No. 89-354
IN THE SUPREME COURT OF THE STATE OF MONTANA
1990
BERGLUND and BERGLUND, INC.,
Petitioner and Appellant,
-VS-
CONTRIBUTIONS BUREAU, UNEMPLOYMENT INSURANCE
DIVISION, MONTANA STATE DEPARTMENT OF LABOR
AND INDUSTRY, and BOARD OF LABOR APPEALS, MONTANA
STATE DEPARTMENT OF LABOR & INDUSTRY,
Respondents.
APPEAL FROM: District Court of the Fourth Judicial ~istrict,
In and for the County of Missoula,
The Honorable Jack L. Green, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Brian L. Delaney; Mulroney, Delaney & Scott, is sou la,
Montana
For Respondent :
avid Scott, Dept. of Labor & Ind.ustry,Helena, Montana
Submitted on ~riefs: Dec. 1,
Decided: January 9 , 1990
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. Clerk
Chief ~ustice A. Turnage delivered the Opinion of the Court.
J.
Berglund and Berglund, Inc. (Berglund), appeals a memorandum
and order of the District Court for the Fourth Judicial District,
Missoula County. That memorandum and order affirmed a decision of
the Board of Labor Appeals (Board), which in turn affirmed a
hearing officer's decision that compensation paid for travel
expenses to Berglund's employee truck driver constituted wages
reportable to and taxable by the Unemployment Insurance Division
(Division) . We affirm.
The issue is whether the District Court abused its discretion
in affirming the administrative decision.
Berglund is a long-haul trucking company located in Missoula,
Montana. It owns one truck and employs one driver.
According to the record, Berglund's truck driver is paid 10
cents per mile, plus 7% cents per mile for travel expenses. The
driver is not required to itemize travel expenses because the
travel allowance is based upon the miles he drives. The 10 cents
per mile is reported to the Internal Revenue Service as income to
the driver and the 7% cents per mile is reported as non-employee
compensation. Mrs. Berglund, one of the incorporators, testified
that Berglund believed that it had structured this pay plan so that
the travel expenses would not be taxed for purposes of unemployment
insurance.
After a field audit, an auditor for the Division determined
that the compensation Berglund paid its driver for travel expense,
at 75 percent of the wages paid, "does not appear reasonable." He
noted that Berglundls system of payment required no documentation
of travel expenses at all and decided that the travel expenses must
be included in the wages reportable to and taxable by the Division.
Berglund appealed to the Appeals Bureau of the Department of
Labor and Industry and a hearing was held. The hearing officer
concluded that travel expenses were within the definition of
wwagesll 5 39-51-201(17), MCA (1985) (now subsection (18) of the
in
same statute). He reasoned that the 74 cents per mile for travel
expenses should be included as wages, thereby increasing unemploy-
ment benefits in the event of unemployment. He cited the duty to
construe the Unemployment Insurance Act in favor of the allowance
of benefits. See Scott v. Smith (1962), 141 Mont. 230, 241, 376
P.2d 733, 739. The Board adopted the hearing officer's findings
and decision.
Berglund next appealed to the District Court for the Fourth
Judicial District. The court recited its limited standard of
review of administrative decisions. It found substantial evidence
to support the Board's decision and affirmed.
Did the District Court abuse its discretion in affirming the
administrative decision?
Our standard for review of administrative findings of fact is
whether they are supported by substantial evidence. In reviewing
questions of law, we will reverse if there has been an abuse of
discretion. City of Billings v. Billings Firefighters (1982), 200
Mont. 421, 430-31, 651 P.2d 627, 632.
Berglund's objections are based on the hearing officer's
reliance, in his findings and conclusions, upon 5 39-51-201, MCA,
and ARM 24.11.808. Neither the statute nor the administrative rule
was discussed at the hearing. At the hearing, the parties referred
instead to a three-criteria test set out in Division guidelines for
whether a travel allowance was subject to unemployment contribu-
tions tax. That test had been discussed in correspondence from
the Division to Berglund.
The statute and rule relied upon by the hearing officer
provide the definition of ltwagesl'
for purposes of unemployment
insurance. The statute contains a list of items which are excluded
from wages. Because travel expenses are not listed as exclusions
from wages, the hearing officer concluded that they must be
included.
Berglund argues that it was denied its constitutional right
to due process because it was not given notice of the criteria
which would ultimately be relied upon in making this decision. But
both the statute and rule are published. Furthermore, Berglund had
several weeks to review the hearing officer's proposed findings and
conclusions, including their legal theories, between the time they
were issued and the hearing before the Board.
Berglund argues that the court should have reversed the Board
because the Board failed to apply the proper criteria (the three
criteria listed in the Division guidelines) in determining whether
the travel allowance constituted wages. However, it is undeniable
that the statute and administrative regulation apply. If a statute
and a rule adopted in conformity therewith conflict, the statute
governs. Michels v. Dept. of Social & Rehab. Services (1980), 187
Mont. 173, 177-78, 609 P.2d 271, 273. Therefore, Berglund must
ultimately comply with the statute. We conclude that the Board
used the correct laws and regulations in determining whether the
travel expenses were wages.
Next, Berglund contends that the Board should have been
reversed because it "failed to comply with [its] duty to promulgate
and make known clear and concise rules and guidelines which would
put the public on adequate notice of what is expected of it in
order to comply with [defendant's] policies." By promulgating the
guidelines which Berglund argues would allow its driver's travel
expenses to go untaxed, Berglund maintains that the defendants
waived their right to or are equitably estopped from relying on the
statute and administrative rule.
Estoppel is not favored and will only be sustained upon clear
and convincing evidence. Kenneth D. Collins Agency v. Hagerott
(1984), 211Mont. 303, 310, 684 P.2d 487, 490. Here, Berglund has
not shown by clear and convincing evidence the element of equitable
estoppel requiring reliance upon a misrepresentation to the
relierfs detriment. (See Sweet v. Colborn School Supply (1982),
196 Mont. 367, 372-73, 639 P.2d 521, 524, for the elements of
equitable estoppel.) Berglund has not demonstrated by clear and
convincing evidence that if the guidelines were applied, it would
be in a better position, because Berglund has not shown that it met
criteria no. 3 under the guidelines. That criteria required that
the amount of travel reimbursement approximated actual expenses as
documented on a reasonable basis. Berglundfs truck driver was
required to keep no records of travel expenses whatsoever. It is
immaterial whether, as Berglund contends, the amount of its
payments for travel expenses was within Internal Revenue Service
parameters.
The District Court found substantial evidence to support the
Board's findings. It concluded that there had been no abuse of
discretion in the law applied. We agree.
Affirmed.
We concur: