6 Mass. App. Ct. 784 | Mass. App. Ct. | 1979
By this action the plaintiff attacks the method used by the Division of Employment Security
The rate of contribution for each employer depends on a number of variables. In the first instance, it depends on the ratio of the total unemployment compensation fund
The division also maintains a single “solvency account” (G. L. c. 151A, § 14[c]) to which is credited all revenue received by the fund which is not credited to an employer’s account. This includes, e.g., interest on earnings of the fund (G. L. c. 151A, § 14[e][l]), any restitution by an employee of benefits improperly paid him (to be “credited... when such restitution is made,” G. L. c. 151A, § 14[e][4], as appearing in St. 1953, c. 397),
The solvency account provides a mechanism by which the disparity among employer’s accounts is somewhat alleviated by keeping their reserve percentages within limits — between minus three percent and plus thirteen percent under § 14(e)(5) and (6) (as in effect prior to St. 1977, c. 720, §§ 18 and 19 which changed those percentages to minus nine percent and plus fifteen percent,
Further, when as of any computation date the balance of the solvency account is less than one-half of one percent of the total taxable payrolls reported by all covered employers for the twelve months preceding that computation date all such employers must, in addition to contributing to the unemployment compensation fund in accordance with their respective experience rates, make an additional uniform contribution ranging from one tenth of one percent to one percent, depending on the state of the solvency fund. G. L. c. 151 A, § 14(j).
We now summarize the facts concerning the adjustment which the division made under the procedure out
Those reimbursements were not actually credited to the plaintiff’s employer’s account until June, 1973, when they were credited as of September 30,1972. As a result, when the plaintiff’s contribution rate for calendar year 1973 was originally calculated, the September 30, 1972, balance of the plaintiff’s employer’s account was $3,689.33, and the account’s reserve percentage as of that date was only six-tenths of one percent. The record does not disclose the contribution rate assigned to the plaintiff* on the basis of those computations.
On the authority of § 323(g)(2) the division undertook to "determin[e] whether or not [the plaintiff*was] entitled to a reduced rate of contributions” if the reimbursed payments of unemployment compensation were "disregard [ed]” in computing the rate for 1973. In making that determination the division applied the total $591,954.11 to recompute the plaintiff’s 1973 experience rate by adding the reimbursement to the plaintiff’s employer’s account as of September 30, 1972. That action resulted in increasing the balance of the account as of that computation date to $595,643.94 and the account’s reserve percentage to 95.2 percent. The reserve percentage being in excess of thirteen percent, the division, pursuant to G. L. c. 151A, § 14(e)(6), transferred $514,358.06 from the plaintiff’s employer’s account to the solvency account; that action reduced the balance in the plaintiff’s account as of September 30, 1972, to $81,285.88 and the account’s reserve percentage to exactly thirteen percent. The division then redetermined the plaintiff’s experience rate for the
On June 27, 1973, the plaintiff applied to the division (see G. L. c. 151A, § 18) for a refund of allegedly excessive contributions it had paid in 1971,1972, and the first quarter of 1973 on the basis of contribution rates which had reflected charges to its employer’s account for benefits paid its former employees but which had not reflected any credits for the Federal reimbursements. Interpreting § 323(g) of the Trade Expansion Act, 19 U.S.C. § 1942(g), to authorize such refunds in addition to the recomputation of future experience rates, the division, on August 17.1973, refunded $43,448.42 to the plaintiff. Pursuant to G. L. c. 151A, § 14(d)(2) (see note 5, supra), that amount was charged to the plaintiffs employer’s account as of the date of the refund.
The resulting decrease in the balance of the plaintiffs employer’s account reduced the account’s "reserve percentage” (see pages 787-788, supra) to less than thirteen percent on the following computation date, September 30.1973, as of which date the plaintiffs contribution rate for calendar year 1974 was computed. The contribution rate thus assigned the plaintiff for the calendar year 1974 was 3.7 percent, rather than the minimum contribution rate for that year of 2.3 percent. The plaintiff complains that the refund should have been charged on the same computation date that the reimbursement was credited. In that case the resulting credit ($591,954.11 minus $43,-448.42) to the employer’s account would have still yielded a reserve percentage well over thirteen percent, and the plaintiff would have been entitled (after the transfer to the solvency account pursuant to G. L. c. 151A, § 14[e][6]) to the minimum contribution rate rather than the 3.7 percent rate actually assigned — which resulted from the charge of the refund to a computation date subsequent to the computation date on which the reimbursement was credited. We see nothing (1) in the Trade Expansion Act
1. The Trade Expansion Act. The plaintiffs argument here is that the Act obligated the division to “pass through to the plaintiff the benefit of reimbursement”— or, otherwise stated, to maximize the effect of the reimbursement on the plaintiffs contribution rate. We see no such obligation. Section 323(g) of the Act provided that the reimbursed unemployment compensation payments "may be disregarded under the State law” (emphasis supplied); and the word "may” is generally permissive. Farmers & Merchs. Bank v. Federal Reserve Bank, 262 U.S. 649, 662-663 (1923). Anderson v. Yungkau, 329 U.S. 482, 485 (1947). See United States v. Thoman, 156 U.S. 353, 359 (1895); City Bank & Trust Co. v. Board of Bank Incorporation, 346 Mass. 29, 31 (1963); John Donnelly & Sons v. Outdoor Advertising Bd., 369 Mass. 206, 212-213 (1975); Young’s Court, Inc. v. Outdoor Advertising Bd., 4 Mass. App. Ct. 130, 133-134 (1976). Cf. Hecht Co. v. Bowles, 321 U.S. 321, 326-329 (1944). It is, of course, true as the above cited cases indicate and as the plaintiff argues, that where the context and the intent of the draftsman indicate otherwise, "may” is construed as equivalent to the mandatory "shall” or "must.” Here, however, an examination of the various provisions of the Act indicates that "shall” is consistently employed in contradistinction to "may” where a command is intended.
Our interpretation is supported by the legislative history of § 323(g)(2) of the Act (19 U.S.C. § 1942[g][2], set out in note 1, supra). That provision originated in the Senate Finance Committee, to which the version of the Trade Expansion Act passed by the House (H.R. 11970, 87th Cong., 2d Sess. [1962], reprinted in 1 Hearings before the Senate Finance Committee on H.R. 11970, 87th Cong., 2d Sess. 2-25 [1962]) had been referred. 108 Cong. Rec. 12233 (1962). The House version contained no provision for the reimbursement generally of unemployment compensation benefits paid to workers receiving trade readjustment allowances; rather, the House bill provided only for trade readjustment allowances to supplement unemployment compensation benefits paid under State law (H.R. 11970, § 323[c][l]). The House thus evidenced no concern in such a case for the impact of unemployment compensation payments on the contribution rates of employers.
The Senate Finance Committee amended H.R. 11970 to provide that the trade readjustment allowance program be completely federally funded, that if unemployment
The division reduced the plaintiff’s experience rate, as the plaintiff admits in its complaint, "in technical compliance with the provisions of M.G.L. c. 151A”,
2. Constitutional issues. We do not accept the plaintiffs contention that the application by the division of the statutory accounting procedure violated the constitutional mandate that (as put in the plaintiffs brief) such application be made "in a fair and systematic way” or — as also put in its brief — that it "be reasonable, not arbitrary ... so that all persons similarly situated shall be treated alike,”
Judgment affirmed.
Section 323(g) provided in pertinent part: "(g)(1) If unemployment insurance is paid under a State law to an adversely affected worker for a week for which —... (B) he makes application for a trade readjustment allowance and would be entitled ... to receive such allowance, the State agency making such payment shall... be reimbursed from funds appropriated... to the extent such payment does not exceed the amount of the trade readjustment allowance which such worker would have received, or would have been entitled to receive, as the case may be, if he had not received the State payment. The amount of such reimbursement shall be determined by the Secretary of Labor on the basis of reports furnished to him by the State agency.
"(2) In any case in which a State agency is reimbursed under paragraph (1) for payments of unemployment insurance made to an adversely affected worker, such payments, and the period of unemployment of such worker for which such payments were made, may be disregarded under the State law... in determining whether or not an employer is entitled to a reduced rate of contributions permitted by the State law.”
A number of changes have been made in the Unemployment Compensation Law since 1975 when this case was brought. (See, in particular, St. 1976, c. 473, § 5, and St. 1977, c. 720, §§ 15-23.) We use the present tense where the law has not been changed, and we use the past tense where there has been some change — usually in details.
The controversy over the desirability of an experience rating system and the literature it has generated are summarized in Palomba, Experience Rating: A 30 Year Controversy, 19 Labor Law Journal 28 (1968).
The nine categories consisted of seven schedules, § 14(¿)(3)-(9), and two groups of experience rates, § 14(f)(1) and (2), applicable when the unemployment compensation fund available for benefits was less than two percent of total taxable wages.
General Laws c. 151A, § 14(d) (2), as appearing in St. 1966, c. 560, § 2, reads, "An amount equal to the amount of contributions refunded to any employer in accordance with the provisions of section eighteen shall be charged to the employer’s account as of the date when refunded.”
Illegal payments which have been charged to an employer’s account are, with certain exceptions, credited to that account "as of the date discovered” and charged to the solvency account to which restitution, if any, is credited. Section 14(d)(3), as in effect prior to St. 1976, c. 473, § 5, and § 14(e)(4).
From and including 1972, the additional contribution has been at the maximum 1%. [1978] 6 Unempl. Ins. Rep. (CCH) 24, 111. [1978] IB Unempl. Ins. Rep. (CCH) 4869.
Generally (omitting various refinements) workers were eligible for trade readjustment allowances under that Act to relieve them from unemployment determined by the United States Tariff Commission to have been caused by increased imports resulting from concessions granted in trade agreements which the Act authorized the President to make (§§ 201, 301, and 302 of the Act, 19 U.S.C. §§ 1821, 1901, and 1902). A worker’s cash readjustment allowance was equal to 65% of his average weekly wage and was normally limited to fifty-two weeks. See §§ 323(a) & 324(a) of the Act, 19 U.S.C. §§ 1942(a) & 1943(a). For a short summary of the operation of the Act, see Sorrentino, Trade Adjustment Assistance to Workers Displaced by Imports, Fiscal 1963-73, 97 Monthly Lab. Rev. 63 (Jan. 1974). For comments on the Massachusetts experience, see McCarthy, Contrasting Experiences with Trade Adjustment Assistance, 98 Monthly Lab. Rev. 25 (June, 1975).
The trade readjustment allowance program was modified and superseded by the Trade Act of 1974, P.L. 93-618, 88 Stat. 1978 (1975), 19 U.S.C. 2101 et. seq. (1976). See § 602(e) of the Trade Act of 1974, repealing §§ 301(a)(2) & (3), (c), (d)(2), (f)(1) & (3), 302(b)(1) & (2), (c), (d), and (e), 311-315, 317(a), 321-338 of the Trade Expansion Act of 1962, 19 U.S.C. §§ 1901(a)(2), (3), 1901(c), 1901(d)(2), 1901(f)(1), (3), 1902(b)(1), (2), 1902(c)-(e), 1911-1915,1917(a), 1931-1978. And see Title II, chapters 1 & 2, of the Trade Act of 1974, 19 U.S.C., §§ 2251-2322 (1976). Under the Trade Act of 1974, the amount of readjustment assistance was generally increased, but Federal funding was provided only for that portion of a worker’s readjustment allowance which exceeded his entitlement under the State unemployment program, thus ending any further reimbursement to the States for any unemployment compensation paid. See § 232(c), 19 U.S.C., § 2292(c) (1976). For a general discussion of the operation of the trade readjustment allowance provisions of the Trade Act of 1974, see Henle, Trade Adjustment Assistance: Should it be Modified? 100 Monthly Lab. Rev. 40 (March, 1977).
See, e.g., the following sections of 19 U.S.C. (1964) using the word "may”: §§ 1901(a)(1) & (2), 1902(a) & (c), 1911(a) & (c), 1912(c), 1913(a), 1914(a), 1916(a), 1920,1942(g)(2), 1944,1961, and 1972(c), and compare with the following sections using the word "shall”: §§ 1901(a)(3) & (b) (g), 1902(b), (d) & (e), 1911(b) & (d), 1912(a) & (b), 1913(b) & (c), 1914(b) & (c), 1915, 1916(b), 1917-1919,1931, 1941, 1942(a) (g)(1), 1943, 1951, 1952,1962(b), 1971(b) & (c), 1972(a) & (b), and 1973-1976.
Reimbursement to the State was provided by § 323(g) of H.R. 11970 when unemployment compensation under State law was paid to a worker undergoing training approved by the Secretary of Labor. In contradistinction to the explicit reference in § 323(g)(2), as finally passed, to an employer’s contribution rate, the House version is silent on the matter. We note the statement in the Report of the Committee on Ways and Means of the House of Representatives, to accompany H.R. 11970 (H.R. Rep. No. 1818, 87th Cong., 2d Sess. 31 [1962]), that under the House version, providing for reimbursement for unemployment insurance payments made to trainees, it was intended that such "payments not be charged to employers’ accounts.” But the plaintiff sees no significance for the reimbursement made in this case. Its memorandum on the statutory history of the act (requested at oral argument) states that "the House committee report therefore does not discuss the issue presented. See H.R. No. 1818,87th Congress, 2d Sess. (1962).”
The point was also made in a letter from the State of Wisconsin Industrial Commission incorporated in the House hearing. 5 Hearings Before the Committee on Ways and Means on H.R. 9900, 3232-3233, 87th Cong., 2nd Sess. (1962).
The only exception we have found is in the statement of Carl J. Gilbert, chairman of the Committee for a National Trade Policy, at 331, which contains a brief and undeveloped allusion to the possibility of differences in the impact of the program passed by the House on unemployment compensation rates, which might result in differences among the States in their ability to compete for industry.
"In any case in which a State agency is reimbursed under paragraph (1) for payments of unemployment insurance made to an adversely affected worker, such payments, and the period of unemployment of such worker for which such payments were made, may be disregarded under the State law... in determining whether or not an employer is entitled to a reduced rate of contributions permitted by the State law, but only if, under the State law, such payments and such period are disregarded in determining such worker’s eligibility for unemployment insurance under the State law upon the termination of such worker’s eligibility to receive trade readjustment allowances as determined under section 324.” 108 Cong. Rec. 19573 (1962).
Assistance to firms was provided in other portions of the Act — Title III, chapter 2, §§ 311-326 — in the form of loan guaranties, technical assistance, and liberalizations of the tax provisions with reference to net operating losses.
The statement in the paragraph, following the quotation, on which the plaintiff relies, that upon reimbursement "the situation [will be] returned to that which would have existed...,” seems in context to refer to the workers’ unemployment benefits rather than to contribution rates.
We note also the committee’s use of the word "authorize” indicating its intent that the word "may” as used in its version of § 323(g (2) be construed as a word of permission rather than command.
"It is the understanding of the managers on the part of the House that, with respect to the conference action on Senate amendment No. 78, the conferees on the part of both the House and the Senate intend that if — (1) payments of unemployment insurance are made by a State to an adversely affected worker and the State agency is reimbursed for such payments, and (2) such payments, and the period of unemployment of such worker for which such payments were made, are disregarded under State law in determining whether or not an employer is entitled to a reduced rate of contributions permitted by State law, then the worker is not to have his eligibility for unemployment insurance under the State law reduced on account of such payments.” Conference Rep. No. 2518, 87th Cong., 2d Sess. (1962), reprinted in [1962] U.S. Code Cong. & Ad. News at 3141.
Senator Harry F. Byrd of the Senate Finance Committee stated on the floor of the Senate, "[T]he conferees intended that if payments of unemployment insurance are made by a State to an adversely affected worker and the State agency is reimbursed for such payments, and such payments are disregarded under the State law in determining whether or not an employer is entitled to a reduced rate of contributions permitted by State law, then the worker is not to have his eligibility for unemployment insurance reduced on account of such payments.” 108 Cong. Rec. 22179 (1962). Representative Wilbur Mills
The plaintiff overlooks this section of the Act, which provides that reimbursed funds be credited to the Commonwealth’s account in the employment trust fund, when the plaintiff indicates in its brief that failure to base experience ratings on the reimbursements meant that they "would provide a windfall to State Treasuries.”
It is clear that § 14(d)(2) required that the refund "be charged to the employer’s account as of the date when refunded.” See note 5, supra. Further, the briefs indicate (though it is not stated explicitly) that the reimbursement was received before September 30,1972, and under the statute was reflected in the September 30,1972, computation.
Indeed, the plaintiff concedes the validity of the reduction of its reserve percentage to thirteen percent, as provided in G. L. c. 151A,
The plaintiff cites a number of provisions in the Massachusetts and Federal Constitutions but attempts no analysis based on any specific provision.. We consider the matter broadly in terms of due process and equal protection. See Roberts v. State Tax Commn., 360 Mass. 724, 728 n.4 (1972).
Indeed, among the objections to the use of experience rates in establishing employer’s contributions are its "costliness, waste of manpower, and cumbersomeness.” Eden, The Case Against Experience Rating in Unemployment Insurance,” 11 Labor Law Journal 347, 364 (1960). See Teple & Nowacek, Experience Rating: Its Objectives, Problems and Economic Implications, 8 Vanderbilt Law Rev. 376, 383 (1955).