944 N.W.2d 125
Mich. Ct. App.2019Background
- Three employers (Ambs Message Center, Great Oaks Country Club, NBC Truck Equipment) were client employers of Professional Employer Organizations (PEOs) that operated in Michigan before Jan 1, 2011.
- Michigan amended unemployment-insurance reporting (MCL 421.13m) to require PEOs to report and calculate tax rates using client employer accounts; PEOs in operation before Jan 1, 2011, could delay switching to that method until Jan 1, 2014.
- MCL 421.13m(2)(a)(i)(A) states a client employer is entitled to the new-employer tax rate if it reported no employees or payroll for 8 or more calendar quarters, or, beginning Jan 1, 2014, for 12 or more calendar quarters.
- Each claimant had reported no employees or payroll for eight quarters before Jan 1, 2014 but did not meet a 12-quarter lookback; each claimant’s PEOs switched reporting on Jan 1, 2014.
- The Agency denied the new-employer rate (requiring 12 quarters because the PEOs changed reporting on Jan 1, 2014); ALJs and circuit courts ruled for claimants (8 quarters sufficient); Court of Appeals granted leave and consolidated appeals.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether MCL 421.13m(2)(a)(i)(A) allows client employers with 8 quarters of no payroll as of Jan 1, 2014 to obtain the new-employer rate, or requires 12 quarters when the PEO changed reporting on/after Jan 1, 2014 | Claimants: “beginning Jan 1, 2014” only fixes the cutoff date by which 8 quarters must have occurred; 8 quarters suffice | Agency: the clause imposes a 12-quarter lookback for client employers when the PEO changed reporting on/after Jan 1, 2014 | Court: statute not ambiguous; where the PEO changed reporting on Jan 1, 2014 the 12-quarter requirement applies; claimants lacking 12 quarters do not qualify |
Key Cases Cited
- Adamo Demolition Co v Dep’t of Treasury, 303 Mich App 356 (2013) (describes PEO arrangements and historical reporting of unemployment contributions)
- Polania v State Employees’ Retirement Sys, 299 Mich App 322 (2013) (de novo review applies to statutory interpretation)
- Bush v Shabahang, 484 Mich 156 (2009) (principles for statutory construction and ascertaining legislative intent)
- Klapp v United Ins Group Agency, Inc, 468 Mich 459 (2003) (court must avoid constructions that render statutory language nugatory)