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Justices agree subsidiaries are not new employers

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Emphasizing its ruling only deals with determining the proper merit rate for unemployment fund contributions, the Indiana Supreme Court ruled a manufacturer did not create employers through its new subsidiaries, so it wasn’t entitled to a lower rate.

In Franklin Electric Company, Inc. v. Unemployment Insurance Appeals of the Indiana Dept. of Workforce Development, No. 93S02-1102-EX-89, Franklin Electric Co., which makes pumps, decided in 2002 to split the company into two new subsidiaries – one for manufacturing and one for sales. Franklin Electric retained 100 percent ownership in both entities while serving as corporate headquarters for the two.

An accounting firm believed that the two new subsidiaries would be eligible for a new unemployment insurance experience account with the rate of 2.7 percent. Franklin Electric’s experience rating was near 5 percent. The Department of Workforce Development investigated the company and determined that Franklin Electric didn’t “dispose of a distinct and segregable portion of its organization, trade, or business” and recalculated Franklin Electric’s merit rate. It demanded back payments, interest and a 10 percent penalty.

The liability administrative law judge affirmed the determination that the three entities were a single employer, but declined to impose penalties. The Indiana Court of Appeals affirmed, and the justices also agreed with the LALJ’s determination.

The manufacturing and sales subsidiaries didn’t acquire a distinct and segregable portion of Franklin Electric’s business, so they didn’t qualify as “employers” under the laws governing unemployment compensation arrangements, wrote Chief Justice Randall T. Shepard. The two subsidiaries combined formed essentially the same business as before the change –  Franklin Electric still does the payroll and provides benefits to all the companies, in addition to paying the workers’ compensation coverage for the entities.

“Today’s holding is a narrow one,” he wrote. “It deals only with the language ‘distinct and segregable’ as used in the unemployment statutes and only concerns determining the proper merit rate for unemployment contribution. The instant ruling neither calls into question the validity of the wholly owned subsidiary arrangement, nor holds that the creation of a wholly owned subsidiary can never result in the new entity becoming a separate employer.”

The justices agreed that imposing a penalty against Franklin Electric would be inappropriate because the company filed its reports to determine status in good faith based on advice from the accounting firm.



 

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  1. @ President Snow, like they really read these comments or have the GUTS to show what is the right thing to do. They are just worrying about planning the next retirement party, the others JUST DO NOT CARE about what is right. Its the Good Ol'Boys - they do not care about the rights of the mother or child, they just care about their next vote, which, from what I gather, the mother left the state of Indiana because of the domestic violence that was going on through out the marriage, the father had three restraining orders on him from three different women, but yet, the COA judges sent a strong message, go ahead men put your women in place, do what you have to do, you have our backs... I just wish the REAL truth could be told about this situation... Please pray for this child and mother that God will some how make things right and send a miracle from above.

  2. I hear you.... Us Christians are the minority. The LGBTs groups have more rights than the Christians..... How come when we express our faith openly in public we are prosecuted? This justice system do not want to seem "bias" but yet forgets who have voted them into office.

  3. Perhaps the lady chief justice, or lady appellate court chief judge, or one of the many female federal court judges in Ind could lead this discussion of gender disparity? THINK WITH ME .... any real examples of race or gender bias reported on this ezine? But think about ADA cases ... hmmmm ... could it be that the ISC actually needs to tighten its ADA function instead? Let's ask me or Attorney Straw. And how about religion? Remember it, it used to be right up there with race, and actually more protected than gender. Used to be. Patrick J Buchanan observes: " After World War II, our judicial dictatorship began a purge of public manifestations of the “Christian nation” Harry Truman said we were. In 2009, Barack Obama retorted, “We do not consider ourselves to be a Christian nation.” Secularism had been enthroned as our established religion, with only the most feeble of protests." http://www.wnd.com/2017/02/is-secession-a-solution-to-cultural-war/#q3yVdhxDVMMxiCmy.99 I could link to any of my supreme court filings here, but have done that more than enough. My case is an exclamation mark on what PJB writes. BUT not in ISC, where the progressives obsess on race and gender .... despite a lack of predicate acts in the past decade. Interested in reading more on this subject? Search for "Florida" on this ezine.

  4. Great questions to six jurists. The legislature should open a probe to investigate possible government corruption. Cj rush has shown courage as has justice Steven David. Who stands with them?

  5. The is an unsigned editorial masquerading as a news story. Almost everyone quoted was biased in favor of letting all illegal immigrants remain in the U.S. (Ignoring that Obama deported 3.5 million in 8 years). For some reason Obama enforcing part of the immigration laws was O.K. but Trump enforcing additional parts is terrible. I have listed to press conferences and explanations of the Homeland Security memos and I gather from them that less than 1 million will be targeted for deportation, the "dreamers" will be left alone and illegals arriving in the last two years -- especially those arriving very recently -- will be subject to deportation but after the criminals. This will not substantially affect the GDP negatively, especially as it will take place over a number of years. I personally think this is a rational approach to the illegal immigration problem. It may cause Congress to finally pass new immigration laws rationalizing the whole immigration situation.

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