« Environment - "Invasive species, other issues at center of presentations for lawmakers, officials" | Main | Courts - "Immigration law may face federal test: Justice Department considers challenge in Indiana, other states" »
Friday, September 30, 2011
Ind. Decisions - 2nd Supreme Court opinion filed late yesterday afternoon
In Franklin Electric Company, Inc. v. Unemployment Insurance Appeals of the Indiana Dept. of Workforce Development, an 8-page, 5-0 opinion, Chief Justice Shepard writes:
Franklin Electric formed two new subsidiaries and started new unemployment experience accounts with a low introductory contribution rate for each one. We hold that the new subsidiaries are not new employers and that Franklin Electric’s experience rate should have applied to contributions made by the subsidiaries. * * *On November 18, 2008, the Department notified Franklin Electric that it had conducted an investigation and determined that Franklin Electric “did not dispose of a distinct and segregable portion of its organization, trade, or business.” (Division’s Ex. A.) The Department canceled Franklin Electric Manufacturing’s and Franklin Electric Sales’s experience accounts. All experience balances and liabilities reverted to Franklin Electric, and the Department recalculated Franklin Electric’s merit rate for 2005, 2006, 2007, and 2008. The Department demanded back payments, interest, and a ten percent penalty.
Franklin Electric appealed the Department’s determination to a liability administrative law judge (LALJ) who affirmed the Department’s determination that the three entities are a single employer, but waived the penalties imposed by the Department. The Court of Appeals affirmed the LALJ. Franklin Elec. Co. v. Unemployment Ins. Appeals of the Dep’t of Workforce Dev., 928 N.E.2d 880 (Ind. Ct. App. 2010). We granted transfer, vacating the opinion of the Court of Appeals. 950 N.E.2d 1199 (Ind. 2011) (table). We affirm the determination of the LALJ. * * *
Franklin Electric raises three issues on appeal, which we restate as whether Franklin Electric Manufacturing and Franklin Electric Sales acquired the “distinct and segregable portion” of Franklin Electric’s business required to make them “employers.” We hold that Franklin Electric Manufacturing and Franklin Electric Sales did not acquire a distinct and segregable portion of Franklin Electric’s business and thus did not qualify as “employers” under the laws governing Indiana’s unemployment compensation arrangements. * * *
Today’s holding is a narrow one. It deals only with the language “distinct and segregable” as used in the unemployment statutes and only concerns determining the proper merit rate for unemployment contribution. The instant ruling neither calls into question the validity of the wholly owned subsidiary arrangement, nor holds that the creation of a wholly owned subsidiary can never result in the new entity becoming a separate employer.
Posted by Marcia Oddi on September 30, 2011 11:05 AM
Posted to Ind. Sup.Ct. Decisions