Smith v. State , 107 Idaho 625 ( 1984 )

HUNTLEY, Justice.

We are asked to decide whether the State Industrial Commission erred in holding that Larry L. Smith willfully failed to report a material fact in order to obtain unemployment compensation benefits as provided for by I.C. § 72-1366(7), and holding that, for the purposes of Mr. Smith’s eligibility for benefits, the week of January 16,1982, was not a “compensable week” within the meaning of I.C. § 72-1312.

During the time Mr. Smith was receiving unemployment compensation benefits he was employed part-time as an electronics technician at a radio station. When hired, he was paid $350.00 per month, with the understanding that he work as repair services were needed, for a total of approximately 30 hours a month. Since his work was only part-time, he was eligible for unemployment insurance benefits. Based on his monthly earnings he reported wages from this job as $81.62 per week.

After several months a new radio station manager replaced the person who had hired Mr. Smith. The new manager required that he work more than 30 hours a month, but his pay did not increase. Mr. Smith did not protest for fear of losing his job. During some weeks he worked substantially more than his prior average of seven hours, but he continued to report earnings of $81.62 each week because that was all he was being paid. He did not report the uncompensated extra hours worked.

Also, during the time he was receiving unemployment compensation claimant went with a friend to the Duck Valley Indian Reservation to complete a project, which he did not report.

I.C. § 72-1366(7) provides that if a claimant for unemployment insurance benefits has willfully made a false statement or representation, or willfully failed to report a material fact in order to obtain benefits, he is not entitled to benefits for a period of 52 weeks from the date of such determination. Since Mr. Smith regularly reported all of his earnings on his weekly certification form, the question is whether the number of hours worked — independent of any compensation received — constitutes a “material fact” within the meaning of I.C. § 72-1366(Z). We hold that it does. In Meyer v. Skyline Mobile Homes, 99 Idaho 754, 760, 589 P.2d 89, 95 (1979), we stated that “a fact is material if it is relevant to the determination of a claimant’s right to benefits; it need not actually affect the outcome of that determination.” Benefits are payable only as to a “compensable week,” defined in I.C. § 72-1312; the definition provides for both amount of earnings and amount of time to be considered. The latter is important in determining whether the week for which benefits are sought was “a week of either no work or less than full-time work.” The number of hours during the week which a claimant is working, even though the work may be voluntary and no compensation received, may nevertheless be material to the question of whether he is “available for suitable work, and seeking work” as required for eligibility under I.C. § 72-1366(d). Hence, the number of hours worked during the week for his employer, whether they be gratuitous or for pay, is a material fact and must be reported by the claimant.

Since it was correctly determined that Mr. Smith failed to report a material fact, the next question is whether such failure was willful. There is no question but that the claimant’s action was knowingly done; that is, his omission of the extra hours worked was not inadvertent. But it was not “knowing” in the sense that he understood the necessity for reporting that particular fact. Mr. Smith felt he was required to report any work he had done during the week. He relied on the definition of work to which he was referred by the unemployment compensation examiner: the definition of “Bona Fide Work” contained in the Department of Employment booklet “Facts About Your Unemployment Insurance.” The definition read, “Work performed by an employee for an employer and for which remuneration was received.” (Emphasis added.) Since he received no compensation for the extra hours he volunteered, he felt he did not need to report them. He was not aware they were “material.” Moreover, after Mr. Smith spoke with an official at the Idaho State Labor Relations Board (relative to recovering pay for the extra hours the new radio station manager had required him to work), and learned that his work hours should have been reported, he reported them within a week to the Department of Employment, voluntarily and without being approached by the Department.

In Meyer v. Skyline Mobile Homes, supra, we reaffirmed earlier Idaho case law indicating that “willful” implies a conscious wrong. 99 Idaho at 761, 589 P.2d at 96. We stated:

“The legislature’s presumed knowledge of our interpretations of willful in Arch-bold, and Hall suggests that it intended to disqualify those claimants who purposely, intentionally, consciously or knowingly fail to report a material fact, not those whose omission is accidental because of negligence, misunderstanding or other cause.” (Citations omitted.)

To interpret the “willful” requirement in I.C. § 72-1366(i) otherwise, as was done in this case, would create a type of constructive knowledge. We therefore reverse the holding of the Commission that claimant willfully failed to report a material fact in order to obtain unemployment insurance benefits, as being based upon the erroneous interpretation of “willful”.

As to claimant’s failure to report time and earnings for helping another individual install electronic equipment on the Duck Valley Indian Reservation, we note that the same principles would apply. The omission was of material facts, but inasmuch as claimant suffered a net loss of approximately $60.00 on the project, there were no earnings to report, and claimant’s failure was not “willful”.

We now address the Department’s contention that claimant was not entitled to benefits for the week of January 16, 1982. The record shows that he worked 41 hours that week. Regardless of the fact that he was compensated for only seven of those hours, the time worked for his employer rendered claimant ineligible for benefits because it was not a week “of either no work or less than full-time work.” I.C. § 72-1312. The Commission’s determination that the benefits received by claimant for that week must be refunded to the Department is correct.

The Commission’s judgment that claimant willfully failed to report a material fact to receive unemployment benefits is reversed. The Commission’s judgment is affirmed in all other respects. Costs to appellant.

BISTLINE, J., concurs. DONALDSON, C.J., concurs in the result.