Employment Development Department v. California Unemployment Insurance Appeals Board

*182 Opinion

In State Unemployment Tax Act (SUTA) “dumping,” one employer transfers employees or payroll wages to another employer in order to take advantage of the other employer’s lower unemployment insurance tax rate. In essence, the first employer “dumps” payroll with a higher contribution rate into the second employer’s unemployment insurance account with a lower rate. The Legislature directed plaintiff Employment Development Department (Department) to stop such rate manipulation and provided a procedure for doing so.

Real parties in interest Screaming Eagle, Inc., and Payday California, Inc. (Payday), provide payroll services for television production companies. The Department issued an assessment against Screaming Eagle for underpaying its unemployment insurance contributions. An administrative law judge (ALJ) determined the assessments should be set aside because the Department had not followed the appropriate procedures. Defendant California Unemployment Insurance Appeals Board (Appeals Board) affirmed the ALJ’s decision. The trial court reversed the Appeals Board, finding the Department’s assessment comported with the statutory requirements.

Screaming Eagle appeals,…