No. 89-354 IN THE SUPREME COURT OF THE STATE OF MONTANA 1990

BERGLUND and BERGLUND, INC., Petitioner and Appellant,-VSCONTRIBUTIONS 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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. ClerkChief ~ustice J. A. Turnage delivered the Opinion of the Court. Berglund and Berglund, Inc. (Berglund), appeals a memorandum and order of the District Court for the Fourth Judicial District, Missoula County. Thatmemorandum 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 iswhether the District Court abused its discretion in affirming the administrative decision. Berglund is a long-haul trucking company located inMissoula, 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 ithad structured thispayplan so that the travel expenseswould not be taxed forpurposes of unemployment insurance.After a field audit, an auditor for the Division determined that the compensation Berglund paid itsdriver for travel expense, at 75percent of thewagespaid, "doesnot appear reasonable." He noted that Berglundlssystem of payment required no documentation of travel expenses at all and decided that the travel expensesmust be included in the wages reportableto and taxableby theDivision.

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 in 5 39-51-201(17), MCA (1985) (nowsubsection (18)of the

same statute). He reasoned that the 74 centsper mile for travel expenses should be included aswages, thereby increasing unemployment benefits in the event of unemployment. He cited the duty to construe the Unemployment InsuranceAct 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 reviewof administrativedecisions. It found substantial evidence to support the Board's decision and affirmed.Did the District Court abuse its discretion in affirming the administrativedecision? 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 Billingsv. 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, andARM 24.11.808. Neither the statutenor theadministrativerule was discussed at thehearing. At thehearing, theparties referred instead toa three-criteriatest setout inDivision guidelines for whether a travel allowance was subject to unemployment contributions 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 containsa list of itemswhich 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 reliedupon inmaking thisdecision. Butboth the statuteand rule arepublished. Furthermore,Berglundhad several weeks to reviewthehearing officer'sproposed findingsand conclusions, including their legal theories,between the time they

were issued and the hearing before the Board. Berglund argues that the court shouldhave reversed the Board because the Board failed to apply the proper criteria (the three criteria listed in the Division guidelines) in determiningwhether the travel allowance constituted wages. However, it is undeniable thatthe statuteand administrative regulation apply. Ifa 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 "failedto comply with [its] duty topromulgate 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 complywith [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 theirright to or are equitably estopped fromrelying on the statute and administrative rule.Estoppel isnot favored and will only be sustainedupon clear and convincing evidence. Kenneth 

### D. Collins Agency v. Hagerott

(1984), 211Mont. 303, 310, 684P.2d 487, 490. Here, Berglund has not shownby clearand convincing evidence the element of equitable estoppel requiring reliance upon a misrepresentation to the relierfsdetriment. (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 guidelineswere applied, itwould be in a betterposition, becauseBerglundhasnot 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. Berglundfstruck driver was required to keep no records of travel expenseswhatsoever. 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: