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.

UPDATE (19 Sept. 2016): After numerous legislators wrote the Advisory Council in a letter dated 1 April 2013 containing 33 proposed changes to unemployment law, the Department drafted a table detailing these proposals relative to the Department proposals that the council had before it already. See also “Advisory Council Meeting — 18 April 2013” (describing events of the April 18th Advisory Council meeting and linking to certain documents relevant to this meeting, including the April 1st letter and the DWD table). In this table, the Department projects missed savings of $17 million through the substantial fault and new misconduct disqualifications that the Advisory Council had declined to adopt. No explanation is available regarding why this amount differs from the earlier $19.2 million figure in the February 2013 version of D12-01. As indicated here, the financial impact of substantial fault has actually been much greater: between $67 to $64 million.

 

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.

Concealment charges and collections

As noted in February of this year, concealment cases jumped to 2.79% of all unemployment benefits paid out. For the three previous years, concealment cases had always been under 2% of all unemployment benefits paid.

NOTE: a 0.8% increase is remarkable and unprecedented. If such a change in the unemployment rate or GDP took place from one year to the next, that change would receive headlines across the state.

Because 2015 collection data was not available at the time of the February post, I estimated how much concealment money the Department was taking in for 2014 when compared to previous years. That estimate indicated that concealment monies being collected from claimants was rising markedly.

Now, in 2016, the Department’s updated fraud report is available. This report, furthermore, has data for both how much concealment is being assessed and how much concealment monies are being collected.

In regards to the concealment being assessed, there is good news and bad news.

As seen in this chart, over-payments assessed in 2015 declined to 2.21% of unemployment benefits paid out. Still, the concealment charges are over 2% of benefits, so concealment cases remain abnormally high relative to 2011, 2012, and 2013, when the benefits at issue were two to three times greater than the benefits paid out in 2015.

The story with the Department’s collection efforts, on the other hand, is pretty much bad news (except for the impact on Department coffers arising from these collection efforts).

Here, the concealment over-payments collected in 2011 were under 1% of the benefits paid out that year. In 2012 and 2013, the concealment over-payments collected were under 2% of the benefits paid out. In 2014, however, the concealment over-payments jumped to nearly 3%, and in 2015 concealment over-payment collections climbed to 3.42% of the total benefits paid out that year. In other words, in 2015, out of every $100 claimants received, the Department took back $3.42 in concealment over-payments.

These collection numbers also reveal how concealment collection is a growing part of the Department’s collection efforts. Whereas assessments in 2015 show a slight decline in concealment/fraud assessments to non-fraud assessments — 121.10% in 2014 to 112.69% in 2015 — collections for fraudulent over-payments relative to non-fraud over-payments continued to increase in 2015 — going from 116.52% in 2014 to 140.11% in 2015. In other words, nearly two out of every three over-payment dollars collected in 2015 were for concealment. The Department is becoming VERY good at debt collection and, essentially through concealment, discounting the benefits being paid out to claimants. The problem is that claimants who apply for unemployment benefits are not aware of this “discount” on their benefits until charged with concealment six to twelve months after first filing their unemployment claims.

So, what I wrote in February 2016 remains valid, especially since the definition of concealment has now been changed formally to make claimants liable for any mistakes they make on their weekly claim certifications:

These numbers show a sudden increase in 2014 in concealment cases and this increase accelerated in 2015. In this light, the Department’s push to change the definition of concealment is part of an agenda to expand the scope and reach of concealment. The Department countered in its testimony before the committee that an intent to conceal is still required under its proposed changes to the definition of concealment. The proposed language, numerous posts on this blog, a Commission memorandum, and Kevin Magee’s testimony at the public hearing belie the Department’s assertions. Mistakes are increasingly being charged as concealment by the Department, and Commission review applying the actual concealment standard is the only way to fight these kind of charges.

Essentially, concealment is becoming the modus operandi of the Department’s efforts in administering the state’s unemployment law. Anyone who makes a mistake is at risk of a concealment charge from the Department, and the Department wants to change unemployment law to reflect this practice.

UPDATED 27 Oct. 2018: added ability to click on tables to see full-sized versions.

AB819 signed into law

The Advisory Council Bill, AB819, was signed into law by Governor Walker and published on March 31st as 2015 Wis. Act 334. Details of this new law were described in this previous post about the bill.

The concealment changes will probably have the biggest impact on unemployment law. As noted previously, these changes mean that the Department will no longer need to show an intent to conceal when alleging concealment against claimants. Claimants will essentially be strictly liable for their mistakes and subject to steep and unforgiving concealment penalties.

Given the risk of making a mistake when filing an unemployment claim (especially as the claim filing process becomes increasingly complex), NO ONE SHOULD EVER FILE FOR UNEMPLOYMENT CLAIMS ANY LONGER. Since any mistake can now lead to a charge for concealment, claimants will be at the mercy of Department whims about when to consider a mistake as concealment or not.

If a person has no other choice but to file an unemployment claim, the only way to escape a concealment charge is to demonstrate that the mistake occurred because of advice from a Department representative. So, claimants should call up a Department representative and have that person walk him or her through the entire claim-filing process for EVERY weekly certification. Make sure to ask questions about everything that could possibly be an issue in your claim and to document the advice you receive from the representative about those issues. Note that is common for one representative to contradict the advice of a prior representative, so your notes about the advice you receive will be crucial to surviving a concealment charge.

Keep in mind that the Department has numerous notices during the claims-filing process about how folks should contact the Department with any questions they might have. So, take the Department up on this offer and actually ask for the kind of detailed advice you need to complete a successful unemployment claim.