Potlatch Forests, In re

• Decision Date: 05 February 1952
• Docket Number: No. 7750,7750
• Parties: In re POTLATCH FORESTS, Inc.
• Court: Idaho Supreme Court

Page 242

240 P.2d 242

72 Idaho 291

In re POTLATCH FORESTS, Inc.

No. 7750.

Supreme Court of Idaho.

Feb. 5, 1952.

Elder, Elder & Smith, Coeur d'Alene, for Potlatch Forests, inc.

Robert E. Smylie, Atty. Gen., John W. Gunn, Asst. Atty. Gen., and Sherman F. Furey, Jr., Salmon, for the Agency.

THOMAS, Justice.

This is an appeal from findings, conclusions and ruling of the Industrial Accident Board, which reviewed and sustained a determination made by the Employment Security Agency under the Employment Security Law, Title 72, Chap. 13, I.C., determining the experience rating of Potlatch Forests, Inc., (hereinafter referred to as Potlatch) for 1949, to be 1.5 percent.

It is the contention of Potlatch that the experience rating was not determined by the Agency in accordance with the 1947 law, particularly what now appears to be Section 72-1351, I.C., and that the experience rating should have been determined to be 1.1 percent under such statute.

As a historical background and to better understand both the primary question presented, as well as questions auxiliary thereto, it is deemed advisable to analyze briefly the pertinent provisions of the law as it existed prior to the amendment of 1947, as well as the pertinent provisions of the above designated Section of the 1947 law.

Beginning with the year 1939 and until the year 1943, there was no provision in the Employment Security Law for granting a reduced contribution rate based upon employment experience. During this period of time all employers were charged 2.7 percent without regard to the amount of benefit payments charged to their respective accounts. The Agency was not, during this period of time, concerned with the reasons and circumstances surrounding the separation of employees, particularly with reference as to whether or not such separation was because the employee had quit voluntarily without cause or had been discharged for cause.

From July 1943 to July 1946 the law provided that in the event an employee was separated from his last employer (we must bear in mind there is a distinction between last employer and last base period employer) under circumstances which made him eligible for benefit payments, such payments were automatically charged against the account of the last base period employer, even through the employee had been separated from the employment of the last base period employer because he had been discharged for cause or had voluntarily quit without cause. Under the Act as it existed from 1943 to July 1946, an employee could have been discharged for misconduct or could have voluntarily quit his employment with his last base period employer without cause, and then have gone to work for another employer and if he was separated from the employment of the last employer, as distinguished from the last base period employer, for any reasons which would make him eligible for benefits, those benefit payments would have been charged against the account of the last base period employer and not the last employer, unless, of course, the last base period employer and the last employer were one and the same party.

In July 1946 the Agency, by regulation, provided that where an employee voluntarily quit his last base period employment without good cause or was discharged therefrom for cause, any benefits thereafter paid to such employee were not to be chargeable to the experience rating account of his last base period employer.

This brings us down to July 1, 1947 when the Act in question became effective, 1947 Session Laws, Chap. 269, Section 51(b), page 821. The pertinent provisions of said section, which is now Section 72-1351, I.C., are set forth as follows:

'(a) Subject to the provisions of sections 72-1349 and 72-1350, each eligible employer's contribution rate shall be determined in the manner set forth below for the period from July 1 to December 31, 1947, and for each calendar year thereafter:

'(1) If the excess of contributions over benefits paid on the employer's account since December 31, 1939, is not less than 5.5 per centum and not more than 8 per centum of the average annual payroll of the past preceding three years, the rate shall be 2.3 per centum.

'(2) If the excess of contributions over benefits paid on the employer's account since December 31, 1939, is not less than 8 per centum and not more than 10.5 per centum of the average annual payroll of the past preceding three years, the rate shall be 1.9 per centum.

'(3) If the excess of contributions over benefits paid on the employer's account since December 31, 1939, is not less than 10.5 per centum and not more than 13 per centum of the average annual payroll of the past preceding three years, the rate shall be 1.5 per centum.

'(4) If the excess of contributions over benefits paid on the employer's account since December 31, 1939, is over 13 per centum of the average annual payroll of the past preceding three years, the rate shall be 1.1 per centum.

'(b) For experience rating purposes, benefits paid during any calendar year shall be charged to the account of the claimant's last covered employer during the base period; however, no charge shall be made to the account of such covered employer with respect to benefits paid under the following situations:

'(1) If paid to a worker who terminated his service for such covered employer voluntarily without good cause, or who had been discharged for misconduct in connection with such services; * * *.'

It will be observed that the greater the spread between contributions made by the employer and the benefit payments made to employees and charged to his account, the lower the experience rate will be.

Potlatch contends its rate for 1949 should have been 1.1 percent and not 1.5 percent, because under the Act, Potlatch should not be charged for the purpose of determining its experience rate, and for no other purpose, with the benefit payments made to its employees who (a) voluntarily quit their employment without good cause or (b) who were discharged for cause at any time after December 31, 1939. Potlatch does not contend that under the law as it then existed, it was not proper and correct to make those charges against its account at the time they were made, but only contends that for the purpose of determining its experience rate at any time after the effective date of the Act of 1947, those charges should have been deleted for the purpose of determining that rate, and for no other purpose.

The Agency, on the other hand, contends the Act of 1947 does not operate retroactively and even though an employee quit voluntarily without good cause or was discharged for cause from 1940 to July 1946, the employer still is not entitled to have the benefit payments so made charged off for experience rate purposes, because there was no provision for nonchargeability prior to July 1946 and that such benefit payments were automatically charged against the last base period employer without regard for the reason why the employment was terminated.

The Agency further contends it was not required to and did not keep any record with reference to the reasons for severance of employment as it was not required to have this information at any time prior to July 1, 1946, except insofar as the last base period employer and the last employer were one and the same employer; that the Agency was not concerned with the reason for separation except the separation of the last employment and if such separation would make the employee eligible for benefit payments, such payments were automatically made and charged against the last base period employer.

The experience rating was set up to reward employers for efforts directed towards stabilizing employment by providing for reduced rates where the severance of employment was not occasioned by any arbitrary actions or fault of the employers.

While Potlatch had kept a record at all times since December 31, 1939, in which it had set forth the purported reasons for severance of employment and had on every occasion forwarded to the Agency a notice of separation of an employee and set forth thereon the purported reasons for such separation, yet the Agency contends it kept no such records for the reasons hereinbefore briefly set forth.

At this point it perhaps would be appropriate to state that Potlatch served a subpoena duces tecum upon the Director of the Agency to produce all of the records of charges of the Employment Security Agency against Potlatch for benefits paid from 1939 to 1948. There records were not produced and the evidence reveals they were not produced for the reason the Agency had destroyed such records and that before such destruction, had made microfilms of the benefit payment cards only, and the information on such microfilms was of no particular benefit with reference to the matter before the Board.

Potlatch then offered some 194 exhibits of its records dating back to 1939 showing, among other things, the purported reasons for separation of employment on the ground they were the best evidence obtainable and were admissible under the provisions of the Uniform Business Records as Evidence Act, Title 9, Chap. 4, Idaho Code. These exhibits were admitted conditionally and later, upon motion of attorney for the Agency, they were stricken.

It is further contended by the Agency that even though the interpretation...