Franklin Electric Co. v. Unemployment Insurance Appeals of the Department of Workforce Development

# Franklin Electric Co. v. Unemployment Insurance Appeals **What Happened** Franklin Electric Company created two subsidiary corporations called FEM and FES. The company structured these subsidiaries to operate separately for unemployment insurance purposes, which allowed them to maintain lower contribution rates—the money employers pay into the unemployment insurance system. The Department of Workforce Development challenged this arrangement, arguing the subsidiaries should not be treated as independent employers. **What the Court Decided** The Indiana Court of Appeals agreed with the Department of Workforce Development. The court ruled that FEM and FES were not truly separate employers. It ordered the subsidiaries to transfer their unemployment insurance experience accounts back to Franklin Electric and pay the higher contribution rate that applies to the parent company. **Why This Matters for Workers** This ruling prevents employers from using corporate structures to dodge higher unemployment insurance contributions. These contributions fund the unemployment insurance system that supports workers who lose their jobs. By closing this loophole, the court helped ensure that employers cannot artificially reduce their contributions through creative corporate arrangements, protecting the stability of benefits available to unemployed workers.