A. D. s. s. B. o.

STATE OF MICHIGAN

::·I ':J •

No. No.

dO.J..-U4J22-78627

52

IN THE CIRCUIT COURT FOR THE COUNTY OF WASHTENAW

MICHIGAN EMPLOYMENT SECURITY COMMISSION,

v.

Plaintiff-Appellant,

GEORGE CLARK and YPSILANTI REGIONAL PSYCHIATRIC HOSPITAL,

Defendants-Appellees.

FRANK J. KELLEY, Attor~ey General of the State of Michigan By: PATRICIA L. SHERROD (P-26749) Assistant Attorney General Attorneys for Appellant, M.E.S . C.

WILLIAM H. RIDLEY (P-27596) Attorney for Appellee, G. Clark

YPSILANTI REGIONAL PSYCHIATRIC HOSPITAL Defendant-Appellee

----------------------------------~/ OPINION AND ORDER

No. 82-23903-AE

At a session of said Court, held in the Washtenaw County Courthouse, Ann Arbor,

Michigan, on the 20th day of April, 1983~

PRESENT: HONORABLE HENRY T. CONLIU, CIRCUIT JUDGE.

The Defendant-Appellee, George Clark , had been employed as

a child care worker at ~he Ypsilanti Regional Psychiatric

Hospital (YRPH) for about five years. During the last two

years of this eoployment, he had returned to graduate school to

complete a Master of Social Work degree. This necessitated

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reducing his status at Ypsilanti Regional Psychiatric Hospital

to part-time so that he could concentrate on his studies. In

January , 1981 Mr . Clark interviewed for a full time position as

a medical social worker with the Allen Park Veterans

Administration Medical Center. On January 21, 1981 he was

offered this position, and he formally accepted it. On

February 3, 1981 he completed a pre-employment physical

examination and filled out health information and insurance

forms at the request of his new employer. He was instructed to

report to work at 8:00 a.m. on Monday, February 9, 1981 .

Mr. Clark had informed the Ypsilanti Regional Psychiatric

Hospital personnel office that he had accepted full time

employment with the Federal Government at the beginning of

February, 1981. He asked that his resignation request be

delayed because he knew that there was a federal hiring freeze

in effect. However, since he had been told to report to work

on February 9th, he submitted his resignation and worked his

last shift at Yps ilanti Regional Psychiatric Hospital on

Sunday, February 8, 1981. When he repor ted to the VA on

Monday, he was told that there would be a delay in the start of

his employment. He returned to Ypsilanti Regional Psychia tric

Hospital and asked to continue his part-time employment. He

was told that the state had also imposed a hiring freeze and

that since he had submitted his resignation he would not be

rehired. Mr. Clark had not missed any work at Ypsilanti

Regional Psychiatric Hospital because of the nature of his

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part-time schedule. However, because his resignation had been

entered into the state computer, he would have to be considered

a "new hire" and was therefore subject· to the state hii:ing

freeze.

The Defendant-Appellee applied for unemployment benefits

on February 17, 1981. The Michigan Employment Security

Commission determined that he was disqualified for benefits

under Section 29(1)(a) of the Michigan Employment Security Act,

~.fCLA 421.1ff; MSA 17.50lff. This decision was affirmed by

Referee Lois H. Smith in a written opinion dated May 29, 1981.

Th~ referee's decison was reversed by the Michigan Security

Board of Review in a written decision dated August 31, 1982.

The Michigan Employment Security Commission filed this appeal.

When reviewing the determinations of an administrative

tribunal an appellate court must review both the factual and

legal basis for the decision reached. A separate standard of

review i s used in each category. Factual determinations must

be reviewed to find if the adninstrative tribunal's decision is

support ed by competant, material and substantial evidence on

the record considered as a whole. Saber v. Capital

Reproductions, Inc., 28 Mich App 462 (1970) A thorough and

thought provoking discussion of the parameters of this standard

of review can be found in MERC ~Detroit Symphony Orchestra,

393 Mich 116 (1974) in which our Supreme Court reviewed the

record of the 1963 Constitutional Convention for direction on

the precise meaning of the substantial evidence standard of

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review. The Court concluded its analysis with the following

model to be used by reviewing courts=

"The cross-fire of debate at the Constitutional Convention imports meaning to the 'substantial evidence' · standard in Uichigan jurisprudence. What the drafters of the Constitution intended was a thorough judicial review of administrative decision, a review which considers the whole record -- not just those portions of the record supporting the findings of the administrative agency. Although such a review does not attain the status of de novo review, it necessarily entails a degree-of qualitative and quantitative evaluation of evidence considered by the agency. Such review must be undertak«?n with considerable sensitivity in order that the courts accord due deference to administrative expertise and not invade the province of exclusive administrative fact-finding by displacing an agency choice between two reasonably differing views. Cognizant of these concerns, the courts must walk the tightrope of duty which requires judges to provide the prescribed meaningful review."

Practically and concisely put, this means that a reviewing

court will not substitute its judgement of the facts f~r that

of the fact finding tribunal but that a careful review of the

whole record must be made on review. Williams v. Arnold

Cleaners, 25 Mich App 672, 675 (1970) On factual questions,

"' ... the judicial function is finished when there is found to

be a rational basis for the conclusions approved by the

ad:r.~.inistrative body.'" Dynamic Manufacturers v. Employment

Security Co'rnmission, 369 Mich 556, 560 (1963) quoting from

Rochester Telephone Corp. ~United States, 307 US 125; 59 SCt

754; 83 LEd 1147.

A careful scrutiny of the total record provided by the

Employment Security Board Review in this case shows that there

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is factual support for the decision reached by the Board of

Review. There is no dispute that hlr. Clark left a part-time

job for full time employment or that this factual situation can

provide the basis for an exemption from the disqualification

provisions of Section 29 of the Empl0yment Security Act. The

legal issue present a~ the adminis~rative level, as here,

concerns the meaning of the phrase "·performs services" found in

Section 29(5) of the Employment Security Act. Does the record

below provide a sufficient factual basis for the Board of

Review to conclude that Mr. Clark had "provided services" for

the Veterans Administration? I think that it does. First, Mr.

Clark became active on the Federal ·Civi l Service register in

March, 1980. (April 8, 1981 hearing - p. 8) Second, Mr. Clark

interviewed for the job on January 20, 1981. (April 8, 1981

hearing - p. 9) Third, Ur. Clark was offered and accepted full

time employment on January 21, 1981, and this commitment

remained open at the time of the hearing pending the end o! the

federal hiring freeze. (April 8, 1981 hearing- p. 9-11) At

all relevant times Mr. Clark remained available for and willing

to work for the Veterans Administration. (April 8, 1981

hearing - p. 11) Forth, Mr. Clark through his counsel

informed the Board of Review that he had reported for a

pre-employment physical scheduled by the Veterans

Administration on Tuesday, February 3, 1981 at which time he

filed out health insurance forms as well as taking the physical

examinat ion. (April 8, 1981 hearing - Exhibit 12) Fifth, Mr.

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Clark reported for work on February 9, 1981 as required by the .

Veterans Administration. (April 8, 1981 hearini- p. 11)

Sixth, the Board of Review was aware that Mr. Clark did not

start work on February 9, 1981. (April 8, 1981 hearing - p .

11, 26) Therefore, it is the finding of this Court that there

is present in the record of this case a rational basis for the

factual finding of the Board of Review.

It remains to decide if there is a legal basis which

sustains the decision of the Board of Review. The pa~ties are

in agreement that Section 29(5) provides an exemption from the

disqualification provisions found in Section 29(1) of the

Employment Security Act . Section 29(5) reads in pertinent

part:

"If an individual leaves his work to accept permanent full-time work with another employer, and performs services for that employer ... the disqualification provisions of subsection (1) shall not apply to that leaving . "

Two criteria must be satisfied for this exemption to

apply: There must be permanent full-time work, and the

individual must perform services for that employer. There is

no dispute here that the Veterans Administration position was a

permanent full-time position. The dispute centers around the

meaning to be given the phrase "perform services.'' The Board

of Review held that

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'' ... the Refereeis conclusion was based on too narrow an interpretation of the actual services performed by the claimant in behalf of his new employer . ..

While the VA Hospital employer was prevented from assigning the claimant to the new position, there is no question that the claimant fully complied with the employer's recruitment procedures. His performance was clearly a service in behalf of the staffing needs of that employer. The claimant did, indeed, carry out acts under the direction of his new employer , although the specific tasks to which he was appointed could not be performed at that time because of the recruitment freeze." Board of Review Decision p. 2 .

In support of this holding the Board cited the case Ingham

County~ Cole, Docket No. 55295 (1981) which is the only

Michigan case that has attempted to define the "perform

services" language. In Cole the claimant had worked for Ingham

County as a Deputy County Clerk Bookkeeper for only a few hours

on the morning of February 22, 1978 before she terminated her

employment. In construing th i s same section the Court of

Appeals concluded that the claimant had performed services

wi~hin the meaning of subsection 29(5). In reaching this

conclusion the Court applied an analysis which has been

consistently applied by Michigan courts when interprating the

Employment Security Act. This analysis merits a closer look.

First, the provisions of the Employment Security Act are meant

to be liberally construed by reviewing courts. This policy

position has been consistently reiterated by Uichigan Courts .

In Linski v. Employment Sec. Comm. , :358 r.1ich 24X, 245 ( 1959)

the Hichigan Supreme Court stated:

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...

"Our concern with employment security cases does not apply solely to the claimant before us. In each such case, there may likewise be involved the fate of claimant's family, and impact of his unemployment upon the butcher, the baker and the candlestick ~aker who supply his needs . The effect of mass unemployment upon society g a ve rise to this great social insurance statute. In one of this Court ' s first i nterpretations of it, we held that a liberal interpretation should be given to it:

'The purpose of the unemployment compensation act is to relieve the distress of economic insecurity due to unemployment. It was enacted in the interest of public welfare to provide for assistance to the unemployed and as such is entitled t o a liberal interpretation . Godsol ~ Unemployment Compensatiorr Commission , 302 Uich 652, 665 (142 ALR 910)."

The analysis found in Laya ~ Cebar Construction.Co, 101

llich App 26 (1980) serves as a paradigm for determining a

" liberal interpretation" of the statute in situations where the

claimant is forced by circumstances beyond his control to be

unemployed . The cla imant in Laya had taken a job in Ohio 275

miles from his Warren, ~ichigan home after being laid off. He

worked for 25 days visiting his family on the weekends before

quiting his job because of fa~ily problems. The Court found

that the claimant was not disqualified for voluntarily quitting·

his Ohio job . This conclusion was reached by applying " .•• a

realistic standard which [recognizes] that the physical

distance between home and work, as well as the economic

problems in . trying to maintain t wo homes, could render a

decision to quit as involunta ry as it would be if compelled

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instead by law, the element s , or a serious illness •..

Plaintiff was not faced with a choice between alternatives that

ordinary persons would consider reasonable.rr Id. at 31, 33 If

the alternative presented to the claimant is not reasonable

then the Laya Court found that the purpose of the act was

thwarted.

"The declaration of policy found in the employment security act provides:

'Declaration of policy. The legislature acting in the exercise of the police power of the state· declares that the public policy of the state is as follows: Economic insecurity :: due to unemployment is a serious menance to the health, morals, and welfare of the people of this state. Involuntary unemployment is a subject of general interest and concern which requires action by the legislature to prevent its spread and to lighten its burden which so often falls with crushing force upon the unemployed worker and his .family, to the detriment of the welfare of the people of this state. Social security requires protection against this hazard to our econimic life. Employers should be encouraged to provide stable employment. The systematic accumulation of funds during periods of employment to provide benefits for periods of unemployment by the setting aside of unemployment reserves to be used for the benefit of persons unemployed through~ fault of their own, thus maintaining purchasing power and limiting the serious social consequences of relief assistance, is for the public good, and the general welfare of the people of this state.' MCL 421.2; MSA 17.502 (Emphasis added.)

It bears repeating that the courts should construe the provisions of the act liberally in order to give effect to this remedial policy. General Motors Corp~ Employment Security Cornm , 378 Mich 11 0, 117; 142 NW2d 686 (1966), Linski ~Employment Security Comm, 358 Mich 239, 245; 99 NW2d 582 (1959). For this same reason, the d~squalification provisions of the

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act should be narrowly construed. Chrysler Corp ~ DeVine, 92 Mich App 555, 558; 285 NW2d

·- 373 (1979). It would be a sad commentary on our values and would be wholly inconsistent with the purposes of the act for our law to be interpreted in such a manner as to discourage the initiative displayed by the plaintiff in the instant case . .. This is not a worker who is unemployed through his own fault." Id . at 34, 35

It is clear that the Board of Review applied this analysis

to the present case, and their decision deserves to be

sustained. A careful reading of their decision makes clear

that they have followed the dictates of the appellate courts of

this state that the employment security act be liberally

construed to avoid injustice in situations where the claimant

is unemployed through no fault of his own and has made a

reasonable effort to obtain full-time employment. Mr. Clark

showed initiative and acted ethically in the present situation.

He would have covered himself to a greater extent by not

informing his employers at YRPH of his federal position until

after he began his regular duties. £owever, he was upfront and

· honest in his dealings with them so that they had as much

advance notice as he could provide that he was changing

employment. Additionally, Mr. Clark sought to move from a

part-time job to a full-time position. Clearly, the

legislature seeks to encourage this type of employment change

especially if the commitment made by the new employer is as

strong as that present in this case. No more could be asked of

a citizen than the intiative shown by Mr. Clark in seeking to

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advance himself. That political and economic circumstance

caught him in this type of "catch 22" situation is unfortunate.

Therefore, given the purpose of the employment security

act, the broad interpretation of the phrase "performs services''

used by the Review Board in this case is both appropriate and

just. To determine tha t the services performed by Mr. Clark at

the direction of the Veterans Administration officials were not

adequate simply because he was not directly compensated for

them would basically conflict with the purpose of the act. The

Court of Appeals in Laya ~ Cebar Construction Co, supra

recognized, as did the . Board of Review in this case, that a

realistic standard of review must be used in these cases.

Actions taken by the claimant must be viewed in the context of

the real world. This type of analysis mode allows factual

situations like this to be covered by an exception clearly

intended by the legislature to do this.

THEREFORE, the decision of the Board of Review is

AFFIRMED.

IT IS SO ORDERED.

HENRY T. CONLI , CIRCUIT JUDGE

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STATE OF. MICHIGAN EMPLOYMENT SECURITY BOARD OF REVIEW

In the Matter of the Claim of

GEORGE W. CLARK, Appeal Docket No. BBl-04322-7862~

Claimant Social Security No.

YPSILANTI REGIONAL PSY. HOSPITAL,

Employer

DECISION OF BOARD OF REVIEW

In this case, the Referee held the claimant disqualified for leaving work voluntarily without good cause attributable to the employer under Section 29(1) (a) of the MES Act. For the reasons that follow, the Referee's decision is reversed.

The Referee, in his decision, considered whether the provisions of Section 29(5 ) could apply to the claimant's leaving. The Section provides:

''Sec. 29. (5) If an individual leaves his work to accept permanent full-time work with another employer, and performs services for that employer, or to accept a recall from a former employer, the disquali­fication provisions of subsection (1) shall not apply to that leaving; but the wages earned with the employer that he last left, including wages previously transferred under this provision to the last employer, shall, for the purpose of computing and charging benefits, be deemed wages earned from the employer with whom the individt.~al

accepted work or recall, and benefits paid based upon those wages, shall be charged to that employer. When issuing a determination covering that period of employment, the commission shall advise the chargeable employer of the name and address of the other employer, the · period covered by the employment, and the extent of the benefits which may be charged to the account of the chargeable employer."

Upon being notified that he was offered a full-time position as social worker with Federal VA Hospital, the claimant . notified his state employer on February 4, 1981 of his intention to resign (T, PP• 9 & 12). He completed his schedule on the last weekend of work and prepared to assume his new duties ::>n Monday (T, pp. 7 & 8, 13), the next work day. ~

Reporting to the ne~~ VA Hospital employer, as required on February 9, the claim­ant was informed a hiring freeze order delayed the start of his new employment (T, pp. 11 & 12).

I:nmediately returning to his former state employer, the claimant was informed that, despite his f:!.ve-year record of sat:! sfactory employment (T, p. 20), the processing of his t"esignation had changed his employment status. Under the employer's policy, he could only be reinstated as a new hire (T, p 15) . However, the claimant was :ol1 :hat a sts~e-wide hiring freeze prevented his reinstate­ment at that time (!, P• 22).

uv l 'O.J ~ ,_, ... _

Page 2

There is no question in the record that the claimant's leaving was for the purpose of beginning his new assignment with the VA Hospital, the federal employer, and that there was reasonable expectation of permanent, full-time work. The choice was voluntary on the claimant's part, not attributable to any cause of the state hospital employer.

The Referee held that the claimant's inability to perform the duties of his new federal appointment foreclosed application of Section 29(5) and that the claim­ant was, therefore, disqualified under the voluntary leaving provisions of Section 29(1)(a). It is the opinion of the Board that the Referee's conclusion was based on too narrow an interpretation of the actual services performed by the claimant in behalf of his new employer. The VA Hospital letter of commit­ment (Exhibit 10), the testimony of the claimant, and the claimant's counsel's argument in requesting a hearing, before the·· Board of Review, all support the extent of the claimant's performance of services, namely:

1) Through application and examination the claimant became actively listed on the Federal Civil Service register in March, 1980 (T, p. 8);

2) On January 21, 1981, following an . employment interview the claimant was informed that he was accepted for a Federal position (T, p. 9);

3) The claimant submitted a pre-employment medical exam and completed health insurance application forms on that date (claimant counsel oral hearing argument);

4) As required by the employer commitment letter, specifying the terms of t he federal appointment (Exhibit 10), the claimant reported for work.

While the VA Hospital employer was prevented from assigning the claimant to the new position, there is no question that the claimant fully complied with the employer's recruitment procedures. His performance was clearly a service in behalf of the st.affing needs of that employer. The claimant did, indeed, carry out acts under the direction of his new employer, although the specific tasks to which he was appointed could not be performed at that time because of the recruitment freeze.

In a recent decision, Ingham County v Cole, Mich App (October 1, 1981), the Court of Appeals interpreted the scope of the "performance of services" requirement of Section 29(5) on similar facts of interrupted performance. In that case, the claimant reported for duty and "observed the work of others but did not actually perform any specific task herself." The Court of Appeals held that the claimant "performed acts" in accordance with the instructions of her employer, even though the claimant decided on that reporting day not to carry out the assigned tasks after her observation. Section 29(5) was applied to the claimant's leaving to accept the new employment and the Board of Review's decision holding the claimant not disqualified for leaving the first employer was affirmed.

We add that the courts of this state haYe consistently held that a ~arty who is misled as to his legal rights and induced, through misrepresectation by another to act contrary to his interests, should be extended affirmative relief from the

Page 3

consequences of his adverse actions. As the Supreme Court in Carpenter v Detroit Forging Co, 191 Mich 45 ( 191 6) pointed out, in releasing a party from a work­man's compensation settlement induced through misrepresentation, such equitable relief is an exception to the ordina-ry practice of withholding relief from a party claiming ignorance having a mistaken view of legal requirements.

The Supreme Court added in Holt v Stofflet, 338 Mich 115, 119 (1953):

"The central principle of equitable estoppel is that one who by his language or conduct leads another to do what he would not otherwise have done, shall not subject such person to loss or injury by disap­pointing the expectations upon which he acted . "

On the basis of the foregoing, we think fhat the second employer in our case--the federal government--is estopped from denying the claiman~ 1 s perform­ance of service under Section 29(5).

Therefore, we believe the Referee should have applied the affirmative relief of Section 29(5) and held the claimant not disqualified for benefits under Section 29(1 )(a) of the Act. Moreover, Section 31 of the MES Act requires that this Board construe the statute in a way that would avoid a waiver of benefits in this case through the agreement between the claimant and the federal employer.

The federal employer did not appear at the Referee hearing. Application of Section 29(5) may present unanticipated difficulties in transferring credits from the state to the federal employer's rating account considering that the federal employer is ' governed by a separate unemployment insurance program. The Board wishes to state that it will consider the federal employer's position regarding said difficulties should a request for rehearing on this question be filed in a timely manner.

The decision of the Referee is hereby reversed.

The claimant is not disqualified by reason of the separation in issue, and is entitled to unemployment benefits if otherwise eligible and qualified.

Thomas L. Gravelle, Member

MAILED AT DETROIT, MICHIGAN __ A_u_gus_t_3_1_,_1_9_8_z __ _

This decision will become final unless a written request for rehearing or appeal to the appropriate circuit court is RECEIVED on or before

September 20, 1982

TO PROTECT YOUR RIGHTS, YOU MUST nE ON TIME.