STATE OF WISCONSIN
LABOR AND INDUSTRY REVIEW COMMISSION
P O BOX 8126, MADISON, WI 53708-8126 (608/266-9850)

JACK R MAYER, Employee

LOCAL 1056 MILLWRIGHTS, Employer

UNEMPLOYMENT INSURANCE DECISION
Hearing No. 04404010GB


An administrative law judge (ALJ) for the Division of Unemployment Insurance of the Department of Workforce Development issued a decision in this matter. On July 27, 2005, the commission, on its own motion, set aside the appeal tribunal decision issued on January 11, 2005, and remanded the matter for further hearing. The commission has considered the evidence submitted to the ALJs. Based on its review, the commission makes the following:

FINDINGS OF FACT AND CONCLUSIONS OF LAW

The employee worked as a millwright for twenty-eight years through a local union hiring hall. The employee worked for various employers under a collectively bargained agreement. That agreement provided under Article VII Fringe Benefit Trust Funds, as follows:

Section 8.1 Contributions. During the term of this Agreement, each Employer covered by this Agreement shall pay for each hour worked by all employees covered by this Agreement the sums per hour specified in Section 7.1, Article VII. "Wage Rates," to the following Funds:

a) The Wisconsin Carpenters Pension Fund
b) The Wisconsin Carpenters Health Fund
c) The Northern Wisconsin Regional Council of Carpenters Training Fund
d) Carpenters International Training Fund
e) Contract Administration Fund

and further, each such Employer shall deduct from the employee's wages for each such hour worked by all such employees the sums per hour as specified in Section I, Article VII for the following:

f) Wisconsin Carpenters Vacation Fund
g) Working Dues Deduction for all employees who have signed authorization cards

Article VII Section 7.1 set forth the specific wage rates, deductions, contributions and other payments to be made pursuant to Article VIII, Section 8.1. Section 7.1 sets forth, among other things, the vacation and working dues deductions, and pension, health, training, and administrative fund payments to be made by the employer. Section 7.1 notes that the working dues and vacation are deducted from the hourly wage rate, are not additional employer contributions, and are subject to F.I.C.A. and income tax withholding.

The employer sent the pension monies to the Wisconsin Carpenter's Pension Fund, which managed the pension fund and distributed the pensions to the participants, when they became eligible. The employee received a monthly pension amount of $1,493.00 as of November 1, 2004, when he retired. That amount was increased to $1,505.00 as of December 1, 2004. The employee initiated a benefit claim in week 46 of 2004.

The issue to be decided is whether the employee was receiving a pension payment as of week 46 of 2004 and, if so, what portion of those payments should be treated as deductible income for any week claimed.

Wisconsin Stat. § 108.05(7) provides, in part, as follows:

1. Definitions. In this subsection: 1. "Pension payment" means a pension, retirement, annuity or other similar payment made to a claimant, based on the previous work of that claimant, whether or not payable on a periodic basis, from a governmental or other retirement system maintained or contributed to by an employer from which that claimant has base period wages, other than a payment received under the federal Social Security Act (42 USC 301 et seq.).

If the pension payment is received under other than the Railroad Retirement Act, the claimant has base period wages from the employer from which the pension payment is received, the claimant has performed work for that employer since the start of the claimant's base period, and that work or remuneration for that work affirmatively affected the claimant's eligibility for or increased the amount of the pension payment, the department shall reduce the weekly benefits payable by 50% of the weekly pension amount, or by the percentage of the employer's contribution if acceptable evidence of a contribution by the employer other than 50% is furnished to the department.

The employee argued that the amount contributed to the fund was determined by the workers and not the employer. The employee argued that his base period employers did not contribute to his pension fund but merely acted as conduits.

In Ardell H. Helland, UI Dec. Hearing No. 00000087MD (LIRC Dec. 8, 2000), the commission stated:

The commission has affirmed the appeal tribunal decision in this case, because it must conclude that the contributions in question are from the employer and not from the employee. The basis for the commission's decision is the treatment of such monies under the Internal Revenue Code. An employer's contributions to an employee's retirement plan are not included in the employee's income at the time contributed. So it is here. Further, an employee's investment in a pension or annuity, only includes amounts an employer contributed if the employee was required to include those amounts in income. In the present case, this condition is not satisfied. The monies in question, although the amount is determined by the employee (via this collective bargaining representative) are not included in the employee's income.

It is also the department's position that if the contribution is from an employee's taxed compensation it is considered a contribution by the employee. However, if the source of the contribution is pre-tax contribution, the department considers that contribution to be employer funded. This is also the reasoning set forth in the Department of Labor's Unemployment Insurance Program Letter No. 22-87, Change 2, February 3, 2003, which states:

Question 4: During a collective bargaining process, employees may give up pay raises or cost of living adjustments in return for an increased employer contribution to the pension plan. May states consider these employer payments to be "contributions made by the individual?"

Answer: No. The controlling factor is whether the individual actually made any direct contributions to the plan. A direct contribution is one made by payroll deduction or otherwise from an employee's personal funds. A wage agreement that results in increased employer contributions to a retirement plan in exchange for a surrender in wages does not constitute a direct contribution to the pension plan by the employees.

The collective bargaining agreement itself distinguishes between employer contributions/payments and deductions. The pension payment is not a deduction and the employee does not pay income taxes on the pension fund monies at the time the payment is made to the pension fund. The employee was taxed when he withdrew his pension. Further, there was no payroll deduction taking place for the pension contribution.

The commission therefore finds that as of week 46 of 2004, the employee was actually or constructively receiving a pension payment that when apportioned, reduced, and calculated on a weekly basis amounted to $344.58 in weeks 46 through 48 of 2004, and $347.35 as of week 49 of 2004. As a result, benefits otherwise payable for a completed week of partial or total unemployment are reduced by those amounts, within the meaning of Wis. Stat. § 108.05(7)

The commission further finds that the employee was paid benefits in the amount of $12,257.00 for weeks 46 through 52 of 2004, and weeks 1 through 3, 6 through 9, 15 through 20, 22 through 26, week 35, and weeks 45 and 46, and weeks 51 through 53 of 2005, and weeks 1 through 7 of 2006, for which the employee was not eligible and to which the employee was not entitled, within the meaning of Wis. Stat. § 108.03(1).

The final issue to be decided is whether recovery of overpaid benefits must be waived. Wis. Stat. § 108.22(8)(c), provides that the department shall waive the recovery of overpaid benefits if the overpayment was the result of departmental error, and the overpayment did not result from the fault of the employee. Under Wis. Stat. § 108.02(10e)(a) and (b), departmental error is defined as an error made by the department in computing or paying benefits which results from a mathematical mistake, miscalculation, misapplication or misinterpretation of the law or mistake of evidentiary fact, by commission or omission, or from misinformation provided to a claimant by the department, on which the claimant relied.

The overpayment in this case did not result from the fault of the employee. The overpayment was the result of a misapplication of the law by the department.

The commission further finds that waiver of benefit recovery is required under Wis. Stat. § 108.22(8)(c), because the overpayment did not result from the fault of the employee as provided in Wis. Stat. § 108.04(13)(f), and the overpayment was the result of a departmental error. See Wis. Stat. § 108.22(8)(c)2.

DECISION

The initial determination is modified to conform to the foregoing findings and, as modified, is affirmed. Accordingly, as of week 46 of 2004, benefits otherwise payable to the employee shall be reduced by $344.58, and as of week 49 of 2004, by $347.35. The employee is not required to repay the sum of $12,257 to the unemployment reserve fund.

Dated and mailed March 17, 2006
mayerja . urr : 132 : 8 : UW 980

/s/ James T. Flynn, Chairman

/s/ David B. Falstad, Commissioner

/s/ Robert Glaser, Commissioner


cc: Siemens Westinghouse Gen. Serv. Co.


Appealed to Circuit Court.  Appeal dismissed September 13, 2006.   [Summary of Circuit Court Order]

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