DANIEL L WALKER, Employee

An administrative law judge (ALJ) for the Division of Unemployment Insurance of the Department of Workforce Development issued a decision in this matter. A timely petition for review was filed.

The commission has considered the petition and the positions of the parties, and it has reviewed the evidence submitted to the ALJ. Based on its review, the commission agrees with the decision of the ALJ, and it adopts the findings and conclusion in that decision as its own.

The decision of the administrative law judge is affirmed. Accordingly, as of week 37 of 2009, benefits otherwise payable for any week of partial or total unemployment are reduced by $1,240.00 and, in week 25 of 2010, benefits are reduced by $400.00. The employee is required to repay the $726.00 overpayment to the Unemployment Reserve Fund. This decision also results in an overpayment of Federal Additional Compensation (FAC) benefits. The employee will receive, or may have already received, a separate "UCB-25 Notice of Federal Additional
Compensation Overpayment" regarding the amount of FAC benefits that must be repaid.

Dated and mailed July 8, 2010
walkeda . usd : 164 : 1  UW 980

/s/ James T. Flynn, Chairperson

/s/ Robert Glaser, Commissioner

Ann L. Crump, Commissioner

In his petition for commission review the employee argues that the pension payment was funded by the employee, not the employer, so his benefits should not be reduced. This argument fails. It is undisputed that the employer made all the contributions to the fund and that no contributions were made by the employee himself. While the employee makes the argument that his union bargained for the pension contributions in lieu of pay raises, this argument was considered and rejected in Paul M. Murphy v. LIRC and Miron Construction Company, Inc., Case No. 06 CV 125 (Wis. Cir. Ct., Oconto Co., June 18, 2007). The Murphy decision referenced a Program Letter issued by the United States Department of Labor which specifically addressed this question and which states, in relevant part:

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.

Department of Labor Unemployment Insurance Program Letter No. 22-87, Change 2, February 3, 2003.

Next, the employee argues that the statutory criteria for benefit reduction are not satisfied because the department only reduces the employee's weekly benefits by the amount of the pension if the following criteria are met:

1. The claimant has base period wages from the employer from which the pension payment is received; and

2. 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.

Wis. Stat. § 108.05(7)(e).

The employee maintains that, at the time he took the lump sum payment, he was being paid fully federally funded benefits, both EUC and later extended benefits, and was not being paid benefits funded by his base period employer. He contends that the employer was considered a base period employer only because the department continued utilizing qualifying information from his previous base period during the multiple federal extensions of unemployment benefits. Again, this argument fails. Section 108.05(7)(e)1. of the statute does not ask which entity is paying the unemployment benefits. Rather, the question is whether the employee had base period wages from the employer from which the pension was received. It is clear both from department records and from the claimant's own testimony that he had base period wages from the employer that funds his pension. The criteria set forth in Wis. Stat. § 108.05(7)(e)1. is thereby satisfied.

The employee also contends that he has not performed work for his base period employer since the start of the base period that increased the amount of his pension fund. He argues that he would have been eligible for the amount he withdrew regardless of his work for the base period employer. The commission has considered this argument, but finds it unpersuasive. The employee cannot artificially segregate his pension payments so as to support a claim that the amount he withdrew was not based upon current contributions but was based upon contributions made earlier. In a prior decision the commission addressed a similar argument as follows:

". . . The law does not provide for isolation of the pension contributions by the employers the claimant has worked for during his base period. The only requirements are that the claimant has not contributed to the pension and that the claimant has worked for the base period employer. He must also have performed work that affirmatively affected his eligibility for the pension or increased its amount."

Holger Olsson, UI Hearing No. 01201395EC (LIRC Nov. 20, 2001).

Where, as here, the claimant performed work for his base period employer, which then generated additional payments into his pension fund, it cannot reasonably be said that the work did not affect his eligibility for the pension or increase its amount.

Finally, the employee makes the argument that, because he did not retire, but took a lump sum payment as a result of a one-time opportunity offered by his union to help during trying financial times, this was not really a "pension" payment. This, too, is without merit. The statute defines a "pension payment" as:

"1. . . . 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. . ."

The department does not consider the employee's eligibility for retirement when determining whether a payment constitutes a pension. A lump sum payment to an individual who is not yet eligible for retirement payments can constitute a pension. Abler v. Brunswick Corp., UI Hearing No. 09004903FL (LIRC Feb. 13, 2009).

Because the commission agrees with the appeal tribunal that the employee was receiving a pension payment as of the week at issue, within the meaning of the statute, the appeal tribunal decision is affirmed.

cc: Mark Hoffman
Joel Kapusta
Attorney Victor M. Arellano

Appealed to Circuit Court

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