CANDICE DANA V AMERICAN YOUTH FOUNDATION
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STATE OF MICHIGAN
COURT OF APPEALS
FOR PUBLICATION
June 24, 2003
9:00 a.m.
CANDICE DANA,
Claimant-Appellee,
v
No. 237919
Grand Traverse Circuit Court
LC No. 01-021595-AE
AMERICAN YOUTH FOUNDATION,
Employer,
and
CONSUMER and INDUSTRY SERVICES,
DEPARTMENT OF UNEMPLOYMENT,
Updated Copy
August 15, 2003
Defendant-Appellant.
Before: Smolenski, P.J., and Griffin and O'Connell, JJ.
SMOLENSKI, P.J.
This case arose from the denial of a claim by Candice Dana for unemployment
compensation following her service in an AmeriCorps program. Appellant Unemployment
Agency, Department of Consumer and Industry Services, appeals by leave granted from the
circuit court order that reversed the Employment Security Board of Review's decision denying
claimant unemployment-insurance benefits. We affirm.
Claimant served with the Rural Strategic Action Initiative (RSAI) from October 30, 1995,
to August 31, 1996. The American Youth Foundation1 (AYF) administered the RSAI project as
an AmeriCorps program. During her service, claimant served as "a model and a leader of the
1
American Youth Foundation is not a participating party in this appeal. Therefore, references to
"appellant" in this opinion refer to Unemployment Agency, Department of Consumer and
Industry Services.
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AmeriCorps Program." She recruited volunteers to begin new projects and then trained them to
take over those projects. Claimant received a monthly stipend, referred to as a "living
allowance," totaling $7,945 over the course of her service. She also qualified for health
insurance and a child-care allowance during her service. At the end of her term, claimant
received an education award of $4,725 to be used within seven years of the completion of her
service.
When claimant's term of service with the RSAI ended, she applied for unemployment
benefits, and the Michigan Employment Security Agency denied her application.2 Claimant
requested a hearing before a referee. Following various motions and procedural delays, the
details of which are unimportant to this appeal, the hearing referee affirmed the agency's
decision. The referee found that federal authority prohibited finding an employer-employee
relationship between the AYF and claimant. Thus, the referee concluded, claimant's services
were not performed in employment covered by the Michigan Employment Security Act (MESA),
MCL 421.1 et seq.
Claimant appealed to the Employment Security Board of Review. The board reversed the
referee's decision, concluding that federal law was not controlling. The board applied Michigan's
"economic realities" test and determined that claimant had been the AYF's employee. Thus,
because claimant's employment was covered under MESA, she was entitled to benefits.
Appellant moved for rehearing, and the board reversed its earlier decision. The board
determined that the "economic realities" test indicated claimant had not been the AYF's
employee because the AYF had not directed and controlled her activities. The board found that
the AYF did not hire, fire, or have the right to discipline claimant; it merely served as a fiscal
agent for the project in which claimant participated. Therefore, claimant was not entitled to
unemployment benefits.
Claimant appealed the board's second decision, and the circuit court reversed, effectively
affirming the board's first decision. The court also applied the "economic realities" test and
found that claimant had been in an employer-employee relationship with the AYF during her
term of service. The court further concluded that the RSAI project was not a work-relief or
work-training program exempt from unemployment coverage under MCL 421.43(o)(v). The
Unemployment Agency, Department of Consumer and Industry Services, appealed.
The narrow issue presented on appeal is whether the court erred in determining that
AmeriCorps' programs are not work-relief or work-training programs exempt from
2
According to the Employment Security Board of Review, the agency denied claimant benefits
on two grounds: (1) her service with AmeriCorps was not "covered employment," and (2) she did
not have sufficient credit weeks. Only the first ground is at issue in this appeal.
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unemployment coverage under MCL 421.43(o)(v).3 This Court has limited review of a trial
court's review of an agency determination. This Court must determine "whether the lower court
applied correct legal principles and whether it misapprehended or grossly misapplied the
substantial evidence test to the agency's factual findings." Boyd v Civil Service Comm, 220 Mich
App 226, 234; 559 NW2d 342 (1996). This standard of review is indistinguishable from the
"clearly erroneous" standard of review. Id. at 234-235.
However, questions of statutory interpretation are reviewed de novo by this Court.
Robertson v DaimlerChrysler Corp, 465 Mich 732, 739; 641 NW2d 567 (2002). The primary
goal in construing a statute is to ascertain and give effect to the Legislature's intent. Id. at 748.
This Court looks first to the specific language of the statute, because the Legislature is presumed
to have intended the meaning it has plainly expressed. Id. If the expressed language is clear,
judicial construction is neither required nor permitted, and the statute must be enforced as
written. Id.
Employees who become involuntarily unemployed may qualify for unemployment
compensation under MESA. The act is "remedial and was designed to 'safeguard the general
welfare through the dispensation of benefits intended to ameliorate the disastrous effects of
involuntary employment.'" Korzowski v Pollack Industries, 213 Mich App 223, 228-229; 539
NW2d 741 (1995), quoting Tomei v Gen Motors Corp, 194 Mich App 180, 184; 486 NW2d 100
(1992). Therefore, the act should be liberally construed to achieve its intended goal. Empire
Iron Mining Partnership v Orhanen, 455 Mich 410, 417; 565 NW2d 844 (1997).
MCL 421.42 defines "employment" for purposes of determining eligibility for
unemployment benefits, while MCL 421.43 describes types of service that are excluded from the
term "employment." Specifically, MCL 421.43(o)(v) provides:
3
Appellant has not challenged the court's finding that an employer-employee relationship existed
between plaintiff and the AYF. Thus, appellant's arguments on this matter are irrelevant to our
analysis.
However, we address one point on this subject for clarification. Under the National and
Community Service Act, 42 USC 12501 et seq., an AmeriCorps participant "shall not be
considered to be an employee of the program in which the participant is enrolled." 42 USC
12511(17)(B). At first blush this would seem dispositive, but, as the court in Twombly v Ass'n of
Farmworker Opportunity Programs, 212 F3d 80, 84 n 4 (CA 1, 2000), noted, "[T]he U.S.
Department of Labor considers participants not to be federal employees for purposes of the
federal unemployment compensation system, but leaves it to the states to determine eligibility for
the state unemployment systems."
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For purposes of section 42(8), (9), and (10),[4] "employment" does not
apply to service performed in any of the following situations:
(v) As part of an unemployment work-relief or work-training program
assisted or financed in whole or in part by a federal agency or an agency of a state
or political subdivision of a state by an individual receiving the work relief or
work training.
Appellant argues that because AmeriCorps was created as a job-training program,
claimant's work was performed as part of a government-funded work-training program, which is
specifically excluded from eligibility for unemployment insurance benefits under MCL
421.43(o)(v). We disagree.
AmeriCorps was created under the National and Community Service Act (NCSA), 42
USC 12501 et seq. The AYF, in turn, administered the AmeriCorps program in which claimant
participated. The parties do not dispute that the AYF was financed at least in part by government
funds. In enacting the NCSA, Congress made the following findings:
(1) Throughout the United States, there are pressing unmet human,
educational, environmental, and public safety needs.
(2) Americans desire to affirm common responsibilities and shared values,
and join together in positive experiences, that transcend race, religion, gender,
age, disability, region, income, and education.
(3) The rising costs of postsecondary education are putting higher
education out of reach for an increasing number of citizens.
(4) Americans of all ages can improve their communities and become
better citizens through service to the United States.
(5) Nonprofit organizations, local governments, States, and the Federal
Government are already supporting a wide variety of national service programs
that deliver needed services in a cost-effective manner.
(6) Residents of low-income communities, especially youth and young
adults, can be empowered through their service, and can help provide future
community leadership. [42 USC 12501(a).]
4
MCL 421.42(8), (9), and (10) refer to service performed in classified civil service, for certain
educational entities, for certain political subdivisions of the state, for a state hospital, or for
certain religious, charitable, or other organizations the Federal Unemployment Tax Act, 26 USC
3301 et seq., excludes from "employment" under 26 USC 3306(c)(8).
-4-
In addition, Congress described the purpose of the NCSA as follows:
It is the purpose of this Act to—
(1) meet the unmet human, educational, environmental, and public safety
needs of the United States, without displacing existing workers;
(2) renew the ethic of civic responsibility and the spirit of community
throughout the United States;
(3) expand educational opportunity by rewarding individuals who
participate in national service with an increased ability to pursue higher education
or job training;
(4) encourage citizens of the United States, regardless of age, income, or
disability, to engage in full-time or part-time national service;
(5) reinvent government to eliminate duplication, support locally
established initiatives, require measurable goals for performance, and offer
flexibility in meeting those goals;
(6) expand and strengthen existing service programs with demonstrated
experience in providing structured service opportunities with visible benefits to
the participants and community;
(7) build on the existing organizational service infrastructure of Federal,
State, and local programs and agencies to expand full-time and part-time service
opportunities for all citizens; and
(8) provide tangible benefits to the communities in which national service
is performed. [42 USC 12501(b).]
Appellant believes that these characteristics show a work-relief or work-training program,
asserting "there can be no doubt that, since Congress enacted NCSA, in large measure, for its
anti-poverty and work-training attributes, it was squarely within the purview of excluded services
as set forth in section 43(o)(v) of the MES Act."
Michigan courts have not addressed whether AmeriCorps is a work-relief or worktraining program excluded from "employment" under MESA, nor have they determined what
constitutes a work-relief or work-training program. However, the Federal Unemployment Tax
Act, 26 USC 3301 et seq., includes a work-relief and work-training exclusion nearly identical to
the Michigan provision. Specifically, the federal provision exempts from mandatory state
unemployment coverage services performed "as part of an unemployment work-relief or worktraining program assisted or financed in whole or in part by any Federal agency or an agency of a
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State or political subdivision thereof or of an Indian tribe, by an individual receiving such work
relief or work training." 26 USC 3309(b)(5).
Because the Michigan provision closely mirrors the federal exclusion, interpretations of
the federal statute provide highly persuasive, although not binding, authority. Sharp v City of
Lansing, 464 Mich 792, 819; 629 NW2d 873 (2001). Although we were unable to find case law
interpreting "work relief" or "work training" as used in the federal exclusion, a policy statement
issued by the United States Department of Labor (USDOL), Employment and Training
Administration provides guidance.5 This Court generally defers to the interpretation of a statute
by the administrative agency responsible for administering it, unless that interpretation is clearly
wrong. Faircloth v Family Independence Agency, 232 Mich App 391, 406; 591 NW2d 314
(1998).
The USDOL construed "work-relief" and "work-training" programs as distinct exclusions
and described the distinction as follows:
Work-relief projects are primarily intended to alleviate the disadvantaged
status of the individual by providing employment. For "work-training," there is
no requirement that the individual must be economically disadvantaged. Instead,
work-training focuses on improving the individual's employability. (This does
not, however, preclude the possibility that some work-training programs be
limited to the economically disadvantaged.)
In addition, the USDOL provided a list of the distinguishing characteristics of these programs:
A. Both of the following characteristics must be present in either workrelief or work-training:
(1) the employer-employee relationship is based more on the participants'
and communities' needs than normal economic considerations such as increased
demand or the filling of a bona fide job vacancy;
(2) the products or services are secondary to providing financial
assistance, training, or work-experience to individuals to relieve them of their
unemployment or poverty or to reduce their dependence upon various measures of
relief, even though the work may be meaningful or serve a useful public purpose.
5
USDOL Unemployment Insurance Program Letter No. 30-96 is available on the internet on the
federal
Department
of
Labor's
web
site:
<http://www.doleta.gov/regs/
fedregs/notices/96_28656.htm>.
-6-
B. A work-relief or work-training program must have one or more of the
following characteristics:
(1) the wages, hours, and conditions of work are not commensurate with
those prevailing in the locality for similar work;
(2) the jobs did not, or rarely did, exist before the program began (other
than under similar programs) and there is little likelihood they will be continued
when the program is discontinued;
(3) the services furnished, if any, are in the public interest and are not
otherwise provided by the employer or its contractors; and
(4) the jobs do not displace regularly employed workers or impair existing
contracts for services.
C. The following characteristic must be present only for work-relief
programs:
The qualifications for the jobs take into account as indispensable factors
the economic status, i.e., the standing conferred by income and assets, of the
applicants.
The USDOL declined to name programs that meet these characteristics, stating, "the
characteristics of the program will determine whether or not they must be covered."
In this case, claimant's AmeriCorps service embodied several of these characteristics.
First, the evidence indicates that claimant's employment was based more on her needs and the
communities' needs than on typical economic considerations. There was no indication that the
AYF hired claimant to fill a bona fide job vacancy or meet increased demand. The common
thread through all the stated purposes is a desire to encourage service to communities in need,
and the NCSA also aims to increase participants' educational opportunities. Additionally,
claimant's service was in the public interest, and AmeriCorps' goals include not displacing
employed workers, 42 USC 12501(b)(1), both of which are characteristic of a work-training
program. Furthermore, the qualifications for participating in the AmeriCorps program as
administered by the AYF take into account the applicants' economic status by aiming for
seventy-five percent of participants to come from the low-income areas the programs served, a
characteristic of a work-relief program.
However, AmeriCorps does not satisfy a key element in order to be considered a workrelief or work-training program. According to the USDOL's policy statement, a mandatory
characteristic of either a work-relief or work-training program is that "the products or services are
secondary to providing financial assistance, training, or work-experience to individuals to relieve
them of their unemployment or poverty or to reduce their dependence upon various measures of
relief . . . ." The NCSA's stated purposes do not support such a characterization of AmeriCorps.
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The NCSA's primary stated purpose was to encourage service to community, not to provide job
training or help alleviate poverty. In fact, there is no indication that these were intended
objectives of the NCSA, and appellant provides no support for its contrary assertion.
Therefore, we conclude that the AmeriCorps programs cannot be classified as work-relief
or work-training programs, and appellant cannot deny claimant unemployment compensation on
this basis. Accordingly, we hold that the circuit court did not err in reversing the board's
decision.
Affirmed.
/s/ Michael R. Smolenski
/s/ Richard Allen Griffin
/s/ Peter D. O'Connell
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