UI Presentations: Don’t file for UI

Over the last several months, I have made two presentations about unemployment law. On 16 May 2016, I explained to the South Central Federation of Labor about “Misconduct, substantial fault, and concealment: presuming employee fault.” For the 4 August 2016 meeting of the Wisconsin Association of Worker’s Compensation Attorneys, I offered a more detailed presentation about “Misconduct and substantial fault: presuming employee fault.”

The concealment changes that went into effect in April of 2016 cannot be emphasized too much. Here is what changed via 2015 Wis. Act 334:

Section 18. 108.04 (11) (g) of the statutes is renumbered 108.04 (11) (g) 1. and amended to read:

108.04 (11) (g) 1. For purposes of In this subsection, “conceal” means to intentionally mislead or defraud the department by withholding or hiding information or making a false statement or misrepresentation.

Section 19. 108.04 (11) (g) 2. and 3. of the statutes are created to read:

108.04 (11) (g) 2. A claimant has a duty of care to provide an accurate and complete response to each inquiry made by the department in connection with his or her receipt of benefits. The department shall consider the following factors in determining whether a claimant intended to mislead the department as described in subd. 1.:

a. Whether the claimant failed to read or follow instructions or other communications of the department related to a claim for benefits.

b. Whether the claimant relied on the statements or representations of persons other than an employee of the department who is authorized to provide advice regarding the claimant’s claim for benefits.

c. Whether the claimant has a limitation or disability and, if so, whether the claimant provided evidence to the department of that limitation or disability.

d. The claimant’s unemployment insurance claims filing experience.

e. Any instructions or previous determinations of concealment issued or provided to the claimant.

f. Any other factor that may provide evidence of the claimant’s intent.

3. Nothing in this subsection requires the department, when making a finding of concealment, to determine or prove that a claimant had an intent or design to receive benefits to which the claimant knows he or she was not entitled.

At the same time this new law took effect in April 2016, the Department also instituted its new on-line claim-filing process that turned 11 or so questions into a 40+ question marathon.

These two changes go hand in hand. First, this new definition of concealment makes claimants liable for unemployment fraud for their unintentional mistakes on their claims. Second, the new on-line process is so complicated and cumbersome that a mistake is now incredibly easy to make (e.g., by reporting income in the wrong category or failing to check a definition relating to a question that you don’t think applies to your situation — $10 from a parent for taking care of the laundry or cutting the grass counts as babysitting income that should be reported).

Accordingly, given the ease of making a mistake and the consequences for concealment related to that mistake, no one should be filing for unemployment benefits anymore.

If you absolutely must file for unemployment benefits, do NOT file via the on-line process but make all your weekly claims by phone. And, try to get a DWD specialist on the phone when filing your weekly claim certifications and take detailed notes of any advice your receive from that DWD representative. That advice is probably your only avenue for escaping a concealment charge from DWD when you make a mistake.

UI solvency done on backs of the unemployed

The CapTimes and Madison.com just published my letter to the editor about a recent AP report on the solvency of the state’s UI fund.

Dear Editor: Recent concerns over the solvency of the Unemployment Insurance fund are misplaced.

As stated in a recent article, “The state could also further cut down on benefit payments to address the fund’s solvency,” and the state has been doing just that. Benefit payments in Wisconsin have plummeted to record lows. In early 2013, the Department of Workforce Development projected UI benefits to be $797 million in 2014 and $696 million in 2015. The actual benefit payments in 2014 were $732,327,104 and only $605,481,027 in 2015, $91 million less than expected.

Why have benefit payments plunged from what was expected? First, the department has set up a series of obstacles for folks to overcome when filing their claims, including poor phone support, mandatory internet registration, cumbersome job search busy work, and an increasingly complex filing process. Second, until the recent appeals court decision in Operton v. LIRC, substantial fault allowed DWD to disqualify claimants for inadvertent mistakes they make on the job. Finally, DWD has been charging claimants with unemployment fraud for making mistakes when trying to follow the increasingly complex process DWD has set up.

Recent DWD statistics showcase how unemployment fraud is becoming a major operation within DWD. In 2014, unemployment fraud charges jumped 44 percent from the previous year even as benefit payments markedly declined. For 2015, collection for unemployment fraud was up nearly 81 percent from 2013 collection efforts.

Since it is now so oppressive and dangerous to collect unemployment benefits, the risk of the fund going insolvent is minimal. But this concern for fund solvency ignores the whole point of unemployment benefits: to help those in need (and the state as a whole) when folks lose jobs through no fault of their own. In place of employers paying their taxes, the state has essentially achieved solvency on the backs of the unemployed.

Job search problems continue

At the 13 April 2016 Advisory Council meeting, the Council received two letters from state residents concerning the limitations on work search waivers that took effect this past winter.

The first, a 31 March 2016 e-mail message (originally sent to Sen. Harsdorf), explained:

Hi: I work for a concrete company that lays people off in early winter. I have been there for 10 years and have been laid off every winter since I started. Some winters I’m off longer than others, it just depends on different factors. This year (Dec 18th) I was laid off and longer than other winters, so that brings up the issue.

So with the new regulations in the unemployment I/we are suppose to look for work after 12 weeks. My employer does not like to loose workers (Drivers) because with my companies requirements it’s kind of hard to find drivers without accidents and DWIs and enough experience.

What I am trying to say is,there should be some stipulations put into place for (work search after 12 weeks) I’m on my 12th day over the 12 weeks. I was just informed Tuesday that I’m finally going back this next Monday the 4th. It was up in the air for the last few weeks, due to road restrictions and lack of business. Then to add insult to injury I find out my work truck is in the shop ((due to other drivers using it while on lay off)) and wouldn’t be road worthy for another week.

I did not do the job service thing and in turn I’m going to loose $1110. I was suppose to sign up with [DWD] and start applying @ 4 places a week. I did not do this because, If I was offered a different job I would probably have to turn it down, and I will explain why. I worked a job back in 1995 to 2002 and I left for more $ and I ended up making less than the other job. I should have made $500–$600 more a month but it didn’t work out that way. Hence the phrase (the grass isn’t always greener on the other side of the fence) Since I have good benefits and wages with this job, I plan on staying for quite a while. So as far as the [job search requirements and work search waivers], there should be some changes made. I hope that I made sense… Please reply Thank You.

The second was a letter to the Council received on 28 March 2016:

Unemployment Insurance Advisory Council

I write this letter to each and every one of you, with hope it may do some good for the future beneficiaries, herself included.

My opinion; Whoever wrote and voted for this bill must be brain-dead, or forgot the reason for U.I. Without U.I. there would be many thousands of people on welfare. Do the math, which would be the most inexpensive way to go for the State and the U.S.government?

About me!

In my younger years I had a construction business in the Twin Cities area I struggled for years to build it into a profitable business. Than a recession hit. I was forced to sell. I began a new career with Glastron boat co. and later with Bombardier. Again, another recession. Bombardier closed all its facilities in the U.S. and again I was out of work. I than moved here to northwestern Wisconsin and started a new career with Burnett county Hiway dept. I worked there for 22 years. One day going home from work a lady ran over me on my motorcycle. It took two years to recover and of course I lost my job, as I didnt have enough sick leave to cover two years. I took an early retirement receiving only a small percentage of retirement income I had hoped for. When I was able I tried farming but that was a disaster, with prices what they are.

For the past two years I have worked for a dirt contractor as a dump truck driver. Last year they had there worst year in a decade, so my time was cut in half. My income from them was just over $6000. I filled for bankruptcy in 2015, something I will never get over. Through all of this I can’t recall ever drawing U.I. except for last year and this year. I must have a boatload of money paid on my behalf but yet I only draw $125 a week and have to jump your rope to even get that. Something is drastically wrong here. Its no wonder Donald Trump is so far ahead in the polls. WE NEED A CHANGE, A BIG CHANGE.

Let me tell you how this bill effects me and thousands just like me

I don’t have a computer and don’t even know how to operate one. My nearest job center is 42 miles away. I have signed up with them as requested, that is I think I have. I have had no confirmation of that. I have contacted employers within a reasonable distance. No response as of yet. I have to wonder what they will say when I tell them I have a job?

This, to me, seems like effort and money I don’t have down the drain, too accomplish nothing. Nothing fraudulent here:

I am CONFUSED and ANGRY

P.S. Maybe you should take off your high heels and come here for a couple of days. See how we live!

Notice that in both of these letters neither person has actually received all the unemployment benefits due them because of issues relating to registration at the job center of Wisconsin website, searching for jobs that likely pay less or have fewer benefits than their seasonal laid-off position, or jumping through hoops without feedback about which Department requirements are successfully completed.

In response to these letters, Janell Knutson explained to Council members that the writers of these letters were not asking for any specific changes and so she was just forwarding their concerns to the Council. Council members asked that she write the authors to let them know that the Advisory Council had received their letters.

The financial impact of substantial fault

A document available on this blog is cited by the Appeals Court in Operton v. LIRC, namely the original Department proposal for substantial fault — D12-01.

The appeals court observes at n.5 on p.6 of its decision that this document does not quite match the version of D12-01 supplied by the Commission in its briefing. Even though both versions are dated 24 October 2012, the copy produced by the Commission has an actual number for the fiscal impact of the proposed addition of substantial fault and the changes to misconduct — $19.2 million per year. The original D12-01 document introduced at the 27 November 2012 Advisory Council meeting only stated that the fiscal impact was yet to be determined. From my records of the Advisory Council meetings, it appears that the Department made this revision to D12-01 at the 21 February 2013 council meeting.

Obviously, the Department added this fiscal impact information without otherwise noting this change. Certainly, this number reveals a staggering impact on Wisconsin claimants when UI data from 2013 is considered. In the fourth quarter of 2013, the average weekly benefit claimants received in Wisconsin that year was $276.14, and those unemployment benefits lasted 15.9 weeks on average (see p. 64 of the data report). Multiplying these numbers together leads to a total benefit amount received of $4,390.63. Divide this number into the proposed $19.2 million fiscal impact from substantial fault, and 4,510 claimants end up being disqualified under these changes in unemployment. Each year.

“Substantial” changes to substantial fault

Last week, the Appeals Court issued a decision in Operton v. LIRC that significantly changes how the Labor and Industry Review Commission and the Department of Workforce Development have been applying the substantial fault disqualification put into affect in 2014 by the Legislature over the rejection of the Advisory Council.

The Commission had previously held that substantial fault equals negligence and that the only way to avoid disqualification for a work-related mistake was for the claimant to demonstrate he or she lacked the skills or equipment to do the required work or that there was no prior warning from the employer about avoiding the mistake at issue. Operton significantly changes what employees need to show about their alleged lack of skills or whether their mistakes were inadvertent or not.

The case arose from a Madison unemployment clinic client that Marilyn Townsend took on. She and her partner, Fred Wade, made a crafty, inside attack into what substantial fault means and broke it apart from within. The appeals court held in Operton that: (1) some kind of employee intent behind the mistakes at issue were necessary to show that the mistakes were more than inadvertent and (2) employer warnings did not automatically transform an inadvertent mistake into an intentional act. As a result, accidental qua inadvertent actions should not disqualify claimants any more.

NOTE: Accidents that cause substantial damage to an employer’s property, however, can still qualify as misconduct under another change passed by the legislature over the rejection of that change by the Advisory Council. See Hamson v. Ozark Motion Lines, UI Hearing No. 14004168MD (5 March 2015).

As noted previously, substantial fault led to sharp decline in benefit payments. Given how important unemployment benefits are to those who need to pay rent and buy food, this decision should have a significant impact for many. But, that impact might only play out for those realizing they need to appeal initial denials of their benefit claims. As has emerged with how the Department applied concealment law the past several years, the Department will simply ignore legal precedents with which it disagrees and then re-write the law to match the outcome it desired.

DWD implementing its new concealment definition

The Department of Workforce Development has issued a new directive about the new definition of unemployment concealment set forth in 2015 Wis. Act 334.

As noted already, the new concealment definition makes claimants strictly liable for their mistakes and places the burden of proof on them to explain that any mistakes at issue were not their fault. If they fail to make that case, then the concealment charge and all the associated liabilities will stand.

There are two issues to take away from this directive.

First, this new directive points out that the new concealment definition is effective for all initial determinations issued after 3 April 2016. So, understand that the Department will be applying this new definition regardless of when the mistakes actually occurred. Mistakes that took place in 2012 will now be subject to this new concealment definition simply because the Department is alleging concealment after April 3rd of 2016.

Second, the Department explicitly acknowledges that this new concealment definition actually aligns with its prior concealment enforcement. The action required by the Department to enforce this new concealment definition is simply: “None, UI Staff currently use this definition of concealment to make eligibility decisions. Staff should continue to consider all relevant factors when determining if any individual has concealed information.”

So, the Department stopped following Commission and court precedents on concealment and now has rewritten the statute to reflect what the Department is currently doing. This development represents a government agency pursuing an ideological goal of punishing people who collect unemployment benefits rather than just trying to help people understand and follow claim filing requirements. If these and other legal developments continue, in five or so years employers will be paying UI taxes into a system to which only very few have access. And then many will be asking why have an unemployment system at all.