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


JAMES E DUNHAM, Employe

AMERISERVE FOOD DISTRIBUTION INC, Employer

UNEMPLOYMENT INSURANCE DECISION
Hearing No. 00002001MD


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

The employe worked approximately 14 years as a computer specialist, most recently two years for the current owner of the company. The company distributed food for fast food businesses to warehouses. The employe's last day of work was January 14, 2000 (week 3). On February 4, 2000 (week 6) the employe applied for unemployment insurance.

In October of 1999 the employe was notified that the employer would be closing its Madison terminal, where the employe worked at the end of the year. The employe's employment was to continue through January 14, 2000 (week 3) so he could help close down and ship out the computers. The employe was not offered a transfer to another area. The employe was notified that he would be paid severance pay, calculated on the basis of his current salary of $800.00 per week for a total of 20 weeks. The employe was also informed that he was to be kept on payroll for two weeks subsequent to his release date and that he would receive a COBRA subsidy of 22 weeks at $100.00 per week.

On February 4, 2000 the employe received a letter from the employer advising him that the employer had filed a petition under Chapter 11 of the United States Bankruptcy Code asking the Bankruptcy Court for protection from its creditors while it reorganized its business and debt. The employe was informed that the employer could not honor the severance pay agreement until it obtained authorization from the Bankruptcy Court. However, on February 7, 2000 the employe received a payment from the employer that included the gross amount of $1,600.00 less taxes for two weeks continuance pay. On February 18, 2000 the employer deposited in the employe's account the gross amount of $1,600.00 less taxes. Shortly thereafter a representative of the employer's payroll department advised him that the last payment had been made in error and that no further payment would be made until the employer received a court order from the Bankruptcy Court. The employe testified that some of the money he received constituted a two week continuance of his pay as well as part of his COBRA subsidy.

The issue for review is whether the employe received dismissal or termination pay that should be treated as wages for benefit purposes for weeks 6 through 25 of 2000.

Wis. Stat. § 108.05(5) provides as follows:

"TERMINATION PAY. An employe's dismissal or termination pay shall, for the purposes of eligibility for benefits or partial unemployment under sub. (3), be treated as wages for a given week only if it has by the close of that week become definitely allocated and payable to the employe for that week, and the employe has had due notice thereof, and only if such pay, until fully assigned is allocated;

(a) At not less than the employe's approximate full weekly wage rate; or

(b) Pursuant to any other reasonable basis of allocation, including any basis commonly used to computing the termination pay of employes."

In answering the above-stated issue, the ALJ concluded that Wis. Stat. § 108.05(5) does not require actual payment of severance pay, but only that the employer be obligated to make the payment. The ALJ reasoned that if the US Bankruptcy Court ultimately rules that the employer does not have to pay the remaining severance amounts, the employe should contact the department to seek any adjustment in benefit payment.

The statute however specifically states that dismissal or termination pay shall be treated as wages when they "become definitely allocated and payable to the employe for that week." The commission is satisfied that as used in Wis. Stat. 108.05(5) "definitely allocated and payable" does not include sums that might be ordered paid at some future undetermined time, and in some undetermined amount, subject to rulings in another jurisdiction and forum.

Indeed, Black's Law Dictionary, 1128, (6th Edition, 1990), defines "payable" as:

"Capable of being paid; suitable to be paid; admitting or demanding payment; justly due; legally enforceable. A sum of money is said to be payable when a person is under an obligation to pay it. Payable may therefore signify an obligation to pay at a future time, but when used without qualification, the term normally means that the debt is payable at once, as opposed to `owing.' " (1)

In Wis. Stat. 108.05(5), the legislature qualifies the terms allocation and payable, but it does with the word "definitely". The commission is therefore satisfied that severance or termination pay under Wis. Stat. § 108.05(5), while it need not be "paid" must be more than merely a dischargeable debt a bankrupt employer may be required to pay.

The employe received notice on or about February 7, 2000, that the employer would not make the severance payments subject to the Bankruptcy Court order. Upon the filing of the bankruptcy petition, whether under Chapter 11 or otherwise, an "automatic stay" under 11 USC 362 prohibits all actions to collect debts during the bankruptcy proceedings. Further, there is no guarantee, even under Chapter 11 of the Bankruptcy Code, (2) that all creditors will be paid pursuant to the reorganization plan.

Consequently, the employe's severance pay can no longer be regarded as "payable" even though the employer may have had a contractual obligation to pay the employe which may yet be paid subject to bankruptcy order. The commission therefore concludes that the severance pay that has not been paid to the employe but remains subject to bankruptcy order cannot be regarded as wages within the meaning of Wis. Stat. § 108.05(5). Because it is unclear from the record whether the $2,079.00 the employe received during weeks 6 through 12 of 2000, is severance pay or another amount that should be treated as wages under Wis. Stat. § 108.05(5), the matter is remanded to the department for further investigation and proceedings if necessary.

DECISION

The decision of the administrative law judge is reversed. Accordingly, the employe is eligible beginning in week 6 of 2000, if otherwise qualified. The case however is remanded to the department for an investigation and further proceedings if necessary, to determine whether the monies the employe received after his termination are wages within the meaning of Wis. Stat. 108.05(5).

Dated and mailed September 14, 2000
dunhaja.urr : 135 : 1   BR 317   UW 950

/s/ David B. Falstad, Chairman

/s/ James A. Rutkowski, Commissioner

MEMORANDUM OPINION

The commission did not confer with the ALJ as to credibility. The commission does not disagree with any credibility assessment made by the ALJ. Rather, the commission reverses the appeal tribunal decision as a matter of law as to the phrase "definitely allocated and payable".

cc: CHICAGO CONSOLIDATED CORP

 


PAMELA I. ANDERSON, COMMISSIONER (dissenting):

I am unable to agree with result reached by the majority herein and I dissent. § 108.05(5) provides "Termination Pay. An employe's dismissal or termination pay shall, for purposes of eligibility for benefits for partial unemployment under sub. (3), be treated as wages for a given week only if it has by the close of that week become definitely allocated and payable to the employe for that week, and the employe has had due notice thereof, and only if such pay, until fully assigned is allocated: (a) At not less than the employe's approximate fully weekly wage rate; or (b) Pursuant to any other reasonable basis of allocation, including any basis commonly used in computing the termination pay of employes." There is no question in this case that the employe's severance pay was allocated at the employe's weekly wage and with notice to the employe.

The only potential dispute revolves around the use of the word "payable". The Supreme Court in Ronald W. Coutts, Sr. v. Wisconsin Retirement Board and City of Racine, 209 Wis. 2nd 655 (1997) has looked at this issue. On page 668 of Coutts , the Court writes "These definitions demonstrate that the term "payable" refers to sums presently owing or to be remitted in the future. The definitions do not support the proposition that the word "payable: includes sums that have been remitted in the past. It is axiomatic that a sum which is "paid" is no longer "payable." At page 670 the Court continued that "The Board's belief that the word "paid" is subsumed within the statutory term "payable" is also belied by the legislature's creation of statutes using both words. If the Board is correct that "paid" is a lesser included meaning of "payable," then the legislature has repeatedly engaged in the hollow gesture of using both terms in the same descriptive phrase. Such a construction of the statute is at odds with the rule that effect must be given to each word of a statute if possible, so that no portion of the statute becomes superfluous.Because the two words can and should be given distinct meanings, we conclude that "paid" does not come within the meaning of "payable."

One of the statutes the Court used was 108.04(2)(f) which reads "A claimant is ineligible to receive benefits for any week for which benefits are paid or payable because the claimant knowingly provided the department with a false social security number." Thus, I believe that the employer is not required to have paid the employe by the close of the week in question.

I believe payable means a legally enforceable debt. In this case the employer filed for a chapter 11 reorganization on a voluntary basis. The employer is not allowed to pay the employe unless the bankruptcy court gives its approval. Even if the court grants only 50 cents on the dollar, the employe would not likely be eligible for unemployment compensation in that week. Assuming the court grants permission for the employer to pay this debt, the employe will likely be required to pay back large sums of money. If it were clear that there was very little chance of being paid ever, I might think differently but this is not that case. Thus, I agree with the administrative law judge and was affirm his decision.

____________________________________
Pamela I. Anderson, Commissioner


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Footnotes:

(1)( Back ) This definition was adopted by the Wisconsin Supreme Court in Coutts v. Wisconsin Retirement Board and City of Racine, 209 Wis.2d 655, 667 (1997).

(2)( Back ) As the dissent notes, "the employer is not allowed to pay the employe unless the Bankruptcy Court gives its approval."