B.F. Goodrich Co. v. Director, Division of Employment Security

385 N.E.2d 262, 6 Mass. App. Ct. 784 (1979)

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B.F. Goodrich Co. v. Director, Division of Employment Security

Massachusetts Court of Appeals
385 N.E.2d 262, 6 Mass. App. Ct. 784 (1979)

Facts

The Unemployment Compensation Law (the law) required employers to contribute to an unemployment compensation fund. The yearly rate of contribution, calculated on the preceding September 30, was based on the “reserve percentage,” which determined the employer’s “experience rate.” Each employer had an account credited with the employer’s contributions as of the date they were made and charged with payments as of the date they were made. The employer’s account was also charged with refunds received due to claims for adjustment. The Division of Employment Security (DES) (defendant) maintained a “solvency” account. When an employer’s account balance was negative, the deficit was charged to the solvency account. According to § 14(E)(5) of the law, if, on any computation date, an employer’s account had a negative balance resulting in a reserve percentage below minus three percent, an amount was charged to the solvency account and credited to the employer’s account to bring the negative balance equal to minus three percent of the employer’s total taxable payroll during the year before that computation date. If an employer’s account balance indicated a reserve percentage above 13 percent, an amount sufficient to reduce the balance to 13 percent of the employer’s total taxable wages during the preceding year was charged to the employer’s account and credited to the solvency account. B.F. Goodrich Company (B.F. Goodrich) (plaintiff) closed a manufacturing plant, terminating its employees, many of whom received unemployment compensation. The payments were charged to B.F. Goodrich’s account. Some employees also applied for weekly trade-adjustment allowances totaling $591,954.11, for which the DES received reimbursement that was required to be credited to the employer’s account. Although DES received the reimbursements in September 1972, the payments were not credited to B.F. Goodrich’s account until June 1973, and deficiencies were attributed to B.F. Goodrich’s account. DES recomputed B.F. Goodrich’s experience rate, ultimately transferring $514,358.06 from B.F. Goodrich’s account to the solvency account, reducing the reserve percentage to 13 percent and the company’s experience rate to 2.1 percent. In June 1973, B.F. Goodrich applied to DES for a refund, which was charged to B.F. Goodrich’s account as of the date of the refund. The resulting decrease in the account’s balance reduced the reserve percentage to less than 13 percent on the 1973 computation date. The contribution rate assigned for 1974 was 3.7 percent. B.F. Goodrich sued, arguing that the refund should have been charged on the same computation date that the reimbursement was credited, resulting in a lower contribution rate.

Rule of Law

Issue

Holding and Reasoning (Goodman, J.)

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