Judge Mitchell L. Beckloff, Case Number: 22STCP04162, Date: 2023-11-17 Tentative Ruling

Judge: Mitchell L. Beckloff, Case: 22STCP04162, Date: 2023-11-17 Tentative Ruling

Petitioner, Lionel C. Williams, seeks a writ of mandate setting aside the decision of Respondent, the California Unemployment Insurance Appeals Board (CUIAB), affirming the Employment Development Department’s decision Petitioner received an overpayment of unemployment insurance benefits. (AR 5-6.) Respondent opposes the petition.

The Employment Development Department (EDD) notified Petitioner on September 21, 2021 it determined he had been overpaid unemployment insurance benefits.[1] (AR 5.) The EDD advised “benefits were paid before it was known that you had earnings over $25.99.” (AR 5.) The EDD reported to Petitioner it had added a statutory penalty of 30 percent to the amount of overpayment. (AR 5.) Finally, the EDD informed Petitioner he was “liable to repay this overpayment.” (AR 5.)

Petitioner appealed the EDD’s determination he had been overpaid unemployment insurance benefits. (AR 13.) Petitioner indicated on the appeal form that he disagreed with the EDD’s decision he had been overpaid benefits because:

Under IRS § (131) foster payments are non taxable and are not considered gross income and are exempt and excluded from wages or gross wages per IRS code (131) foster payments. (See attached law.) (AR 13.)

Petitioner explained his position that the EDD was in “violation of Internal Revenue Code (131) and . . . Welfare and Institutions Code ‘11250’ and 11251.” (AR 14.) Petitioner requested his benefit payments be restored and the overpayment finding eliminated. (AR 14.)

An administrative law judge (ALJ) conducted a hearing on Petitioner’s appeal on May 4, 2022. (AR 65.) The ALJ identified the issues for resolution:

· Whether Petitioner “was overpaid benefits, and, if so, whether the claimant is liable for the repayment of those benefits; and

· Whether the claimant was overpaid benefits due to a willful “false statement or representation,” or a willful “withholding of a material fact when claiming benefits.” (AR 188.)

The issue before the ALJ concerned the money Petitioner received for providing IHSS. As explained by the ALJ:

The department then received wage report information from IHSS indicated that [Petitioner] worked for a care recipient named Barbara Saner throughout all relevant time periods in question, earning between $563 and $577 per week for the 26 weeks ending January 9, 2021, $577.41 per week for the 13 weeks ending April 10, 2021, and $592 per week for the nine weeks ending September 11, 2021. (AR 188.)

During the hearing, Petitioner asserted he was not required to report the money he received for providing IHSS to Barbara Saner to the EDD for purposes of unemployment insurance benefits. Petitioner explained he provides care to a disabled adult through IHSS, and the funds he receives are for work he does for that person. (AR 73.) Petitioner advised the ALJ “it’s very different if the person lives within your home and you’re with them 24/7.” (AR 73.) Petitioner noted: “Under the law – under the – under the caregiving law, it’s foster care or they have it listed as difficult of care payments. So foster – so for caregivers that live-in – [] and foster care, it’s the same thing.” (AR 72.) Petitioner told the ALJ: “When you – when you live with the person that you’re taking care of, you do not pay Federal. You do not pay State. Its not considered a wage.”

The ALJ denied Petitioner’s appeal in part. The ALJ determined Petitioner was required to disclose his IHSS wages to the EDD for purposes of calculating entitlement to unemployment insurance benefits. (See, e.g., AR 177.) Thus, the ALJ decided Petitioner had been overpaid unemployment insurance benefits. The ALJ did find Petitioner not liable, however, as to the 30 percent penalty assessment the EDD had imposed. (See, e.g., AR 177, 189.)

While Petitioner does not so specify, he seeks review of Respondent’s decision pursuant to Code of Civil Procedure section 1094.5.

Under Code of Civil Procedure section 1094.5, subdivision (b), the issues for review of an administrative decision are: whether the respondent has proceeded without jurisdiction, whether there was a fair trial, and whether there was a prejudicial abuse of discretion. An abuse of discretion is established if the respondent has not proceeded in the manner required by law, the decision is not supported by the findings, or the findings are not supported by the evidence. (Code Civ. Proc. § 1094.5, subd. (b).)

Petitioner asserts Respondent “made a mistake of law.” (Opening Brief 7:16.) Petitioner argues under “IRS Notice 2014-7”[2] the IHSS payments relied upon by the IHSS to support its overpayment assessment are excludable as income under section “131 of the Internal Revenue Code.” (Opening Brief 7:7-10.) Petitioner concludes under Unemployment Insurance Code section 13009 and title 22 of the California Code of Regulations at section 4309-2, subdivision (a)(1)(2), the money he received for providing IHSS “should be excluded from wages.” (Opening Brief 7:10-11.)

“In reviewing a decision of the [California Unemployment Insurance Appeals Board], the Superior Court exercises its independent judgment on the evidentiary record of the administrative proceedings and inquires whether the findings of the administrative agency are supported by the weight of the evidence.” (Lozano v. Unemployment Ins. Appeals Bd. (1982) 130 Cal.App.3d 749, 754.) In addition, “ ‘[o]n questions of law arising in mandate proceedings, [the court] exercise[s] independent judgment.’ ” (Christensen v. Lightbourne (2017) 15 Cal.App.5th 1239, 1251.) The interpretation of statute or regulation is a question of law. (See State Farm Mut. Auto. Ins. Co. v. Quackenbush (1999) 77 Cal.App.4th 65, 77.)

Division Six of the Unemployment Insurance Code includes sections 13000 through 13101. Division Six addresses employment tax withholding. (See Unemp. Ins. Code, § 13000 [“department shall have the powers and duties necessary to administer the reporting, collection, refunding to the employer, and enforcement of taxes required to be held”].)

Unemployment Insurance Code section 13009 defines wages for Division Six of the Unemployment Insurance Code. Unemployment Insurance Code section 13020, within Division Six, instructs employers they must make certain deductions and withhold certain amounts from the wages they paid (as defined in Unemployment Insurance Code section 13009) to employees.

Division 2.5 of title 22 of the California Code of Regulations similarly addresses withholding taxes on wages paid to employees. The regulations define wages for purposes of Unemployment Insurance Code section 13009. (Cal. Code Regs., tit. 22, § 4309-1.) Under the regulations, certain remuneration for services is not included in the term “wages” for purposes of deductions and withholding. (Id. at § 4309-2, subdivision (a).)

In contrast, Unemployment Insurance Code section 1252 defines “unemployment.” The section generally provides an individual is unemployed when they receive no “wages” because they performed no services. The section also defines “wages”: “For the purpose of this section only ‘wages’ includes any and all compensation for personal services whether performed as an employee or as an independent contractor . . . .” (Unempl. Ins. Code, § 1252, subd. (c) [emphasis added].) Thus, wages for purposes of defining what it means to be unemployed means “any and all compensation for personal services . . . .”

Petitioner has not addressed Unemployment Insurance Code section 1252 and its specific application to unemployment insurance benefits. The court finds Petitioner’s reliance on statutes related to income tax withhold and deductions are not applicable to whether an individual has “wages” for purposes of determining whether the individual is entitled to unemployment insurance benefits.

Accordingly, Petitioner has not met his burden of demonstrating error by Respondent.

[1] The notice advised the overpayment occurred for benefits paid for certain weeks in the first four months of 2021. (AR 5.) On the same date, Petitioner also received a second notice of overpayment for various dates in 2020. (AR 10.) The second notice of overpayment indicated Petitioner had improperly received benefits of $13,939.90 for 24 weeks in 2020 and two weeks in January 2021. (AR 10.) The EDD’s notice of overpayment also advised Petitioner he was liable for the amounts overpaid and a 30 percent statutory penalty. (AR 10.) For purposes of this petition, the issue is not about the alleged amount of overpayment, but whether there was, in fact, an overpayment. The petition turns on whether Petitioner was required to report to the EDD certain payments he received for providing In Home Support Services (IHSS).

[2] On its own motion, the court takes judicial notice of IRS Notice 2014-7. The notice explains certain payments (“difficulty of care payments”) are “excludable under § 131 of the Internal Revenue Code.” 26 United States Code at section 131 provides “amounts received by a foster care provider” shall not be included in the provider’s gross taxable income. Nothing suggests the IHSS payments received by Petitioner relate to foster care.