In re Loyal Order of Moose, Inc., Lodge # 1090 (2004-112)
2005 VT 31
[Filed 15-Mar-2005]
ENTRY ORDER
2005 VT 31
SUPREME COURT DOCKET NO. 2004-112
DECEMBER TERM, 2004
In re Loyal Order of Moose, Inc., } APPEALED FROM:
Lodge # 1090 }
}
}
} Employment Security Board
}
}
} DOCKET NO. BC-03-03-052-12
In the above-entitled cause, the Clerk will enter:
¶ 1. Employer Loyal Order of Moose, Inc., Lodge #1090, appeals pro
se from the Employment Security Board's decision charging its
experience-rating record with a share of unemployment benefits paid to one
of its employees. The Board found that employer provided employee with
irregular, as-needed, employment, and it "terminated" her after each
assignment. The Board thus concluded that employer was not entitled to the
benefit of 21 V.S.A. § 1325(f)(3), which provides that the
experience-rating record of a base-period employer shall not be charged if
an individual's employment with that employer has not been terminated or
reduced in hours. We conclude that the Board misinterpreted 21 V.S.A. §
1325(f)(3), and we therefore reverse.
¶ 2. Employer hired employee in 2001 to work as a part-time
waitress and bartender on an as-needed basis. The employee subsequently
obtained a full-time position elsewhere, but continued to work for employer
Moose as well. In February 2003, the employee left her full-time job, and
applied for unemployment benefits. Because employer Moose was a
base-period employer for employee, it was asked to complete a "Request for
Separation Information" form. On the form, employer indicated that it
continued to employ employee, her hours had not been reduced, and she
worked as a "spare - when needed - no hours committed." In March 2003, the
Department of Employment and Training notified employer that it would be
charged for a portion of the employee's unemployment compensation benefits.
Employer requested a hearing, and after a hearing, an appeals referee
concluded that employer had reduced the employee's hours, and thus, its
experience-rating record was properly charged for its share of benefits
paid to employee.
¶ 3. Employer appealed to the Employment Security Board. After a
hearing, the Board affirmed the referee's decision, concluding that
employer should be charged because it was not entitled to the benefit of 21
V.S.A. § 1325(f)(3), which exempts the charge where "the individual's
employment with that employer had not been terminated or reduced in hours."
The Board found that employer contacted its employee when it needed a spare
waitress or bartender, and at the end of each assignment, there was no
guarantee that employer would contact the employee again. Absent a regular
schedule, the Board reasoned, the parties' employment relationship did not
continue beyond each specific assignment, and the relationship was more
accurately described as a termination or layoff after each assignment. The
Board concluded that 21 V.S.A. § 1325(f)(3) was intended to provide relief
to employers who continued to employ individuals on the same, regular,
consistent basis as they had before the individuals separated from other
employers; it did not provide relief to employers, such as employer Moose,
who provided irregular, on call, as-needed, employment. The Board thus
upheld the referee's decision charging employer's experience-rating record
for a portion of the unemployment benefits paid to employee. Employer
appealed.
¶ 4. On appeal, employer argues that the Board erred in concluding
that it was not entitled to the benefit of 21 V.S.A. § 1325(f)(3).
Employer asserts that it did not terminate employee, nor did it reduce her
hours; rather, employee's work schedule has remained steady, and her
employment schedule is consistent with the purpose for which she was
hired-as an "as-needed" employee. Employer argues that the Board
erroneously concluded that employee was "terminated" after each assignment
because she was, and continues to be, an active employee.
¶ 5. On review, we will uphold the Board's decision unless it can
be demonstrated that its findings and conclusions are erroneous. Trombley
v. Dep't of Employment & Training, 146 Vt. 332, 334, 503 A.2d 537, 539
(1985). Absent a compelling indication of error, we defer to the Board's
interpretation of a statute that it is charged with executing. Sec'y,
Agency of Natural Res. v. Upper Valley Reg'l Landfill Corp., 167 Vt. 228,
238, 705 A.2d 1001, 1007 (1997). As discussed below, we conclude that the
Board erred in charging employer's experience-rating record for a share of
employee's unemployment benefits because employer was plainly entitled to
the benefit of 21 V.S.A. § 1325(f)(3).
¶ 6. Unemployment legislation is designed to remove economic
disabilities and distress that results from involuntary unemployment, and
assist those workers who become jobless for reasons beyond their control.
Adams v. Dep't of Employment Sec., 139 Vt. 413, 414, 430 A.2d 446, 447
(1981). Employers bear the financial burden of accomplishing these goals
because they are generally in a better position than individual workers to
bear a share of the economic cost, and because penalty assessments may tend
to prevent casual lay-off decisions. Hunt v. Dep't of Employment Sec., 142
Vt. 90, 92, 453 A.2d 391, 392 (1982). To provide a fund for unemployment
compensation claims, employers are taxed based on a portion of wages paid
in each calendar year, and on the basis of a benefit experience ratio
computed by the Commissioner. 21 V.S.A. §§ 1321(a), (b), 1326(a). The
benefit experience ratio is the quotient of the total benefits charged to
the employer over a three-year period divided by the total of the taxable
payroll for that same period. Id. § 1326(a). The ratio is structured so
that "employers who cause the need for compensation by terminating workers
should pay more taxes than those who do not cause such need." Sirloin
Saloon v. Dep't of Employment & Training, 151 Vt. 123, 125, 558 A.2d 226,
227 (1989).
¶ 7. Normally, when an eligible individual receives unemployment
benefits, the experience-rating record of each subject employer who
provided base-period wages is charged its proportionate share. 21 V.S.A. §
1325(f). The experience-rating record of a base-period employer is not
charged, however, if "as of the date on which the individual filed an
initial claim for benefits, the individual's employment with that employer
had not been terminated or reduced in hours." Id. § 1325(f)(3). The Board
concluded that 21 V.S.A. § 1325(f)(3) applied only to employers who
continued to employ individuals on the "same, regular, consistent basis" as
they did before the individuals separated from other employers. The Board
found that this did not include employer because it provided "irregular"
employment to employee. We reject the Board's interpretation of 21 V.S.A.
§ 1325(f)(3) because it contravenes the statute's plain language, and it
undermines the intent of the provision.
¶ 8. In construing a statute, our primary task is to give effect
to the intent of the Legislature. Sirloin Saloon, 151 Vt. at 126, 558 A.2d
at 228. When a statute is plain on its face, we enforce it according to
its terms. Id. If the meaning is unclear, we consider the whole statutory
scheme-the effects and consequences, and the reason and spirit of the law.
Id. We resolve any ambiguities against the taxing power, and in favor of
the taxpayer. Id. The plain language of 21 V.S.A. § 1325(f)(3) indicates
its applicability to employer here. Employer neither "terminated" its
employee, nor "reduced" her hours; it continued to employ her on the same
"as-needed" basis as it had before she filed a claim for unemployment
benefits.
¶ 9. The Kansas Court of Appeals addressed an analogous situation
in Manpower, Inc. v. State Employment Security Board of Review, 724 P.2d
690 (Kan. Ct. App. 1986). In that case, employer provided customers with
temporary, emergency, and part-time employees, and claimant worked in this
capacity on "various intermittent" days for employer. Id. at 691. At some
point, claimant did not report to employer for a new assignment, although
employer had work available. After working for other employers, claimant
filed a claim for unemployment compensation, and employer's
experience-rating was charged based on its liability as a base-period
employer. The board upheld the charge, explaining that work assignments at
various locations with different employers could not be construed as
continuous employment, but instead constituted different periods of
employment. According to the board, each time an assignment was completed
by the employee, the employee was laid off due to lack of work until a new
assignment was accepted.
¶ 10. The court rejected this position, and concluded that
employer's experience-rating should not be charged because the
employer-employee relationship was continuous in nature, and the completion
of a given work assignment did not result in the termination of the
employer-employee relationship. As the court explained, claimant accepted,
and contracted for, work assignments as the employee of employer when they
might be available, but that did not mean that when one work assignment was
completed, he had to make application to become an employee of employer for
a new assignment. "Availability of work assignments could obviously be
sporadic, but that is not the same thing as completion of one job and
rehiring for another." Id. at 693. The court explained that claimant
became an employee of employer without a guarantee of full-time employment
but with the understanding that work would be available as long as there
were customers for employer's services. Claimant had the option of not
reporting for work, but he also had the opportunity to work when there was
demand for employer's particular services. "In those circumstances," the
court stated, "the employment agreement was continuing at claimant's
option, as is the case with most employment calling for unskilled or
semiskilled labor." Id. at 695.
¶ 11. Although the Kansas court's decision turned on the
applicability of a different statutory provision than the one at issue in
this appeal, we find its employment relationship analysis persuasive. As
in that case, there is no support for a conclusion that employee here was
terminated after each work assignment with employer. It simply does not
follow that in the absence of a regular schedule, an employer-employee
relationship does not continue beyond each specific assignment. In this
case, as in the case discussed above, the parties have a continuing
employment relationship, dependent on the availability of work. Cf. In re
Platt, 130 Vt. 329, 332, 292 A.2d 822, 824 (1972) (explaining that, in a
nontechnical sense, claimant was not "unemployed" because he worked
regularly for two weeks each month to carry out a specific task for the
same employer and at the end of each assignment, he was not "discharged,"
to be "reemployed" the following month; it was plain from the facts that
the claimant had a "continuing part-time job" that he and his employer both
expected him to perform each month); see also Unified Sch. Dist. No. 500 v.
Womack, 890 P.2d 1233, 1242 (Kan. Ct. App. 1995) (concluding that each
substitute teaching assignment did not constitute separate term of
employment, and substitute teacher not deemed terminated or laid off at
conclusion of each assignment if there is reasonable assurance that
substitute will continue to be contacted for further assignments during
school year); Town of Mattapoisett v. Dir. of Div. of Employment Sec., 466
N.E.2d 125, 127 (Mass. 1984) (stating that to characterize part-time
employees, who were hired to work on an "as-needed" basis, as "partially
unemployed" when both parties understood at the beginning of the employment
relationship that the hours of employment were to be irregular and less
than full time, is to torture the plain meaning of the term). We reject
the Board's conclusion that the employee was "terminated" for purposes of
21 V.S.A. § 1325(f)(3) after each work assignment.
¶ 12. The legislative material provided by the Department indicates
that 21 V.S.A. § 1325(f)(3) was designed to remedy the unfair practice of
holding a part-time employer responsible for a proportionate share of an
employee's unemployment compensation benefits when that employer did
nothing to cause the employee's partial unemployment. See Proposed
Legislation Questionnaire, Kathleen C. Hoyt to Judith B. Stephany, November
18, 1988, at 1; see also Weight Watchers, Inc. v. Sec'y of Human Res., 592
P.2d 887, 889 (Kan. 1979) (statutory provision providing exemption for
employers who continue to provide employees with "regular part-time
employment" designed to combat inequity of charging the experience-rating
record of such employers). There is no suggestion that the Legislature
considered the inequity any less for employers who continue to provide the
same "on call" or "as-needed" employment as opposed to those who continue
to provide so-called "regular" employment. Section 1325(f)(3) does not
draw such a distinction, and the Board erred in reading this restriction
into the statute. See Gen. Teamsters Union Local No. 249 v. Commonwealth,
459 A.2d 1363, 1364-65 (Pa. Commw. Ct. 1983) (statute providing that
part-time employer's account "shall not be charged with compensation paid
to an employee separated from his full-time work while the part-time work
continues without material change" did not draw distinction between regular
and irregular or sporadic, part-time work, and suggesting that it would be
error to find that, because employees were not hired on a part-time regular
basis and did not have a regular and specific work schedule, statute was
inapplicable).
¶ 13. The Minnesota Supreme Court considered a similar issue in
Zoet v. Benson Hotel Corp., 274 N.W.2d 120 (Minn. 1978) (per curiam). In
that case, the court concluded that an employer's experience rating record
should not be charged for unemployment compensation benefits paid to five
banquet waitresses who continued to work for employer. Employees filed
unemployment compensation claims for those periods in which they were not
scheduled for work due to an insufficient number of banquets. The
then-applicable law provided that an employer's experience rating account
would be charged unless the employees were part-time employees who
continued to receive substantially equal part-time employment from their
base-period employer. Id. at 121. The court rejected the argument that
employer's experience rating record should be charged because the employees
were separated from their employment and, thus, they were not receiving
substantially equal part-time employment from their base-period employer.
As the court explained, this assertion ignored the reality of the parties'
employment relationship because, even after filing for unemployment
compensation benefits, the employees continued to work for employer on the
same basis as before. Id.
¶ 14. In reaching its conclusion, the court noted that the state's
employment security act was designed to encourage stable employment by
raising the employer's contribution rate through charging its experience
rating account. The court stated that the sole question before it was
whether this employer's account should be charged for the benefits paid to
its employees when the unemployment was not attributable to the employer.
"Fault," the court explained, "is a basic element to consider in
interpreting the [Employment Security] Act." Id. at 122. The court found
that, although employees worked less than they wanted, their unemployment
was attributable to employer only to the extent that employer did not have
sufficient business to schedule employees for the number of shifts that
they sought. Thus, because the employer was not the cause of the
employees' unemployment, the court found it inappropriate to charge its
experience rating account, and thus raise its contribution rate.
¶ 15. Although the Minnesota legislature later amended the
statutory provision at issue to require that employers provide weekly
part-time employment equal to at least ninety percent of the part-time
employment provided in the base-period to avoid a charge to their
experience-rating record, this does not undermine the basic principle
underlying the court's decision. Indeed, the underlying sentiment was
reiterated in New London Nursing Home, Inc. v. Lindeman, 382 N.W.2d 868,
871 (Minn. Ct. App. 1986). In that case, the court found that the revised
statute, as applied, violated the equal protection rights of an employer
who provided "stable," but not weekly, continuing employment to an
employee. The court explained that it was unconstitutional to charge the
experience-rating record of such an employer when the employee continued to
work for employer on a stable basis, and the employee was collecting
unemployment compensation benefits as a result of another employer's
actions, and due to no fault of employer, when the same burden was not
imposed under similar circumstances on an employer who provided weekly,
part-time employment. Id.
¶ 16. It would be equally unfair, and contrary to the purposes
underlying our unemployment statutes, to charge the experience-rating
record of employer in this case. As noted above, the benefit experience
ratio is designed so that those employers who have terminated employees pay
more than those who have not terminated employees. Charging employer's
account in this case would frustrate that purpose as employee continues to
work for employer on the same basis as before she filed her claim for
benefits. See Am. Sec. & Trust Co. v. Dist. Unemployment Comp. Bd., 376
A.2d 824, 826 (D.C. 1977) (to implement legislative intent underlying
unemployment compensation laws, unemployment compensation could be charged
only against accounts of former employers, and not against accounts of
continuing employers). Adopting the Board's interpretation would require
employer to subsidize the full-time employer who actually laid off
employee, when employer bears no responsibility for employee's
unemployment. This is plainly unfair to employer, and it also serves to
discourage employers from hiring part-time workers who have full-time
employment elsewhere. See id. (voicing same policy concerns); see also
Bloomsburg Univ. of Penn. v. Unemployment Comp. Bd. of Review, 692 A.2d
586, 590 n.7 (Pa. Commw. Ct. 1997) (noting that it would be unjust and
absurd to require employer to pay full-time wages to employee, while
concurrently paying a portion of employee's unemployment compensation
benefits that arose from conduct of employee and/or another employer over
which continuing remaining employer had no control, and stating that
"[s]uch a liability could deter potential second employers from hiring
anyone having an equal or better first job"). Because the Board's
interpretation of 21 V.S.A. § 1325(f)(3) conflicts with both the plain
language of the statute, and its underlying purpose, we reverse the Board's
decision charging employer's experience-rating record for a share of
employee's unemployment compensation benefits.
Reversed.
BY THE COURT:
_______________________________________
John A. Dooley, Associate Justice
_______________________________________
Denise R. Johnson, Associate Justice
___________________________________
Marilyn S. Skoglund, Associate Justice
_______________________________________
Paul L. Reiber, Associate Justice
_______________________________________
Frederic W. Allen, Chief Justice (Ret.),
Specially Assigned
.