs:Min

worked

Wages earned ($13/hour)

Benefits

due

Benefits

paid

 Erroneous payment

51/12

1:15

$16.25

$301

$301

$0

52/12

1:00

$13.00

$301

$301

$0

1/13

1:00

$13.00

$301

$301

$0

Total

 

 

 

 

$0

 

 

 

 

 

 

 

 

For Hearing No. 16400604AP:

Week of

issue

Hrs:Min

worked

Wages earned ($13/hour)

Benefits

due

Benefits

paid

 Erroneous payment

2/13

0:00

$0.00

$291

$0 (waiting wk)

$0

3/13

1:00

$13.00

$291

$291

$0

5/13

0:30

$6.50

$291

$291

$0

6/13

1:15

$16.25

$291

$291

$0

7/13

0:45

$9.75

$291

$291

$0

8/13

0:45

$9.75

$291

$291

$0

9/13

0:45

$9.75

$291

$291

$0

10/13

1:00

$13.00

$291

$291

$0

11/13

0:45

$9.75

$291

$291

$0

13/13

1:00

$13.00

$291

$291

$0

14/13

0:30

$6.50

$291

$291

$0

15/13

0:45

$9.75

$291

$291

$0

Total

 

 

 

 

$0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For Hearing No. 16400605AP:

Week of

issue

Hrs:Min

worked

Wages earned ($14/hour)

Benefits

due

Benefits

paid

 Erroneous payment

52/13

1:00

$14.00

$291

$291

$0

1/14

1:00

$14.00

$291

$291

$0

Total

 

 

 

 

$0

 

 

        

 

 

 

 

For Hearing No. 16400607AP:

Week of

issue

Hrs:Min

worked

Wages earned ($14/hour)

Benefits

due

Benefits

paid

Erroneous payment

2/14

0:00

$0.00

$291

$0 (waiting wk)

$0

3/14

0:30

$7.00

$291

$291

$0

4/14

1:25

$17.60

$291

$291

$0

5/14

0:45

$10.50

$291

$291

$0

6/14

1:30

$21.00

$291

$291

$0

7/14

0:30

$7.00

$291

$291

$0

8/14

0:45

$10.50

$291

$291

$0

Total

 

 

 

 

$0

 

 

 

 

 

 

 

 

 

 

 

 

For Hearing No. 16400607AP:

Week of

issue

Hrs:Min

worked

Wages earned ($14/hour)

Benefits

due

Benefits

paid

Erroneous payment

9/14

40:00

$560.00

$0 (hrs+)

$0

$0

10/14

8:00

$112.00

$236

$236

$0

11/14

40:00

$560.00

$0 (hrs+)

$221

$221

12/14

35:00

$490.00

$0 (hrs+)

$221

$221

Total

 

 

 

 

$442

 

 

33.   

 

 

 

 

 

 

33.    Ms. Gussert was erroneously paid benefits totaling $442, as set forth above.

 

34.    Those benefits were overpaid as a result of departmental error, within the meaning of Wis. Stat. § 108.02(10e). The department made a mistake of evidentiary fact and misapplied the law. The employee reported on her weekly claim certifications for weeks 11 and 12 of 2014 that she worked more than 32 hours in each of those weeks, and that she earned more than $500 in week 11 of 2014, yet the department paid benefits to her for those weeks, contrary to Wis. Stat. § 108.05(3)(c) and (dm).

 

35.    Recovery of the overpayment shall be waived, pursuant to Wis. Stat. § 108.22(8)(c).

 

36.    Because Ms. Gussert did not conceal work or wages, within the meaning of Wis. Stat. § 108.04(11)(b), on her claim certifications for the weeks at issue, there are no overpayment penalties, within the meaning of Wis. Stat. § 108.04(11)(bh), and she is not subject to forfeitures or benefit amount reductions, within the meaning of Wis. Stat. § 108.04(11)(be) and (bm).[13]

 

Memorandum Opinion

The department petitioned for commission review of 12 appeal tribunal decisions issued in this matter, all of which found that the employee, Cynthia Gussert, did not conceal work and wages on her weekly claim certifications when filing for unemployment insurance benefits in 2009 through 2014. The department argued that the commission must reverse the appeal tribunal decisions or remand the matter for further hearing. The commission is not persuaded.

In January 2014, a recently-discharged employee of Springhetti’s Landscaping and Lawn Care, Inc., Derreck Johnson, reported to the department that the owner of the small business, Dan Springhetti, made employees work over the winter months and did not pay them. Johnson alleged that workers were told by the owner to collect unemployment insurance benefits in the winter as their form of payment. Johnson, who had been hired by another individual in April 2013 to work in the employer’s pool division, thought that he was supposed to work year-round and get full wages year-round. He was unhappy that he was laid off for the winter and did not get his regular paychecks after Thanksgiving.

Based on Johnson’s allegations, the department believed that the owner was aiding and abetting workers in committing acts of concealment.[14] For unemployment insurance purposes, conceal means “to intentionally mislead or defraud the department by withholding or hiding information or making a false statement or misrepresentation.”[15] The burden to establish that a claimant concealed information is on the department.[16] The Wisconsin Supreme Court has required that concealment, as a form of fraud, be proven by clear, satisfactory, and convincing evidence.[17]

 The department investigated the alleged aiding and abetting scheme, and the involvement of employees therein, for two years. The department’s theory of the case against Ms. Gussert was that she understood the “banking system” (banking of hours in the attempt to hide them and not have to report them to the department), that she participated in that system, and that she instructed others to do it. The department did not believe that Ms. Gussert made a simple mistake in failing to report her off-season work; rather, “it was actually a plan or a scheme that she was involved in that she was instructing others to do … to get money from the Department … and that she followed this plan and that she encouraged others to follow it.”[18]

The ALJ found that it was “not established by clear and convincing evidence that [Ms. Gussert] applied for unemployment insurance that she knew that she was not entitled to receive.” The ALJ concluded that Ms. Gussert did not intentionally conceal work performed and wages earned.

In its petition for commission review and in its briefs, the department makes several arguments. First, the department challenged the adequacy of the factual findings made by the ALJ. The commission has addressed the concerns raised by the department by making its own findings after a thorough review of the record, as the ultimate responsibility for making findings of fact rests with the commission.[19]

The department argued that the ALJ’s reading of the concealment statute is contrary to law and the evidence, in that the ALJ did not find concealment because Ms. Gussert earned less than $30 per week. Again, the commission has addressed the concerns raised by the department by making its own findings of fact and conclusions of law after a thorough review of the record.

The department also argued that the ALJ failed to receive and consider significant evidence that showed that Ms. Gussert intentionally misled the department. Specifically, it argued that the ALJ did not ask enough questions; unduly limited the department’s questions when attempting to get circumstantial evidence into the record; failed to consider Ms. Gussert’s credibility; and did not allow the department to question Ms. Gussert about her financial need for benefits. The department contended that the ALJ improperly quashed the subpoena of a witness who would have impeached Ms. Gussert’s testimony. Finally, it argued that the ALJ failed to consider other evidence that the department believes proves concealment.

All of the parties in this matter were represented by counsel. The ALJ was responsible for ensuring that a complete record was made, but the attorneys for the parties were likewise responsible for creating a complete record. If counsel was concerned that a sufficient record had not been made, such concerns should have been brought to the ALJ’s attention. The attorney for the employer made offers of proof during the course of the hearing, and the department had the opportunity to do so as well. Prior to the close of the hearing, counsel for the department told the ALJ that the department did not have anything further to present.

The ALJ did not unduly limit the department’s questions. The ALJ merely instructed counsel for the department to ask direct questions to move the hearing along. An ALJ is required to “secure the facts in as direct and simple a manner as possible.”[20] The ALJ gave similar instructions to counsel for the employee to move things along.

Counsel for the department was appropriately prohibited from questioning Ms. Gussert about her financial need for unemployment benefits. Benefits “compensate for wage loss resulting from unemployment due to lack of work, without regard to any means or needs test.”[21] “It was the intent of Congress to create a social insurance system under which entitlement to benefits was a matter of right on the part of those who became involuntarily unemployed because of a lack of work ….”[22] As the department’s adjudicator explained, “unemployment is not based on need; it’s based on eligibility.”[23]

The appeal tribunal decisions did not contain express findings of credibility, but that does not mean that the ALJ did not consider Ms. Gussert’s credibility. Written decisions of an ALJ are required only to “contain ultimate findings of fact and conclusions of law.”[24] In finding that Ms. Gussert did not conceal, within the meaning of Wis. Stat. § 108.04(11)(g), work performed and wages earned, the ALJ implicitly credited Ms. Gussert’s denial of any intent to mislead or defraud the department.[25] The commission, in making its own factual findings, credited Ms. Gussert’s testimony that, when filing claims for the weeks at issue, she did not understand how the system worked and that she did not lie to obtain unemployment insurance benefits. Ms. Gussert’s testimony was internally consistent and plausible. Her understanding of the program was neither unreasonable nor unprecedented.[26]

 

Furthermore, the testimony of Derreck Johnson, the whistleblower, corroborated Ms. Gussert’s testimony that, beyond being told that workers could apply for benefits when laid off for the winter, no one at Springhetti’s discussed unemployment insurance. Ms. Gussert and Johnson never spoke about it. No one at Springhetti’s used the term “banking hours,” as Johnson understood the term, or engaged in the practice. He, like Ms. Gussert, understood that she was laid off for the winter because she no longer came to the office.

 

Finally, the department argued that the ALJ committed reversible error with his decision to quash the department’s subpoenas for several individuals, specifically Cory Schmit, a former employee.[27] At the time the ALJ quashed the subpoenas, he explained that he believed that the testimony from the individuals he identified as necessary would be sufficient and that the testimony of Schmit and the others was not sufficiently relevant. The ALJ informed the department that its request could be renewed and that an offer of proof could be made on the record after the other witnesses had testified, if the department needed the testimony of any witness whose appearance was not compelled. The department did not renew its request that Schmit’s testimony be taken, nor did the department make an offer of proof. When objections to evidence or procedure are not made before the fact-finding tribunal, the trier of fact does not have the opportunity to correct possible errors.[28] The rule requiring that an issue be raised before appeal also applies to administrative proceedings.[29] In the absence of a renewed request for Schmit’s testimony or an offer of proof at the hearing as to what his testimony would have added, it cannot be concluded that the ALJ’s decision to quash his subpoena was erroneous.[30]

 

The cases cited by the department in its brief to support its arguments are not persuasive. It is difficult to make comparisons between claimants accused of concealment, because, as the department’s adjudicator explained, “everybody’s situation is unique.”[31] With respect to the case involving Nicole Suchowski,[32] the claimant there understood how the unemployment insurance program worked and had been filing claims for partial benefits correctly while working for her employer until she stopped reporting her work and wages. Ms. Suchowski presumed that the department would ask her employer how many hours she worked and how much she earned, so Ms. Suchowski decided that she did not need to provide that information on her claims. Ms. Suchowski’s actions in failing to report her work and wages were intentional. In contrast, Ms. Gussert was not reporting to work at her regular place of employment, and she did not understand that the few things that she did for her employer in the off season constituted “work.” Ms. Gussert was new to unemployment and consistently filed her claims the same way, albeit incorrectly.

 

With respect to the case involving Christine Lampert,[33] Ms. Lampert reported to her regular workplace, like Ms. Suchowski, and she worked her regular job in one week, and she worked at a new job in the following week. Ms. Lampert knew that she had worked and she knew that she needed to report the hours she worked to the department. She claimed to be unsure about when to report the wages from that work, when earned or when received, but she did not report it all until months later after being penalized for failing to disclose a job refusal. In Ms. Gussert’s case, she did not go to her regular place of employment and she did not understand that, for purposes of unemployment insurance, the few things that she did for the employer in the off season constituted “work.” With the exception of weeks 9 through 12 of 2014, Ms. Gussert did not file for benefits for weeks in which she received a paycheck from the employer.[34]

 

The final case cited by the department, that involving Anita McGee,[35] is, again, not comparable to that here. Ms. McGee intentionally did not report any wages she earned from a part-time employer. She knew from past encounters with the department that she needed to report all hours worked and all wages earned. She had been found to have concealed work and wages from a different employer. Therefore, Ms. McGee’s failure to report her work and wages was determined to not be the result of an honest mistake, a misinterpretation of information received, or a good faith misunderstanding of her obligations. In contrast, Ms. Gussert did not realize that the few things she did for the employer in the off season constituted “work.” And, unlike Ms. McGee, Ms. Gussert did not seek to blame her inaccurate answers to the “Did you work?” question on her employer. Ms. Gussert did not discuss with her employer how to answer questions asked of her during the claims process. Ms. Gussert never had reason to know or to suspect that she was filing her claims incorrectly.

 

In her brief, Ms. Gussert raised several issues of concern. First, Ms. Gussert questioned the propriety of the department’s decision to issue the initial determinations in this matter concerning work and wages without naming and providing notice to the employer. Although the department’s failure to name the employer is unusual, the issue is moot. The hearing office provided the employer with notice of the proceedings. The fundamental requirement of procedural due process is the opportunity to be heard at a meaningful time and in a meaningful manner.[36] Yet, “we cannot condone a system which does not inform a party in interest of proceedings affecting that interest….”[37]

 

Ms. Gussert also questioned whether the department afforded her due process during the first year and one-half of its investigation. The department’s usual practice is to schedule a fraud interview early in a concealment investigation. The fraud interview notice sent by the department informs a claimant that overpayments and penalties may result because of discrepancies between what the claimant reported on a claim and what the department has cause to believe the correct information to be. The fraud interview notice also informs a claimant that a referral for criminal prosecution is possible and that he or she has the right to be represented by counsel.

 

Here, despite the department’s belief in February 2014 that Ms. Gussert concealed work and wage information on her claims as far back as 2009 and that she was an integral part of an aiding and abetting scheme, the department did not notify Ms. Gussert that she was under investigation for concealment until July 2015. By that time, Ms. Gussert had been interviewed by both of the department’s program integrity investigators (December 29, 2014) and by the adjudicator (April 16, 2015). Ms. Gussert was, likewise, not informed that she had the right to be represented by counsel until July 2015. It is not clear from the record why, in this case, the department did not provide the claimant, Ms. Gussert, with more timely notice that she was under investigation for fraud and advise her of her rights. “Administrative agencies may deviate from prior agency policy and practice as long as a satisfactory explanation is provided,”[38] although no such explanation was proffered by the department. “[S]tates have broad authority … to prevent, detect, and recover improper payments, [but] states must also ensure that individuals’ rights are protected.”[39]

 

In addition, as a condition for receiving unemployment compensation administrative grants from the federal government, states, in the context of identifying and establishing improper payments, must continue making timely unemployment compensation payments when due.[40] When a question concerning continued eligibility for benefits for a given week arises for a claimant in a continued claims series, the state agency conducts an investigation of the facts and makes a determination of eligibility or ineligibility. While such a determination is pending, the state agency need not issue payment for the week in question until it issues a determination regarding eligibility, provided the determination is timely.[41] A determination is issued timely if it is issued no later than the end of the week following the week in which the issue was detected by the state agency.[42] When the question of eligibility does not affect later weeks, however, states must make payment for later weeks without delay. Therefore, “when the question of eligibility relates to eligibility or possible fraud for past weeks only, benefits claimed for current weeks may not be suspended while an investigation is conducted.”[43] So, while it may have been the department’s policy to hold Ms. Gussert’s payments of unemployment insurance benefits during its investigation,[44] regardless of the length of the investigation, the department’s policy appears to conflict with the state’s agreement with the U.S. Department of Labor, with U.S. Supreme Court precedent, and with the federal government’s requirement to administer its program in such a way as to ensure that benefits are paid “when due.”[45]

 

The final issue raised by Ms. Gussert in this case concerns the propriety of the ALJ’s decision to grant a protective order preventing pages of the department’s Disputed Claims Manual from being disclosed to the public. It is not disputed that the ALJ had the authority to issue a protective order to prohibit the parties and their representatives from disclosing any evidence and exhibits listed as confidential in the protective order if the interests of justice so require.[46] The ALJ accepted the department’s representation that it was in the interests of justice to issue a protective order because the evidence and exhibits at issue were confidential.

 

The commission reached its decision in this matter based on its determinations of credibility and intent. The confidentiality question did not need to be resolved in order to reach a decision, and the commission declines to take up the question at this time. However, the commission notes that there are federal regulations that address the confidentiality and disclosure of unemployment insurance information.[47] Those regulations provide that “information about State UC law (and applicable Federal law) provisions, rules, regulations, and interpretations thereof, including statements about general policy and interpretations of general applicability” is public domain information[48] and not subject to confidentiality.[49] The federal confidentiality and disclosure requirements apply to states and state agencies.[50]

 

 

cc:

Attorney Victor Forberger

Attorney Kristin Shimabuku

Gill & Gill, SC

 



[1] Appeal Rights: See the blue enclosure for the time limit and procedures for obtaining judicial review of this decision. If you seek judicial review, you must name the following as defendants in the summons and the complaint: the Labor and Industry Review Commission, all other parties in the caption of this decision or order (the boxed section above), and the Department of Workforce Development.

 Appeal rights and answers to frequently asked questions about appealing an unemployment insurance decision to circuit court are also available on the commission’s website http://lirc.wisconsin.gov.

 *The employer was not a named party in Hearing Nos. 16640602AP, 16400606AP, and 16400608AP.

[2] All references to the Wisconsin Statutes are to the 2013-14 version, unless otherwise indicated.

[3] Subject of Hearing No. 16400598AP.

[4] Subject of Hearing No. 16400599AP.

[5] Subject of Hearing No. 16400600AP.

[6] Subject of Hearing No. 16400601AP.

[7] Subject of Hearing No. 16400603AP.

[8] Subject of Hearing No. 16400604AP.

[9] Subject of Hearing No. 16400605AP.

[10] Subject of Hearing No. 16400607AP.

[11] Subject of Hearing No. 16400609AP.

[12] The statute provides that, if an eligible employee earns wages in a given week, the first $30 of the wages shall be disregarded and the employee’s applicable weekly benefit payment shall be reduced by 67 percent of the remaining amount, except that no such employee is eligible for benefits if the employee’s benefit payment would be less than $5 for any week.

[13] The statutory penalties for concealment found in Wis. Stat. § 108.04(11)(be), (bh) and (bm) were not the same for all weeks at issue. Because it has been decided that Ms. Gussert did not conceal work and wages while filing claims for unemployment insurance benefits, it is not necessary to outline in detail the precise nature and amount of the penalties.

[14] Wisconsin Stat. § 108.04(11)(c) provides that any employing unit that aids and abets a claimant in committing an act of concealment may, by a determination under Wis. Stat. § 108.04(10), be required, as to each act of concealment the employing unit aids and abets, to forfeit an amount equal to the amount of benefits the claimant improperly received as a result of the concealment. The employing unit is also penalized by having to forfeit $500 for each single act of concealment that the employing unit aids and abets a claimant to commit.

[15] Wis. Stat. § 108.04(11)(g) (2013-14). The statutory definition of concealment changed slightly after 2015 Wis. Act 334, which went into effect on April 4, 2016. The determinations in this matter were issued prior to that date.

[16] In re Joseph W. Hein, Jr., UI Dec. Hearing No. 00605374MW (LIRC Dec. 13, 2001).

[17] Wangen v. Ford Motor Co., 97 Wis. 2d 260, 299, 294 N.W.2d 437 (1980) (supreme court requires a higher burden of proof, i.e., to a reasonable certainty by evidence that is clear, satisfactory and convincing, in the class of cases involving fraud); Kamuchey v. Trzesniewski, 8 Wis. 2d 94, 98, 98 N.W.2d 403 (1959) (“fraud must be proven by clear and satisfactory evidence, which requires a higher degree of proof than in ordinary civil cases”).

[18] T1. 14:18-15:3. (T1 refers to the transcript from the first hearing, which was held on Friday,
May 20, 2016, to address motions to quash several subpoenas issued by the department.)

[19] Goranson v. DILHR, 94 Wis. 2d 537, 545, 289 N.W.2d 270 (1980).

[20] Wis. Admin. Code § DWD 140.16(1).

[21] Unemployment Insurance Program Letter No. 787 (Oct. 2, 1964).

[22] Id.

[23] T2. 291:6-7. (T2 refers to the transcript from the second hearing, which was held on Monday,
May 23, 2016.)

[24] Wis. Admin. Code § DWD 140.17(2).

[25] Valadzic v. Briggs & Stratton Corp., 92 Wis. 2d 583, 591, 286 N.W.2d 540 (1979) (a finding not explicitly made may be inferred from other properly made findings and from findings which the appeal tribunal failed to make).

[26] See, e.g., Hollett v. Shaffer, UI Dec. Hearing Nos. 13003690MW and 13003691MW (LIRC Apr. 30, 2014), aff'd, Wis. Dept. of Workforce Dev. v. Wis. Labor & Indus. Rev. Comm'n and Hollett, Case No. 14 CV 331 (Wis. Cir. Ct. Sauk Cnty. Jan. 22, 2015) (employee did not report services she performed at home as “work” because she did not think of the services as a job); Karandjeff v. Cmty. Living Alliance Inc., UI Dec. Hearing No. 11611430MW (LIRC June 20, 2012) (employee, who was providing care in her home to her adult son with disabilities, did not understand that her services were considered "work" for unemployment insurance purposes).

[27] Wis. Admin. Code § DWD 140.10(4) (an ALJ scheduled to conduct a hearing for which a subpoena has been issued may quash the subpoena if the ALJ determines that the witness subpoenaed is not necessary to a fair adjudication of the issues of the hearing or that the subpoena has not been served in the proper manner).

[28] See State ex rel. Olson v. City of Baraboo Joint Review Bd., 2002 WI App 64, ¶ 23, 252 Wis. 2d 628, 643 N.W.2d 796.

[29] See, e.g., Goranson v. DILHR, 94 Wis.2d 537, 545, 289 N.W.2d 270 (1980).

[30] Theodore Fleisner, Inc. v. DILHR, 65 Wis. 2d 317, 329, 222 N.W.2d 600 (1974).

[31] T2. 286:16.

[32] Suchowski v. Golden County Foods Inc., UI Dec. Hearing Nos. 13202496EC and 13202497EC (LIRC Jan. 9, 2014).

[33] Lampert v. Waunakee Manor Health Care Center, UI Dec. Hearing Nos. 14000936MD and 14000937MD (LIRC Sept. 19, 2014).

[34] Compare Waoh-Tobin v. Banana Republic, UI Dec. Hearing No. 16602900MW (LIRC Oct. 18, 2016) (while it seems logical to some claimants, such as the employee, to report income/wages when received, the law requires that wages be reported in the week they are earned, not when paid).

[35] McGee v. Crossmark Inc., UI Dec. Hearing Nos. 14609275MW through 14609278MW (LIRC
May 28, 2015).

[36] Rhonda R.D. v. Franklin R.D., 191 Wis. 2d 680, 701, 530 N.W.2d 34 (Ct. App. 1995) (citing Mathews v. Eldridge, 424 U.S. 319, 333 (1976)).

[37] Griesbach v. Seek Career/Staffing Inc., UI Dec. Hearing No. 10402551AP (LIRC Nov. 30, 2010), citing Cornwell Personnel Associates, Ltd. v. DILHR, 92 Wis. 2d 53, 62, 284 N.W.2d 706 (Ct. App. 1979).

[38] Stoughton Trailers, Inc., v. LIRC, 2006 WI App 157, 27, 303 Wis. 2d 514, 735 N.W.2d 477.

[39] Unemployment Insurance Program Letter (UIPL) No. 1-16, Federal Requirements to Protect Individual Rights in State Unemployment Compensation Overpayment Prevention and Recovery Procedures (Oct. 1, 2015).

[40] Id.

[41] Unemployment Insurance Program Letter (UIPL) No. 04-01, Payment of Compensation and Timeliness of Determinations during (sic) a Continued Claims Series (Oct. 27, 2000). (Emphasis in original).

[42] Id.

[43] Id. (Bracketing omitted.)

[44] T2. 297:9-19.

[45] See Social Security Act, § 303(a)(1); California Dep’t of Human Resources Dev. v. Java, 402 U.S. 121, 91 S. Ct. 1347, 28 L.Ed.2d 666 (1971); UIPL No. 1-16, supra.

[46] Wis. Admin. Code § DWD 140.09(2).

[47] 20 CFR § 603 et seq.

[48] 20 CFR 603.2(c).

[49] 20 CFR 603.5(a).

[50] 20 CFR § 603.1.