12. Misconduct

Laque v. Tru Tech Systems, Inc., UIA – 12.144

Laque v. Tru Tech Systems, Inc., UIA
Digest No. 12.144

Section 421.29(1)(a)

Cite as: Laque v Tru Tech Systems, Inc., Macomb Circuit Court, No. 2005-4944-AE

Appeal pending: No
Claimant: Michael J. Laque
Employer: Tru Tech Systems, Inc.
Docket no.: 2005-4944-AE
Date of decision: May 25, 2006

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HOLDING: When a claimant voluntarily terminates his or her employment, a withholding of wages by the employer pursuant to an IRS order constitutes good cause attributable to the employer when the employer continues such withholding long after the IRS order is resolved.

FACTS: Claimant held a traveling service job for Tru Tech, beginning January 2003 and ending in December 2004 when he quit due to withheld paychecks. In November 2004, Employer began to withhold wages earned by Claimant pursuant to a levy issued by the IRS. Claimant explained that the IRS had issued the levy by mistake and produced a release of the levy eight days after the IRS’s request for withholding. Employer continued to withhold paychecks due on December 2, 9, and 16, and on December 20, 2004, Claimant called Employer to end his employment due to the unnecessarily withheld pay. On December 18 (or earlier, based on the testimony of Employer), Claimant met with Employer to discuss changing his status to independent contractor. Employer failed to produce written record of any such discussion and claimant “vehemently disputed the employer’s testimony” that he had ever considered himself an independent contractor. When Claimant filed for unemployment benefits, his claim was denied by the Unemployment Insurance Agency. On appeal to an Administrative Law Judge, this decision was reversed and his claim was granted. On Employer’s appeal to the Michigan Employment Security Board of Review, the ALJ’s decision was at first reversed, then affirmed on reconsideration. Employer then appealed further to the District Court.

DECISION: The Board of Review decision is affirmed and Claimant is entitled to unemployment insurance benefits.

RATIONALE: When a justification for withholding pay, such as an IRS order, becomes ineffective (e.g., by an official rescission of the IRS order), employers immediately regain their duty to pay their employees in a timely fashion. For the relevant legal question of whether a “reasonable, average, and otherwise qualified worker” would give up her or his employment, such circumstances are essentially the same, from the worker’s perspective, as an employer withholding pay for no reason.

Digest Author: James Fahringer, Michigan Law, Class of 2017
Digest Updated: 1/6/2016