Perry & Associates, LLC v. Illinois Department of Employment Security
2017 IL App (1st) 143299
| Ill. App. Ct. | 2017Background
- Perry & Associates (architectural/engineering firm) terminated employee Clarence Passons in Nov 2011; Passons filed for unemployment benefits and employer contested for misconduct.
- After multiple hearings, a referee found Passons ineligible (Dec 2012); Board reversed and found him eligible (Apr 2013); benefits charges were restored to Perry’s account and the Department revised Perry’s 2013 contribution rate upward from 0.55% to 2.85%, retroactive to Jan 1, 2013.
- Perry protested the revised rate and argued the Department could not retroactively change a rate midyear, that doing so violated section 1509 and public policy, and that interest should not accrue because of Department delay.
- The Director and his representative denied relief, concluding the Department may revise rates when circumstances change, that interest rules in the Administrative Code and Northern Trust authorize interest on retroactive additional contributions, and that benefit-charge disputes must be raised in the benefits proceeding.
- Circuit court affirmed the Director; on appeal the Appellate Court affirmed, holding Winakor controls (the Director is not bound by the “final and conclusive” language in section 1509), interest assessment was proper, and benefit-amount objections were barred in the rate challenge.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Authority to revise contribution rate midyear | Section 1509 makes notified rate "final and conclusive" on Director and employer; Department cannot change rate retroactively | Section 1509 binds employers but does not bind the Director; Winakor permits Director to revise rate when circumstances change | Department may revise an employer’s rate when circumstances (e.g., reinstated benefit charges) change; Winakor controls |
| Applicability of Marco v. Doherty | Marco limits Department’s retroactive changes to its own final adjudicatory decisions, so Department here lacks authority | This case is more like Winakor (rate not produced by adjudicatory hearing) and Marco is distinguishable | Marco is limited to its facts and does not displace Winakor here; Marco inapplicable |
| Assessment of interest on retroactive additional contributions | Retroactive interest is unconstitutional/unfair given delays; employer should not pay interest accruing before notice | Administrative Code (56 Ill. Adm. Code 2765.63) and statute authorize interest from original due date; Northern Trust approves such interest accrual | Interest assessment was proper; employer could avoid interest by paying additional contributions under protest within 30 days |
| Ability to challenge benefit-charge amounts in rate appeal | Employer may challenge amount of benefits (e.g., other income of claimant) as defense to rate increase | Section 1509 bars employer from questioning benefit charges in a rate proceeding if served with statement; benefit-amount disputes belong in benefits proceeding | Benefit-charge amount cannot be relitigated in the rate challenge if employer was served; challenge belongs in benefits action |
Key Cases Cited
- Winakor v. Annunzio, 409 Ill. 236 (1951) (statute’s “final and conclusive” language binds employer but does not bar Director from later revising assigned rate)
- Northern Trust Co. v. Bernardi, 115 Ill. 2d 354 (1987) (interest on deficient contributions accrues from date contributions became due, not from date of discovery)
- Marco v. Doherty, 276 Ill. App. 3d 121 (1995) (limited to circumstance where Director attempted to retroactively change a final adjudicatory decision)
- Carson Pirie Scott & Co. v. State of Illinois Department of Employment Security, 131 Ill. 2d 23 (1989) (describes experience-rating system and allocation of unemployment insurance costs)
- AFM Messenger Service, Inc. v. Department of Employment Security, 198 Ill. 2d 380 (2001) (standard for review of mixed questions of law and fact)
- Comprehensive Community Solutions, Inc. v. Rockford School District No. 205, 216 Ill. 2d 455 (2005) (clarifies mixed-question review standard)