May 19, 2019

Colorado Court of Appeals: Satisfaction of Statutory Criteria Qualifies Acquiring Employer as “Successor” for Unemployment Purposes

The Colorado Court of Appeals issued its opinion in Dos Almas LLC v. Industrial Claim Appeals Office on Thursday, September 20, 2018.

Unemployment Tax—C.R.S. § 8-76-104(1)(a)Successor Employer.

Dos Almas LLC began operating a restaurant after it acquired nearly all of the assets of WooPig LLC, which had operated a different restaurant at the same location. After the acquisition, Dos Almas applied for an unemployment compensation insurance account and a determination of employer liability by submitting a form along with a copy of the asset purchase agreement to the Department of Labor and Employment (Department).

A deputy ruled that Dos Almas was a successor employer to WooPig for unemployment compensation tax rate liability purposes because it met the requirements of C.R.S. § 8-76-104(1)(a) due to the acquisition. Dos Almas appealed more than eight months after the applicable 21-day time limit. Nevertheless, a hearing officer ruled that good cause was shown for the delay, and following a hearing the officer found that Dos Almas was not a successor entity to WooPig under the statutory criteria largely because it did not retain the employees as part of the asset sale. A panel of the Industrial Claims Appeal Office (the Panel) reversed. The Panel upheld the factual findings, but based on Dos Almas having acquired 90% of WooPig’s physical and intangible assets, ruled that it had acquired substantially all of WooPig’s assets and thereby met the statutory criteria to be considered a successor employer for unemployment compensation tax rate liability purposes.

On appeal, Dos Almas contended that the Panel erred in ruling that it is a successor to WooPig for unemployment tax rate liability purposes. The hearing officer’s factual findings support the conclusion that Dos Almas is a successor employer to WooPig for unemployment compensation tax rate liability purposes under the applicable statutory criteria in C.R.S. § 8-76-104(1)(a). Further, the lack of employee retention in the asset purchase transaction is irrelevant to the successor issues in this case. The Panel did not err.

The order was affirmed.

Summary provided courtesy of Colorado Lawyer.

Colorado Court of Appeals: Cafeteria Plan Deductions Should Not Be Included in Unemployment Compensation Calculations

The Colorado Court of Appeals issued its opinion in Meyer v. Industrial Claim Appeals Office on Thursday, November 17, 2016.

Lizabeth A. Meyer (Claimant) received unemployment compensation benefits in the amount of $500 per week, effective March 11, 2012, and continuing until May 19, 2012, when she obtained full-time employment. During the majority of that period, she worked part-time at Coach, and for the last two weeks she worked full-time at Sutrak. A deputy for the Division of Unemployment Insurance conducted an audit of Claimant’s file and determined that she had been overpaid unemployment compensation benefits in the amount of $1,712 for the period from March 18, 2012, through May 19, 2012. The deputy found that claimant had underreported her hours and earnings for certain weeks during that period, and assessed a monetary penalty of $1,112.80 against her.

Claimant appealed the deputy’s determination and an evidentiary hearing was held, at which Claimant conceded that the hours reported on her paystubs, rather than those she reported online, accurately reflected the hours she worked. However, she asserted that she was only required to report her taxable earnings, not her gross earnings. The Division’s hearing officer accepted Claimant’s concessions about the hours worked but held that she was required to report her gross earnings. The hearing officer found that because Claimant knowingly misrepresented her gross earnings, she was overpaid $1,890.64 in unemployment compensation, and assessed a monetary penalty of $1,228.91. Claimant appealed to the Industrial Claim Appeals Office, and the Panel affirmed. Claimant then appealed to the Colorado Court of Appeals.

Claimant contended the Panel erred in determining she was required to report her gross earnings rather than her taxable earnings, arguing she was not required to report any contributions to her 26 U.S.C. § 125 cafeteria plan. The court of appeals agreed. The court found that the Division required Claimant to report her gross earnings, but that was in contravention of the definition of “wages” in C.R.S. § 8-70-142. The court held the Division erred in requiring Claimant to report her gross wages without deducting contributions to her § 125 cafeteria plan.

Claimant next contended that the Panel erred in upholding the hearing officer’s determination that she knowingly failed to report her earnings accurately, and that both the Panel and hearing officer erred in determining she had received an overpayment and imposing a monetary penalty. The court of appeals agreed in part. The court found that, for the period from May 6 through May 21, 2012, Claimant was not eligible for unemployment compensation benefits and therefore was overpaid $1,000 for this period. The court found the Division did not err in imposing the 65% penalty for this period, in the amount of $650. However, for the period for which Claimant worked for Coach, she was eligible for benefits. Because the Division calculated Claimant’s overpayment based on her gross earnings rather than her taxable wages, the Division erred in its calculations. The court of appeals analyzed Claimant’s taxable wages and found an overpayment of $76 for the period in which she worked for Coach. The 65% penalty for this amount is $49.40, for a total of $125.40 owed for the period in which Claimant worked for Coach.

The court of appeals affirmed in part, reversed in part, and remanded with directions for the Panel to issue a new order regarding the $76 overpayment.

Colorado Court of Appeals: Hearing Officer Erred in Ascribing Fault to Claimant for her Mental Health Disorders

The Colorado Court of Appeals issued its opinion in Mesa County Public Library District v. Industrial Claim Appeals Office on Thursday, June 16, 2016.

Unemployment Compensation Benefits—Mental Health Disorder.

Gomez worked for the Mesa County Public Library District (Library) for almost 25 years. In 2013, she began having performance issues and was placed on two successive performance improvement plans (PIPs). In September 2014, she was placed on a third PIP and told to produce a satisfactory organizational capacity report by October 7 or face additional disciplinary action, including discharge. She called in sick on that date, and again on October 9, and did not return to work again. On October 14, she submitted a doctor’s note advising that she was suffering from acute stress disorder and major depressive disorder. She was granted a request to remain off work for four to six weeks. The Library director terminated her on October 20, 2014 for failing to provide the organizational capacity report.

The hearing officer in her unemployment compensation benefits case determined that Gomez had become mentally unable to perform her job duties but found her “at fault” for becoming mentally unable to complete the report, and under C.R.S. § 8-73-108(5)(e)(XX), disqualified her from receiving benefits. On review, the Industrial Claim Appeals Office (Panel) adopted the hearing officer’s evidentiary findings but rejected as a matter of law the conclusion that Gomez was disqualified from receiving benefits because she was at fault for her own diagnosed mental disorders. It awarded her benefits under C.R.S. § 8-73-108(4)(j).

On appeal, the Library argued that the Panel substituted its findings of fact for those of the hearing officer. The Court of Appeals found that the Panel adopted the hearing officer’s findings of fact. The Court also rejected the Library’s contention that the evidence demonstrated that Gomez’s mental health disorder did not affect her ability to complete the report. The Court agreed with the Panel that the hearing officer erred in determining that Gomez was at fault for her nonvolitional conduct.

The Panel’s order was affirmed.

Summary provided courtesy of The Colorado Lawyer.

Colorado Court of Appeals: Christian-Themed Child Care Center Not Religious Organization for Purposes of CESA

The Colorado Court of Appeals issued its opinion in A Child’s Touch v. Industrial Claim Appeals Office on Thursday, December 31, 2015.

Child Care Center—Elementary School—Kindergarten—Unemployment Compensation Benefits—Religious Organization—Exemption.

A Child’s Touch is a state-licensed child care center providing infant and toddler day care, preschool, and kindergarten programs for children from 6 weeks to 6 years of age, and a summer camp for children ages 6 to 12 years. Christian-themed iconography, prayers, and devotions are incorporated into its daily curriculum. Claimant served as a maintenance worker at A Child’s Touch from approximately 1997 until his termination in September 2013, when his position was eliminated while he was on medical leave for double hip replacement surgery. A Child’s Touch denied claimant’s unemployment compensation claim, and the hearing officer upheld the denial. The Industrial Claim Appeals Office (Panel) set aside the hearing officer’s decision and awarded claimant benefits.

On appeal, A Child’s Touch argued that claimant was not in covered employment and that, as a religious organization, it was exempt from unemployment compensation taxes under the Colorado Employment Security Act (CESA). A Child’s Touch was not principally supported by a church or association of churches at the relevant period of time. Further, a child care facility that offers day care, preschool, and kindergarten, but does not teach any higher grades, is not an “elementary school” for purposes of a religious exemption from unemployment compensation taxes under CRS § 8-70-140(1)(a). Accordingly, the Panel correctly determined that A Child’s Touch is not entitled to a religious exemption from unemployment compensation taxes under CESA. Accordingly, the Panel’s order was affirmed, and the case was remanded to the Division of Unemployment Insurance to determine claimant’s entitlement to and eligibility for unemployment compensation benefits.

Summary and full case available here, courtesy of The Colorado Lawyer.

Colorado Court of Appeals: All Separations from Base Period Employers Must Be Evaluated to Determine Unemployment Eligibility

The Colorado Court of Appeals issued its opinion in Nagl v. Industrial Claim Appeals Office on Thursday, April 23, 2015.

Unemployment Compensation—CRS § 8-73-108(5)(e)(IV)—Constitutional Right to Travel.

Claimant worked as a front desk agent for Destination Vail Hotel, Inc. He quit this job to be located closer to his girlfriend in Telluride. Claimant found a new position in Telluride, but was subsequently laid off.

Claimant then sought unemployment insurance benefits. A deputy for the division of unemployment insurance denied claimant’s request for benefits based on his employment with Destination Vail Hotel. However, claimant did receive benefits based on his work for his Telluride employer. Claimant appealed, and the hearing officer affirmed the deputy’s decision. The Industrial Claim Appeals Office (Panel) affirmed.

On appeal, claimant contended that the Panel’s decision was inconsistent with the express purpose of the Colorado Employment Security Act (CESA), which is to provide unemployment benefits to persons who are unemployed through no fault of their own. Whether a claimant is entitled to unemployment benefits attributable to wages paid by a particular employer depends on the reason for the separation from that employment. Because it was undisputed that claimant voluntarily quit his employment with Destination Vail Hotel, and thus was at fault for that separation, the hearing officer and the Panel did not err in determining that he was disqualified from receiving benefits from that employer.

Claimant also argued that the move to Telluride was not a disqualifying event under CRS § 8-73-108(4)(n). However, the hearing officer properly limited the proceeding to the circumstances surrounding his Vail job, not his subsequent employer. The fact that he accepted work after leaving the Vail job does not bear on whether he refused to accept work following the termination of his Telluride job. Thus, CRS § 8-73-108(4)(n) does not provide a basis for awarding benefits to claimant based on his employment with Destination Vail Hotel.

Claimant further argued that the hearing officer’s application of CESA violated his right to travel, as protected by the Colorado Constitution, because it effectively penalized his right to move within the state. To succeed on an “as applied” challenge, a party must show that the statute is unconstitutional under the circumstances in which the party acted. Here, the loss of benefits resulting from claimant’s decision to quit his job to move closer to his girlfriend is not a constitutionally significant restriction. The order was affirmed.

Summary and full case available here, courtesy of The Colorado Lawyer.

Tenth Circuit: Plaintiff Denied Due Process When Not Allowed Hearing on Allegations of Sexual Harassment

The Tenth Circuit Court of Appeals issued its opinion in McDonald v. Wise on Tuesday, October 28, 2014.

Wayne McDonald was a Special Assistant to Denver Mayor Michael Hancock in 2011 and 2012. He was appointed by the mayor to serve “at the pleasure of the Special Assistant,” and in his official duties, he worked closely with Denver police officer Leslie Wise, who provided security to the mayor. He communicated with Ms. Wise on and off duty, discussing both work-related and personal matters. Between September 2011 and March 2012, Ms. Wise called Mr. McDonald at least 41 times on his personal phone, with calls as early as 6:26 a.m. and as late as 7:39 p.m. On November 3, 2011, unbeknownst to Mr. McDonald, Ms. Wise recorded two of these calls. At least 3/4 of the calls from Ms. Wise to Mr. McDonald occurred after November 3, 2011. She also gave him a Christmas gift, attended church with him, and met his family. They last spoke on March 14, 2012, when Ms. Wise telephoned Mr. McDonald.

On May 18, 2012, the mayor’s deputy chief of staff and the city attorney informed Mr. McDonald that Ms. Wise had accused him of sexual harassment and produced the two recorded phone calls from November 3, 2011. Mr. McDonald denied the allegations and agreed to participate fully in an investigation. He left the meeting with the understanding that he was suspended pending the outcome of an investigation and hearing. At a subsequent meeting on May 21, Mr. McDonald was told he could either resign or be fired due to the allegations. Mr. McDonald requested an investigation and opportunity to defend himself, but was fired on the spot. The mayor and his staff subsequently informed the news media that Mr. McDonald was fired for sexual harassment. Mr. McDonald applied for unemployment compensation benefits, but was denied based on his termination for sexual harassment. He appealed to the Colorado Department of Labor, and the hearing officer determined Mr. McDonald was not responsible for the separation from employment. Mr. McDonald has not been able to find subsequent employment, and has been told by potential employers that his termination for sexual harassment is the reason. He brought suit against the city, the mayor, and the mayor’s press secretary for due process violations, breach of contract, and unlawful disclosure of confidential information. He sued Ms. Wise for defamation. The district court rejected all of his claims, and this appeal followed.

The Tenth Circuit first addressed Mr. McDonald’s claims that he was deprived due process of the law for both property and liberty interests. The Tenth Circuit found that Mr. McDonald did not have a property interest in his continued employment, because he served at the pleasure of the mayor and as such was an at-will employee. He could not have had a property interest in continued employment because of his at-will status, and the district court correctly dismissed this claim. The Tenth Circuit reached a different outcome as to Mr. McDonald’s liberty interest in his good name and continued employment. The mayor said at a press conference that Mr. McDonald was terminated for sexual harassment, not because of allegations, thus effectively affirming the allegations in a public forum. The statements called Mr. McDonald’s good name into question, and Mr. McDonald has been unable to secure further employment due to the statements. The Tenth Circuit determined that Mr. McDonald’s liberty interest was infringed upon, and next turned to the question of whether he had a chance to clear his name at a proper name-clearing hearing. Because Mr. McDonald received no hearing at all on this issue, the Tenth Circuit found a serious deprivation of due process related to his protected liberty interest, and reversed the district court. However, the Tenth Circuit found that the mayor’s press secretary need not be named in her official capacity in the suit, since the mayor and the city were named. On remand, the proper parties for this issue are solely the mayor and the city.

Mr. McDonald also contended that his termination was a breach of his employment contract with the city. The Tenth Circuit disagreed, finding as above that his employment was at will, and his claim is not one for which relief can be granted. The Tenth Circuit likewise disposed of his claim regarding non-disclosure of personnel records under the Colorado Open Records Act, because there is no private right of action under CORA and he did not allege sufficient reason to amend his complaint.

Finally, the Tenth Circuit turned to Mr. McDonald’s defamation claim against Ms. Wise. The district court dismissed his defamation claim, finding qualified immunity for Ms. Wise, and that even if she were not immune, Mr. McDonald failed to allege a viable defamation claim. The Tenth Circuit disagreed with the trial court’s reasoning, finding instead that Ms. Wise was not entitled to qualified immunity since her actions were willful and wanton. Mr. McDonald’s complaint alleged sufficient facts to support an inference of willful and wanton conduct, including the numerous phone calls made to him by Ms. Wise after the date of the alleged sexual harassment, and he was entitled to a trial on the merits. As to the defamation claim, the Tenth Circuit found that Ms. Wise held no qualified privilege since she made the allegedly defamatory statements with actual malice, and the district court erred by concluding Ms. Wise was immune from liability.

The Tenth Circuit affirmed the district court’s dismissal of Mr. McDonald’s property interest due process claim, breach of employment contract claim, and CORA violation claim. The Tenth Circuit reversed the district court’s dismissal of Mr. McDonald’s liberty interest due process claim and defamation claim against Ms. Wise, and remanded for further proceedings.