JENNIFER L LEMA, Employee
HARLEY DAVIDSON MOTOR CO, Employer
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:
The employee has worked for about four years and twenty-one weeks as a machinist for the employer, a motorcycle manufacturer. She was laid off and filed for benefits from February 11, 2007 (week 7) to March 3, 2007 (week 9).
On February 23, 2007 (week 8), the employee received a short term incentive plan (STIP) check in the amount of $1,907.50.
The employee testified that the STIP payment is based on the company's performance in the prior year including the employer's earnings, quality and reaching certain goals. It is not based on production. Payment is also based on the number of days the employee worked in 2006.
The employee would have received the STIP payment even if she had retired on January 1, 2007. The employee did not have to be working during week 8 to receive the STIP payment.
The issue to be decided is whether the STIP payment the employee received should reduce her benefits in any of the weeks that she was unemployed.
Wisconsin Statute § 108.02(26)(a) defines wages to include every form of remuneration payable, for a given period, or payable within a given period, by an employing unit to an individual for performance of personal services. There is no dispute that the STIP payment was remuneration for performance of personal services in 2006 and, as such, must be considered "wages" for unemployment insurance purposes.
Wisconsin Statute § 108.05(3) 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 rate shall be reduced by 67 percent of the remaining amount." The question is when the employee "earned" the STIP payment.
In finding that the STIP payment reduced the employee's unemployment benefits in week 8 of 2007, the ALJ reasoned:
The Labor and Industry Review Commission has held that the general statutory provision of Wis. Stat. § 108.05(3) applies and that a lump sum bonus is earned in the week in which it is payable by that week. James P. Ali v. Golden Books Publishing Co., Inc., UI Dec. Hearing No. 99603262RCG (LIRC, Feb. 17, 2000).
The STIP the employee received is a payment for past personal services and was made by the employer to the employee in addition to the employee's normal wages. As such, for unemployment insurance purposes, the STIP is a bonus payment. The department treats a bonus payment as wages for the week in which the employee becomes eligible for the bonus and has enough information to calculate the amount of the bonus. If the employee does not know when she becomes eligible for the bonus or does not have enough information to calculate the amount of it, the bonus is reportable for the week in which the employer notifies the employee of her eligibility and the amount of the bonus, or for the week in which the bonus is paid, whichever is first.
The department's policy on bonus payment is as follows:
C. Bonus
A bonus is a payment made by an employer to an employee in addition to the employee's normal wages. It is generally an incentive or reward. A bonus may be based on length of service, attendance, productivity, etc.
A bonus is treated as wages for the week in which the employee becomes eligible for the bonus and has enough information to calculate the amount of the bonus. If the employee does not know when he/she becomes eligible for the bonus or does not have enough information to calculate the amount of it, the bonus is reportable for the week in which the employer notifies the employee of his or her eligibility and the amount of the bonus, or for the week in which the bonus is paid, whichever occurs first.
An attendance bonus may be paid to an employee if he/she performs all of the work that he/she is scheduled for within a calendar month. The claimant who meets the attendance requirements knows he/she is entitled to the bonus as the end of that month. If the claimant is filing for partial unemployment insurance benefits, the bonus must be reported as wages for the week that includes the end of that month if the claimant knows the amount of the bonus or has enough information to calculate the amount of the bonus.
Profit sharing, in general, is a variation of a bonus and should be accorded the same treatment as other types of bonuses. Profit sharing is wages only if the amount of the profit sharing is based on the earnings of the individual or on the employee having performed services for the employer during the time frame the "profit'" was made by the employer. Profit sharing will be reported in the week in which the claimant is told the amount of the profit sharing bonus.
Disputed Claims Manual, Vol. 3, Part VII, Ch. 8, pp. 10-11.
Thus, under the department's policy, a bonus is treated as wages for a week in which the employee is eligible/knows she is eligible for the bonus, and knows the amount of the bonus. Under the department's policy, the employee knew she was eligible for the bonus and the amount of the bonus when she received the check in week 8 of 2007. However, the department's internal policy is not a rule. When the employee is told she is eligible for a bonus and the amount of the bonus does not establish when the bonus was "earned."
In addition, the ALJ's reliance on the commission's decision in Golden Books is misplaced. In Golden Books, the employer had been having financial difficulties. As a result, it asked the bargaining units, which represented the employees, to accommodate the employer in order to limit the employer's exposure to excessive overtime pay. The unions agreed and contracts were established whereby the employees would receive, in lieu of an across-the-board wage increase, "a lump-sum payment equivalent to 2.0% of scheduled Calendar Year 1999 straight-time hourly wages, payable in January 1999." The economic benefit to the employer in allowing the wage raise to be paid in a lump sum and at standard hours was that the employees would be giving up that pay raise for any future overtime hours. The bonus amount was reportable as taxable income. In Golden Books the commission stated:
The commission finds that the bonus was "earned" in week 4 of 1999. That is, it was earned as of week 4 of 1999 and therefore it is treated as wages solely in that week. The bonus is earned not by working in the upcoming year, indeed not by working even another day, but by being employed by the employer in week 4 of 1999. It is paid and payable by the employer to the employe whether or not the employe worked for the employer in the prior week, whether or not the employe works for the employer after that week. The employer has no right to seek return of the payment if an employe quits after week 4 of 1999. There is no provision that it is prorated based on the number of hours the employe actually works in a week, or is prorated based on the number of hours the employe actually works in the calendar year, in which the payment is received. [Footnote omitted.]
The language of the contract at issue here provides for "a lump-sum payment equivalent to 2.0% of scheduled Calendar Year 1999 straight-time hourly wages, payable in January 1999." While the contract language provides that the lump-sum amount is the equivalent of 2 percent of 52 weeks of work in the upcoming year, it also provides that the lump sum is payable once in January of 1999. Thus, as long as an employe is employed on the date of the lump-sum payment, the employe is entitled to the full amount of the lump-sum payment. The contracts do not provide for division or proportionate distribution of the lump-sum payment under any circumstances. For example, there is no evidence that an employe who begins work before the payment and leaves shortly after the bonus payment can be required to repay a portion of the bonus, nor does the contract indicate that any portion of the lump-sum payment is obtainable if an employe begins working for the employer, for example, the day or week after the bonus is paid and works the remainder of the year.
In Golden Books, the commission found the payment earned in the week it was paid because the employees "earned" the bonus by being employed by the employer in that week. Even if the employees had been paid the bonus in a later week, it was "earned" in week 4 of 1999. The employees had an irrevocable right to the payment based on their employment in week 4 of 1999. Thus, in Golden Books, the week the employees earned the bonus and the week the employer paid the bonus were the same. In this case, the employee earned the STIP payment based on the company's performance and services performed in 2006. The employee was entitled to that bonus irrespective of whether she was employed by the employer in week 8 of 2007. The employee did not earn the bonus based on services performed for the employer in week 8 of 2007, or based on her status as an employee in week 8 of 2007. The focus should be on services and conditions that led to the employee's entitlement to the payment, and not on when the employer decided to calculate the amount of the bonus and notify the employee of the amount of the payment.
The commission therefore finds that in week 8 of 2007, the employee did not earn wages reducing her benefit entitlement in that week, within the meaning of Wis. Stat. § 108.05(3).
The decision of the administrative law judge is reversed. Accordingly, the employee is eligible for benefits beginning in week 8 of 2007, if she is otherwise qualified. There is no overpayment as a result of this decision.
Wisconsin Statute § 108.09(6)(c) provides that, for reasons it deems sufficient, the commission may set aside any final determination of the department or appeal tribunal or commission decision within 2 years from the date thereof upon grounds of mistake or newly discovered evidence, and take action under par. (d). Wisconsin Statute § 108.09(6)(d), provides that the commission may affirm, reverse, modify or set aside the decision on the basis of the evidence previously submitted, may order the taking of additional evidence, or it may remand the matter to the department for further proceedings. Pursuant to authority granted in Wis. Stat. § 108.09(6)(c) and (d), the commission sets aside the appeal tribunal decisions in Stanford v. Harley-Davidson Motor Co., UI Dec. Hearing No. 07601901MW (May 4, 2007), Rogers v. Harley-Davidson Motor Co., UI Dec. Hearing No. 07605331MW (Sep. 18, 2007) and Meifert v. Harley-Davidson Motor Co., UI Dec. Hearing No. 07004046MD (Oct. 12, 2007) and remands those cases to the hearing office for further proceedings and decisions on the merits of the cases.(1)
Dated and mailed October 26, 2007
lemajen . urr : 132 : 1 : UW 965
/s/ James T. Flynn, Chairman
/s/ Robert Glaser, Commissioner
/s/ Ann L. Crump, Commissioner
NOTE: The commission did not consult with the ALJ who presided at the hearing regarding his impressions of witness credibility and demeanor. The commission has not reversed the ALJ based on the credibility of the employee but upon reaching a different legal conclusion than that reached by the ALJ.
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