STATE OF RHODE ISLAND AND PROVIDENCE PLANTATIONS
PROVIDENCE, SC DISTRICT COURT, SIXTH DIVISION


JUDITH SCOTT :

V.: A.A. 07-102:

DEPARTMENT OF LABOR AND TRAINING, BOARD OF REVIEW  :

 

 D E C I S I O N

 

LaFAZIA, J.   This matter is before the Court on the appeal of Judith Scott (claimant) seeking review of a final decision issued by the Department of Labor and Training, Board of Review (the Board).  In its decision the Board upheld the decision of the Referee which determined that the claimant’s benefits were subject to the reduction provisions of § 28-44-19.1 of the Rhode Island Employment Security Act.
            Jurisdiction is pursuant to the Administrative Procedures Act G.L. 1956 § 42-35-15(g).
            The decision of the Board is reversed for the reasons set forth below.

FACTS AND TRAVEL
            The claimant was employed as an Interim Executive Director for the South Providence Neighborhood Ministries (S.P.N.M.) a 501(c)(3) organization under the Internal Revenue Code.  The claimants last day of work was February 8, 2007.
            Claimant had been receiving social security disability benefits since October 2000.  (Tr. p. 3).  Her social security pension benefits were in the amount of $877.50 per month.  Based upon that monthly pension, the Board determined her weekly pension deduction to be in the amount of $102.00.  Additionally, claimant receives a state pension which was not the subject matter of this petition.
            Claimant was discharged from her interim position in February 2007 when a permanent Director was announced.  Claimant was awarded weekly employment benefits at a rate of $465.00.  Her weekly benefits were reduced by the aforementioned amount of $102.00.  Claimant was therefore awarded a net benefit of $363.00 per week.
            Claimant filed this appeal, maintaining that no deduction should have been applied because her employer, SPNM, was a 501(c)(3) organization and as such was not entitled to a tax credit because it paid no taxes.  Claimant argues therefore that her claim for benefits falls within the purview of U.S.C. 3301 et seq. and that therefore subsection 2 of § 28-44-19.1 applies as opposed to subsection 1 which contained the language relied upon by the Board.
            Claimant filed a timely appeal with supporting memoranda.  No memorandum has been received on behalf of the Appellee.
STANDARD OF REVIEW
The standard of review is provided by Rhode Island General Laws § 42-35-15(g), a section of the state Administrative Procedures Act, which provides as follows:
42-35-15. Judicial review of contested cases.
                        (g)       The court shall not substitute its judgment for that of the agency as to the weight of the evidence on questions of fact.  The court may affirm the decision of the agency or remand the case for further proceedings, or it may reverse or modify the decision if substantial rights of the appellant have been prejudiced because the administrative findings, inferences, conclusions, or decisions are:

(1)       In violation of constitutional or statutory provisions;
            (2)       In excess of the statutory authority of the agency;
            (3)       Made upon unlawful procedure;
            (4)       Affected by other error of law;
(5)       Clearly erroneous in view of the reliable, probative, and substantial evidence on the whole record; or
(6)       Arbitrary or capricious or characterized by abuse of discretion or clearly unwarranted exercise of discretion.

  1. Thus, on questions of fact, the District Court ". . . may not substitute its judgment for that of the agency and must affirm the decision of the agency unless its findings are clearly erroneous.”  Guarino v. Department of Social Welfare, 122 R.I. 583, 584, 410 A.2d 425 (1980) citing Rhode Island General Laws § 42-35-15(g)(5).  The Court will not substitute its judgment for that of the Board as to the weight of the evidence on questions of fact.  Cahoone v. Board of Review of the Department of Employment Security, 104 R.I. 503, 246 A.2d 213 (1968).  Stated differently, the findings of the agency will be upheld even though a reasonable mind might have reached a contrary result.  Cahoone v. Board of Review of Department of Employment Security, 104 R.I. 503, 246 A.2d 213, 215 (1968).  See also D’Ambra v. Board of Review, Department of Employment Security, 517 A.2d 1039, 1041 (R.I. 1986).
  2. The Court has recognized that a liberal interpretation shall be utilized in construing and applying the Employment Security Act:
  3. . . . eligibility for benefits is to be determined in the light of the expressed legislative policy that "Chapters 42 to 44, inclusive, of this title shall be construed liberally in aid of their declared purpose which declared purpose is to lighten the burden which now falls upon the unemployed worker and his family.”  G.L. 1956, § 28-42-73. The legislature having thus declared a policy of liberal construction, this court, in construing the act, must seek to give as broad an effect to its humanitarian purpose as it reasonably may in the circumstances.  Of course, compliance with the legislative policy does not warrant an extension of eligibility by this court to any person or class of persons not intended by the legislature to share in the benefits of the act; but neither does it permit this court to enlarge the exclusionary effect of expressed restrictions on eligibility under the guise of construing such provisions of the act.  Harraka v. Board of Review of Department of Employment Security, 98 R.I. 197, 201, 200 A.2d 595, 597 (1964).
  4.  
  5. DISCUSSION
  6.  
  7.             Section 28-44-19.1 reads in part:

“An individual shall be disqualified from receiving benefits for any week of his or her employment within any period with regard to which that individual is currently receiving or has received retirement income in accordance with the following provisions:

  1. The amount of compensation payable to an individual for any week which begins in a period with respect to which that individual 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 that individual shall be reduced, but not below zero, by an amount of fifty percent (50%) of the amount of that pension, retirement . . . or other payment which is reasonably attributable to that week, IF (emphasis added) that payment is required as a condition for full tax credit against the tax imposed by the Federal Unemployment Tax Act, 26 U.S.C. § 3301 et seq; provided that if the person made no contributions to the retirement plan then the amount of compensation payable to the individual shall be reduced, but not below zero, by the full amount of the pension, retirement . . . or other pay which is reasonably attributable to that week.”

The Board relied upon the above provision in rendering its decision.
Section 28-44-19.1 subsection (2) provides in addition to the above:

  1. “If at any time following May 3, 1979, subdivision (1) of this section or any provision of it is NOT (emphasis added) required by Federal law in order for an eligible employer to qualify for full tax credit against the tax imposed by the Federal Unemployment Tax Act 26 U.S.C. § 3301 et seq., then subdivision (1) of this section of the provision of it is no longer required and SHALL HAVE NO FORCE OR EFFECT” (emphasis added).

It does not appear that this section was considered by the Board in its decision.
            26 U.S.C. § 3301 – Rate of tax provides in part:
            “. . .  There is hereby imposed upon every employer a . . . tax . . . equal to . . .
1)         6.2% in case of calendar years 1988 – 2007 . . . of the total wages paid by him . . . with respect to employment (as defined in section 3306(c) . . .
            (c)        Employment
For purposes of this chapter, the term employment means any service performed . . . EXCEPT: (emphasis added.)
(8) service performed in the employ of religious, charitable, educational or other organization described in 501(c)(3) which is exempt from income tax under section 501(a).
It does not appear that this section nor any subsection of 26 USC § 3301 was considered by the Board in its decision.  Both of the latter citations were argued by counsel for the claimant at the initial hearing.
            There appears to be no dispute that the claimant’s employer qualified as a 501(c)(3) organization.  The above referenced sections of the U.S. Code and the Rhode Island Employment Security Act are pertinent to the legal issue before the Court. The Board should have considered and applied these sections but there is no indication that the Board did so.  A review of the entire record demonstrates that the Board’s decision was therefore affected by error of law and is otherwise in violation of constitutional or statutory provisions.
            Because South Providence Neighborhood Ministries qualified as a 501(c)(3) organization, § 28-44-9.1(2) is controlling and no reduction should apply to the unemployment benefits otherwise awarded to claimant.

            Accordingly, the decision of the Board is hereby reversed.