Court of Appeals of Illinois, First District, Fourth Division
from the Circuit Court of Cook County No. 14 L 50442
Honorable Robert Lopez Cepero, Judge Presiding.
McBRIDE JUSTICE delivered the judgment of the court, with
Justices Howse and Burke concurred in the judgment and
1 Plaintiff Perry & Associates, LLC appeals from the
circuit court's order affirming the administrative
decision of defendants, the Illinois Department of Employment
Security (Department) and the Director of Employment Security
(Director), holding that the raise in plaintiff's rate
for contributions to the Illinois Unemployment Insurance
Trust Fund (Fund) for calendar year 2013 was proper. On
appeal, plaintiff argues that the Department cannot
retroactively change the contribution rate for an employer
midyear because (1) this change violates the terms of section
1509 of the Unemployment Insurance Act (Act) (820 ILCS
405/1509 (West 2012)), (2) the unilateral ability to increase
the rate at any time on any year violates public policy, (3)
the retroactive application of the rate and imposition is
improper, (4) the Department caused delays in proceedings by
failing to provide a fair hearing such that it is inequitable
to assess interest, and (5) the refusal to address the
benefits to the claimaint as a defense to the rate was
2 Plaintiff is an architectural and structural engineering
firm located in Chicago, Illinois, with Christopher J. Perry
as the principal. In November 2011, plaintiff, through Perry,
terminated the employment of the claimant Clarence Passons.
Passons filed a claim for unemployment benefits with the
Department. Plaintiff contested Passons unemployment claim,
contending that Passons was ineligible due to misconduct.
3 The administrative proceedings over the benefits claim were
complicated and lasted multiple years. Three hearings were
conducted before two different referees. In December 2012,
following the third hearing, the referee found that the
claimant was terminated for misconduct and ineligible for
benefits. Passons appealed to the Board of Review (Board),
which reversed the referee's decision in April 2013. The
Board concluded that the evidence did not support a finding
of misconduct. Plaintiff sought review in the circuit court.
In December 2013, the circuit court remanded the case back to
the Board with instructions to assess credibility in making
its decision. In February 2014, the Board issued its new
decision with credibility determinations and set aside the
referee's decision. Plaintiff again filed for
administrative review in the circuit court. In September
2014, the circuit court affirmed the Board's decision
finding it was not clearly erroneous. Plaintiff filed an
appeal with this court. We affirmed the Board's decision,
finding the Board's determination that Passons was not
terminated for misconduct under section 602A of the Act was
not clearly erroneous and Passons was eligible for benefits.
See Perry & Associates, LLC v. Illinois Department of
Employment Security, 2016 IL App (1st) 143344-U.
Plaintiff filed a petition for leave to appeal with the
Illinois Supreme Court, which the court denied on September
28, 2016. Perry & Associates, LLC v. Illinois
Department of Employment Security, No. 120799 (Sept. 28,
2016) (petition for leave to appeal denied). Thus, our
decision affirming the Board's finding that Passons was
eligible for benefits is the final decision on the benefits
4 As a result of the December 2012 determination by the
referee that Passons was ineligible for unemployment
benefits, the benefit charges incurred by plaintiff due to
payments made to Passons were cancelled. The Department
reduced the rate at which plaintiff was required to make
contributions to the Fund for the calendar year 2013 to the
minimum rate of 0.55% of taxable wages. In April 2013, the
Board issued its decision setting aside the referee's
finding and found Passons eligible for benefits. In July
2013, the benefit charges were restored to plaintiff's
account based on the Board's decision. The Department
revised the contribution rate for calendar year 2013 to 2.85%
of taxable wages, retroactive to the beginning of the year.
5 In August 2013, plaintiff filed a protest to the revised
contribution rate. Plaintiff asked the Department to reverse
the rate increase, arguing that it had a "substantial
likelihood of prevailing" on the benefits case in the
circuit court. The Director denied plaintiff's protest
"unless and until" the circuit court ruled in
plaintiff's favor. Plaintiff subsequently filed a protest
and petition for hearing with the Department, asserting that
"the computed rate is against the weight of the evidence
of a chargeable claim due to repeated misconduct on the part
of the Department" and the Board was "not
authorized" to revise the contribution rate.
6 In October 2013, the Director's representative issued
his recommended decision that the Director's decision
denying plaintiff's application for review be affirmed.
The findings of fact stated that plaintiff's 2013
contribution rate revision from the minimum 0.55% to the
"experienced" 2.85% was "solely attributable
to the addition to [plaintiff's] account of benefit
charges" in the fourth quarter of 2011 and the first two
quarters of 2012. All of the benefit charges related to the
November 2011 termination of Passons. The Director's
representative concluded that under section 1509 of the Act,
the Director's orders are considered prima facie
correct and the burden is on the protesting employer to prove
that the decision is incorrect. The Director's
representative found that plaintiff failed to meet its burden
and that plaintiff failed to state a basis for relief under
the facts or the law.
7 Plaintiff subsequently filed an objection to the
recommended decision of the Director's representative.
Plaintiff contended that section 1509 provides that the
contribution rate is "final and conclusive" in all
proceedings, and the Department cannot revise the
contribution rate after the rate has been set. In November
2013, the Director remanded the case to his representative to
conduct a hearing.
8 In March 2014, the Director's representative conducted
a telephone hearing with Perry as the representative for
plaintiff. Later in March 2014, following the hearing, the
director's representative issued his recommended decision
that the Director's order denying plaintiff's
objection be affirmed. The second recommended decision is
substantially similar to his prior recommendation.
9 In April 2014, plaintiff filed its objection to the
recommended decision of the director's representative.
Plaintiff raised several reasons for its objection. First,
plaintiff argued that the recommended decision results in an
unconstitutional retroactive tax. Plaintiff asserted that
this was an "extraordinary" situation because it
involved events more than two years ago and the extended time
frame for adjudication was the fault of the Department. Next,
the recommended decision was procedurally incorrect based on
the Board's actions on the benefits case in 2013.
Finally, the recommended decision is incompatible with the
supreme court's decision in Winakor v.
Annunzio, 409 Ill. 236 (1951), because in
Winakor, the rate revision was made within the same
operative tax year, whereas the Department's actions have
made the revision years later.
10 In May 2014, the Director issued his decision. The
Director found that under section 1509 of the Act (820 ILCS
405/1509 (West 2012)), plaintiff was barred from contesting
the amount of benefits charges used to calculate its
contribution rate if the statement of benefit charges was
served on plaintiff, and the record indicated that it was.
The Director found that plaintiff's contentions regarding
the benefit charges could be "solely resolved" by
the resolution of the benefits case. The Director stated that
he had no authority to disregard the decision of the Board
and its finding that Passons was eligible for benefits had
not been set aside. Accordingly, the contribution rate for
2013 was correct.
11 Further, the Director observed that the Department's
authority to issue revised contribution rate determinations
was established in Winakor and is not
unconstitutional. The Director also noted that interest on
additional contributions due to an upwardly revised
contribution rate would be waived if the employer pays the
additional contributions within 30 days after the notice of
the revised contribution rate was mailed. See 56 Ill. Adm.
Code 2765.63 (1987). If the employer failed to pay the
additional contributions within 30 days, then interest would
begin to accrue on the unpaid balance on the account from the
date that the original contributions accrued. If the revised
contribution rate was later set aside, then employer's
remedy was to seek a refund under section 2201 of the Act.
820 ILCS 405/2201 (West 2012). See also Northern Trust
Co. v. Bernardi, 115 ...