Wisconsin Labor and Industry Review Commission --
Summary of Wisconsin Court Decision relating to Unemployment Insurance


Subject: Department of Workforce Development v. Labor and Industry Review Commission and Dustin Richards, Case 08 CV 568 (Wis. Cir. Ct., Dane Co., February 25, 2009)

Digest Codes: TRA Overpayment Waiver

The employee was eligible to apply for Trade Readjustment Allowances (TRA). The Department of Workforce Development (department) scheduled an appointment for him to do so on December 9, 2004, not realizing that the federal deadline for the employee’s application was December 7. The employee completed his application and the department approved it, following which the employee received $22,683 in benefits. A federal audit led to discovery of the untimeliness of the employee’s application, at which point the department sought recovery from the employee of the overpayment. Waiver of recovery of TRA overpayments is governed by 19 U.S.C. § 2315(a), which allows waiver if the claimant was not at fault and requiring repayment would be contrary to equity and good conscience. Federal regulations interpret “contrary to equity and good conscience” to mean that recovery of the overpayment will cause the claimant “extraordinary financial hardship,” which in turn is defined as “loss of or inability to obtain minimal necessities of food, medicine, and shelter for a substantial period of time.” 20 C.F.R. § 617.55(a)(2)(ii)(C)(1).

The appeal tribunal found that waiver of recovery of the overpayment was inappropriate on the ground that the employee’s monthly income exceeded his regular monthly expenses.  LIRC's decision  reversed and found that waiver of recovery of the overpayment was in order on the ground that, in addition to the employee’s regular monthly expenses, he also had additional expenses due to financial assistance he provided his parents for the care of his mentally and physically disabled brother.

Held: AFFIRMED on different ground. First, the court gave no deference to the commission’s legal conclusion, reasoning that, while the commission had experience and expertise in interpretation of the Trade Act, it had not yet developed a consistent interpretation of that Act. Second, in affirming the commission’s ultimate conclusion that waiver was appropriate, the court set forth what it considered a more reasonable interpretation of the law: “Equity and good conscience” is measurable not only by a balancing of income and expenses, but also by the enormity of the repayment obligation, and a $22,683 debt not knowingly incurred by a wage earner “presents a potentially crippling obligation for the employee’s entire working life.” The court reasoned that this interpretation was consistent with one of the congressional purposes underlying the Trade Act, assisting workers in adjusting to changes in international trade flows. The court rejected as unduly alarmist, finally, the department’s argument that the commission’s decision could lead to the imposition by DOL of penalties against the state.
 


Please note that this is a summary prepared by staff of the commission, not a verbatim reproduction of the court decision.

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