Background
Todd and Sonja Brown, spouses who co-owned an online business selling beer and liquor memorabilia, each sought Pandemic Unemployment Assistance benefits in July 2020. They stated on their initial applications that COVID-19 quarantine orders had closed their business and prevented them from resuming operations.
For seventy-four weeks, the Browns also certified that they had not worked in self-employment and had not received self-employment income. The Department of Workforce Development concluded that those answers were knowingly false because the Browns continued operating the business and making online sales. An administrative law judge and then the Labor and Industry Review Commission found fraud, ordered repayment of the overpaid benefits, and imposed fraud penalties. The Milwaukee County Circuit Court affirmed.
The Court’s Holding
The Wisconsin Court of Appeals affirmed LIRC’s decisions. Credible and substantial evidence supported LIRC’s finding that the Browns knowingly made material misrepresentations in their initial applications and weekly certifications to obtain PUA benefits. Their continued eBay sales and business operations permitted LIRC to reject their explanation that the repeated answers were inadvertent mistakes.
The court also held that the Browns had to report their business’s total gross receipts, without deductions for inventory costs or other expenses. Applying its prior decision in Morgan v. LIRC, the court rejected the Browns’ argument that sales of tangible goods, rather than services, or net business losses eliminated reportable gross income. Although LIRC cited an incorrect Wisconsin statute at one point, it articulated and applied the governing federal knowing-fraud standard.
Key Takeaways
- PUA claimants may be disqualified for knowingly misrepresenting material facts even if they otherwise qualify as covered individuals.
- For self-employed PUA recipients, reportable gross income includes total business gross receipts without deductions for costs of goods sold or expenses.
- Appellate courts defer to LIRC’s reasonable credibility determinations and factual inferences when supported by credible and substantial evidence.
Why It Matters
The decision confirms that continued online business activity and sales can support a finding that repeated PUA certifications denying work or income were knowingly false. It also reinforces that self-employed claimants cannot treat business expenses or losses as eliminating gross-income reporting duties for PUA purposes.