The Michigan Employment Security Act (MESA) (MCL 421.1 et seq.); Whether the claimants were entitled to the new employer unemployment insurance rate; MCL 421.13m; The Michigan Professional Employer Organization Regulatory Act (MCL 338.3721 et seq.); Statutory interpretation; Polania v. State Employees’ Ret. Sys.; Bush v. Shabahang; Construction rendering portions of a statutory scheme nugatory; Klapp v. United Ins. Group Agency, Inc.

Holding that under the plain terms of MCL 421.13m(2)(a)(i), none of the claimants-employers were entitled to the new employer unemployment insurance tax rate under the MESA, the court reversed the circuit court decisions in each of these consolidated appeals, and vacated the circuit court orders as well as the decisions of the Commission and the ALJs. It remanded to the ALJs for entry of decisions upholding the appellant-Agency’s determinations that the claimants were not entitled to the new rate for the relevant tax years. In enacting MCL 421.13m, the Legislature required professional employer organizations (PEOs) “to file reports and pay contributions for its client employers by using the account information for the client employer.” The Agency determined that the claimants were not entitled to the new employer tax rate beginning with the 2014 tax year on the basis that each “had to report no employees or no payroll for 12 quarters because their [PEOs] did not change their reporting method until” 1/1/14, and the statute provided that beginning on that date “the client employer had to have reported ‘12 or more calendar quarters’ of no payroll or employees in order to qualify for” the new rate. Claimants appealed to the ALJs, who determined that they were entitled to the new rate. The Commission and the circuit courts affirmed the ALJs. The issue was “whether the ALJs properly interpreted and applied MCL 421.13m(2)(a)(i)(A).” The court found that the claimants’ construction of the statute was “untenable because it renders portions of the statutory scheme nugatory.” The court held that the statute “was not ambiguous and provided that the shorter lookback periods applied only when a [PEO] that was operating in this state before [1/1/11], elected to change its reporting method before” 1/1/14. As claimants’ PEOs waited until 1/1/14 “to change their reporting method, the longer lookback period applied to each claimant.” Thus, they were not entitled to the new rate “unless they had 12 quarters of not reporting payroll or employees.” It was undisputed that none met this requirement. Thus, the Agency did not err in concluding that they were not entitled to the new rate.