{ "id": 2468537, "name": "PETER M. HMELYAR, Plaintiff-Appellant, v. PHOENIX CONTROLS et al., Defendants-Appellees", "name_abbreviation": "Hmelyar v. Phoenix Controls", "decision_date": "2003-06-17", "docket_number": "No. 2-02-0242", "first_page": "700", "last_page": "708", "citations": [ { "type": "official", "cite": "339 Ill. App. 3d 700" } ], "court": { "name_abbreviation": "Ill. App. Ct.", "id": 8837, "name": "Illinois Appellate Court" }, "jurisdiction": { "id": 29, "name_long": "Illinois", "name": "Ill." }, "cites_to": [ { "cite": "13 Ill. 2d 222", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 2774241 ], "year": 1958, "pin_cites": [ { "page": "227-28" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/13/0222-01" ] }, { "cite": "324 Ill. App. 3d 768", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 256359 ], "year": 2001, "pin_cites": [ { "page": "771" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/324/0768-01" ] }, { "cite": "Cal. Lab. Code \u00a7 200", "category": "laws:leg_statute", "reporter": "Cal. Code", "year": 1989, "opinion_index": 0 }, { "cite": "814 A.2d 298", "category": "reporters:state_regional", "reporter": "A.2d", "case_ids": [ 9338274 ], "year": 2003, "pin_cites": [ { "page": "300", "parenthetical": "because stock options cannot be valued until they are exercised, they are excludable as income in workers' compensation matters for purposes of determining a claimant's average weekly wage" } ], "opinion_index": 0, "case_paths": [ "/a2d/814/0298-01" ] }, { "cite": "746 A.2d 566", "category": "reporters:state_regional", "reporter": "A.2d", "case_ids": [ 11471274, 11471322, 95818, 95750 ], "year": 2000, "pin_cites": [ { "page": "570", "parenthetical": "\"the value of the stock option is speculative and not readily ascertainable until exercised. *** [T]he taxing authority must wait until the exercise of the stock option to compute the associated [earned income] tax liability\"" } ], "opinion_index": 0, "case_paths": [ "/a2d/746/0566-01", "/a2d/746/0566-02", "/pa/560/0453-02", "/pa/560/0453-01" ] }, { "cite": "560 Pa. 453", "category": "reporters:state", "reporter": "Pa.", "case_ids": [ 95818, 95750 ], "year": 2000, "pin_cites": [ { "page": "460-61", "parenthetical": "\"the value of the stock option is speculative and not readily ascertainable until exercised. *** [T]he taxing authority must wait until the exercise of the stock option to compute the associated [earned income] tax liability\"" } ], "opinion_index": 0, "case_paths": [ "/pa/560/0453-02", "/pa/560/0453-01" ] }, { "cite": "66 Fed. Reg. 57023", "category": "reporters:federal", "reporter": "Fed. Reg.", "year": 2001, "opinion_index": 0 }, { "cite": "326 Ill. App. 3d 364", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 1281406 ], "year": 2001, "pin_cites": [ { "page": "369" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/326/0364-01" ] }, { "cite": "26 U.S.C.A. \u00a7 422", "category": "laws:leg_statute", "reporter": "U.S.C.", "year": 2002, "opinion_index": 0 }, { "cite": "191 F.3d 1033", "category": "reporters:federal", "reporter": "F.3d", "case_ids": [ 11579895 ], "weight": 3, "year": 1999, "pin_cites": [ { "page": "1039" }, { "page": "1039" }, { "page": "1039" } ], "opinion_index": 0, "case_paths": [ "/f3d/191/1033-01" ] }, { "cite": "323 Ill. App. 3d 733", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 171624 ], "year": 2001, "pin_cites": [ { "page": "735" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/323/0733-01" ] }, { "cite": "153 Ill. 2d 76", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 4738801 ], "year": 1992, "pin_cites": [ { "page": "88" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/153/0076-01" ] }, { "cite": "181 Ill. 2d 191", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 821407 ], "weight": 2, "year": 1998, "pin_cites": [ { "page": "204" }, { "page": "205" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/181/0191-01" ] }, { "cite": "317 Ill. App. 3d 1010", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 1025871 ], "year": 2000, "pin_cites": [ { "page": "1017" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/317/1010-01" ] }, { "cite": "179 Ill. 2d 141", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 801355 ], "year": 1997, "pin_cites": [ { "page": "148" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/179/0141-01" ] } ], "analysis": { "cardinality": 837, "char_count": 19809, "ocr_confidence": 0.759, "pagerank": { "raw": 4.621887471290392e-08, "percentile": 0.28965897239568794 }, "sha256": "4c8465bc26541d38b02a30ffd6a981757e95cb76f2e5ef76b89da08f5a560def", "simhash": "1:cb32f0ac4fe9042a", "word_count": 3155 }, "last_updated": "2023-07-14T22:12:32.579911+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [], "parties": [ "PETER M. HMELYAR, Plaintiff-Appellant, v. PHOENIX CONTROLS et al., Defendants-Appellees." ], "opinions": [ { "text": "PRESIDING JUSTICE HUTCHINSON\ndelivered the opinion of the court:\nPlaintiff, Peter M. Hmelyar, appeals from an order of the circuit court of Du Page County on administrative review, affirming a decision by defendant, the Board of Review of the Illinois Department of Employment Security (the Board), that denied plaintiff unemployment benefits for December 3, 2000, through December 16, 2000. The Board found that, during this period, plaintiff was not \u201cunemployed\u201d under section 239 of the Unemployment Insurance Act (the Act) (820 ILCS 405/239 (West 2000)). On appeal, plaintiff contends that this finding is against the manifest weight of the evidence. We reverse and remand.\nOn November 9, 2000, defendant Phoenix Controls terminated plaintiffs employment. In an \u201cEmployment Separation and Release\u201d (severance agreement) dated November 9, 2000, Phoenix Controls informed plaintiff that, from November 22, 2000, through July 12, 2001, he would receive 34 weekly severance payments of $2,295 each and that his health insurance plan would continue in force.\nBy a letter dated November 15, 2000, Gordon Sharp, president of MylndoorAir, Incorporated (MylndoorAir), offered plaintiff a job as its vice president of sales. The letter, which plaintiff signed November 15, 2000, set out the terms of employment. The terms included:\n\u201c1. Compensation including three components: salary, two contingent bonuses, and incentive stock options (ISO).\n* Annual base salary of $121,000. Note that from November 13th, 2000 through July 9th, 2001 this salary and all health and dental benefits will be paid by Phoenix Controls.\n* * *\n* 50,000 Incentive Stock Options, with a current purchase price of $1.75/share, and a four-year vesting period (pending Board of Director approval).\n2. From November 13th, 2000, through July 13th, 2001 your health and dental benefits will continue to be provided by Phoenix Controls. Additionally you are covered with all of your other Phoenix Controls benefits until the end of November. Consequently, from December 1st and forward you will be eligible for all of the following Group Insurance Benefits except health and dental coverage.\u201d\nThe \u201cGroup Insurance Benefits\u201d included life, short-term disability, and long-term disability insurance. The value of any benefits was tied to plaintiffs salary.\nPlaintiff filed a claim with the Illinois Department of Employment Security for unemployment benefits for December 3 through 16, 2000. The claim included a \u201cwork search record\u201d for the week ending December 15, 2000. Phoenix Controls protested the claim. The case went to a hearing before a referee on January 24, 2001. Plaintiff and Jamie Hopmayer, Phoenix Controls\u2019 human resources manager, testified by telephone. At the time of the hearing, the severance agreement had not been filed; thus, the referee had not reviewed it.\nPlaintiff testified that his last day of employment for Phoenix Controls was November 9, 2000. At that time, plaintiffs weekly salary was $2,295. Although the letter from MylndoorAir stated that plaintiffs \u201cannual base salary\u201d would be paid from November 13, 2000, through July 9, 2001, that \u201csalary\u201d was reflected as part of his severance package. Plaintiff believed that, if he stopped working for MylndoorAir, he would still receive his severance pay from Phoenix Controls. Plaintiff was looking for other job opportunities, but he and Sharp had hoped that, as soon as MylndoorAir obtained enough financing, plaintiff could begin to \u201cdraw *** money from the company.\u201d\nPlaintiff further testified that Sharp had started Phoenix Controls but left approximately two years before the hearing to form MylndoorAir, At one time, MylndoorAir was a unit of Phoenix Controls and had leased office space from Phoenix Controls, but since January 2000 the companies had been \u201cseparate business entities.\u201d\nSince mid-November 2000, plaintiff had assisted MylndoorAir with marketing research and developing a business plan. In the week beginning December 3, 2000, plaintiff devoted approximately 16 hours to this work; for the week beginning December 10, 2000, the figure was 20 hours. To date, plaintiff had received no \u201cW-2 wages\u201d from MylndoorAir. His contract provided for several contingent bonuses, but none had been paid because the contingencies relating to raising capital had not been fulfilled. Also, the stock options would not begin to vest until November 15, 2001, and would have value only if the company received \u201cventure capital funding.\u201d\nHopmayer testified that plaintiffs \u201cbase salary\u201d under the MylndoorAir contract was actually part of his severance package from Phoenix Controls. Asked whether the MylndoorAir contract was \u201clater modified\u201d to conform to the severance agreement, Hopmayer responded, \u201cThat has nothing to do with Phoenix Controls. *** [Ojbviously, one company has no control over what another company does with Pete Hmelyar. *** [T]hat document was not drafted in concert with Phoenix Controls at all.\u201d\nThe referee found that plaintiff was not an \u201cunemployed individual\u201d during the period at issue and specifically that plaintiffs stock options had some value and that plaintiff received them when he started with MylndoorAir. Also, while not expressly finding that the payments from Phoenix Controls were \u201cwages,\u201d the referee doubted that they were severance pay, as the MylndoorAir contract called them \u201csalary.\u201d\nPlaintiff appealed to the Board and supplied it a copy of the severance agreement. The Board affirmed the referee. In holding that plaintiff had not been \u201cunemployed,\u201d the Board reasoned:\n\u201cWhile the claimant states he has received no remuneration for his services, clearly the stock options he has received have a value of at least $1.75/share. Whether or not the stock options have vested, the claimant, under his employment contract, has been given the rights to the stock options. Also, as remuneration for his services, the new employer is providing group insurance benefits for the claimant. While the claimant may not be receiving base salary during the period under review, the claimant has received remuneration or wages for the services he performed for his new employer.\u201d\nOn administrative review, the trial court affirmed the Board\u2019s decision. Plaintiff timely appealed. He contends that the Board\u2019s decision must be reversed outright because he was an \u201cunemployed individual\u201d during the period at issue. Plaintiff argues specifically that neither the stock options nor the group insurance benefits were \u201cwages\u201d as defined in the Act. See 820 ILCS 405/234, 235 (West 2000). Plaintiff argues in the alternative that, even if he did receive wages, the Board did not determine their value and thus did not decide whether either week\u2019s wages were less than his weekly benefit amount. Therefore, the Board could not decide whether plaintiff was \u201cunemployed\u201d and the cause must be remanded so the Board may do so.\nPhoenix Controls has not filed a brief on appeal. The Board argues that its finding that plaintiff was not unemployed is supported by the evidence and that its decision may be affirmed on other grounds on which its written order did not rely.\nOur standard of review for a final administrative decision is governed by the Administrative Review Law (735 ILCS 5/3\u2014101 et seq. (West 2000)). Under the Administrative Review Law, our review encompasses all questions of law and fact presented by the entire record. 735 ILCS 5/3\u2014110 (West 2000); Bridgestone/Firestone, Inc. v. Aldridge, 179 Ill. 2d 141, 148 (1997). Our role is to review the administrative decision, not the trial court\u2019s determination. Thigpen v. Retirement Board of Firemen\u2019s Annuity & Benefit Fund, 317 Ill. App. 3d 1010, 1017 (2000).\nIn examining an administrative agency\u2019s factual findings, we are limited to ascertaining whether such findings of fact are against the manifest weight of the evidence. City of Belvidere v. Illinois State Labor Relations Board, 181 Ill. 2d 191, 204 (1998), citing Abrahamson v. Illinois Department of Professional Regulation, 153 Ill. 2d 76, 88 (1992). An agency\u2019s findings on a question of law are reviewed de novo. City of Belvidere, 181 Ill. 2d at 205; White v. City of Aurora, 323 Ill. App. 3d 733, 735 (2001).\nSection 239 of the Act provides in relevant part:\n\u201c \u2018Unemployed individual.\u2019 An individual shall be deemed unemployed in any week with respect to which no wages are payable to him and during which he performs no services or in any week of less than full-time work if the wages payable to him with respect to such week are less than his weekly benefit amount.\u201d (Emphasis added.) 820 ILCS 405/239 (West 2000).\nTherefore, plaintiff was \u201cunemployed\u201d during a given week of less than full-time work if, during that week, his wages were less than his benefit amount. See 820 ILCS 405/239 (West 2000). If, as plaintiff contends, he received no wages during the- period at issue, then his wages were less than his benefit amount and he was unemployed.\n\u201cWages\u201d are \u201cevery form of remuneration for personal services, including salaries, commissions, bonuses, and the reasonable money value of all remuneration in any medium other than cash.\u201d 820 ILCS 405/234 (West 2000). However, \u201cwages\u201d do not include any payment made to or on behalf of an individual \u201cunder a plan or system established by an employer which makes provision generally for individuals performing services for him ***, on account of (1) sickness or accident disability ***, or (2) medical or hospitalization expenses in connection with sickness or accident disability, or (3) death.\u201d 820 ILCS 405/235(B) (West 2000).\nThe Board held that, between December 3 and 16, 2000, plaintiff received wages in the forms of group insurance benefits and stock options. However, we agree with plaintiff that neither the group benefits nor the stock options were wages.\nThe Board\u2019s conclusion that the group insurance benefits were wages is legally erroneous because, as the Board now concedes, section 235(B) explicitly excludes life insurance and disability insurance from \u201cwages.\u201d The Board\u2019s conclusion is also factually against the manifest weight of the evidence because, under the contract, any benefits were tied to plaintiffs salary, and plaintiffs salary was zero.\nThe stock options present a more complicated issue. However, we agree with plaintiff that the options cannot be considered \u201cremuneration.\u201d A stock option is the right to buy a share or shares of stock at a specified price or within a specified period. Black\u2019s Law Dictionary 1431 (7th ed. 1999); see also International Business Machines Corp. v. Bajorek, 191 F.3d 1033, 1039 (9th Cir. 1999). Incentive stock options are options that satisfy the requirements of section 422 of the Internal Revenue Code of 1986. 26 U.S.C.A. \u00a7 422 (West 2002).\nAlthough our research has uncovered no Illinois case law addressing whether and when stock options are \u201cwages\u201d under the Act, the treatment of stock options in other contexts is instructive. In Illinois marriage dissolution cases, unvested stock options have been treated as marital property on the basis that the options create a contractual right in the employee who holds them. See In re Marriage of Peters, 326 Ill. App. 3d 364, 369 (2001); see also 750 ILCS 5/503(b)(3) (West Supp. 2001) (options acquired during marriage but before a judgment of dissolution or declaration of invalidity of marriage are presumed to be marital property, even if they have not vested and even if their value cannot be ascertained). At dissolution, courts must allocate stock options between the parties, even though the options\u2019 value may be unascertainable and the actual property division may occur at a later date. 750 ILCS 5/503(b)(3) (West Supp. 2001).\nUnder proposed Treasury Regulations, federal unemployment taxes will be assessed when incentive stock options are exercised and not upon their grant. 66 Fed. Reg. 57023 (November 14, 2001). Thus, for purposes of funding the unemployment compensation system, the exercise, not the grant, of the option triggers a tax liability. Similarly, for certain state law purposes, the exercise, not the receipt, of a stock option is treated as a significant event. See, e.g., Marchlen v. Township of Mt. Lebanon, 560 Pa. 453, 460-61, 746 A.2d 566, 570 (2000) (\u201cthe value of the stock option is speculative and not readily ascertainable until exercised. *** [T]he taxing authority must wait until the exercise of the stock option to compute the associated [earned income] tax liability\u201d); Scott v. Workers\u2019 Compensation Appeal Board, 814 A.2d 298, 300 (Pa. Commw. 2003) (because stock options cannot be valued until they are exercised, they are excludable as income in workers\u2019 compensation matters for purposes of determining a claimant\u2019s average weekly wage).\nIn Bajorek, a statute made it unlawful for an employer to collect or receive from an employee any wages that the employer had already paid the employee. The statute defined \u201cwages\u201d as \u201c \u2018all amounts for labor performed by employees of every description ***.\u2019 \u201d Bajorek, 191 F.3d at 1039, quoting Cal. Lab. Code \u00a7 200 (West 1989). Despite this broad definition, the court held that the stock options, which apparently had vested, were not wages because they \u201care not \u2018amounts.\u2019 They are not money at all,\u201d but only rights with no fixed or readily ascertainable value. Bajorek, 191 F.3d at 1039.\nHere, the contract gave plaintiff the right to purchase as many as 50,000 shares of MylndoorAir stock at some later date for $1.75 per share. However, plaintiffs\u2019 \u201ccompensation\u201d was contingent in several respects. As the contract and plaintiffs testimony establish, plaintiffs right to buy any stock did not commence vesting until one year from the date of the contract, well beyond the period at issue. Second, even had the options vested, their value was uncertain. Finally, the contract indicated that the option grant was contingent upon board of director approval.\nWe conclude that the unvested and unexercised stock options here do not constitute \u201cwages\u201d for purposes of the Act. As the foregoing authority indicates, a stock option\u2019s value is speculative and unascertamable upon the option\u2019s grant. Here, the value of any remuneration is critical because it determines whether plaintiff is entitled to any benefits and their amount. Where the value of any compensation is speculative and unascertainable, the compensation cannot constitute \u201cwages\u201d for purposes of the Act. We further note that the grant was contingent upon board of director approval. There is no indication that this contingency was met. We thus conclude that the Board erred when it determined that the stock options were \u201cwages.\u201d Therefore, the Board\u2019s decision cannot be sustained on either basis given in its order.\nHowever, the Board now contends that we can affirm because (1) plaintiff failed to prove that he was not employed less than full-time, and (2) plaintiff did not prove that his severance payments were not really salary. The Board observes that plaintiff has the burden to prove that he is eligible for benefits (see Acevedo v. Department of Employment Security, 324 Ill. App. 3d 768, 771 (2001)), and it asserts that he did not disprove either of these grounds for rejecting his claim.\nThe Board did not find either that plaintiff was employed full time or that his severance payments were really a form of salary. The Board never held that plaintiff did not meet his burden of proof on these issues. Because the evidence is at most conflicting, we decline to usurp the Board\u2019s fact-finding role in affirming its judgment.\nThe Board\u2019s first alternative argument is that plaintiff did not satisfy section 239 because he did not prove that either week was one of \u201cless than full-time work.\u201d 820 ILCS 405/239 (West 2000). However, it was undisputed that plaintiff worked no more than 20 hours either week and that he spent his time searching for work elsewhere. Plaintiff was not working full time during the period in question; had the Board found otherwise, that finding would have been against the manifest weight of the evidence.\nA regulation that the Board itself cites defines \u201cfull-time\u201d work as \u201cthe number of hours or days a class of workers would work if the employing unit had all the business it could handle,\u201d customarily 40 hours per week. 56 Ill. Adm. Code \u00a7 2920.1 (2001). This definition is provided to clarify substantive regulations that follow. However, even if we take it as authority for interpreting section 239 itself, it supports a finding that plaintiff worked less than full time between December 3 and 16, 2000.\nThe Board\u2019s remaining ground for affirmance is that plaintiff did not prove that his severance pay from Phoenix Controls was not really salary from MylndoorAir. The Board observes that the referee appeared to endorse this theory. However, the referee did not have a copy of the severance agreement when he issued his findings. The Board itself did not find that plaintiffs severance pay was really salary, although it stated somewhat ambiguously that it adopted the referee\u2019s decision. In any event, even had the Board found that plaintiffs severance pay was really salary, that finding could not be sustained.\nA person may be \u201cunemployed\u201d during a given week even though she or he is receiving severance payments from a former employer. The reason is that, ordinarily, severance payments are not payable \u201cwith respect to\u201d (820 ILCS 405/239 (West 2000)) the period after the employment has ceased. The test for whether severance pay is really salary is whether the payments are fixed with a view toward the employee\u2019s future conduct or needs. Kroger Co. v. Blumenthal, 13 Ill. 2d 222, 227-28 (1958).\nThe Board observes that plaintiff was terminated from Phoenix Controls only shortly before MylndoorAir hired him and that there is some evidence of a connection between Phoenix Controls and MylndoorAir. The companies were started by the same person. MylndoorAir was formerly a unit of Phoenix Controls, and they shared office space for a time. The Board urges that this evidence demonstrates a connection between plaintiffs firing and his hiring, and it concludes that Phoenix Controls was really paying his starting salary at MylndoorAir. The Board asks that we affirm its decision on that ground or remand for the Board to take more evidence on this issue.\nAgain, we decline to affirm on a theory that the Board did not use and that rests on evidence that is more susceptible to the opposite interpretation. The evidence reflects that plaintiff was hired six days after he was terminated; that his weekly severance pay was equal to his weekly salary; and that Phoenix Controls and MylndoorAir were separate business entities by November 2001. Phoenix Controls\u2019 human resources manager testified that her company exercised no role in arranging or drafting plaintiffs contract with MylndoorAir and that plaintiffs severance package was not salary.\nThe Board\u2019s finding that plaintiff was not unemployed during the period at issue is against the manifest weight of the evidence. Therefore, plaintiff qualifies for unemployment benefits for that period. We must remand the cause to the Board so that it may decide how much is due plaintiff.\nThe judgment of the circuit court of Du Page County is reversed, and the cause is remanded to the Board for proceedings consistent with this order.\nReversed and remanded with directions.\nCALLUM and GILLERAN JOHNSON, JJ., concur.", "type": "majority", "author": "PRESIDING JUSTICE HUTCHINSON" } ], "attorneys": [ "Mark J. Stauber, of Wheaton, for appellant.", "Lisa Madigan, Attorney General, of Chicago (Joel D. Bertocchi and Laura M. Wunder, Assistant Attorneys General, of counsel), for appellee Board of Review." ], "corrections": "", "head_matter": "PETER M. HMELYAR, Plaintiff-Appellant, v. PHOENIX CONTROLS et al., Defendants-Appellees.\nSecond District\nNo. 2\u201402\u20140242\nOpinion filed June 17, 2003.\nMark J. Stauber, of Wheaton, for appellant.\nLisa Madigan, Attorney General, of Chicago (Joel D. Bertocchi and Laura M. Wunder, Assistant Attorneys General, of counsel), for appellee Board of Review." }, "file_name": "0700-01", "first_page_order": 716, "last_page_order": 724 }