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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