P O BOX 8126, MADISON, WI 53708-8126 (608/266-9850)



Hearing No. 10402551AP

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, and for the reasons described in the attached Memorandum Opinion, the commission makes the following:


The decision of the administrative law judge is set aside. This matter is remanded to the department for a new hearing and decision in this matter, in which Northeast Wisconsin Technical College shall be made a party, with notice of the hearing and the opportunity to participate as a party. Both the merits, and all overpayment issues (see attached NOTE), should be taken up at this new hearing.

Dated and mailed November 30, 2010
griesba . urr : 110 : PC 715

/s/ James T. Flynn, Chairperson

/s/ Robert Glaser, Commissioner

Ann L. Crump, Commissioner


Facts -- The employee worked as a seasonal gardener for Northeast Wisconsin Technical College (NWTC). She started a benefit claim with week 2 of 2010. Her benefit entitlement was based almost entirely on base period wages from NWTC, and it was the only employer potentially liable to be charged for her benefits.

In the spring of 2010, NWTC decided that it was going to move its current seasonal employees to a payroll service, Seek Career/Staffing Inc. ("Seek"). It told the employee that to continue doing the same job she had been doing for NWTC, she would have to go to Seek and sign up to become its employee. The employee did go to Seek and complete an employment application, but she then declined to fill out some other forms and left without completing them. She did not report for work thereafter and did not hear anything further from either NWTC or Seek.

The department then conducted an investigation, in which the adjudicator had contacts with and got information from the employee, Seek, and NWTC. On May 27, 2010 an initial determination was issued finding that the employee had refused an offer of work, without good cause, within the meaning of Wis. Stat. § 108.04(8)(a), that her benefit eligibility was suspended, that an overpayment of $548 resulted, and that the overpayment could not be waived.

Although Seek had never been an employer of the employee and thus faced no potential impact on its interests, and although NWTC was the base period employer of the employee and would be liable for UI benefits if allowed, the determination listed only Seek as an employer, and NWTC was not sent a copy. When the employee filed a timely appeal of the determination, the "Hearing Instructions And Document Packet" sent out by the department listed only Seek as the employer, and no copy was sent to NWTC. Similarly, when the department issued its Notice of Hearing, it again listed only Seek as the employer and did not send a copy to NWTC.

The hearing on the employee's appeal was held on September 27, 2010. The employee appeared in person, represented by counsel. When Seek was contacted by telephone, its director of human resources stated that he was not prepared to present any evidence or otherwise take part in the hearing, and the call was then ended. The hearing proceeded with only the employee participating. The employee testified and presented testimony from another witness. The ALJ then issued a decision on October 1, 2010, which reversed the determination, concluding that "the employer" (the reference being to Seek) did not meet its burden to establish that the employee was given a bona fide offer of suitable work.

As had occurred with the initial determination and the notices, the ALJ's decision listed only Seek as the employer in the caption, and NWTC was not sent a copy.

Both Seek and NWTC filed petitions for commission review, arguing that NWTC should have been informed of the hearing and allowed to participate because it was the affected employer.

Discussion - The UI Act provides that copies of determinations shall be mailed to the last-known address of each of "the parties," and that "any party to a determination" may request a hearing as to any matter in that determination. Wis. Stat. § 108.09(2)(d), (2r). However, it does not indicate who is or should be considered a "party." It seems clear that in a benefit case, the affected benefit claimant will always need to be considered a party. The difficult question is in deciding which employer(s) should be considered parties where there are more than one with some involvement in or connection to the case. Neither the UI Act nor the department's administrative rules provide any instructions on how to answer that question.

The department has addressed the question in the Employer Party of Interest section of its "Disputed Claims Manual". More often than not, that section specifies that it is the "issue employer" which is to be considered the "employer party in interest." The term "issue employer" is not defined in the Manual, but it seems intended to refer to "the employer who is a party to the issue" - in other words, the employer involved with the facts that give rise to the issue, rather than the employer whose interests are affected by the how the issue is resolved. It appears that in this case, Seek was treated as the "employer party of interest" pursuant to the manual's Employer Party of Interest provisions, because it was the employer involved with the purported job offer. However, internal policies of the department reflected in its various manuals have not been formally promulgated as administrative rules pursuant to the requirements of Chapter 227, and they cannot be considered to have the force and effect of law. Lema v. Harley Davidson Motor Company (LIRC, October 26, 2007), McClelland v. Harley Davidson Motor Company (LIRC, October 26, 2007), Jones v. Seek (LIRC, July 6, 1999), Kerry Stamm (LIRC, Jan 12, 2005). Thus, the fact that the department's Disputed Claims Manual may have dictated that Seek, rather than NWTC, should be treated as the employer party here, is irrelevant.

The legal considerations which are relevant, were discussed in Prom v. Klemm Tank Lines (LIRC, Aug. 28, 2003), a case presenting a situation (and an issue) very similar to this one. In Prom, one employer, U.S. Oil Co., was selling part of its business to another employer, Klemm Tank Lines, with which it had an agreement that that the purchasing employer would offer jobs to drivers being laid off by the selling employer. Klemm did make such job offers, but Prom, a driver who had been laid off by U.S. Oil, refused Klemm's offer of employment, and began claiming benefits. His claim was based on his base period employment with U.S. Oil. In Prom, the department treated the offering employer (Klemm) as the "employer party of interest," just as in this case it treated Seek as the "employer party of interest." Thus, the department did not list U.S. Oil on the determination and did not send it a copy. The matter eventually came before the commission, where the issue was whether U.S. Oil should have been allowed by the department to participate as a party in the adjudication of the issue about whether Prom had good cause to refuse employment with Klemm. The commission held that it should have been, and that the lower authority decisions in the matter should be set aside and the matter remanded for further proceedings in which U.S. Oil would be allowed to participate.

In Prom, the commission looked to Cornwell Personnel Associates, Ltd. v. DILHR and Truszynski, 92 Wis. 2d 53, 284 N.W.2d 706 (Ct. App. 1979). In Cornwell, as here, the employer whose account was affected by the benefit claim and which was thus potentially affected by the resolution of the eligibility issue presented, was not notified of the determination by the department; instead, the department made another employer, which had knowledge of the facts relevant to the eligibility issue, the employer in the case. While in the posture in which it was presented to the court Cornwell involved a different ultimate question (that being whether the unaffected employer was "aggrieved" such that it could seek court review), the Court of Appeals noted the fact that "the true employer-interest...was not notified of any of the hearings or proceedings within the department, despite the fact that its reserve account was the only one affected by any of those proceedings," and it specifically stated in regard to that fact, that

we cannot condone a system which does not inform a party in interest of proceedings affecting that interest...

92 Wis. 2d at 62. The commission also noted the holding of Brandt v. LIRC, 166 Wis. 2d 623, 480 N.W.2d 494 (1992), that an employer is an "adverse party" within the meaning of Wis. Stat. § 102.23(1)(a) governing judicial of review of commission decisions, because of the effect of eligibility determinations on the UI account of that employer. See, 166 Wis. 2d at 632-34. Finally, the commission looked to the decision of the Wisconsin Supreme Court in Boynton Cab v. Giese and Ind. Comm., 237 Wis. 237, 296 N.W. 630 (1941), which indicated that the interest of an employer in not having their unemployment contribution rate affected by the granting of an employee's benefit claim, was a "property" interest sufficient to bring into play the protections of the due process clause, including the right to appeal a hearing. It further noted the principle that statutes should if possible be interpreted so as to avoid constructions giving rise to serious doubts about constitutionality, see, Swanke v. Oneida County, 265 Wis. 92, 99, 60 N.W.2d 756, 62 N.W.2d 7 (1953), and it noted that a construction of the phrase "party to a determination" and similar terms in Wis. Stat. § 108.09 as including employers whose reserve accounts are potentially affected by determinations, would be permissible and would avoid the doubts raised by a construction which allowed such employers to be denied the right to appeal and hearing.

The commission believes that the rationale of Prom is fully applicable here. On that basis it has concluded that the decision of the ALJ must be set aside and the matter be sent back for re-hearing and re-decision, with NWTC given formal notice and opportunity to participate as a party in interest.

NOTE: The initial determination issued in this matter resulted in an overpayment of $548 in regular UI benefits as well as an overpayment of an amount of Federal Additional Compensation (FAC) benefits. The initial determination found that that overpayment could not be waived because the erroneous payments were not the result of departmental error and/or were the result of the claimant's failure to provide correct and complete information to the department. The effect of the first Appeal Tribunal Decision, which reversed the initial determination and held that benefits were allowed, was to eliminate this overpayment. The effect of this decision to set aside that Appeal Tribunal Decision, is to return matters to the state at which they were before the Appeal Tribunal decision was issued - which includes the suspension of benefit eligibility, and the existence of that overpayment.

As it was in the original hearing, in the re-hearing which is being ordered herein, one issue that should be taken up involves that overpayment and whether it can be waived.

In addition to the foregoing, though, there is another overpayment waiver issue which should also be addressed. If the new Appeal Tribunal Decision which will be issued in this matter after the re-hearing is a decision to affirm the initial determination that suspended benefit eligibility, this will create an additional overpayment, corresponding to the benefits which were paid as a result of the first Appeal Tribunal Decision which allowed benefits. Because this possibility exists, the question of whether any such additional overpayment was the result of departmental error, employee fault, or employer fault, should also be taken up at the re-hearing ordered herein.

cc: Attorney Sarah J Kons
Petit & Dommershausen SC

Northeast Wisconsin Technical College
c/o Kim Jameson

[ Search UC Decisions ] - [ UC Digest - Main Index ] - [ UC Legal Resources ] - [ LIRC Home Page ]

uploaded 2011/01/14