Submitted on Briefs: July 30, 2014
Amended: October 21, 2014
District Court of the Fourth Judicial District, In and For the County of Missoula, Cause No. DV 13-237 Honorable Karen Townsend, Presiding Judge
For Appellant: Patricia L. Bik, Special Assistant Attorney General; Department of Labor and Industry; Helena, Montana
For Appellee: Spencer T. MacDonald; MacDonald Law Office, PLLC; Missoula, Montana
Beth Baker Justice
¶1 When Robert Sayler, owner and president of a Montana corporation, stopped paying himself a salary but continued working, he applied for and received unemployment assistance. To receive benefits, Sayler reported to the State of Montana Department of Labor and Industry (DLI) that he worked zero hours a week. DLI eventually determined that Sayler misrepresented the hours he worked and that Sayler was ineligible for assistance. DLI required Sayler to repay the benefits, and imposed an administrative penalty. The Fourth Judicial District Court reversed in part, concluding that when Sayler drew no salary he was eligible to receive unemployment benefits and was not under a duty to report the hours he worked. DLI appeals that decision. We now address the following issues:
¶2 1. Whether a corporate officer working full-time without pay for his corporation is engaged in employment under Montana's Unemployment Insurance Law and is required to report his hours of work when seeking unemployment benefits.
¶3 2. Whether DLI correctly imposed a penalty on Sayler for misrepresenting the amount of hours he worked.
¶4 We reverse and remand for entry of judgment in favor of DLI.
PROCEDURAL AND FACTUAL BACKGROUND
¶5 Robert Sayler owns and is president of Big Sky Bikes (BSB), a Montana corporation located in Missoula. Sayler owns 51% of BSB and his wife owns the rest. When BSB experienced a downturn in business in 2010, Sayler stopped taking a salary and, in November 2010, applied for unemployment benefits. Despite no longer drawing a salary, Sayler continued his customary 50-hour work weeks for BSB. Sayler continued working to keep the business going and to protect his personal investment in BSB until it again could turn a profit.
¶6 Between November 2010 and September 2012, Sayler periodically would collect unemployment benefits. For each week Sayler claimed benefits, the benefit application rules required Sayler to report "all hours of insured work and gross wages for insured work." Sayler repeatedly reported that he worked zero hours, and repeatedly received benefits.
¶7 BSB initiated a "bonus plan" in mid-2011. Under the "bonus plan, " Sayler occasionally received a bonus or wage from BSB, and Sayler reported these earnings. As the earnings disqualified him from unemployment benefits, Sayler did not ...