Oklahoma Goodwill v. Oklahoma Esc, 102,539.

• Court: Supreme Court of Oklahoma
• Writing for the Court: Per Curiam
• Citation: 2009 OK 55,219 P.3d 540
• Parties: OKLAHOMA GOODWILL INDUSTRIES, INC., Plaintiff/Appellee, v. OKLAHOMA EMPLOYMENT SECURITY COMMISSION, Defendant/Appellant, and Assessment Board of the Oklahoma Employment Security Commission; Board of Review of the Oklahoma Employment Security Commission; and Beverly A. Peters, Defendants.
• Docket Number: No. 102,539.,102,539.
• Decision Date: 07 July 2009

219 P.3d 540 2009 OK 55 OKLAHOMA GOODWILL INDUSTRIES, INC., Plaintiff/Appellee,
v.
OKLAHOMA EMPLOYMENT SECURITY COMMISSION, Defendant/Appellant, and
Assessment Board of the Oklahoma Employment Security Commission; Board of Review of the Oklahoma Employment Security Commission; and Beverly A. Peters, Defendants. No. 102,539. Supreme Court of Oklahoma. July 7, 2009.

[219 P.3d 541]

On Appeal from the District Court, Oklahoma County; Honorable Vicki Robertson, Trial Judge.

¶ 0 Oklahoma Goodwill Industries, Inc., operates rehabilitative work programs for disabled individuals. These programs are operated at Goodwill owned facilities, such as its sheltered workshop and thrift shops, and at government facilities and offices pursuant to contracts authorized by state and federal law. Oklahoma law provides at 40 O.S. Supp.2008 § 1-210(7)(d), an exemption from unemployment compensation taxes for "an individual receiving rehabilitation ... while participating in a program in a facility that: (i) conducts a program of rehabilitation for [disabled] individuals whose earning capacity is impaired ... or (ii) conducts a program that provides remunerative work for [disabled] individuals who ... cannot be readily absorbed into the competitive labor market." The Oklahoma Employment Security Commission and Assessment Board determined that this exemption did not apply to a claimant who had worked in a Goodwill rehabilitation program at Tinker Air Force Base. The Commission and Assessment Board concluded the exemption is limited to persons who work in a facility operated by Goodwill and that Tinker Air Force Base is not such a facility. On appeal by Goodwill to challenge this ruling, the district court ruled that the exemption did not depend upon the place where the individual works, but upon an individual's participation in a rehabilitative program. Upon further appeal to this Court, we agree with the trial court and affirm.

TRIAL COURT JUDGMENT AFFIRMED.

John E. Miley, Deputy General Counsel, Oklahoma Employment Security Commission, Oklahoma City, OK, for Appellant.

Sarah J. Timberlake and William C. McAlister, Abowitz, Timberlake & Dahnke, P.C., Oklahoma City, OK, for Appellee.

PER CURIAM.

¶ 1 The issue presented is whether Oklahoma Goodwill Industries, Inc., is exempt from paying unemployment taxes on individuals participating in rehabilitation and/or remunerative work/training programs that Goodwill operates at Tinker Air Force Base and in Oklahoma state offices. Goodwill provides such programs pursuant to federal and state contracts mandating that individuals with severe handicaps or disabilities be utilized in performing contracted-for commodities or services. We hold that the Legislature intended to exempt employers, like Goodwill, from the payment of unemployment taxes when operating rehabilitation or remunerative work programs for individuals (1) whose earning capacity is impaired by age, physical or mental deficiency, or injury, or (2) who, because of their impaired mental or physical capacity, cannot be readily absorbed into the competitive labor market, as provided by 40 O.S. Supp.2008 § 1-210(7)(d).¹ We further hold that the purpose of this exemption is to promote programs of this general nature, as opposed to only programs operated at employer-owned facilities. Accordingly, this exemption extends to individuals who participate in rehabilitation work programs operated at non-Goodwill owned

219 P.3d 542

facilities like Tinker Air Force Base and state offices pursuant to the federal and state contracts.

FACTS AND PROCEDURAL HISTORY

¶ 2 Goodwill is a non-profit organization that provides rehabilitation and remunerative work for severely disabled persons. Individuals who participate in Goodwill's rehabilitation program(s) are classified as consumers. Goodwill assigns consumers to work at its sheltered workshop and thrift shops, as well as at Tinker Air Force Base and state offices. Consumers who provide services at Tinker Air Force Base and the state offices do so pursuant to federal and state set-aside contracts authorized by the Javits-Wagner-O'Day Act (JWOD Act) (41 U.S.C. §§ 46 through 48c) and the State Use Act (74 O.S. 2001 and Supp.2008 §§ 3001 through 3010).²

¶ 3 Under the contracts with Tinker Air Force Base and the state, the consumers perform supervised custodial services. At least seventy-five percent (75%) of the hours worked under these contracts must be supplied by Goodwill consumers. Goodwill maintains office space at Tinker Air Force Base and in the state office buildings which is utilized to offer rehabilitation services to consumers working as custodians under the respective contracts. The support that Goodwill supplies at government facilities include: (1) team meetings between case workers and trainers; (2) vocational evaluations by the case workers and/or trainers; (3) meetings or conferences with consumers and/or their representatives; and (4) individualized training.

¶ 4 In 2002, Goodwill's newly appointed president concluded that Goodwill consumers working at Tinker Air Force Base and state offices under these governmental contracts fall within the statutory exemption found at § 1-210(7)(d) from unemployment coverage. This subsection provides:

(7) For the purposes of paragraphs (3) and (4) of this section the term `employment' does not apply to service performed:

* * *

(d) by an individual receiving rehabilitation or remunerative work while participating or enrolled in a program in a facility that:

(i) conducts a program of rehabilitation for individuals whose earning capacity is impaired by age, physical or mental deficiency, or injury; or

(ii) conducts a program that provides remunerative work for individuals who, because of their impaired mental or physical capacity cannot be readily absorbed into the competitive labor market....

Goodwill stopped reporting the wages of the individuals working under federal and state contracts on January 1, 2003.

¶ 5 The Oklahoma Employment Security Commission's (OESC) tax enforcement officer investigated several claims for unemployment benefits by Goodwill consumers who had been separated from employment under the federal and state contracts. In reviewing the claim of Beverly Peters, a Goodwill consumer who had been assigned to work at Tinker Air Force Base, OESC determined

219 P.3d 543

that the services performed there did not fall within the statutory exemption from unemployment taxes and awarded her unemployment benefits. Following the award and entry of an assessment, Goodwill brought a tax protest before the OESC Assessment Board (Board). The sole issue addressed by the Board was whether individuals performing service as part of a rehabilitation work program under the terms of the JWOD Act and the State Use Act are exempt from coverage as provided in § 1-210(7)(d).

¶ 6 OESC has argued before the Assessment Board and on appeal in the district court that exemptions from coverage should be narrowly construed against the taxpayer. OESC has asserted that intent to limit the exemption to only those workers who work in an employer-owned facility is reflected in the Legislature's use of the term "in a facility" to describe where eligible programs are conducted.

¶ 7 Goodwill has countered that its consumers who perform services that are rehabilitative in nature, should be exempt from coverage if they "cannot be readily absorbed in the competitive labor market" because of their mental or physical limitations, regardless of where the rehabilitative work is performed. Goodwill believes the statutory exemption is tied to the nature of the rehabilitative program provided by Goodwill and, therefore, extends to rehabilitative programs at Tinker and state offices under the aforementioned state and federal contracts.

¶ 8 The Board affirmed the OESC determination. Upon Goodwill's appeal to the district court, the trial court reversed the Board's order. Upon further appeal to this Court by OESC, we have retained this case for disposition. We agree with Goodwill's interpretation of § 1-210(7)(d).

GOODWILL REHABILITATIVE WORK PROGRAMS AT FEDERAL AND STATE FACILITIES ARE EXEMPT FROM UNEMPLOYMENT TAXES UNDER 40 O.S. SUPP.2008 § 1-210(7)(d).

¶ 9 It is undisputed that the rehabilitation programs Goodwill provides at Tinker Air Force Base and state offices are the type of rehabilitation work programs exempted by § 1-210(7)(d). However, OESC argues that only consumers participating in a program "in a facility" fall under the exemption. More particularly, OESC asserts the tax exemption is applicable to Goodwill's services only when a consumer is employed in a sheltered workshop or other location owned and/or operated by Goodwill. Given the fact that both federal and state law promote rehabilitation and remunerative work programs on-site at federal and state facilities, we cannot agree that the Legislature intended such a restrictive application of the exemption.

¶ 10 It is well settled that Legislative intent is not determined from isolated phrases in a statutory framework. Rather, intent is ascertained from the whole act in light of its general purpose and objective. McSorley v. Hertz Corp., 1994 OK 120, ¶ 6, 885 P.2d 1343; Oglesby v. Liberty Mutual Ins. Co., 1992 OK 61, ¶ 8, 832 P.2d 834; Smicklas v. Spitz, 1992 OK 145, 846 P.2d 362.

¶ 11 In general, "facility" is construed as an inclusive term intended to embrace anything which aides in the performance of a duty.³ Rather than a restricted interpretation to indicate services provided at a physical location owned, operated or controlled by Goodwill, it is much more likely the term "facility" in the statute relates to the entity who has undertaken the duty to provide the program of rehabilitation or remunerative work to consumers with severe disabilities. While a...