Unemployment concealment in other states

The push to charge concealment/fraud for mistakes when filing for unemployment is not just happening in Wisconsin. It is a national phenomena.

Here are descriptions about what is happening in two other states.

Pennsylvania

In Fugh v. Unemployment Comp. Bd. of Review, 153 A.3d 1169 (Pa. Commw. Ct., 2017) — also available here, the state’s unemployment board argued for an expansion of the definition of fault in that state’s unemployment statutes to cover non-intentional mistakes.

In this case, the claimant had her hours reduced and most of her job duties re-assigned to others. She then quit and filed a claim for unemployment benefits, listing “lack of work” as the reason for her separation. Technically, a lack of work is a layoff, so she misunderstood how to properly classify her separation. The state unemployment program, however, charged with being at “fault” for that mistake, which meant she had to repay the unemployment benefits she had initially received with interest, and the state could file liens and intercept taxes in order to recoup those unemployment benefits.

A prior Pennsylvania court decision, Cruz v. Unemployment Compensation Board of Review, 110 Pa. Commw. 117, 531 A.2d 1178 (Pa. Cmwlth. 1987), had previously held that extremely similar circumstances did not provide evidence of an intentional mistake necessary for a finding of fault. The Pennsylvania board argued that Cruz and decisions based on it were wrongly decided and that any finding of fault does NOT require either knowledge or an intent to file a deceptive unemployment claim.

In Fugh, an en banc panel of the state’s appeals court rejected this argument and explained (Fugh, 153 A.2d at 1176-7, footnote omitted):

A statute should be construed, if possible, to give effect to all its provisions. 1 Pa. C.S. § 1921(a). “[S]tatutory language must be read in context, that is, in ascertaining legislative intent, every portion of statutory language is to be read ‘together and in conjunction’ with the remaining statutory language, ‘and construed with reference to the entire statute’ as a whole.” Pennsylvania Gaming Control Board v. Office of Open Records, 628 Pa. 163, 103 A.3d 1276, 1285 (2014) (citation omitted). “Fault” is a persistent theme throughout the Unemployment Compensation Law.

For example, the Law states that it protects workers who have suffered a loss of income due to separation from employment “through no fault of their own.” Section 3 of the Law, 43 P.S. § 752; Preservation Pennsylvania v. Unemployment Compensation Board of Review, 673 A.2d 1044, 1046 (Pa. Cmwlth. 1996). Where a claimant is “at fault” for his loss of employment by reason of his willful misconduct, he is ineligible for unemployment compensation. The term “willful misconduct” is not defined by the Law, but our appellate courts have defined the term as “(a) wanton or willful disregard for an employer’s interests; (b) deliberate violation of an employer’s rule; (c) disregard for standards of behavior which an employer can rightfully expect of an employee; or (d) negligence indicating an intentional disregard of the employer’s interest or an employee’s duties or obligations.” Reading Area Water Authority v. Unemployment Compensation Board of Review, 137 A.3d 658, 662 (Pa. Cmwlth. 2016). A “fault” separation requires conduct “of such a degree or recurrence as to manifest culpability, wrongful intent, or evil design, or show an intentional and substantial disregard of the employer’s interest or of the employee’s duties and obligations to the employer.” Id. (quotation marks omitted). A negligent act alone does not constitute willful misconduct; rather, the conduct must be of “an intentional and deliberate nature.” Grieb v. Unemployment Compensation Board of Review, 573 Pa. 594, 827 A.2d 422, 426 (2003) (citation omitted).

The Referee found that Claimant “made a mistake” when reporting “lack of work” as the reason for her separation from Employer. Referee Decision at 3. The Referee found no evidence that Claimant had wantonly disregarded the truth of the information she provided in her application. Nor was her conduct found grossly negligent. The commission of a mere voluntary act does not establish fault. Daniels, 309 A.2d at 741. The Board cannot hold a claimant liable for a fault overpayment for a mere mistake or confusion. Cruz, 531 A.2d at 1180. The Board erred in holding that Claimant’s mistake made her liable for a fault overpayment of benefits under Section 804(a) of the Law, 43 P.S. § 874(a).

The Board asks this Court to abandon the principle of stare decisis and “correct [our] prior statement of the standard required to establish a fault overpayment,” i.e ., the state of mind standard set forth in Daniels and its progeny. Board Brief at 19. Stare decisis is “the preferred course because it promotes the evenhanded, predictable, and consistent development of legal principles, fosters reliance on judicial decisions, and contributes to the actual and perceived integrity of the judicial process.” Payne v. Tennessee, 501 U.S. 808, 827, 111 S.Ct. 2597, 115 L.Ed.2d 720 (1991). Indeed, our Supreme Court has explained that “stare decisis has ‘special force’ in matters of statutory, as opposed to constitutional, construction, because in the statutory arena the legislative body is free to correct any errant interpretation of its intentions.” Hunt v. Pennsylvania State Police, 603 Pa. 156, 983 A.2d 627, 637 (2009) (quoting Shambach v. Bickhart, 577 Pa. 384, 845 A.2d 793, 807 (2004 ).

We decline the Board’s invitation. Apart from the restraints of stare decisis, we conclude that our long held construction of “fault” is not in need of “correction.” It is as sound today as it was 40 years ago. The revision to the Section 804 paradigm proposed by the Board is one for the General Assembly to make. Accordingly, we reverse the Board’s adjudication, in part, and remand the matter for revision of Claimant’s restitution obligation to reflect her liability for a non-fault overpayment under Section 804(b) of the Law, 43 P.S. § 874(b).

Michigan

As previously noted here, Michigan created an algorithm for charging unemployment fraud that led many of its residents to be accused without any actual evidence from their unemployment claims. Thousands ended up being falsely accused, and, because of quirks in the on-line only notice, could no longer challenge the false accusations.

A 2016 Guardian article updates the problems these false accusations have had on thousands of people. As noted in the article, some solutions at the state level were being discussed and proposed.

Those options came to naught, however. And, a class-action law suit has run into trouble as well because it took too long for the unemployed and their representatives to figure out what was going on in order to file the class-action law suit in the first place (folks did not check their on-line UI accounts when no longer receiving unemployment benefits, and so most only found out about the fake fraud accusations when the state went to recoup the alleged fraud a year or so later). Michigan has basically adopted policies that target vulnerable residents, and then fought like hell to be considered responsible for that targeting and the resulting harm.

UPDATE (11 Oct. 2017): There is a must-read article about how administrative law judges who first noticed the fake fraud accusations and sought to call attention to the problem were attacked by state officials for such temerity. Some of the administrative law judges were even charged with being biased against the state agency for pointing out that accusations of fraud without any factual basis should not be made in the first place and then explaining to claimants their rights at their hearings when nothing was being done to stop the fake accusations.

 

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On-line only claim filing

As of 1 September 2017, the Department mandated that all unemployment claims and all weekly claim certifications be filed on-line only.

As noted when the Department mandated in May 2017 that initial unemployment claims had to be filed on-line, federal guidelines indicate that on-line only requirements are problematic.

This new, more expansive mandate from the Department seems to ignore these cautions from federal authorities about maintaining effective options for those with limited on-line access or limited English proficiency. For instance, the Department seems only to be providing assistance for on-line filing, not any actual alternatives to on-line filing.

At the very bottom of this page, a person having trouble with on-line claims finds this advice:

For help using online services or if you are truly unable to go online call 414-438-7713 during business hours.

The general page about unemployment services also indicates that on-line filing is required. For those who want help with their clams, this advice is offered:

For help using online services call 414-438-7713 during business hours:

Monday — Friday 7:45 AM – 4:30 PM

Callers may be asked to call back on a specific day of the week.

Additionally, this same general page also explains just under the notice about reporting fraud that:

DWD is an equal opportunity employer and service provider. If you have a disability and need assistance with this information, please dial 7-1-1 for Wisconsin Relay Service. Please contact the Unemployment Insurance Division at 414-438-7713 to request information in an alternate format, including translated to another language.

In the claimants’ handbook, the advice for those who might have trouble with the on-line system is tucked away under the Filing a Weekly Claim Certification:

Important Points to Remember When Filing a Weekly Claim:

All questions apply to the specific calendar week for which you are claiming. For example, when asked if you quit a job, you are being asked if you quit during the week you are claiming. If you did not quit during that week, answer “NO.”

If you are truly unable to use online services to file your weekly claim, contact a Claims Specialist at 414-438-5395 during business hours. Claims Specialists are available to assist you.

In a FAQ about benefit filing, the Department explains:

The Unemployment Insurance Division is retiring the automated telephone filing system. Workers must now file online. Apply online at https://my.unemployment.wisconsin.gov. For help using online services call 414-438-7713 during business hours.

So, the Department is having claimants call for assistance to make their on-line claim work and not offering any alternatives to the on-line claim process. Moreover, these phone calls are NOT toll-free and can only occur during limited hours.

For those calling with limited English proficiency, my sources indicate that phone-service interpreters will be added to the call to help explain the on-line filing requirements to claimants. Those with limited access to the Internet — which is most of Wisconsin, as high-speed broadband is still not available to most homes in rural Wisconsin — are being told to file at their local libraries. Indeed, the Department has indicated on numerous occasions to ask librarians for assistance when filing their unemployment claims.

Finally, there are some doubts about the adequacy of the Spanish version of the on-line filing system for Spanish-speaking claimants.

NOTE: There is still no on-line option for Hmong-speaking claimants.

The terms of use for the on-line system declares:

DISCLAIMER FOR TRANSLATION

The Google™ translation feature is provided for informational purposes only. Please be advised that the Department of Workforce Development is unable to guarantee the accuracy of this translation service and is therefore not liable for any inaccurate information resulting from the translation application tool. Please consult with your own translator for accuracy if you are relying on the translation or are using this site for official business.

The US Dep’t of Labor has specifically held in UIPL 02-16 at 9 that machine translation — what google does when it translates — is NOT adequate and that these kinds of disclaimers are just silly. As explained on digitalgov.gov:

Some view disclaimers as the solution to justify an imperfect translation. Ask yourself and your managers: What are we trying to achieve? If an agency provides imperfect information but includes a disclaimer, the agency is essentially saying that it cannot guarantee the accuracy of the information they have provided. If so, how is this:

  • fulfilling a need?
  • fulfilling our mission?
  • serving the public?

Consider how you would react if you were reading information that had a disclaimer that said, very politely, that the agency can’t guarantee the integrity of the translation and, therefore, can’t guarantee the accuracy of the information it is giving you. A disclaimer on translated content works for the agency, but it does not work for the person trying to accomplish a task.

As already noted, this on-line mandate seems little more than an elaborate trap for charging claimants with fraud when they get confused and make a mistake on their claims. The initial screen claimants see with the on-line system — even before they create a user-id and password — makes this goal front and center:

Initial warning screen

Update on 2017 unemployment legislation

The first and probably only hearing on the Advisory Council agreed-on bill, SB399, is slated for 12:30 today, 4 October 2017, at the Committee on Labor and Regulatory Reform in 201 Southeast of the Capitol.

This bill contains the Department’s proposals that the Advisory Council has approved (previously described in this post). Prior drafts of the bill are available here and here.

NOTE: The Advisory Council rejected Department proposals D17-03 (assessing employers for failing to provide employee records) and D17-06 (changing the burden of proof in certain unemployment cases) at the 9 August 2017 council meeting.

During discussions, management members of the Advisory Council made the following proposals:

  • Repeal the quit exception in Wis. Stat. § 108.04(7)(e). Under this provision, a claimant who quits a job within 30 days of being hired may retain their eligibility for unemployment benefits if the job that the claimant quit was not “suitable work” to begin with under Wis. Stat. § 108.04(8) OR the claimant could have refused to accept the under the federally-required labor standards provisions of Wis. Stat. § 108.04(9).
  • Treat state and federal holidays as working days for partial benefits if the employer is closed on those holidays. This provision is similar to what the Governor previously vetoed when added to the 2013 budget bill and which the council declined. See this post and this post.
  • Reduce the maximum number of benefit weeks based on the unemployment rate to 22 weeks when the unemployment rate is below 7% and 18 weeks when the unemployment rate is below 5%. The Council previously rejected this proposal from legislators. See this post and this post.
  • Amend definitions of misconduct and substantial fault in some way.

Labor representatives on the council made the following proposals:

  • Increase maximum weekly benefit rate (WBR) by $10 in 2018 and by another $10 in 2019.
  • Amend the trigger for tax schedule D to $1.8 billion. The current threshold for schedule D (the schedule with the lowest unemployment taxes) is $1.2 billion in the trust fund as of June 30th of the proceeding tax year.
  • Increase the taxable wage base in 2019 to $16,500 and then index that wage base in subsequent years.

The only available information about these proposals is available from this Department memorandum and a limited fiscal analysis. The Management proposals are not detailed in either document, and the description of the labor proposals is very general.

NOTE: An explanation for why management wanted changes to substantial fault and misconduct is provided, however:

Due to recent decisions of the Wisconsin Supreme Court and Court of Appeals regarding discharge for misconduct and substantial fault, the Management members of the Council propose to amend the definitions of “misconduct” and “substantial fault” in order to clarify legislative intent.

At the 9 August 2017 council meeting, the Advisory Council decided that none of these proposals would be taken up.

Finally, the fiscal estimate from the Department for SB399 has this information:

Assumptions Used in Arriving at Fiscal Estimate The bill makes various changes in the unemployment insurance (Ul) law, which is administered by the Department of Workforce Development (DWD). Compliance to the bill’s components will require one time IT work of 3,930 hours and one time administration work of 1,180 hours costing a total of $444,500. The funding will come from the UI Federal Administration grant. It is expected that the proposed changes will increase collections and save the UI Trust Fund $1,250,000 annually.

Long-Range Fiscal Implications It is expected that the proposed changes will increase collections and save the UI Trust Fund $1,250,000 annually.

These savings are largely due to the changes set forth in proposal D17-07 regarding new mechanisms for intercepting tax refunds, lottery payments, state vendor payments, and unclaimed property of taxpayers. See D17-07 at 19 (but note that the original estimates in D17-07 called for much more debt collection from employers to the tune of ~$3 million in light of all the changes being enacted in that proposal).

Claim-filing in Wisconsin at record low but economy not booming

A June press release from the Department of Workforce Development declared Wisconsin’s record low unemployment rate:

BLS Data: Wisconsin’s 3.1% Unemployment Rate Tied for 7th Lowest in Nation

State’s Labor Force Participation Rate also tied for 5th highest in country

MADISON – Department of Workforce Development (DWD) Secretary Ray Allen released the following statement following today’s U.S Bureau of Labor Statistics (BLS) release showing Wisconsin tied for the 7th lowest unemployment rate in the nation, significantly lower than the national rate. The release also noted that Wisconsin’s addition of 40,400 total non-farm jobs from May 2016 to May 2017 was statistically significant and Wisconsin’s labor force participation rate was tied for 5th highest in the country:

“Not only is Wisconsin’s 3.1 percent unemployment rate a near record-low for our state, but our rate is lower than that of 42 other states, including the neighboring states of Illinois, Michigan and Minnesota, and tied with Iowa for 7th lowest in the country,” Secretary Allen said. “We also are tied for the 5th highest labor force participation rate in the country, ahead of the neighboring states of Illinois, Iowa and Michigan. Under Governor Walker’s leadership, Wisconsin’s employers and communities are reaping economic rewards from a winning combination of a best-in-class workforce and innovative. proven worker training programs.”

Highlights of Friday’s BLS release of state-by-state employment and unemployment data for May 2017 include:

  • Wisconsin’s 3.1 percent unemployment rate tied for the 7th lowest in the nation in May 2017 and was significantly lower than the national rate of 4.3 percent.
  • Wisconsin added a statistically significant 40,400 total non-farm jobs from May 2016 to May 2017.
  • Wisconsin’s unemployment rate decline of 1.0 percent from 4.1% in May 2016 to 3.1% in May 2017 was statistically significant.
  • Wisconsin’s labor force participation rate of 68.8% tied for 5th best in the nation in May 2017.

Other indicators of Wisconsin’s economy include:

  • Both total labor force and employment in Wisconsin remained at all-time high in May, while the number of unemployed individuals was its lowest point since February 2000.
  • The rate of 3.1 percent is the second-lowest rate on record for Wisconsin (the lowest rate was 3.0 percent in May-July 1999).
  • Wisconsin’s January (3.9 percent) to May (3.1 percent) unemployment rate decline of 0.8 percentage points in 2017 is the steepest January-May decline since 1983.
  • Wisconsin’s labor force participation rate increased by 0.2 percentage points to 68.8 percent, while the U.S. labor force participation rate decreased to 62.7 percent in May.
  • Initial UI claims ended 2016 at their lowest level in their last 30 years. Year 2017 initial UI claims are running at their lowest levels since 1989.
  • Continuing unemployment claims ended 2016 at their lowest level since 1973. Continuing unemployment claims in Wisconsin are running the lowest in at least the past 30 years.

Friday’s BLS ‘Regional and State Employment and Unemployment Summary’ report

The last two points deserve particular note:

  • Initial UI claims ended 2016 at their lowest level in their last 30 years. Year 2017 initial UI claims are running at their lowest levels since 1989.
  • Continuing unemployment claims ended 2016 at their lowest level since 1973. Continuing unemployment claims in Wisconsin are running the lowest in at least the past 30 years.

These indicate that people have stopped filing unemployment claims at levels when in 1990 the population in Wisconsin was around 4.9 million and per capita income was $18,072 or in 1975 when the state population was around 4.6 million and per capita income was $6,086. For comparison, in 2014 the state’s population was nearly 5.8 million and per capita income was $44,585. And, from 1990 to the start of 2015, the civilian labor force in Wisconsin increased from 2,567,200 to 3,120,800 persons.

Furthermore, when the unemployment rate was similarly low in the late 1990s, per capita income rose by over 5% most of those years. As recent economic reports from COWS establish, however, income in Wisconsin is currently stagnant for most Wisconsin residents except for the very few at the top of the income ladder.

So, there are big contradictions in the Wisconsin labor force. People in Wisconsin are working and not filing unemployment claims. But, they are not getting any wage increases from employers who should be having trouble finding job applicants and so trying to entice people to switch jobs with offers of higher wages and greater job benefits.

Perhaps the Department has created a system where unemployment is much higher than the data indicates because people are NOT filing unemployment claims but instead taking low-wage, part-time work as a substitute in large part because full-time, high wage work is not available from employers who are not expanding or growing their businesses. COWS 2017 report on working Wisconsin reveals that the wealth and economic gains at the very top obscures the economic stagnation for the rest of the state’s residents. The August jobs report reinforces this conclusion, as Wisconsin job growth this summer remained stagnant (private sector jobs in July were revised to a 600 decline, August preliminary numbers indicate a 5,200 loss in private sector employment, and only June shows an anemic increase of 1,300 jobs after a revision).

 

The status of Wisconsin workers in 2017

COWS has issued their 2017 report on Working Wisconsin, and the news is generally not so good.

Urban Milwaukee, as always, provides the takeaways.

  • Job growth in Wisconsin is falling behind the rest of the nation.
  • Wages in Wisconsin are stagnant.
  • Race is a major factor in determining a person’s job opportunities.
  • The income gap between rich and poor in Wisconsin is at record levels.
  • The middle class in Wisconsin is now shrinking.
  • The hit on unions seems to go hand-in-hand with that middle-class decline.

Check out both the report and the news article.

 

New workers’ guide to unemployment law is available

A Workers’ Guide to Unemployment Insurance has just been updated. Significantly revised or new sections include:

  • notes about on-line claim-filing and timely appeals
  • examples of what actions can count as valid job searches
  • exclusions from receiving unemployment benefits when also receiving SSDI benefits
  • the new voluntary drug test reporting
  • misconduct disqualifications for negligent conduct that causes substantial damage or for absenteeism as determined by whatever the employer sets
  • descriptions about how the three exceptions to substantial fault are applied
  • in the fraud and concealment section, examples of the kind of mistakes for which DWD has typically charged unemployment fraud which the Commission usually overturns
  • DWD contact info for various records requests

If you have any unemployment claims or issues in Wisconsin, make sure to read this booklet thoroughly.

Despite Operton and Easterling, no change with substantial fault at DWD

The Easterling and especially Operton decisions should indicate that inadvertent — i.e., careless or unintentional mistakes — on the job should not disqualify someone from unemployment benefits.

The Department, however, is not happy with these outcomes. At the Advisory Council’s 16 March 2017 meeting, the following public comments were made about Easterling:

Ms. Knutson stated the decision in this case will provide general guidance to adjudicators and ALJs; however, cases are very fact-intensive to determine if it is truly an inadvertent error or substantial fault. Mr. Manley stated there should be a way to sharpen the definition of substantial fault to leave less gray area for interpretation and would not allow exceptions that disregard the entire rule. An employee that signed an employer policy of expectations that were not followed should not be able to claim that those policies were not followed because of a mistake to claim benefits. Mr. Manley expressed concern that the decision by the Court of Appeals is not within the spirit of what the Legislature intended to be as the definition of substantial fault. If decisions are based on this conclusion because the statute is not worded as clearly as it should be, it should be revisited.

Meeting Materials at 12.

NOTE: Both the Department and the Advisory Council have apparently forgotten that the council rejected substantial fault. Mr. Manley’s comments, moreover, ignore the basic requirements in unemployment law that employees NOT be disqualified for their unintentional, performance-related mistakes.

Inside the Department, however, the comments have not been so sanguine. In mid-May after Operton was decided, a Department insider explained to me:

The Operton decision went to the adjudication staff soon after it was issued. At a staff meeting a few days later, a supervisor said that there would be no new training on substantial fault despite the decision.

This lack of re-training in light of Operton is important. After Easterling, Ms. Knutsen simply noted that substantial fault involved a fact-intensive inquiry but provided NO explanation about what the Department would do to implement and follow Easterling. Now, a Department supervisor is indicating that there would be NO new training in how to follow the Wisconsin Supreme Court precedent in Operton. In other words, the Department is continuing to apply its pre-Operton and pre-Easterling standards for substantial fault.

A recent clinic case confirms this observation. In this case, the Department denied unemployment benefits to a teller discharged for cash-handling errors. The initial determination stated:

The employee was discharged because her performance did not meet the employer’s expectations. Her final incident was within her control; her actions do not rise to the level of misconduct. It was within the employee’s control to meet the reasonable requirements; therefore, her discharge is considered to be for substantial fault on the part of the employee.

Here, the Department is still applying its pre-Operton and pre-Easterling analysis of determining whether the employee was in control of the action in question. Under this framework, inadvertent errors only occur when employees lack control over their actions. The unintentional or accidental nature of the errors does not matter at all under this analysis.

NOTE: At the 17 November 2016 Advisory Council meeting, the Department presented a memorandum describing some misconduct and substantial fault decisions. The decisions covered in the substantial fault section of the memorandum describe only a few Commission decisions over whether the employee’s actions were major or minor infractions of company rules or involved absenteeism issues. There is no discussion of what constitutes reasonable employer expectations, what actions are reasonably in an employee’s control, what actions are inadvertent errors, and what actions are the result of an employee’s lack of skill, ability, or equipment.

Marilyn Townsend, Operton’s legal representative, took the teller’s case on and over-turned the initial denial of unemployment benefits at the hearing stage. The decision of the appeal tribunal, however, did not apply Operton despite the obvious similarities. At the hearing, there was no indication whatsoever that the teller’s errors were anything other than unintentional and accidental. Yet, the administrative law judge found that the teller essentially lacked the skills to do the work assigned her after a promotion (another exception to substantial fault) and then committed no errors after being demoted which would justify the discharge.

the record reveals that the employee requested additional training and support for her work performance issues. She did not receive the additional training and support which leads to the conclusion that she lacked the skill and ability to perform the job. The employee also struggled to perform the Phase II role and was demoted back to a Phase I role. While working in a Phase I role, the record demonstrated that the employee didn’t have any work performance matters. If she did have infractions in her Phase I role, those matters were not raised on the record by the employer.

So, there are decisions from the Court of Appeals and the state Supreme Court that explain that, pursuant to the statutory language for substantial fault, accidental or unintentional mistakes on the job are inadvertent errors and do not qualify as substantial fault. As of June 2017, however, the Department is ignoring these court decisions when applying what it believes substantial fault should or should not include.

What should claimants do? Appeal. As the Department and the Department’s administrative law judges are NOT following court precedent, claimants have to appeal initial determinations denying them unemployment benefits to appeal tribunals and then the Commission. The Commission will follow court precedent about inadvertent errors and reverse disqualifications based on accidental and unintentional errors on the job.