June 17, 2019

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: Unemployment Taxes Not Required Where Workers not “Employees” for CESA Purposes

The Colorado Court of Appeals issued its opinion in Whitewater Hill, LLC v. Industrial Claim Appeals Office on Thursday, January 29, 2015.

Agricultural Work—Taxes—Exempt—Colorado Employment Security Act—CRS § 8-70-120(1)(a).

Petitioner Whitewater Hill, LLC (Whitewater) operates a small vineyard and winery. Following an audit, the Colorado Department of Labor and Employment (Department) issued a liability determination concluding that agricultural work performed by certain workers for Whitewater amounted to covered employment and that Whitewater must pay taxes on amounts it paid those workers. The hearing officer concluded that the workers’ services were not employment, but rather exempt agricultural labor. Therefore, Whitewater was not required to pay taxes on the amounts it paid the workers. The Industrial Claim Appeals Officeconcluded that the workers’ services constituted covered employment.

On appeal, Whitewater contended that the workers’ services were exempt agricultural labor under the Colorado Employment Security Act(CESA) and that the Panel misinterpreted CRS § 8-70-120(1)(a). CRS § 8-70-120(1)(a) provides that during the current or preceding year, when a putative employer employs ten or more agricultural workers within each of twenty different weeks, the workers’ services constitute employment. Here, because Whitewater had employed ten or more agricultural workers in only four different weeks from 2011 through the first quarter of 2013, the workers’ services were not “employment” under CRS § 8-70-120(1)(a). Consequently, Whitewater was not required to pay unemployment taxes on amounts it paid the workers. The order was set aside and the case was remanded with directions.

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

Colorado Court of Appeals: Attorney Who Started Own Practice Not Fulfilling Obligation of Seeking Employment for Unemployment Purposes

The Colorado Court of Appeals issued its opinion in Hoskins v. Industrial Claim Appeals Office on Thursday, April 10, 2014.

Unemployment Compensation Benefits—Actively Seeking Work.

Claimant was laid off from his job as an associate attorney in November 2012, at which point he decided to start his own practice. A deputy in the division of employment issued a decision finding that claimant was ineligible toreceive unemployment compensation benefitsfor the week ending December 1, 2012 and the entire period from December 15, 2012 through July 13, 2013, because he failed to supply the required listing of job contacts. A hearing officer affirmed the deputy’s decision, finding that claimant had focused his efforts on developing his own business and thus had not made a “reasonable and diligent effort to actively seek suitable work during the periods at issue.” The Industrial Claim Appeals Office (Panel) upheld the hearing officer’s judgment.

On appeal, claimant argued it was error to find that his efforts to establish his own legal practice did not fulfill the requirement that he actively seek work. Under CRS § 8-73-107(1)(c)(I), a claimant is eligible to receive unemployment compensation benefits for a particular week only if he or she is able to work and is available for all work deemed suitable. In addition, a claimant must be “actively seeking work.” The regulations clarify that a claimant must make “a systematic and sustained effort to find work.” A claimant must contact a certain number of employers each week and provide a written record of such contacts.

Those who are self-employed or sole proprietors are excluded from the definition of “employment” under the Colorado Employment Security Act (Act). The hearing officer found, and the Panel agreed, that claimant’s efforts to open his own law firm did not fulfill the statutory requirement to actively seek work. The Court of Appeals agreed that this comported with the plain language of the Act. The order was affirmed.

Summary and full case available here.

HB 14-1075: Reducing Unemployment Benefits for Individuals Whose Separation from Subsequent Employment was for Unsuitability of Working Conditions

On January 8, 2014, Rep. Jovan Melton introduced HB 14-1075 – Concerning a Reduction in the Deferral of Unemployment Insurance Benefits for Individuals Separated from Employment due to the Unsuitability of the Work After Accepting Work While Unemployed. This summary is published here courtesy of the Colorado Bar Association’s e-Legislative Report.

The bill reduces the deferral of unemployment insurance benefits to claimants who, while on unemployment, accept work and then separate from that work because it is unsuitable within 30 days after accepting the work and apply again for unemployment insurance benefits. The current deferral penalty is 10 weeks. The bill reduces the deferral period in these situations to the period of time the claimant worked prior to the separation. The bill is assigned to the Business, Labor, Economic, & Workforce Development Committee.

Colorado Court of Appeals: Unemployment Claimant’s Coworker Not Employer so Benefits Wrongly Awarded

The Colorado Court of Appeals issued its opinion in Yotes, Inc. v. Industrial Claim Appeals Office on Thursday, August 15, 2013.

Unemployment Compensation—Resignation—Personal Harassment—Delayed Employer Response to Employee Complaint— “Coworker” Vs. “Employer.”

In this unemployment compensation case, petitioner Yotes, Inc. (employer) sought review of a final order of the Industrial Claim Appeals Office (Panel) reversing a hearing officer’s decision and awarding unemployment compensation benefits to claimant under CRS § 8-73-108(4). The Court of Appeals set aside the order.

The hearing officer found that claimant resigned because he believed that employer was not acting quickly enough in responding to his complaint of sexual harassment from a coworker. The hearing officer also found that employer was taking the complaint seriously and claimant did not allow employer reasonable time to conduct an investigation and determine the appropriate action. Therefore, the hearing officer concluded that claimant was at fault for the separation and that a disqualification of unemployment benefits was warranted. The Panel reversed the hearing officer’s decision and awarded benefits to claimant.

Employer contended that the Panel erred when it awarded benefits to claimant under CRS § 8-73-108(4)(o). When an employee quits “because of personal harassment by the employernot related to the performance of the job,” benefits must be awarded to the employee. Here, claimant’s coworker was not an employer under the statute. Therefore, the Panel erred as a matter of law when it defined “employer” to include claimant’s coworker. Further, there was no evidence of personal harassment by employer. Because employer had indefinitely removed claimant from the adverse working conditions and claimant did not remain at the job long enough to learn whether the adverse conditions would be eliminated, claimant was not entitled to benefits. Accordingly, the Panel erred in awarding benefits to claimant and the order was set aside.

Summary and full case available here.

Colorado Court of Appeals: Trial Court Erred in Including Statutory Penalty in Restitution Order

The Colorado Court of Appeals issued its opinion in People v. Russell on Thursday, August 15, 2013.

Restitution—Order—Unemployment Benefits—Statutory Penalty.

Defendant Beau Thomas Russell appealed the trial court’s restitution order, which included a mandated statutory penalty following his plea of guilty to one count of forgery. The Court of Appeals affirmed in part and reversed in part, and the case was remanded for further proceedings.

Russell’s plea resulted from his receipt of $3,321 of unemployment compensation benefits over a two-month period, after he falsely reported himself as unemployed to the Unemployment Benefits Division of the Colorado Department of Labor and Employment. Russell asserted that the trial court erred when it included the statutory penalty in the restitution order. The trial court could not impose the statutory penalty without proof of a correlation between Russel’s actions and the amount of the statutory penalty. Because there was no evidence in the record that the statutory penalty relates in any way to the cost of investigating Russell’s conduct, the trial court abused its discretion by including the statutory penalty in the restitution order. Therefore, the restitution order was reversed as to the penalty, and the case was remanded for the trial court to amend the order by deleting the 50% penalty amount from the restitution award. The order was affirmed in all other respects.

Summary and full case available here.

SB 13-157: Continuing the “Colorado Work Share Program”

On Monday, February 4, 2013, Sen. Rollie Heath introduced SB 13-157 – Concerning the Continuation of the “Colorado Work Share Program.” This summary is published here courtesy of the Colorado Bar Association’s e-Legislative Report.

The “Colorado Work Share Program” (program) was created by the general assembly in 2010 to allow employees whose work hours have been reduced to collect prorated unemployment benefits as long as certain requirements are met by the employer and the employee.

The bill makes changes to the program to bring it into compliance with federal law, including required features of a work share plan to make it eligible for approval by the director of the division of unemployment insurance. The bill extends the program indefinitely. The bill also allows eligible employees to participate in certain job training programs. The bill repeals a mechanism that triggers a repeal of the program.

Currently, the federal government will reimburse states for unemployment compensation benefits paid under the program. The bill clarifies that the employer’s account will only be charged for the unemployment compensation benefits if the federal money is not available. The bill also increases the cap on the number of weeks that employees may be paid benefits under the program from 18 to 26 weeks. On Feb. 27, the Business, Labor, & Technology sent the unamended bill to the Appropriations Committee for consideration of the fiscal impact.

Colorado Court of Appeals: Payments Made to Union President for Services Performed to Union Constituted “Wages” for Purposes of Unemployment Compensation

The Colorado Court of Appeals issued its opinion in Communications Workers of America 7717 v. Industrial Claim Appeals Office on August 30, 2012.

Unemployment Compensation Benefits—“Wages.”

Communications Workers of America 7717 (employer) sought review of a final order of the Industrial Claim Appeals Office (Panel) affirming a hearing officer’s decision determining that claimant was entitled to an award of unemployment compensation benefits. The order was affirmed.

From 2003 until February 2011, claimant worked part-time for employer, serving as union president. He was supervised by employer’s executive board. He also worked full-time for another employer (Qwest).

The hearing officer found that when the union wanted claimant to work on union business during times that he would be working for Qwest, employer paid him the equivalent wage he would have received from Qwest. The officer found employee was separated from this employment when employer merged with another local union chapter. The officer found no reason that claimant should be disqualified from receiving benefits based on the reason for the separation, and no reason that employer should be exempt from paying them.

On review to the Panel, employer argued the money it paid to employee did not constitute “wages” under the statute and that employee still had his full-time job with Qwest and therefore suffered no wage loss. The Panel held the nature of the payments made did not exempt employer from paying benefits and that the issue of ongoing work for Qwest was not properly before it. The hearing officer’s decision was affirmed by the Panel.

On appeal, employer renewed its argument that it did not pay “wages” to employee. CRS § 8-70-141(1)(a) defines “wages” as “[a]ll remuneration for personal services.” The undisputed evidence established that claimant provided personal services to employer by performing work as its president and was remunerated by employer with payments. The Court of Appeals saw no error in the finding that claimant was paid “wages” under the statutory scheme.

Employer also argued that claimant suffered no wage loss because he was still employed by Qwest. The Court agreed with the Panel that this was not properly before it for review. The judgment was affirmed.

Summary and full case available here.

Colorado Court of Appeals: More than One Factor Should Be Used to Determine Whether an Independent Contractor is an Employee for Unemployment Tax Liability Purposes

The Colorado Court of Appeals issued its decision in Softrock Geological Services, Inc. v. Industrial Claim Appeals Panel on June 7, 2012.

Unemployment Tax Liability—Covered Employment—Colorado Employment Security Act.

In this unemployment tax liability case, petitioner Softrock Geological Services, Inc. (Softrock) sought review of a final order of the Industrial Claim Appeals Office (Panel) reversing a hearing officer’s decision and concluding that services performed for Softrock by Waterman Guy Ormsby constituted covered employment under the Colorado Employment Security Act (Act), CRS §§ 8-70-101 to 8-82-105. The order was set aside and the case was remanded to the Panel with directions.

Softrock provides geological services in the oil and gas industry. Ormsby is a geologist who provided well site services to Softrock on a project basis from 2007 through 2010 under a written agreement with Softrock. Softrock did not train him. Ormsby used his own vehicle, clothing, tools, and equipment, except for some specialized and expensive laboratory equipment that he rented from Softrock. He had his own business cards, paid his own liability insurance, and did not represent himself to be a Softrock employee.

In March 2011, the Division of Employment (Division) conducted an audit of Softrock and issued a notice of liability, finding that Ormsby was a covered employee for purposes of the Colorado Employment Security Act (Act). The hearing officer reversed the Division’s decision. The Panel agreed that Ormsby had not been under the direction and control of Softrock, but reversed on the ground that Ormsby’s business as a geologist did not survive independently of his relationship with Softrock, because he only worked for Softrock during 2007 to 2010.

On appeal, Softrock argued that the Panel erred by substituting its findings of fact for those of the hearing officer and in using only one factor to hold that Ormsby was not customarily engaged in an independent trade or business. The Court agreed that the Panel improperly based its decision on only one factor and remanded the case with instructions that it look at other factors.

Under the Act, the putative employer must overcome a rebuttable presumption of an employment relationship. Even if the presumption is rebutted, the trier of fact still must determine whether the worker is free from control and direction, and is customarily engaged in an independent trade, occupation, profession, or business related to the service performed.

The determination of whether a worker is engaged in a separate business venture is a multifactor test. Here, it was undisputed that Ormsby provided no services for others between 2007 and 2010. Softrock, however, argued that other factors support its contention that Ormsby was an independent contractor. The Court found that the Panel needed to at least consider and make findings regarding the other factors and could not make its determination just based on the exclusive service relationship during the noted period. It remanded to the Panel for consideration of all factors relevant to Ormsby’s relationship with Softrock.