Allen v. Agra Industries Insurance – 11.07

Allen v. Agra Industries Insurance
Digest no. 11.07

Sections 29(1)(a), 29(5)

Cite as: Allen v. Agra Industries Ins, 2009 BR 203891W (B2009-00698-RO1).

Appeal pending: No
Claimant: John V. Allen
Employer: Agra Industries Insurance
Docket no.: B 2009-00698-RO1-203891W
Date of decision: July 20, 2011

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HOLDING: Section 29(5) applies to preclude Claimant from being disqualified from benefits under Section 29(1)(a) even when the claimant voluntarily left “a Michigan job to accept work in another state” or “an out-of-state job to accept work in Michigan.”

FACTS:  Claimant lived in Gaastra, Michigan. On March 24, 2008, Claimant obtained a job with the Employer in Merrill, Wisconsin. The distance between two cities is approximately 100 miles. To ease the burden of the long commute, Claimant decided to maintain two households– keeping his home in Gaastra, while also renting an apartment in Merrill. Because of the financial burden of maintaining two households, Claimant sought employment closer to his home in Gaastra. Claimant eventually secured a new job in Kingsford, Michigan, and he resigned from the Employer’s job on September 22, 2008. Claimant was laid off from his new job after only 39 days. Claimant filed for unemployment benefits, but the UIA determined that Claimant is disqualified for benefits under Section 29(1)(a). Referee affirmed UIA’s determination. Claimant appealed to the Board of Review.

DECISION: The Board of Review reversed the Referee’s decision. The Claimant is not disqualified for benefits under Section 29(1)(a) because he satisfied the leaving to accept provision of Section 29(5).

RATIONALE: In Merren v. Employment Security Commission, 380 Mich. 240, 156 N.W.2d 524 (1968), the Michigan Supreme Court affirmed the appeal board’s decision to deny benefits to a claimant who quit a job with a Michigan employer to take a job with a Florida employer. The Michigan Court of Appeals subsequently upheld Merren in Roman Cleanser Company v. Murphy, 29 Mich. App. 155 (1970) when it denied benefits to a claimant who quit a job with a Michigan employer to take a job with a Kentucky employer. Both courts were concerned that Michigan employers will be unfairly penalized if they were forced to assume “the entire burden of having charged to its rating account the entire amount of benefits so paid to the [claimant]…” without any contribution from the out-of-state employers. Merren at 246. Relying on the above case law, the Referee below affirmed the UIA’s determination denying Claimant’s benefit.

The policy concerns expressed in the above case law, however, are now mooted by the 1972 amendments to the Federal Unemployment Tax Act (FUTA), 26 USC §3301 et seq., and the resulting Federal Regulations governing Interstate Arrangements for Combining Employment and Wages, 20 CFR 616.1 et seq. The FUTA and the resulting regulations now not only permit, but require the states to utilize its provisions to “collect” funds from out-of-state employers. Considering the lack of policy concern and the legislative intent behind the MES Act, the Board of Review holds that Section 29(5) of the Act should apply when even is the claimant had voluntarily left “a Michigan job to accept work in another state” or “an out-of-state job to accept work in Michigan.”

Digest Author:  Chris Kang
Digest Student-Editor: Nick Phillips
Digest Updated: 8/14