In re Loyal Order of Moose, Inc., Lodge # 1090

In re Loyal Order of Moose, Inc., Lodge # 1090 (2004-112); 178 Vt. 510;
872 A.2d 345

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