UIA v. Tear – 3.09

UIA v. Tear
Digest No. 3.09

Section 421.46

Cite as: Unemployment Insurance Agency v Tear, unpublished opinion of the State of Michigan Court of Appeals, issued December 10, 2015 (Docket No. 13-001038-AE).

Appeal pending: No
Claimant: Rachel Tear
Employer: N/A
Date of decision: December 10, 2015

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HOLDING: Claimant is ineligible for unemployment benefits under MCL 421.46. The Circuit Court’s decision affirming that Claimant is eligible for unemployment benefits is reversed. The case is remanded for the entry of the order upholding the Agency’s denial of Claimant’s claim for benefits.

FACTS: Claimant was discharged from her job and subsequently filed a claim for unemployment benefits. The Unemployment Insurance Agency (“Agency”) denied her claim and found that she could not establish a benefit year under MCL 421.46. At the administrative law hearing, the ALJ reversed the Agency’s finding and found that a benefit year had been established because “Claimant’s high quarter wages were $2,883.00.”

DECISION: The ALJ’s finding that Claimant was paid $2,883.00 in a completed quarter is not supported by substantial and competent evidence. The Circuit Court’s conclusion that Claimant was paid more than $2,871.00 in a completed quarter is clearly erroneous.

RATIONALE: The court referred to the definition of “benefit year” in MCL 421.46(c), the definition of a “base period” in MCL 421.45, and the definition of “calendar quarter” in MCL 421.47 to determine Claimant’s eligibility for unemployment benefits.

Under those provisions, Claimant was required to have been paid at least $2,871.00 in at least one completed calendar quarter in the first four of the last five completed calendar quarters before filing her claim. Claimant would need to meet that requirement to establish a benefit year. In this case, Claimant only made $1,958.30 for the entire calendar year.

Although MCL 421.45 provides an alternative base period if a claimant cannot meet the above requirement, Claimant in this case still did not earn enough to establish a base period under MCL 421.45.

Digest author: Rita Samaan, Michigan Law, Class of 2017
Digest updated: 10/31/2017


Elliott’s Amusements, LLC v. Garrison – 17.23

Elliott’s Amusements, LLC v. Garrison
Digest No. 17.23

Section 421.44

Cite as: Elliott’s Amusements, LLC v Garrison, unpublished opinion of the Ingham County Circuit Court, issued October 1, 2007 (Docket No. 07-251-AE).

Appeal pending: No
Claimant: Ronald L. Garrison
Employer: Elliott’s Amusements, LLC
Date of decision: October 1, 2007

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HOLDING: Certain per diem payments made by the employer to the claimant were remuneration when not for the “convenience of the employer” and the claimant had the ability to choose how to spend the money.

FACTS: The ALJ decided that per diem amounts the employer paid to the claimant were remuneration under Section 44(1). The Board of Review affirmed and incorporated the ALJ’s decision. As the Board explained, the claimant worked six months per year for the employer, while also living in the employer’s trailer and paying rent and food money. The claimant received a per diem payment from the employer, plus reimbursements for some expenses. Citing Seligman v MESC, 164 Mich App 507 (1988) as controlling, the Board endorsed the ALJ’s view that the per diem payments amounted to wages because the employer did not require the claimant to live at the work site, the lodging was not free, and the claimant’s use of the per diem payments were not controlled by the employer.  The claimant choice to use the employer-provided lodging was based on his own convenience, distinguishing his situation from the mandatory on-site lodging provided for the “convenience of the employer” in Seligman.

DECISION: The court upheld the determination that certain per diem payments made by the employer to the claimant were remuneration.

RATIONALE: Per diem payments for on-site lodging and food are considered remuneration if the employer did not control the claimant’s use of the per diem monies and the claimant could have spent the money in other ways.

Digest author: Austin L. Webbert, Michigan Law, Class of 2017
Digest updated: 10/25/2017


Koontz v Ameritech Services Inc – 3.06

Koontz v Ameritech Services Inc
Digest no. 3.06

Section 27(f)

Cite as: Koontz v Ameritech Services Inc, 466 Mich 304 (2002).

Appeal pending: No
Claimant: Nancy Koontz
Employer: Ameritech Services, Inc.
Docket no.: B95-13491-138951
Date of decision: June 12, 2002

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SUPREME COURT HOLDING: The governing statute, Section 27(f)(1), mandates coordination of claimant’s unemployment benefits with her pension benefits.

FACTS: Claimant worked at employer’s Traverse City office for 30 years until employer permanently closed that office. Claimant had the option of transferring to another location or retiring. Claimant chose to retire, and elected to roll over the lump-sum distribution of her employer-funded pension into her IRA instead of receiving a monthly annuity. Claimant applied for unemployment benefits and the Unemployment Agency determined her weekly benefit rate was subject to reduction under Section 27(f) by the pro-rated weekly retirement benefits the claimant would have received if she had taken the monthly annuity.

DECISION: Claimant’s unemployment benefits are subject to reduction under Section 27(f).

RATIONALE: Section 27(f)(1) requires “narrow coordination,” i.e. offset of unemployment benefits if the employer charged for unemployment benefits funded the retirement plan. In March 1980, Congress amended FUTA, 26 USC 3304(a)(15), to require “broad coordination,” meaning unemployment benefits would be offset by retirement benefits regardless of whether the charged employer funded the retirement benefits. Michigan enacted Section 27(f)(5) to comply with the new federal law.

Congress then amended 26 USC 3304(a)(15) in September 1980 and returned to “narrow coordination,” Michigan, however, did not similarly amend Section 27(f). Section 27(f)(1) “always requires coordination of pension benefits that the chargeable employer contributed.” Section 27(f)(5) may require coordination of pension benefits based on previous work if required to conform to federal law.

“Liquidation” as used in Section 27(f)(4)(a)(ii) requires distribution of all assets held in a pension fund for all employees. Distribution of a single employee’s vested interest is not liquidation of the pension fund. Claimant could have elected a monthly annuity.

Claimant “received” her retirement benefits within the meaning of Section 27(f)(1), notwithstanding the fact the employer transferred the funds to her IRA. The funds were transferred at her direction, she accepted them by directing their delivery to her account, and could still access the funds by making a withdrawal.

Digest Author: Board of Review (original digest here)
Digest Updated:

Brennan v Michigan Bell Telephone Co – 3.08

Brennan v Michigan Bell Telephone Co
Digest no. 3.08

Section 27(f)

Cite as: Brennan v Michigan Bell Tel Co, Unpublished Opinion of the Midland County Circuit Court, Issued February 3, 1998 (Docket No. 97-6843-AE-L).

Appeal pending: No
Claimant: John W. Brennan
Employer: Michigan Bell Telephone Company
Docket no.: B93-17227-130278
Date of decision: February 3, 1998

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CIRCUIT COURT HOLDING: Pension benefits accepted as a lump sum and rolled over into an IRA subject a claimant’s unemployment benefits to reduction, notwithstanding preferential tax treatment for IRA programs.

FACTS: Claimant was terminated from his employment at Michigan Bell Telephone Company in September of 1993. At the time, Claimant was over 59 years of age. Because of his age and the fact that he had worked for the company and its predecesors for over 37 years, Claimant was eligible to receive pension benefits. Instead of accepting long-term annuity payments, Claimant elected to receive a lump sum payment in the amount of $566,951.47 in January of 1994, which he promptly rolled over into an IRA.

Due to his involuntary termination, claimant sought to collect unemployment compensation benefits from the MESA. However, although his termination qualified him for such benefits, UIA determined that his pension benefits completely offset his ability to collect unemployment benefits. Claimant appealed decisions of a Referee and the Board of Review to the Circuit Court.

DECISION: Claimant’s benefits were subject to reduction under Section 27(f) due to his voluntary acceptance of a lump sum pension payment, notwithstanding his choice to rollover those funds into an IRA.

RATIONALE: Although the US Department of Labor did not intend FUTA benefits, including “rollover distributions,” to be coordinated with retirement benefits for taxation reasons, an opinion letter written by the USDOL was not binding on the Court’s interpretation of Section 27(f). Further, since the choice to take the pension benefits was voluntary on the part of the employee, there was no “pyramiding” of benefits, meaning claimant was not forced to use the benefits for a different purpose than intended.  Despite the fact that there would be a federal tax penalty for the use of the funds that the Michigan legislature requires claimant to use for transitional economic assistance, claimant’s unemployment benefits are still subject to reduction.

Digest Author: Nick Phillips
Digest Updated: 8/14

Solgat v Accurate Mechanical – 3.05

Solgat v Accurate Mechanical
Digest no. 3.05

Section 27(f)

Cite as: Solgat v Accurate Mechanical, unpublished opinion of the Dickinson Circuit Court, issued June 29, 1995 (Docket No. D94-8517-AE).

Appeal pending: No
Claimant: Clement Solgat
Employer: Accurate Mechanical
Docket no.: B91-16599-123338W
Date of decision: June 29, 1995

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CIRCUIT COURT HOLDING: Where union employees receive a lump economic package pursuant to a labor contract and they decide how much to allocate to wages and how much will be devoted to fringe benefits such as pensions, the contribution to the pension fund is entirely that of the employee.

FACTS: Claimant was denied benefits after being laid off for lack of work in November 1990, because he was receiving a pension. Claimant had been a union pipefitter for many years. His union negotiated labor contracts under which employers agreed to pay pipefitters a certain amount of money. The union members then decided how much of the hourly rate would be paid to them in wages and how much would go to pay for various fringe benefits including the pension fund. The employers paid the lump sum amount for fringes directly into a fringe benefit fund. The balance was paid in wages.

DECISION: Claimant is entitled to receive unemployment benefits.

RATIONALE: The fact that taxes were not deducted from the funds forwarded to the union does not alter the fact the earned funds of the employees in the hands of the employer belonged in total to the employees. The employer merely disbursed it as directed once it had been earned by the performance of labor. “The plan was that of the employee and the contribution to the plan, in total, was that of the employee.”

Digest Author: Board of Review (original digest here)
Digest Updated: 

Kulling v Kirk Design, Inc – 3.07

Kulling v Kirk Design, Inc
Digest no. 3.07

Sections 46(d), (now 46(g)); 46a(1)

Cite as: Kulling v Kirk Design, Inc, unpublished opinion of the Wayne County Circuit Court, issued February 1, 1990 (Docket No. 89-910000-AE).

Appeal pending: No
Claimant: David Kulling
Employer: Kirk Design, Inc.
Docket no.: B87-16118-107903
Date of decision: February 1, 1990

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CIRCUIT COURT HOLDING: The claimant was not entitled to establish a benefit year under Section 46a(1), the alternative earnings qualifier, because he owned more than a 50% proprietary interest in the employing unit and Section 46(d) (now 46(g)) controls.

FACTS: Claimant owned 100% of the employing corporation. On March 5, 1987 he stopped drawing his salary from the corporation. The corporation stopped operating on September 30, 1987. On October 25, 1987 the claimant filed for unemployment benefits. The MESC denied the claim because claimant had more than a 50% proprietary interest in the employing corporation, only established 18 credit weeks and thus could not establish a benefit year.

The claimant argued under the alternative qualifier provision, Section 46a(1), he should be able to establish a benefit year.

Section 46a(1) became effective on January 2, 1982 followed by Section 46(d) on July 24, 1983.

DECISION: The claimant was not entitled to establish a benefit year under Section 46a(1), the alternative qualifier.

RATIONALE: The court noted that Section 46(d) begins with the statement: “Notwithstanding subsection (a)…” and the fact subsection (d) was enacted after Section 46a and concluded the legislative intent of 46(d) was to limit an individual with a substantial interest in an employing unit from receiving benefits. Section 46a(1) operates as an exception to Section 46(a), not Section 46(d).

Digest Author: Board of Review (original digest here)
Digest Updated:

Polites v Flint Public Schools – 3.03

Polites v Flint Public Schools
Digest no. 3.03

Section 27(f)

Cite as: Polites v Flint Pub Schools, 132 Mich App 609 (1984).

Appeal pending: No
Claimant: James R. Polites
Employer: Flint Public Schools
Docket no.: B79 02190 66513
Date of decision: March 5, 1984

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COURT OF APPEALS HOLDING: Claimant contributed less than half the cost of the retirement benefit. The determination of whether claimant’s benefits are to be subject to reduction under Section 27(f) focuses on the amount of claimant’s contribution towards the cost of the benefit not a comparision of what claimant contributed to the employer’s contribution.

FACTS: Claimant was employed by respondent school district as a teacher for approximately 23 years, retiring July 1, 1978. During his employment claimant contributed $14, 615.13 to this retirement fund, while respondent contributed $3,223.80. Contributions to claimant;s retirement fund were also made by the State of Michigan. Claimant’s monthyly retirement benefit consisted of an annuity funded entirely by claimant’s contribution which paid claimant $31.13 monthly and a pension benefit of $533.45 monthly funded entirely by the employer and the State of Michigan.

DECISION: Claimant’s weekly benefit rate was properly subject to adjustment under Section 27(f).

RATIONALE: “… it is clear that, if the employer, has contributed to the retirement plan, unless the employee also contributing to the plan provided more than half of the cost of the benefits, the employee’s unemployment compensation benefits must be reduced. Nothing in the statute suggest that the legislature intended that the employer’s contributions simply be compared to the employee’s in determining if a reduction is proper.”

Digest Author:  Board of Review (original digest here)
Digest Updated: 6/91

Gormley v General Motors Corp – 3.01

Gormley v General Motors Corp
Digest no. 3.01

Section 27(f)

Cite as: Gormley v General Motors Corp, 125 Mich App 781 (1983).

Appeal pending: No
Claimant: Charles M. Gormley
Employer: General Motors Corporation
Docket no.: B80 16457 74672
Date of decision: May 17, 1983

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COURT OF APPEALS HOLDING: “It is a general rule in Michigan, as well as in other jurisdictions, that all statutes are prospective in their operation except in such cases as the contrary clearly appears from the context of the statute itself.”

FACTS: The claimant was receiving a military pension prior to his layoff from General Motors in July, 1980. The statute in effect mandated that the claimant’s unemployment benefits be reduced because of the existence of the military pension. At the time of the claimant’s appeal, a newly enacted pension offset provision provided for a pension offset only if the pension came from a “base period employer.” The claimant contended that the new provision should be applied retroactively.

DECISION: The statute in question is not retroactive.

RATIONALE: Nothing in the language or context of the 1980 amendment to the Federal Employment Tax Act suggests a congressional intent that the amendment was to apply retroactively.

A remedial statute may be applied retroactively. A remedial statute is related to remedies or modes of procedure which do not create new or take away vested rights, but only operate in furtherance of a remedy or confirmation of rights already existing. Kalamazoo Ed Ass’n v Kal Schools, 406 Mich 579, 601 (1979).

Prior to the amendment claimant was barred from receiving full unemployment compensation benefits. However, the 1980 amendment allows claimants to receive full unemployment compensation benefits beginning November 1, 1980. The latter amendment creates a new right in claimant and others in claimant’s position and cannot be considered as being a remedial statute.

Digest Author: Board of Review (original digest here)
Digest Updated: 11/90

Horney v US Post Office – 3.02

Horney v US Post Office
Digest no. 3.02

Section 27(f)

Cite as: Horney v US Post Office, unpublished opinion of the Berrien Circuit Court, issued May 12, 1983 (Docket No. 82-2657-AE-B).

Appeal pending: No
Claimant: Alan A. Horney
Employer: US Post Office
Docket no.: UCF80 16132 75134
Date of decision: May 12, 1983

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CIRCUIT COURT HOLDING: The cost of the benefit cannot be construed to mean the present actuarial value of the benefit. “This Court interprets the statutory use of the word “costs” in its plain and ordinary meaning that is, the amount actually spent for something (perhaps of much greater value)”.

FACTS: Claimant and employer paid matching contributions to the retirement fund totaling $28,848. The ultimate value of the pension (based on an actuarial computation) would be $134,000. There is no showing that other costs, beyond the contributions and the respective interest on said contributions were actually paid into the fund.

DECISION: Claimant’s benefits are not subject to reduction under Section 27(f).

RATIONALE: “That the amount actually contributed by both parties plus interest may not be sufficient to pay the ultimate possible pension benefits that might be received by appellant and that any such contingent balance may have to come from other sources (the amount of which is now underterminate and may be nothing) does not make such contingent balance a “cost of benefits” in determining and reducing the amount of unemployment benefits to which appellant otherwise is entitled.

Digest Author: Board of Review (original digest here)
Digest Updated: 6/91

Zajac v US Post Office – 3.04

Zajac v US Post Office
Digest no. 3.04

Section 27(f)

Cite as: Zajac v US Post Office, unpublished opinion of the Macomb Circuit Court, issued February 9, 1981 (Docket No. 80-2340 AE).

Appeal pending: No
Claimant: John Zajac
Employer: U. S. Post Office
Docket no.: UCFE77 10907 56170
Date of decision: February 9, 1981

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CIRCUIT COURT HOLDING: The “cost of the benefit” is the present actuarial value of the retirement benefit.

FACTS: Claimant worked for the U.S. Postal Service from 1942-1976. While claimant was employed, matching contributions were made by the claimant and the employer to the Federal Retirement Program. Claimant’s total contributions to the fund were $15,939. Claimant receives a gross monthly annuity of $913. As of the date of claimant’s separation, the total present value of the retirement benefit was $93,452.33.

DECISION: Claimant’s weekly benefit rate is subject to adjustment under Section 27(f) despite the fact that claimant and employer made matching contributions.

RATIONALE: Claimant’s contribution is less than 1/2 the present actuarial value of the retirement benefit.

Digest Author: Board of Review (original digest here)
Digest Updated: 6/91