Opinion ID: 437251
Heading Depth: 1
Heading Rank: 3

Heading: Compliance with FUTA

Text: 10 Watkins's principal argument is that FUTA's pension offset provision, 26 U.S.C. Sec. 3304(a)(15), as amended in 1980, authorizes states to offset pension or retirement payments from unemployment insurance benefits only where the pension or retirement payments are attributable to or affected by employment with a base period employer. 5 In making the argument, Watkins relies upon her construction of the plain meaning and the legislative history of the statute. 11 Defendants' position, which was adopted by the district court, is that Sec. 3304(a)(15) only establishes a minimum pension offset requirement that states, at their option, may exceed. Like Watkins, defendants cite the plain meaning and the legislative history of the statute in support of their position; unlike Watkins, however, defendants rely on the interpretation given the statute by the Secretary of Labor. Unemployment Insurance Program Letter (UIPL) No. 7-81 (Nov. 7, 1980), 47 Fed.Reg. 29,904, 29,905 (1982); UIPL No. 7-81 Change 1 (June 9, 1981), 47 Fed.Reg. 29,904, 29,908 (1982); UIPL No. 7-81 Change 2 (Mar. 11, 1983), 48 Fed.Reg. 37,740 (1983). See Cabais v. Egger, supra, 690 F.2d at 238-39 (UIPL No. 7-81 is interpretative in nature with the exception of UIPL No. 7-81 Change 1, Sec. 5); Peare v. McFarland, 577 F.Supp. 791, 793 (N.D.Ind.1984) (relying on Secretary's interpretation as expressed in UIPL No. 7-81).
12 Because the question confronting this court is one of statutory interpretation, we must first turn to the language of the statute. Matala v. Consolidation Coal Co., 647 F.2d 427, 429 (4th Cir.1981). Section 3304(a)(15) expressly provides that the requirement that states offset pension, retirement or other similar periodic payments from unemployment insurance compensation is applicable only if both the pension or retirement benefit is paid under a plan maintained or contributed to by a base period or chargeable employer and, with the exception of Social Security or Railroad Retirement Benefits, services performed for such employer after the beginning of the base period affect the eligibility for, or increase the amount of, the pension or retirement benefits. 26 U.S.C. Sec. 3304(a)(15). See Rivera v. Becerra, 714 F.2d 887, 894 (9th Cir.1983), cert. denied sub nom. International Union, United Automobile, Aerospace & Agricultural Implement Workers of America, --- U.S. ----, 104 S.Ct. 1591, 80 L.Ed.2d 124 (1984); Peare v. McFarland, supra, 577 F.Supp. at 793. Section 3304(a)(15)(B) exempts states from this requirement to the extent that the state determines to take into account an unemployment insurance compensation claimant's contributions for the pension or retirement payment. See Bowman v. Stumbo, 735 F.2d 192 at 197 (6th Cir.1984); Cabais v. Egger, supra, 690 F.2d at 239. 13 Contrary to Watkins's suggestion, this language, which requires states to offset pension benefits from unemployment compensation only if certain conditions are met, is not tantamount to a prohibition of offsets whenever the conditions are not met. Section 3304(a)(15) nowhere explicitly prohibits states from offsetting from unemployment insurance compensation pension or retirement payments in excess of the mandated offset. The absence of such an explicit prohibition in the language of the statute clearly indicates that no such prohibition was intended by Congress. As the Supreme Court has stated concerning a related matter, the absence of such an explicit condition [is] a strong indication that Congress did not intend to restrict the States' freedom to legislate in this area. New York Telephone Co. v. New York State Department of Labor, supra, 440 U.S. at 538, 99 S.Ct. at 1340 (construing Ohio Bureau of Employment Services v. Hodory, 431 U.S. 471, 97 S.Ct. 1898, 52 L.Ed.2d 513 (1977) (footnote omitted). Accordingly, our review of the language of the statute leaves us with the firm conviction that Congress did not preclude states from offsetting pension or retirement payments from unemployment insurance compensation in excess of that mandated by Sec. 3304(a)(15) when it amended that section in 1980. See Cabais v. Egger, supra, 690 F.2d at 240 (impact of states' law varies depending on whether a state chooses to exceed federal minimum standards); McKay v. Horn, supra, 529 F.Supp. at 856 (Sec. 3304 contains only minimum requirements and states are free to set broader offset provisions); Rivera v. Patino, 524 F.Supp. 136, 140 (N.D.Cal.1981) (Federal law sets forth minimum eligibility requirements, but a state is free to impose stricter requirements. Thus, under the new statute, states must offset certain pensions against unemployment insurance benefits in order to maintain federal certification, but if Congress were to repeal the pension offset provision, the state ... could still enact and enforce an identical provision.), aff'd in part & rev'd in part sub nom. Rivera v. Becerra, 714 F.2d 887 (9th Cir.1983), cert. denied sub nom. International Union, United Automobile, Aerospace & Agricultural Implement Workers of America v. Donovan, --- U.S. ----, 104 S.Ct. 1591, 80 L.Ed.2d 124 (1984). Contra In re Cullen, 93 A.D.2d 907, 461 N.Y.S.2d 592 (1983). 14 Watkins also suggests that our construction of the amendment of Sec. 3304(a)(15) in 1980 is such a narrow reading that it has little, if any, force. We do not agree. Quite simply, the 1980 amendment permitted states to refrain from offsetting substantial amounts of pension and other retirement income if the states so chose. See, e.g., 126 Cong.Rec. 23,044 (1980) (remarks of Rep. Davis & Rep. Corman); id. 23,048 (remarks of Rep. Biaggi).
15 Watkins contends that even if the prohibition of pension offsets in excess of that mandated is not clear from the plain meaning of Sec. 3304(a)(15), it becomes so upon resort to the section's legislative history. In part, Watkins relies on the comments of a number of senators concerning the pension offset provision of H.R. 4612. 126 Cong.Rec. 4,561 (1980) (remarks of Sen. Boren); id. 4,562 (remarks of Sen. Dole); id. 4,565 (remarks of Sen. Moynahan); id. 4,566-67 (remarks of Sen. Javits); id. 4,570 (remarks of Sen. Boren). Watkins argues that the general tone of these comments indicates that the Senate was acting to protect retired employees by assuring that pension offsets would be limited to base-period employment situations. Watkins relies principally, however, on the comments of Senators Chafee, Bradley, and Boren on the pension offset provision of H.R. 3904, which, as amended, ultimately was enacted as 26 U.S.C. Sec. 3304(a)(15). 126 Cong.Rec. 20,237-38 (remarks of Sen. Chafee) ([The Senate amendment] modifies the existing law to require that the reduction of unemployment compensation benefits is only required [sic] if the pension comes from the last employer. In addition, States would be given the option to limit the offset to the portion of the pension contributed to by the employer.); id. 20,238 (remarks of Sen. Bradley) (offsetting unemployment insurance benefits by pension benefits dollar for dollar, as required by 1976 amendment, is not a fair way to conduct business.); id. 20,241 (remarks of Sen. Boren) (mandatory pension offset is an injustice in the present law that needs to be corrected. Some people are being treated unfairly by it.); id. 26,040 (remarks of Sen. Bradley) (examples of offset of pension under 1980 amendment do not provide for states offsetting pensions in excess of that mandated). Watkins contends that these comments conclusively demonstrate that Congress, by amending Sec. 3304(a)(15) in 1980, prohibited states from offsetting pensions in excess of that mandated. 16 We do not agree that the legislative history compels the construction of Sec. 3304(a)(15) advanced by Watkins. As an initial point, we note that Watkins has cited no explicit statement in the legislative history of Sec. 3304(a)(15) that states are prohibited from offsetting pension benefits from unemployment insurance compensation in excess of that mandated; nor has our review of the legislative history unearthed any such statement. The legislative history does contain, however, explicit statements recognizing that states retain the power to offset pension benefits in excess of that mandated. Perhaps the clearest indication that states retain this power is contained in the responses of Representative Corman to questions by Representative Pickle concerning H.R. 5507: 17 Mr. PICKLE. Mr. Chairman, I would like to pose a question concerning the treatment of social security beneficiaries under this bill. 18