Gov. Walker’s proposed UI drug testing

Finally, there are details about the drug testing Governor Walker has been talking about for several months now.

The proposed testing includes three initiatives set forth in a newly created Wis. Stat. § 108.133 (see section 3155 of AB21):

1. Allowing employers who conduct preemployment drug screenings to report failed tests to the Department.
2. Requiring drug tests for claimants “for whom suitable work is only available in certain occupations that are federally approved for benefits eligibility testing.”
3. Requiring drug testing for claimants “for whom suitable work is only available in an occupation that regularly conducts drug testing, as determined by the Department.”

Employer drug test reporting

This employer reporting of failed drug tests was in the 2011 budget. After complaints from the Advisory Council about being bypassed and problems noted by the Department about this employer reporting raising questions over employee privacy and administrative costs, this drug testing reporting was repealed by 2011 Wis. Act 198 before it was ever implemented.

This current proposal is an obvious effort to revive this employer reporting of drug tests. Job applicants here who have test results reported or who refuse a drug test are treated as someone who has refused an offer of suitable work pursuant to Wis. Stat. § 108.04(8). This disqualification means that the person cannot collect benefits until he or she has earned 6x his or her weekly benefit rate.

Proposed Wis. Stat. § 108.133(4)(a) sets forth this reporting option and sub-section (b) states: “The department shall promulgate rules necessary to implement par. (a).” Because not all drug tests are equivalent in accuracy, scope, and process, even rules for confidential handling of drug test results or refusals to take tests only scratch the surface of what kind of rules are needed here. Documentation about the kind of tests being done, the chain of custody for the samples, and options for retests of samples, for instance, will be needed with each test report.

Furthermore, because these test results can come from any employer rather than just a prior employer of an employee (as when an employer discharges an employee for a failed drug test), employers simply screening applicants will be dragged into unemployment hearings for their job applicants who want to contest their disqualification. Most employers do not feel a great need to get involved in such situations.

One final note here about job applicants refusing a drug test. Under this proposal, a job applicant who refuses a drug test is treated the same as an applicant who fails a test. On more than a few occasions, applicants refuse a drug test not because he or she fears a positive test result but because they are no longer interested in the job. For them, a no-show for the test is a better way of turning down the offer rather than telling the employer in person that they do not want the job. Certainly, someone currently collecting unemployment benefits does not have this option, as they must accept all reasonable/bona fide job offers. But, someone who is not collecting unemployment benefits will, under this proposal have to take the test and then turn down the job they are no longer interested in. If they decline the drug test, they risk having their unemployment benefits suspended in the future because of this past refusal to take a test (and, even though this reporting prohibition will only apply to current claimants, there is nothing yet to indicate when an employer report of a drug test will matter or be declared stale for this rule). As a result, employers will be paying for additional tests because applicants will feel pressured to take the tests regardless of actual interest in the work at stake.

Testing in federally approved drug testing occupations

The April 2014 minutes of the Advisory Council described how federal law allows for this drug testing:

Drug Screening
The Middle Class Tax Relief Act of 2012 granted states the option to pass laws to enable their UI agencies to require drug testing on UI claimants. In order to be able to require drug testing, a claimant must have been terminated from their most recent employer due to the use of controlled substances, or if the claimant’s only suitable work involves employment that regularly performs drug testing. DOL is currently promulgating rules that will identify specific industries that regularly require drug testing. Wisconsin law does not currently require drug testing of UI claimants.

This part of the proposal seeks to implement this federal law by requiring those in fields where drug testing occurs because of federal drug testing requirements (e.g., commercial drivers or those in heavy manufacturing) to pass an additional drug test when applying for unemployment benefits.

I am unaware of the status of the federal regulations needed to implement this provision. Even with those regulations in place, the Department will need to undertake the following:

(2) DRUG TESTING PROGRAM. The department shall establish a program to test claimants who apply for regular benefits under this chapter for the presence of controlled substances in accordance with this section and shall, under the program, do all of the following:

(a) Promulgate rules to establish the program. The department shall do all of the following in the rules promulgated under this paragraph:
1. Establish a process to test claimants for the presence of controlled substances. In establishing the process, the department shall adhere to any applicable federal requirements regarding drug testing.
2. Identify the parameters for a substance abuse treatment program for claimants who misuse controlled substances and specify criteria that a claimant must satisfy in order to be considered in full compliance with requirements of the substance abuse treatment program.
3. Create a screening process for determining whether a claimant should be required to submit to a test for the presence of controlled substances.
4. Identify the parameters for a job skills assessment for claimants who misuse controlled substances and specify criteria that a claimant must satisfy in order to be considered in full compliance with the requirements of the job skills assessment.

(am) Promulgate rules identifying occupations for which drug testing is regularly conducted in this state.

(b) When a claimant applies for regular benefits under this chapter, do all of the following:
1. Determine whether the claimant is an individual for whom suitable work is only available in an occupation that regularly conducts drug testing.
2. Determine whether the claimant is an individual for whom suitable work is only available in an occupation identified in the rules promulgated under par. (am).
3. If the claimant is determined by the department under subd. 1. to be an individual for whom suitable work is only available in an occupation that regularly conducts drug testing, conduct a screening on the claimant.
4. If the claimant is determined by the department under subd. 2. to be an individual for whom suitable work is only available in an occupation identified in the rules promulgated under par. (am), conduct a screening on the claimant if a screening is not already required under subd. 3.
5. If a screening conducted as required under subd. 3. or 4. indicates that the claimant should be required to submit to a test for the presence of controlled substances, require that the claimant submit to such a test.

(c) Create and provide a substance abuse treatment program in accordance with the rules promulgated under par. (a)2.

(d) Create and conduct job skills assessments in accordance with the rules promulgated under par. (a)4.

See proposed Wis. Stat. § 108.133(2).  As is obvious, a lot of work is needed to implement this testing requirement. Those who test positive or refuse the drug test face a 52 week prohibition on unemployment benefits unless they enroll “in [a] substance abuse treatment program and [undergo] a job skills assessment.” See proposed Wis. Stat. § 108.133(3)(d).

Gov. Walker has earmarked $500,000 in the 2017 fiscal year budget $1 million in his budget for each of the next two fiscal years for this drug testing and treatment. Staff time and effort on creating and implementing these requirements are not funded separately but come out of general DWD funds. This $500,000 $2 million is a made-up number, and there is no evidence available about what the actual costs of the drug testing and treatment will be will be. Given all the cuts in this budget, these monies would certainly be better spent elsewhere (Wisconsin public radio and television, for instance, could use these funds) than in implementing a drug testing requirement that will very likely cost more than in any unemployment benefits it stops from being paid out.

UPDATE: I misread budget figures and have corrected the proposed budget amount based on the LFB analysis.

Drug testing in other occupations

Here, the proposal goes further than in seeking to implement current federal drug testing legislation. Governor Walker is asking the Department to identify on its own occupations for which drug testing is regularly conducted in the state — see (2)(am) above — and then to expand the drug testing of claimants to all of these fields as well as the federally mandated occupations. This expansion, however, is put on hold (as well as any part of this drug testing proposal) if the Department “determines that waiver of the provision is necessary to permit continued certification of this chapter for grants to this state under Title III of the federal Social Security Act or for maximum credit allowances to employers under the federal Unemployment Tax Act.” See proposed Wis. Stat. § 108.133(5)(d). In other words, federal approval is needed before implementation of this expanded testing, and no testing may take place until federal authorization is obtained. As a result, there is almost nothing that can be determined about this expansion from this proposal.  The substance is lacking.

NELP update on unemployment insurance

George Wentworth from the National Employment Law Project has the following update on unemployment insurance.

Unemployment insurance was big news during the Great Recession. At its peak, more than 15 million Americans were out of work, and over 45 percent of them still couldn’t find a job after six months of looking. Congress and the president responded by providing federal jobless aid to workers who ran out of state aid. There were a dozen different authorization debates (most highly contentious) spread over six years about how many weeks of benefits should be available. As the recovery picked up steam, the program was cut back and eventually eliminated at the end of 2013. Now, with unemployment well below 6 percent, it is perhaps understandable if most policymakers would rather put the subject in the rear view mirror.

But now is exactly when we should be talking about unemployment insurance, and in budget proposals released this week, the president is trying to compel Congress to have the conversation. The budget proposals focus on an uneasy truth-the underlying state unemployment insurance programs that helped keep local economies afloat during the recession have taken a beating and need help. The President’s budget offers solutions to the worst of the problems.

For starters, the reach of the program is at an all-time low. As documented in a new NELP report, only 27 percent of unemployed workers actually received unemployment insurance last year-the lowest share ever. Before the recession, in 2007, it was 36 percent. What kind of insurance program only covers one in four of the individuals it is intended to protect?

Much of this decline is attributable to states cutting worker benefits. Because of high numbers of claims and inadequate financing, most state unemployment trust funds were depleted and forced to borrow from the federal government in order to pay benefits at some point in the past five years. Employers were subject to higher unemployment taxes as a result, and many state legislatures responded by restricting eligibility or cutting benefits, rather than looking for ways to more responsibly finance the program when the economy improved. For the first time in over 50 years, states began cutting the basic 26-week program, with seven states reducing coverage down to 20 weeks or less; unemployed Florida workers, for example, can receive no more than 14 weeks of a benefit that maxes out at $275.

Moreover, this recession changed the nature of unemployment in ways that states are still trying to understand. Many workers lost solid family-sustaining careers that were replaced by lower-paying jobs, often part-time or temporary. As many of these workers struggle to get back to where they were, they probably need this safety net more often but instead face unemployment rules that do not accommodate those with part-time jobs or erratic work histories. And despite the brightening labor market, almost a third of the nation’s unemployed have been jobless for six months or more and face challenges associated with being out of the workforce that long. There is no safety net in place for these workers now or when the next recession hits.

Most states recognize how vital it is to their economies to do more to help unemployed workers find jobs, but they lack the resources to do much more than process unemployment claims. Most states recognize their programs need to be brought up to date but they are grappling with inadequate trust funds, organized business opposition and inhospitable legislative climates.

None of this is any surprise to Congress, and indeed, though the parties may differ about what are the best solutions, all who are informed about this program agree that it is badly in need of sweeping reforms that will not only help provide income support to deserving unemployed workers, but will also invest in the kinds of proven reemployment services that help return people to work faster.

The President’s budget confronts these realities with proposals that take the lessons of the recession and offer states ways to fix their programs. A $5 billion unemployment insurance modernization program would help replenish trust funds of states that commit to providing at least 26 weeks of state benefits, expanding eligibility for workers who are currently shut out, and adopting new and proven strategies to connect claimants to work. A more targeted Extended Benefits program would automatically provide additional weeks of benefits to workers in states where the unemployment rate spikes, without the need to engage in contentious federal legislative battles. Changes in the federal unemployment tax would help states rebuild their trust funds to a level that will allow them to avoid borrowing in the next downturn. More dollars would be made available for reemployment services.

For the nation’s economy, the storm may have passed but the middle class has been badly damaged. As those who have been hurt the most can attest, being unemployed in America is a solitary experience that undermines self-worth, family structures and communities. Now, in the aftermath of the storm, it is time to rebuild the nation’s unemployment insurance system. President Obama should be applauded for taking the first step and starting a conversation that is long overdue. We call on Congress to take the next step.

Gov. Walker’s budget proposals for unemployment

There are three main proposals for unemployment contained in Governor Walker’s proposed budget: (1) new drug testing requirements, (2) increased concealment penalties, and (3) job search changes based on suitable work requirements. Here is a quick run down of the latter two. The drug testing will be described in another post.

Increased concealment penalties
At present, those charged with concealment have to repay all weekly unemployment benefits for each week of concealment at issue and are subject to a 15% administrative fee on top of the amount owed. In addition, Wis. Stat. § 108.24(1) has provided that those guilty of concealment “shall be fined not less than $100 nor more than $500 or imprisoned not more than 90 days, or both.”

Governor Walker is proposing increasing the administrative fee charged to claimants for concealment to 40%. In addition, the criminal penalties are being substantially increased: Sections 3131 and 3132 substitute the following penalties:

1. If the value of any benefits obtained does not exceed $2,500, is subject to a fine not to exceed $10,000 or imprisonment not to exceed 9 months, or both.
2. If the value of any benefits obtained exceeds $2,500 but does not exceed $5,000, is guilty of a Class I felony.
3. If the value of any benefits obtained exceeds $5,000 but does not exceed $10,000, is guilty of a Class H felony.
4. If the value of any benefits obtained exceeds $10,000, is guilty of a Class G felony.

There are two issues in play with these changes. First, the Department lately has been pushing in numerous cases that mere mistakes in claim filing serve as evidence of claimant fraud. The Commission has been overturning some of those decisions, but the Commission can only act on cases that reach it. Folks who do not appeal their cases to LIRC remain charged with concealment and have to repay benefits that very well could be from nothing more than making mistakes on their weekly claim filing.

As noted previously (see the discussion of over-payments in this post), the Department takes way too long to investigate claimant mistakes and there are avenues available for tightening up oversight of claimant filing with employer’s wage reporting that could catch problems much sooner. It appears that no one is interested in actually making Department operations on this front more efficient.  Rather, the focus seems simply to squeeze more money out of those who do not understand or cannot afford the time and expense of getting help on these issues.

Right now, too many cases are appearing in which the claimant is accused of fraud that has been going on for years. So, a claimant who might owe $10,000 because of two years of alleged fraud will see an administrative penalty increase from $1500 to $4000. The Department collects this money from future unemployment benefits and also from intercepting state and federal tax returns. As a result, folks charged with concealment will find themselves indebted to the Department for even longer periods of time as these nearly tripled administrative fines get repaid.

Second, in this light the enhanced criminal penalties are even more startling.  The penalties literally create a modern debtor’s prison for those charged with unemployment fraud.  Because the Department is taking one to two years to catch alleged concealment, the monies at issue almost always amount to more than $5000 or $10,000. If prosecutions actually happen and succeed under this proposal, Wisconsin’s prison population could sky-rocket even in an low-unemployment climate (the latest WorkNet quarterly report shows that in the 4th quarter of 2014, there were 110,614 initial claims for benefits, substantially higher than the 65,067 initial claims made in the 3rd quarter of 2014, and the latest Advisory Council fraud report shows that more than 14,000 concealment cases have been pursued by the Department in 2012 and 2013 each year).

Of course, criminal penalties already are available for concealment, but few prosecutions by local district attorneys or DOJ attorneys (the prosecutors responsible for these criminal cases) have taken place.  Department representatives have complained to the Advisory Council about this reluctance to take on these cases.  The proposed increase in penalties appears to be an avenue for making these concealment cases seem more important to prosecutors.

The problem, however, is that prosecutors still need to prove beyond a reasonable doubt that the concealment at issue is intentional. The Department may be determining that confusion warrants a finding of intentional concealment when issuing an initial determination, but a prosecutor will not have the luxury of asserting that a person should have known better when mistakenly reporting weekly income because of learning disabilities or actual lack of knowledge about the exact amount of wages earned (e.g., from an employer who does not provide information about wages from tips or commissions until weeks later).

Job search changes based on new suitable work requirements

The Legislative Reference Bureau describes this proposed change:

Current law places various conditions upon the receipt of UI benefits, including that claimants conduct a reasonable search for suitable work and that claimants accept suitable work when offered. Current law does not define suitable work, but DWD has defined it by rule to mean work that is reasonable considering the claimant’s training, experience, and duration of unemployment as well as the availability of jobs in the labor market. This bill specifically requires DWD to define by rule what constitutes suitable work for claimants, and requires that the rule specify different levels of suitable work based upon the number of weeks that a claimant has received benefits in a given benefit year.

This description is apt, as the specific provision contained in Section 3117 pf the budget bill simply creates a new Wis. Stat. § 108.14(27) that directs the Department to create a rule for specifying “different levels of suitable work based upon the number of weeks that a claimant has received benefits in a given benefit year.”

At present, there are two levels of availability for claimants (the work search regs are in DWD 127).  During the first six weeks of unemployment — what is called a canvassing period — a claimant can restrict his or her availability based on prior training, education, and job experience. See Wis. Stat. § 108.04(8)(d). After those six weeks are up, no restrictions are possible.  So, an engineer can decline an offer to work the fry machine at McDonald’s during week two of her unemployment because that job is not suitable work for her.  But, the claimant has to accept that job offer on week seven.

At present, there is no requirement that claimants apply to any and all jobs after their six-week canvassing period is over. A claimant might have to accept a job offer from McDonald’s on week seven, but she does not have to apply for a job from McDonald’s on week seven

It appears that this proposal is meant to pressure claimants into broadening their job search efforts in some kind of systemic manner. The problem is that it is nearly impossible to come up with such a system: this requirement is asking the Department to categorize the relevant job markets by geography, local business climate, and employees’ relevant educational and work background. While the Department has geographic labor market data, it is still not at all clear how that data can be linked to claimants into some kind of comprehensive scheme for establishing how a particular claimant should expand his or her job search.

To get an idea of just how complicated creating such a scheme is, look at the current requirements in DWD 127(1):

The reasonableness of a search for work will, in part, depend on the employment opportunities in the claimant’s labor market area. A work search which may be appropriate in a labor market area with limited opportunities may be totally unacceptable in an area with greater opportunities. Unreasonable limitations by a claimant as to salary, hours, or conditions of work indicate that a claimant is not making a reasonable search for suitable work. The department expects claimants to conduct themselves as would a prudent person who is out of work and seeking work.

A laid-off welder will certainly be expected to apply for welding jobs here. But, if no welding jobs are available, what kinds of jobs should that welder be required to explore? Machinist? Plumber? Pipefitter? And, what if the welder had prior experience as a camp counselor and summer camp jobs are readily available in her local area? After twenty weeks of unemployment in May, it would be reasonable for that former welder to look at camp jobs. But, how does the Department create a system for mandating that a particular welder with camp experience apply for camp jobs?