What is concealment?

A bill is going forward for creating a seven year ban on benefits after two instances of concealment — aka two strikes and you’re out.

Basic matters in this debate turn on what exactly is concealment and how is concealment uncovered. A case on appeal to the Labor and Industry Review Commission (LIRC or Commission) illustrates how the Department of Workforce Development (DWD or Department) is handling these matters.

In this case, the claimant worked as event waitstaff for a hotel. He received an hourly wage around $4 per hour and a tip based on a percentage of the fee the customer paid for the event (those tips added anywhere from $50 to $300 to his weekly earnings). But, those tips went directly to the hotel, and so the claimant could not know the tip amount he earned until he received his bi-weekly check (and those tips were combined for the two-week pay period).

Unemployment benefit claims are filed on a weekly basis, however. Since he did not know what his tips were for each week, he called the Department to ask about how to file when he only knew his hourly wages. The Department representative told him the Department would get the weekly tips information from the employer when it completed its UCB-23 form about his weekly work for that employer. The difference between the hourly wages he reported and the total wages the employer reported would then be deducted from unemployment benefits in a subsequent week.

Such advice is certainly viable. The claimant does not know his weekly tips when filing, only the employer does. So, while there would be a week or two lag in what his correct benefit amount is, at least the corrected wage information from the employer would lead to corrected unemployment benefits.

But, in this claimant’s case, the employer never returned those weekly UCB-23 forms. And, for six years this happened. Not until the claimant took a second job and was discharged from that job did the Department finally act on the information that the claimant had not been reporting his weekly tips income (again, because he did not know that tips income when filing his weekly claims). The Department is charging this claimant with concealment for not reporting his tips income.

But, why did it take six years for the Department to act on this issue? First, Department representatives have discretion about when to note their advice to claimants. Naturally, when that advice is that there is no issue or problem as perceived by that Department representative, Department representatives usually do NOT note that there is NO issue with a claim filing. Only when there IS an issue will they usually note that something needs follow-up investigation in Department records.

Second, the Department could have seen a problem when the employer filed its quarterly unemployment tax returns. Those returns would have showed both the hourly wages and tips paid to the claimant. But, the Department does not check the accuracy of the claimant’s weekly reporting with those tax returns, except when those returns show wages being paid and the claimant has reported NO earnings from that employer. That is, the Department only compares a claimant’s weekly claim reporting to an employer’s unemployment tax reporting to determine if the claimant has failed to report any wages from the employer (moreover, the Department does not even make this comparison until six months later — aka the second quarterly tax return — for a claimant). Since the claimant in this case reported his hourly wages, no flags were raised despite the difference in what the employer reported on its quarterly tax returns.

NOTE: There are more timely ways to handle wage reporting discrepancies than relying on quarterly tax reports from employers. I have repeatedly suggested to the Department and the Unemployment Insurance Advisory Council mechanisms for matching claimants’ wage reports to employers’ tax withholding data. See, e.g., Findings of the unemployment audit (January 2013 e-mail message to Lutfi Shahrani and Scott Sussman describing a withholding match in other states). Neither the Department nor the council has demonstrated any interest in such mechanisms.

Third, even if the employer had supplied the weekly UCB-23 forms, the Department’s currently practice is only to note those discrepancies and adjust future unemployment benefits for those discrepancies (i.e., as the Department representative told the claimant, the claimant’s future unemployment benefits would be adjusted for the tip income not reported on the weekly claim certification). No flags will be raised about either the amount or quantity of those discrepancies until a new, separate investigation into concealment is instituted at a much later date.

In all, these three factors demonstrate that the Department really has no way of catching on-going mistakes in weekly claim certification except through a concealment investigation that occurs months or years (or even six years in this case) after the problem started. Instead of addressing these institutional deficiencies, the Department makes the claimant responsible for any mistakes in his claim-filing. Here, even though the claimant did not know and could not know his weekly tips income when filing his weekly unemployment claims, the Department still considers him responsible for including that income in each weekly claim he made. And, it is his fault the Department took six years to figure out what was going on when it alleged concealment against him. His mistake constitutes concealment regardless of his intention, his confusion, his employer’s inaction, or the departmental advice he received.

The Commission, however, has required that concealment actually be intentional. See, e.g., LIRC responds to DWD’s concealment agenda. So, the Department and the Advisory Council now seek to change the definition of concealment to make it nothing more than mere mistake and to prevent claimants from contending they were confused, disabled in some way, or the recipient of bad departmental advice. See Concealment redefinition approved: Watch out claimants. With this new definition of concealment, claimants who make mere mistakes in their weekly claim filing will be subject to severe concealment penalties.

NOTE: To understand how severe concealment penalties are, consider this example. Suppose a claimant with a weekly benefit rate of $200 under reports part-time wages of $78 on a weekly claim instead of $87, a mistake of $9. So, instead of $167 in unemployment benefits that week, the claimant should have received only $161 in unemployment benefits, a difference of $6. When concealment is at issue, however, neither the $6 difference nor the $167 actually received is the amount at issue. Rather, the entire $200 potential weekly benefit must now be repaid for that week. Furthermore, there is now a 40% (15% prior to the new state budget) administrative penalty ($80 in this case) that also must be immediately repaid. And, future unemployment benefits ranging from two, four, or eight times the weekly benefit rate for each week/act of concealment will be lost to the claimant (in this case, $400 for the 2X penalty, or two weeks of no unemployment benefits received). Finally, keep in mind that this example is only for one week. In almost all concealment cases, the Department does not allege concealment until months or years have passed, and so the concealment — since it is usually based on an ongoing mistake — concerns dozens of weeks of unemployment benefits. The claimant who did not report his tips income for six years, for instance, is subject to a repayment demand of $32,000+ and forfeits $50,000+ in future unemployment benefits even though his weekly benefit rate hovered around $130.

Keep in mind, the Department has also been making it easier for claimants to make mistakes on their weekly claim filing through too numerous and too confusing questions for weekly claim filing, see Important and comprehensive concealment analysis from LIRC, new job search requirements that ignore basic mechanisms job hunters use to find work and create hidden traps for those at temp agencies, see numerous posts about job search requirements, and new job search verification protocols, see New job search verification requirement starting, that seem little more than one more mechanism for tripping claimants up.

In these circumstances, claimants should most likely avoid unemployment altogether. The risk of making a mistake and being charged for concealment because of that mistake at some future date for some unknown reason is too great. But, most claimants probably will not know about these new issues when the likelihood of being charged for concealment when making a simple mistake on their claim filing is high. So, the proposed bill which will actually ban claimants from receiving unemployment for seven years is a good thing: it keeps claimants away from a Department that does not have their interests at heart.

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New job search verification requirement starting

Effective 23 August 2015, the Department of Workforce Development is implementing a new job search verification requirement.

Weekly Work Search Log Requirement Changes

When Filing Weekly Claims By Telephone

The following changes take effect Sunday, August 23, 2015 for all claimants who file weekly claims and are required to search for work:

    • If you file your weekly claim using the telephone and are required to look for work, you are required to send by fax or U.S. mail a copy of the work search log for the week of your claim, starting Sunday, August 23. This is the written record of your weekly work search that you already are required to create and retain for your records. The Unemployment Insurance (UI) Division will validate your work search before issuing payment.
  • If you file your weekly claim via telephone, NO PAYMENT will be released until your weekly work search log has been received and validated by the UI Division.  Your work search log is due 7 days from the date you file your weekly claim.  We will work diligently to validate logs and issue timely payments as soon as we receive your work search information. The entire process could take up to 10 days.

You can help prevent potential payment delays by filing your weekly claim online at http://my.unemployment.wisconsin.gov. A majority of claimants already file their weekly claims using our online system.  You can file your weekly claim and enter your weekly work search information directly into our online system by using a computer or mobile device.

It’s easy to use UI’s online services:

  1. Go to http://my.unemployment.wisconsin.gov.
  2. Create an account. If you have created an account in the past, you can login using that information.
  3. To file your weekly claim, click the link in the Unemployment Insurance menu or in the Important Message box.

We strongly encourage you to visit http://my.unemployment.wisconsin.gov and create a username and password prior to August 16, 2015. This will provide additional time in case you need our assistance to set up your account.

If you prefer to file your weekly claim by telephone and submit your work search actions by mail or by fax, please print a copy of the UCB-12, Weekly Work Search Log online from the claimant portal at my.unemployment.wisconsin.gov and by clicking on the “get work search log” link. Fill in your work search actions and either mail or fax the work search log to:

Department of Workforce Development
Division of Unemployment Insurance
PO Box 7905
Madison, WI 53707

-or-

Fax: 608-327-6499

Please allow additional time for faxed or mailed logs to be processed and validated. To lessen possible delays, make sure work search entries are complete and clear.

For translation services, call 1-800-494-4944 between 7:45 AM AND 4:30 PM Monday through Friday. An interpreter will be provided for unemployment insurance services at no cost.

There is no explanation or detail explaining what this new job verification actually entails.  My guess is that the Department has implemented some kind of cross-matching algorithm to determine whether job applications being reported match up with job openings on Job Center of Wisconsin. Hence, those who file on-line will not experience any delay because of the verification process. On the other hand, those who file by phone will, after supplying their work search information, most likely have that information uploaded so that the algorithm can be applied to their weekly work search report.

NOTE: For several months now, the Department has been requiring claimants to supply their job search information and has even instituted a requirement that those filing by phone supply their job search information via written forms. So, this requirement to supply work search information each week is NOT new.  What is new is the verification that is being done. 

Pat Schneider from the CapTimes has an article with additional info about this new requirement.