Florence v. DEPT. OF WORKFORCE SERVS.

• Decision Date: 01 November 2001
• Docket Number: No. 20000700-CA.,20000700-CA.
• Citation: 35 P.3d 1148,2001 UT App 323
• Parties: Tracey J. FLORENCE, Petitioner, v. DEPARTMENT OF WORKFORCE SERVICES, Respondent.
• Court: Utah Court of Appeals

35 P.3d 1148

2001 UT App 323

Tracey J. FLORENCE, Petitioner, v. DEPARTMENT OF WORKFORCE SERVICES, Respondent.

No. 20000700-CA.

Court of Appeals of Utah.

November 1, 2001.

Michael E. Bulson, Utah Legal Services, Inc., Ogden, for Appellant.

Lorin R. Blauer, Department of Workforce Services, Salt Lake City, for Appellee.

Before Judges GREENWOOD, JACKSON, and ORME.

OPINION

ORME, Judge:

¶ 1 Petitioner Tracey J. Florence appeals a decision of the Department of Workforce Services Appeals Board (the Appeals Board) affirming a reduction in her unemployment benefits by reason of her receipt of Social Security benefits and remanding her case to the Department of Workforce Services (Workforce Services) for a redetermination of an initially assessed $722 overpayment of unemployment benefits. We affirm.

BACKGROUND

¶ 2 Florence, a hearing-impaired Utah resident, had for some time been receiving Social Security Disability Insurance (SSDI) benefits. "SSDI benefits are provided through a[] [federally funded and administered] insurance program and are only available to disabled persons who have the requisite work history and have contributed to the Social Security program," Nelson v. Betit, 937 P.2d 1298, 1301 (Utah Ct.App.1997), and who, because of their disability, are unable to engage in substantial gainful activity. See 42 U.S.C.A. § 423(a)(1)(D), (d)(1)(A) (West Supp.2001).¹ Therefore, although the record contains no explicit information as to Florence's work history prior to her becoming eligible for SSDI benefits, we assume that Florence worked for some time prior to her receipt of SSDI benefits, that she made the requisite Social Security contributions, and that she withdrew from the workforce due to her disability.

¶ 3 In February of 1998, apparently pursuant to 42 U.S.C.A. § 422(c) (West Supp. 2001),² Florence began to work for the Internal Revenue Service (IRS) while still receiving SSDI benefits.³ In October of 1998, the IRS furloughed Florence, and she applied with Workforce Services for unemployment benefits. Workforce Services determined Florence to be eligible to receive unemployment benefits as of November 1998.

¶ 4 Along about July of 1999, Workforce Services received information from the Social Security Administration alerting Workforce Services to Florence's receipt of SSDI benefits during the same time she had received unemployment benefits. That information prompted Workforce Services to offset Florence's future unemployment benefits by the amount of her SSDI benefits. Workforce Services also notified Florence of a $722 "fault overpayment"⁴ to her of unemployment benefits for the period between November 22, 1998 and January 30, 1999.

¶ 5 Florence filed an administrative appeal of Workforce Services' decision. The Appeals Board affirmed Workforce Services' decision to offset her unemployment benefits by her SSDI benefits and remanded to Workforce Services for a redetermination of the amount and status — fault or no-fault — of the overpayment. She now petitions this court to review her case.

ISSUE AND STANDARD OF REVIEW

¶ 6 We must decide whether the Appeals Board erred in determining that, under Utah Code Ann. § 35A-4-401(2)(c) (Supp.2000), unemployment benefits must be offset by SSDI benefits received for the same time period and whether that interpretation of the Utah Code conflicts with the Federal Unemployment Tax Act, 26 U.S.C.A. §§ 3301-11 (West 1989 & Supp.2001).

[W]e may grant relief from an agency action if the agency "has erroneously interpreted. . . the law." "`We review statutory interpretations by agencies for correctness, giving no deference to the agency's interpretation, unless the statute grants to the agency the discretion to interpret the statute.'"

VanLeeuwen v. Industrial Comm'n, 901 P.2d 281, 283 (Utah Ct.App.) (citations omitted), cert. denied, 910 P.2d 426 (Utah 1995).

ANALYSIS

¶ 7 Some background information regarding unemployment insurance is essential to an understanding of this case.

Unemployment insurance in this country has been a joint federal-state undertaking since first established under Title IX of the Social Security Act of 1935. In general, Congress has afforded great discretion to the states in the design and operation of their unemployment insurance programs, particularly in the establishment of benefit structures and qualifying requirements. Congress, however, has established a limited number of "fundamental standards" that states must meet in order to receive the benefits of federal certification of their programs. Among the "fundamental standards" with which states must comply is the pension offset requirement set forth in [26 U.S.C.A.] § 3304(a)(15).

Prior to 1976, some states allowed retired individuals who received social security or public or private pensions to receive unemployment insurance benefits even though they actually had withdrawn from the labor force. In response, Congress enacted § 3304(a)(15) in 1976 to require, effective September 30, 1979, all states to offset an individual's unemployment insurance compensation by the amount of any public or private pension or other similar periodic retirement payment, including social security and railroad retirement benefits, based on the individual's previous employment.

Watkins v. Cantrell, 736 F.2d 933, 937 (4th Cir.1984) (internal citations omitted). See Cabais v. Egger, 690 F.2d 234, 235-36 (D.C.Cir.1982)

. The pension offset requirement of section 3304 states in relevant part:

(a) Requirements. The Secretary of Labor shall approve any State law submitted to him, within 30 days of such submission, which he finds provides that —

. . .

(15) the amount of compensation payable to an individual for any week which begins after March 31, 1980, and which begins in a period with respect to which such individual is receiving a governmental or other pension, retirement or retired pay, annuity, or any other similar periodic payment which is based on the previous work of such individual shall be reduced (but not below zero) by an amount equal to the amount of such pension, retirement or retired pay, annuity, or other payment, which is reasonably attributable to such week except that —

(A) the requirements of this paragraph shall apply to any pension, retirement or retired pay, annuity, or other similar periodic payments only if —

(i) such pension, retirement or retired pay, annuity, or similar payment is under a plan maintained (or contributed to) by a base period employer or chargeable employer. . . .

26 U.S.C.A. 3304 (West Supp.2001).

¶ 8 In order to comply with the pension offset requirement of the federal statute, and thus qualify Utah's unemployment insurance program for the benefits of federal certification, the Utah Legislature enacted this provision:

The "weekly [unemployment] benefit amount" of an individual who is receiving, or who is eligible to receive, based upon the individual's previous employment, a pension, which includes a governmental, social security, or other pension, retirement or disability retirement pay, under a plan maintained or contributed to by a base-period employer is the "weekly [unemployment] benefit amount" which is computed under this section less 100% of such retirement benefits, that are attributable to a week, disregarding any fraction of $1.

Utah Code Ann. § 35A-4-401(2)(c) (Supp. 2000).

¶ 9 This appeal requires us to determine first whether SSDI benefits qualify as the type of pension payments requiring an offset against unemployment benefits. Florence argues that 26 U.S.C.A. § 3304(a)(15) (West Supp.2001) does not allow an offset of SSDI benefits against unemployment benefits. She then asserts that Utah Code Ann. § 35A-4-401(2)(c) (Supp.2000) "should be interpreted consistent with the federal statute it implements" and that it must also, then, prohibit an offset of SSDI benefits against unemployment benefits. We disagree and conclude that state law requires an offset of SSDI benefits against unemployment benefits and that federal law permits such an offset.

A. Utah Code Ann. § 35A-4-401(2)(c)

¶ 10 We begin our analysis with an examination of the plain language of Utah Code Ann. § 35A-4-401(2)(c) (Supp.2000). See Arredondo v. Avis Rent A Car Sys., Inc., 2001 UT 29, ¶ 12, 24 P.3d 928

("`"When faced with a question of statutory construction, we look first to the plain language of the statute."'") (citations omitted). Section 401(2)(c) defines the types of benefits that must offset unemployment benefits. The plain language of the section requires an offset against unemployment benefits of "pension" payments that are (1) "based upon the individual's previous employment" and (2) made "under a plan maintained or contributed to by a base-period employer." Utah Code Ann. § 35A-4-401(2)(c) (Supp. 2000). Preliminarily, we observe that SSDI benefits fit the general definition of a "pension" because they are "a fixed sum paid regularly . . . to a person following his retirement from service (as due to age or disability)." Webster's Third New International Dictionary 1671 (1993) (emphasis added). Additionally, because "SSDI benefits . . . are only available to disabled persons who have the requisite work history," Nelson v. Betit, 937 P.2d 1298, 1301 (Utah Ct.App.1997) (citing 42 U.S.C.A. § 423(a)(1)(A), (a)(1)(D), (c)(1) (West 1991)), they are based on the individual's previous work. Finally, in Harrington v. Industrial Comm'n, 942 P.2d 961 (Utah Ct.App.1997), we rejected the contention "that because contributions to the Social Security System by both an employer and an employee are required by federal law and not made pursuant to an employment contract, Social Security benefits are not a `plan maintained or contributed to by a base-period employer.'" Id. at 963 (quoting Utah Code Ann. § 35A-4-401(2)(c) (1997)). See id. at 964-66. SSDI benefits are, therefore, received under a plan maintained or contributed to by a base period employer and clearly fall within the...