New Internet Claims Filing Process for 2016

The Department of Workforce Development is revamping its Internet Claims Filing process with a much more complicated and detailed series of questions and screens. At the December 17th Advisory Council meeting, the Department was scheduled to present to the council what these changes would entail. Because of other issues, however, the council never got to see this presentation. Luckily, the Department sent me a copy.

Those filing their weekly claim certifications will now be told about fraud warnings at the start and end of their claim filing. See pp.2 and 17. And, the 14 questions now being asked are at least 20+ questions. Furthermore, rather than simplifying the information being asked about, the new questions continue to be legalistic and leave key information out.

NOTE: For comparison, here are the questions Massachusetts asks claimants (in Massachusetts, the phone questions are the same as when filing by Internet).

NOTE: Also compare the information available in the Massachusetts Guide to Benefits for Claimants with Wisconsin’s Handbook for Claimants. Notice the kind of information available in Massachusetts and the tone of how that information is presented as compared to Wisconsin.

For example, in Wisconsin there will now be a question about school attendance. See p.3. Usually, when you attend school during your regular work shift you are ineligible for unemployment benefits. But, if you work during the evenings while attend classes during the day, you should still be eligible for unemployment benefits when laid off from your evening job. In this case, the schooling does not interfere with your availability on your typical work shift. The new Internet filing form, however, only asks about attending classes during the day and does not include or ask for any information about regular work shifts.

Able and available status are now two separate questions as well. See pp.4 and 5. Missing work because of illness usually leads to a reduction in weekly benefits because work was missed. The question on p.4, however, only asks about your regular employer. Because many claimants who have temporary, part-time work do not think of those employers as their “regular” employers, they will not think a question about missing work with a temporary employer because of sickness is included in this question. This question should be asking about any current or future employer and make no reference to a “regular” employer.

Problems with other questions continue. Claimants are supposed to report all wages earned in the week for which they are filing, regardless of when they are actually paid those wages. So, the Department goes into detail about how to report those wages and hours (and minutes) of work for employers (see pp.6-8) as well as how commission work and sales are to be reported (see p.9). But, then the Department asks about sick pay, bonus pay, holiday pay, and other kinds of pay (see pp.10-12) as already received for the week — “did you receive?” — or to be received — “will you receive?” As a result, these questions imply that regular wages that are to be paid in the future do not need to reported since there is no question about reporting wages that “will be received?” Instead of two questions for vacation pay et al., only one should be asked: “Are you to receive?” And, instead of all of these separate kinds of wage income that now has to be reported separately, the Department should simply ask claimants to report “Any and all kinds of income connected to the work with EMPLOYER you are to receive for the week at issue.” By breaking these kinds of income into separate categories, the Department is requiring claimants to have an accountant’s understanding of their income in order to correctly fill out their weekly claim certifications rather than just asking for the total, gross amount of all income regardless of kind.

NOTE: The Department will even have a screen for miscellaneous income, such as baby-sitting, that has to be reported. See p.13.

Specific work search information for each job action will also now have to be provided. See p.15.

Given all the information that has to be provided in the proper category now, opportunities for mistakes will abound. And, any mistake will be an opportunity for charging claimants with fraud. In short, this new Internet filing process will NOT make it easier for claimants to file their weekly claims. But, this new process will make it easier for the Department to charge claimants with concealment.

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DWD gets a slush fund for “program integrity”

Jabba and C3PO

At the December 17th Advisory Council meeting, the Department presented two new proposals for providing additional funds for program integrity — aka charging claimants with concealment.

D15-14 allows the Department to use leftover special assessment funds for program integrity purposes instead of transferring those leftover monies to the balancing account. At present, this leftover amount is approximately $9.3 million (for comparison, the federal funds DWD currently receives this fiscal year for administering the state’s entire unemployment program is around $56 million).

D15-15 will allow the Department to siphon off 0.01% (i.e., 0.0001) of employers’ UI taxes for program integrity purposes. Employers’ accounts are still credited for these amounts, so employers see no increase in the UI taxes they pay. The balancing account, however, receives less because the funds are being diverted to cover program integrity costs. As a result, this assessment will only occur when there is no danger of the fund turning red (which is extremely unlikely given the low amount of benefits currently being paid out).

How much will this assessment be? As of December 12th, UI tax receipts in 2015 amount to $1.04 billion. Now, a portion of these tax receipts go into a general solvency account to cover benefit payments that are not chargeable to any employer (such as when a claimant is forced to quit a job because of a child care emergency). But, assuming $650 million of these tax receipts are going towards employers’ UI accounts, then a 0.01% assessment will allow $65,000 annually for funding a staffer dedicated to “program integrity.” Add the $9 million plus available under D15-14, then the Department will essentially have for the next several decades its own slush fund for hiring program integrity staffers.

The Department explained that the savings from these increased program integrity efforts will be “multiple times greater” than any expenses incurred from paying out UI benefits to claimants. The Advisory Council subsequently approved both proposals.

Wisconsin DOJ announces criminal concealment push

While a new definition of concealment is pending, Wisconsin’s Dep’t of Justice announced on December 15th an “expanded effort to prosecute Unemployment Insurance fraud cases.” The press release accompanying this announcement states:

An expanded effort to prosecute Unemployment Insurance fraud cases has led to an increase in referrals to the Wisconsin Department of Justice (DOJ) from the Wisconsin Department of Workforce Development (DWD) from 6 in 2014 to 36 in 2015. In a continuing partnership between the two agencies, investigations conducted by DWD are referred to DOJ where these cases are prosecuted for criminal behavior.

“It’s shameful to see this safety net, intended to help those going through a period of financial difficulty and vulnerability, ripped off by fraudulent unemployment insurance claims,” said Attorney General Brad Schimel. “Those who take advantage of the system and steal our hard-earned tax dollars should be held accountable and prosecuted for their misconduct. I applaud Department of Workforce Development Secretary Reggie Newson for prioritizing this type of crime by hiring additional investigators.”

In 2015, the Wisconsin Department of Workforce Development has referred 36 felony cases to DOJ for prosecution. Those cases generally involve situations where people continued to collect unemployment benefits while ineligible because they were employed but failed to report the income. An additional 73 unemployment fraud cases were referred to district attorneys statewide this year.

In one Unemployment Insurance fraud case prosecuted by DOJ, an individual reported wages totaling $2,345.19 during a three year period when in fact, payroll records show the individual actually earned $68,398.36. As a result of this individual’s false statements, he received $42,573 in unemployment benefits to which he was not entitled. In another case, an individual reported no employment for a period of 104 weeks, resulting in more than $19,000 in unemployment benefits for 98 of those 104 weeks. Further investigation revealed this individual had earned $29,169.55 from an employer during 96 of the 98 weeks for which she collected unemployment benefits.

The charges filed against individuals making fraudulent Unemployment Insurance claims can range from misdemeanors to felonies, depending on the amount of money fraudulently collected. Wisconsin State Statutes provide sentencing recommendations for Unemployment Insurance fraud that include full restitution, fines, jail time, and probation.

Having promised to make consumer protection a focal point of his administration, Attorney General Schimel concluded, “DOJ will ensure those in need receive the benefits for which they are eligible and the cheaters and liars who take advantage of public assistance programs do not find refuge in our state. We will continue to partner with other state agencies to root out fraud and hold criminals accountable.”

Certainly actual fraud/concealment should be prosecuted. But, fraud based on nothing more than a simple mistake is NOT unemployment concealment. Misunderstanding of questions or a lack of knowledge about how much total weekly wages were received are currently being charged as concealment by the Department despite no evidence of an actual intent to conceal wages for the purpose of receiving undeserved unemployment benefits.

NOTE: thanks to clinic representation, the claimant charged with failing to report wages he did not know about won his case before the Labor and Industry Review Commission. The Commission explained:

The employee explained his circumstances to department personnel on at least two occasions and thereafter followed the department’s instructions. He reported the wages he could ascertain and relied on the department’s assurances that it would verify his wages with the EMPLOYER and recalculate his benefits to reflect the wages, inclusive of service charge commissions, reported by the employer. The employee was never told to estimate his service charge commissions, which would have been difficult to do given how much they varied from week to week. The employee openly disclosed to the department that he earns hourly base pay plus service charge commissions or, as he referred to them, “tips.” The employee believed that he was filing his weekly claims correctly and that the system was operating as explained.

Unfortunately for the employee, the department’s mechanism for verifying the wages he reported with the EMPLOYER, and obtaining the missing piece of wage information, did not work as expected. Consequently, the employee was paid more in unemployment insurance benefits each week than he should have received. Yet, the erroneous payments were not due to the wrongful or fraudulent actions of the employee. The fact that the department did not anticipate there being discrepancies larger than a few dollars between the amounts reported by the employee and the amounts reported by the EMPLOYER does not transmute the actions taken by the employee in good faith into acts of concealment. The mistakes the employee made when reporting his work for and wages from the EMPLOYER were honest mistakes.

So, it bears repeating: Unemployment is increasingly becoming a trap for claimants, a trap they should avoid by not filing unemployment claims at all.

UI Darth Maul

UI jurisdiction changes going forward

In September of this year, the Department of Workforce Development announced in D15-11 a new, comprehensive rewrite of circuit court review of unemployment decisions. Some of the problems with these changes were previously described in this blog.

At its October 12th meeting, the Advisory Council approved of the changes in D15-11 before the Labor and Industry Review Commission could even respond. Just prior to the council’s October 29th meeting, the Commission did provide a response to D15-11 and asked the council to reconsider its approval of D15-11 in light of those comments. The council asked the Commission to make a formal presentation about the issue that was no more than ten minutes in length at the Council’s November 19th meeting.

The Commission did so and asked the Advisory Council to hold off on D15-11 so that the Department and the Commission could discuss these changes and work out a compromise. The Commission pointed out that D15-11 had been developed without consultation with the Commission and, given the Commission’s role in circuit court review of Commission decisions, there should be some consultation with the Commission in these matters. In the meantime, the Department presented a response to the Commission’s comments. Without comment or explanation regarding the Commission’s plea for some consideration in making these changes, the council approved of LRB draft legislation that had already incorporated D15-11.

The Commission’s comments point to some obvious defects in the Department’s proposed changes. And, the Department’s response highlights a fundamental defect in the Department’s rationale and reasoning for these changes. The Department maintains that a party in an unemployment case who does not file an answer is subject to default and should be subject to default.

Under the proposed change, a court may enter an order declaring that a non-appearing party is in default for failing to timely or properly answer the complaint. In the absence of a defendant’s excusable neglect for failing to answer the complaint, that declaration of default should ordinarily be the result. The defaulting party should be precluded from seeking to litigate the case later. The proposal conforms to the longstanding law and practice in court actions in Wisconsin in cases of other types.

DWD Response to LIRC Comments at 1-2. Right now, the parties who have “won” a Commission decision receive the following cover letter from the Commission when a circuit court complaint seeking review of a Commission decision is filed:

On [date], the Labor and Industry Review Commission received copies of pleadings seeking judicial review of the commission’s decision noted above. You are named as a party in these judicial review proceedings. As required by Wis. Stat. § 102.23, we are sending you a copy of these pleadings. You have the right to participate in this proceeding if you choose.

The commission will file a timely responsive pleading and will defend its position before the court. We will send you a copy of the commission’s response when we file it with the court.

We will be happy to answer any questions you may have about the case.

In other words, parties who agree with the Commission decision essentially piggy-back on the Commission’s efforts in defending its decision. Because unemployment proceedings are not intended to entail much administrative costs, this procedural mechanism for defending the parties interest during court review of a Commission decision makes a great deal of sense. Understandably, when parties feel that they have a concern or interest in a case distinct from the Commission, they have the option of filing their own answer to a complaint.

The Department’s now council-approved changes in D15-11 up end this procedure and require any party in an unemployment to file its own answer to a complaint or risk a default judgment. For employers who are NOT sole proprietors, such answers MUST be drafted by an attorney since corporations can only appear in Wisconsin courts through legal representation. For employer-side counsel, this requirement will certainly lead to more billable hours. For employers who have to hire attorneys to file these answers . . . well, attorneys usually are not cheap.

Social media protections

Thanks to a reminder from the Wisconsin State Law Library, here is some information about social media protections available in Wisconsin since 10 April 2014 with the passage of SB223 as 2013 Wisconsin Act 208. A legislative council memorandum has the full description of this law.

Recall that around 2011 and 2012, media stories appeared about employers demanding job applicants to disclose passwords to Facebook accounts. While such demands are legal folly, at the time there was nothing explicitly illegal about them. This 2013 act explicitly makes such demands to reveal passwords illegal.

Under this law, an employer, educational institution, or landlord may not ask for or demand an employee, student, tenant, or applicant to reveal personal information associated with an Internet account of some kind, like the passwords or lock codes for a personal e-mail address, a personal cell or smart phone, or a personal Facebook account. Likewise, an employer, educational institutional, or landlord cannot discipline, discharge, expel, or refuse to rent to an employee, student, tenant, or applicant for refusing to disclose such information or who opposes such disclosure.

Employers and educational institutions can request and even demand access to Internet accounts connected to that employer or educational institution, however. Likewise, restrictions on which web sites can be visited and the monitoring of Internet access are available to employers and educational institutions on the networks and equipment they provide. And certainly, information in the public domain — i.e., available without use of a password or pass code associated with the account — is available to the employer, land lord, or educational institution without consequence to them.

Finally, if a personal Internet account or device could reasonably be believed to have information relating to an alleged unauthorized transfer of proprietary or confidential information, company financial data, other employment-related misconduct, any violation of the law, or any violation of the employer’s work rules as specified in an employee handbook, then the employer may, in the course of an investigation into these allegations, require an employee to grant access or allow observation of a personal Internet account or device. Even in this case, however, the employer may not demand the employee reveal the password or lock code associated with the personal Internet account or device.

If an employee, student, tenant, or applicant believes that a violation of this law has occurred, he or she can file a discrimination complaint with the Equal Rights Division of the Department of Workforce Development. In the employment context, the employee or job applicant would be entitled to back pay and reinstatement. In addition, criminal forfeiture penalties of up to $1,000 may also be charged pursuant to Wis. Stat. § 995.55 for violations of this act.

So, Wisconsin joins other states in making demands for Facebook passwords illegal.