## Facts

- B.F. Goodrich Co. closed a Massachusetts plant, and many former employees received unemployment benefits charged to Goodrich’s employer account, lowering its reserve percentage.
- Some former employees qualified for federally funded trade readjustment allowances, generating federal reimbursements to the state unemployment system attributable to Goodrich’s layoffs.
- DES received about $591,954.11 in federal reimbursements in September 1972 but credited them to Goodrich’s account in June 1973.
- After the reimbursements were credited, Goodrich’s reserve percentage exceeded the statutory +13% cap, triggering a transfer of about $514,358.06 from Goodrich’s account to the solvency account to reduce the reserve percentage to 13%.
- In June 1973, Goodrich sought and received a refund of some employer contributions; DES charged the refund to Goodrich’s account as of the date the refund was made.
- The refund reduced Goodrich’s account balance for the next annual computation date, resulting in a higher unemployment contribution rate (3.7%) for calendar year 1974 than Goodrich claimed it should have received.
- Goodrich argued DES should have aligned (“backdated”) the refund to the earlier computation framework associated with the federal reimbursement credit so that its reserve percentage would remain at or above 13% for rate-setting purposes.

## Issues

1. Whether DES correctly applied G.L. c. 151A, § 14(d) and (e) by posting credits and charges (including refunds) as of their transaction dates rather than retroactively aligning them to a prior computation date.
2. Whether 19 U.S.C. § 1942(g) required DES to credit federal reimbursements (and handle related refunds) in a manner that altered Massachusetts experience-rating computations or timing rules.
3. Whether DES’s method was unconstitutional as arbitrary or capricious, violating due process or equal protection.

## Decision

- The Massachusetts Appeals Court affirmed judgment for the Director of DES.
- The court held DES’s computation method conformed to G.L. c. 151A, § 14(d) and (e).
- The court held DES was not required to backdate the employer refund to match an earlier computation date associated with federal reimbursement credits.
- The court held federal law did not mandate the alternative accounting treatment sought by Goodrich.
- The court rejected the constitutional challenge, concluding the system and its application were rational and uniformly administrable.

## Legal Principles

- Under G.L. c. 151A, § 14(d) and (e), contributions are credited and benefits/refunds are charged as of the dates paid; annual rate computations use the account balance as of the statutory computation date without retroactive re-dating of later transactions.
- Transfers between an employer’s account and the solvency account at statutory thresholds (including the +13% cap and the −3% floor) are part of the mechanical operation of the experience-rating scheme.
- Federal reimbursement for trade readjustment allowances under 19 U.S.C. § 1942(g) must be accounted for within the state system but does not require a state to alter its experience-rating timing conventions absent a clear conflict.
- A statutorily grounded, uniformly applied experience-rating method is not unconstitutional merely because transaction timing can affect an employer’s rate; rational administrative and fiscal objectives support transaction-date accounting.

## Conclusion

The court upheld DES’s use of transaction-date posting for federal reimbursement credits and employer refund charges in computing reserve percentage and contribution rates, finding no statutory, federal-law, or constitutional basis to require retroactive alignment of the refund with an earlier computation date.


B.F. Goodrich Co. v. Dir. of the Div. of Emp. Sec., 6 Mass. App. Ct. 784, 385 N.E.2d 262 (1979)