Absenteeism decision excludes zero-tolerance policy as misconduct

Today’s appeals court decision in DWD v. LIRC (hereafter referred to as Beres), Appeal No. 2016-AP-1365 (recommended for publication) holds that an employer’s absenteeism policy of one discharge in the first 90 days of a probationary period does NOT qualify as per se misconduct.

In this case, the employee landed a job at a nursing home. Flu-like symptoms, however, led her to miss work, and the employer let her go because she missed a day of work during her 90-day probationary period. When the employee filed a claim for unemployment benefits, the Department found misconduct because she violated the employer’s zero-tolerance absenteeism policy. Per Wis. Stat. § 108.04(5)(e) (emphasis supplied):

Absenteeism by an employee on more than 2 occasions within the 120-day period before the date of the employee’s termination, unless otherwise specified by his or her employer in an employment manual of which the employee has acknowledged receipt with his or her signature . . .

The Department has concluded that this italicized portion of this statute allows employers to decide for themselves how many absences will constitute misconduct for unemployment purposes.

NOTE: This position is a stunning development in contradiction of the rest of unemployment law that presumes employee eligibility for unemployment benefits and establishes the economic importance of unemployment benefits for addressing macro-economic issues in the state’s economy. The Department’s stance means that employers gain the unilateral ability under this provision to determine for themselves when an employee commits misconduct for unemployment purposes.

The Commission reversed, holding that the more than two absences in 120 days provisions without notice sets a floor for a finding of misconduct. The employee was not responsible for her illness, the Commission noted, and so she missed work through no fault of her own — the classic formulation about when employees are eligible for unemployment benefits.

After a circuit court over-turned the Commission’s decision and agreed with the Department, the Commission appealed the case to the appeals court. The appeals court agreed with the Commission that its interpretation of Wis. Stat. § 108.04(5)(e) was more reasonable than the Department’s. The appeals court in Beres at ¶¶18-20 explained:

The purpose of unemployment insurance benefits is to serve as a bridge for employees from one job to the next or “to cushion the effect of unemployment,” absent “actions or conduct evincing such willful or wanton disregard of an employer’s interests.” Wis. Stat. § 108.04(5); Boynton Cab, 237 Wis. at 258-59.

An example illustrates the reasonableness of LIRC’s interpretation that Beres’ actions did not rise to the level to deny benefits. Assume Beres was found to be in a tavern during her scheduled shift and, when called, lied about being sick. At the opposite end of the spectrum, assume that Beres was involved in a serious car accident within two hours of the start of her shift due to no fault of her own and required hospitalization. In both of these examples, Beres would be in violation of [the employer’s] attendance policy. LIRC’s interpretation of Wis. Stat. § 108.04(5) and (5)(e) allows an examination of the employee’s conduct in relation to both the employer’s policy as well as the policy that unemployment benefits should only be denied if the employee engages in actions constituting misconduct or substantial fault. The first example would likely qualify as misconduct under both § 108.04(5) and [the employer’s] written attendance policy, whereas the second example is a technical violation of [the employer’s] attendance policy, but is not an act of misconduct or substantial fault.

Employers are free to adopt a “zero-tolerance” attendance policy and discharge employees for that reason, but not every discharge qualifies as misconduct for unemployment insurance purposes. As our supreme court explained, “The principle that violation of a valid work rule may justify discharge but at the same time may not amount to statutory ‘misconduct’ for unemployment compensation purposes has been repeatedly recognized by this court.” Casey, 71 Wis.2d at 819-20. Similarly, this court found in Operton that employers have “the right to have high expectations of its employees and also [have] the right to discharge an employee for not meeting their expectations,” but we concluded that high expectations were insufficient to deny unemployment benefits. See Operton, 369 Wis.2d 166, ¶31.

A few additional comments about this decision are warranted. First, the appeals court gets the legislative history of this new absenteeism provision wrong. In Beres at ¶2, the appeals court describes the history this way:

Prompted by concerns within the employer community that eligibility for unemployment benefits was too generous, the legislature, in 2013, made wholesale changes to the unemployment benefit law, including modifying the absenteeism ineligibility criteria from “5 or more” absences without notice in a twelve-month period to “more than 2” absences without notice in a 120-day period, “unless otherwise specified by his or her employer in an employment manual.” Compare Wis. Stat. § 108.04(5g)(c) (2011-12), with § 108.04(5)(e) (emphasis added). It is this final clause that is at the heart of the dispute.

In actuality, the concerns prompted by the employer community were only what the Department noted when it — on its own initiative — originated an extensive re-write of unemployment law. See D12-01. The Advisory Council actually rejected these proposed changes and instead put forward the following changes to the then existing absenteeism provisions in Wis. Stat. § 108.05(5g):

“(5g) DISCHARGE FOR FAILURE TO NOTIFY EMPLOYER OF ABSENTEEISM OR TARDINESS.

(a) If an employee is discharged for failing to notify his or her employer of absenteeism or tardiness that becomes excessive, and the employer has complied with the requirements of par. (d) with respect to that employee, the employee is ineligible to receive benefits until 6 weeks have elapsed since the end of the week in which the discharge occurs and the employee earns wages after the week in which the discharge occurs equal to at least 6 times the employee’s weekly benefit rate under s. 108.05 (1) in employment or other work covered by the unemployment insurance law of any state or the federal government. For purposes of requalification, the employee’s weekly benefit rate shall be the rate that would have been paid had the discharge not occurred.

(b) For purposes of this subsection, tardiness becomes excessive if an employee is late for 6 4 or more scheduled workdays in the 12 month 120 day period preceding the date of the discharge without providing adequate notice to his or her employer.

(c) For purposes of this subsection, absenteeism becomes excessive if an employee is absent for 5 2 or more scheduled workdays in the 12-month 120 day period preceding the date of the discharge without providing adequate notice to his or her employer.

(d) 1. The requalifying requirements under par. (a) apply only if the employer has a written policy on notification of tardiness or absences that:

a. Defines what constitutes a single occurrence of tardiness or absenteeism;

b. Describes the process for providing adequate notice of tardiness or absence, and, regarding tardiness, which gives the employee a reasonable time for providing notice and which at least allows the employee the opportunity to provide notice as soon as practically possible; and

c. Notifies the employee that failure to provide adequate notice of an absence or tardiness may lead to discharge.

2. The employer shall provide a copy of the written policy under subd. 1. to each employee and shall have written evidence that the employee received a copy of that policy.

3. The employer must have given the employee at least one warning concerning the employee’s violation of the employer’s written policy under subd. 1. within the 12 month period preceding the date of the discharge.

4. The employer must apply the written policy under subd. 1. uniformly to all employees of the employer.

(e) The department shall charge to the fund’s balancing account the cost of any benefits paid to an employee that are otherwise chargeable to the account of an employer that is subject to the contribution requirements under ss. 108.17 and 108.18 if the employee is discharged by that employer and par. (a) applies.

(em) If an employee is not disqualified under this subsection, the employee may nevertheless be subject to the disqualification under sub. (5). [general misconduct law]

As obvious, this proposal is not what ended up being enacted. See “Advisory Council Meeting — 1 April 2013” (council declined to adopt proposed substantial fault standard but recommended adding various examples of misconduct). The Department, however, never acted on the Advisory Council’s recommendations. Instead, on 29 May 2013 the Joint Finance Committee added the rejected substantial fault and misconduct standards to the budget bill that eventually became 2013 Wis Act 20. See “Advisory Council — 2 May 2013 meeting — and legislative actions today” and “JFC UI amendments” (JFC motion to amend budget bill included various unemployment financing provisions and rejected substantial fault, misconduct, and quit provisions; DWD drafted bills that eventually became 2013 Wis. Act 36 never included the Advisory Council’s agreed-upon misconduct and quit proposals). Accordingly, these changes to unemployment law went against the express recommendations of the Advisory Council.

Second, the appeals court reaches its holding with either a de novo or due weight standard of deference. Beres at n.5. The proposed elimination of LIRC will likely mean that the Department replaces the Commission to whom courts defer on unemployment matters.

Third, a dissent in Beres at ¶¶22-31 essentially accepts the Department’s position that employers get to enact their own misconduct standards per this new absenteeism provision.

Given this dissent and how this argument, if accepted, essentially would undo unemployment eligibility in Wisconsin, a certiorari petition from the Department to the Wisconsin Supreme Court is likely, and I suspect such a petition will be accepted.

Unemployment is going away

The March 2nd edition of the Isthmus has an excellent cover story about unemployment changes the past few years. Make sure to read it.

The Department’s press release that same day provides some additional insight into what is going on with unemployment in this state.

Two issues arising from these news items deserve additional comment.

First, the response from the Department in the Isthmus story indicates that this expansion of concealment to include mistakes is intended.

Now, honest mistakes can lead to fines and criminal charges, Forberger says.

Tyler Tichenor, a DWD spokesperson, counters that the change was made “to make the definition clearer for claimants so they could better understand what they need to do to file a claim accurately.”

John Dipko, another department spokesperson, says the state is making a concerted effort to crack down on fraud and that referrals for prosecution began increasing even before the definition change.

“The number of referrals have gone up,” Dipko says. “We’ve been much more aggressive in referring the most egregious cases of fraud for consideration for possible prosecution.”

The change Mr. Tichenor is referring to is the 2015 change in the statutory definition of concealment. He is NOT referring to providing simpler explanations of unemployment issues for claimants or making the filing process easier to follow. No claimant (or employer for that matter) should be expected to review a legal statute simply to make sure he or she is doing what the Department wants him or her to do. Such a policy is akin to the IRS making everyone read the Internal Revenue Code when filing their taxes. Yes, the statutes govern. But, the agency responsible for carrying out those statutes has a duty to explain those statutory requirements as simply as possible and in a way that is not intended to confuse and trip folks up.

But, confusion and mistakes are the whole point of unemployment concealment now. For instance, the on-line filing process is now more complex, not less, with numerous requirements for which any single mistake can now lead to a charge of unemployment concealment.

And, this concealment push cannot be under-stated. When filing on-line, the first thing a claimant sees, even before he or she creates a user-id and a password, is this screen:

Notice the specific language being used here — “If you make a mistake or forget to report a material fact related to your claim . . . ” The Department is officially declaring here that a simple mistake or even forgetfulness can be the basis for a concealment charge.

Second, the Department’s press release about record-low unemployment claims and a sudden rise in employees’ wages indicate how significant the Department’s changes in unemployment have been.

Four issues in the Department press release on March 2nd highlight the changes being wrought by the Department. First, the Department reveals that September 2015 to September 2016 job growth in Wisconsin was 29,486 total jobs and 25,608 private-sector jobs. When compared to prior job growth numbers, this trend indicates that job growth is actually slowing in Wisconsin — 37,432 jobs from March 2015 to March 2016 and 39,652 jobs from March 2015 to March 2015.

In light of the Department’s push for charging claimants with concealment for their honest mistakes and the loss of work search waivers during the winter months for seasonal employees, three other points from the press release suggest what is actually going on.

• Quarterly wages by covered private-sector employers grew by 7 percent year over year. Total wages grew by 7.5 percent over the year.

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• Initial UI claims ended 2016 at their lowest level since 1988. Continuing unemployment claims ended 2016 at their lowest level since 1973.
• More people were employed last year in Wisconsin (November 2016) than at any point in our state’s history.

As indicated here, the number of people working in Wisconsin is at a record high level. (NOTE: this statistic could also be — and likely is as noted below — because the number of people in the state remains relatively flat.) This increase in working folk should indicate that Wisconsin has a “hot” job market. Employees would then have increased bargaining power and be willing to switch jobs when employers are less than fair or better opportunities appear to be available with other employers. Such a “hot” job market would suggest that unemployment claims would rise somewhat because of individuals trying out new jobs that do not work out or which prove to be less than hospitable. But, initial unemployment claims are at record lows. So, folks either are NOT leaving jobs at all or are NOT filing claims for unemployment benefits when job separations do happen (because of the Department’s concealment push). Finally, the fact that wages have jumped over 7% in one year without a “hot” labor market indicates that employers are voluntarily raising wages for the employees they already have even though labor turnover (signified by the record low number of claims being filed) is markedly down.

As indicated in the Isthmus cover story, employers this past winter were faced with employees who no longer had seasonal job search waivers when claiming unemployment benefits and so had to do four job searches a week along with all the other job search requirements the Department has enacted the past two years. Those employees are essentially making themselves available to be poached by other employers, and so the Department has created a competition for employees among employers where none existed before.

If employees were little more than replaceable cogs, this increased competition would still not lead to higher wages. But, for skilled work where employees are not interchangeable, employers need to keep their skilled labor because of the high replacement costs that arise when those skilled employees leave.

To avoid this whole government-created poaching regime, employers’ only real option is to keep their employees off of unemployment by “hiring” and paying them during winter months despite the lack of actual work available for these employees. In other words, some employers have found themselves handing out winter make-do work to keep their employees off of unemployment. With full wages (or even partial wages), these employees are doing financially much better than when they just received unemployment benefits that max out at $370 a week.

NOTE: as this COWS report indicates, the wage growth at issue here is a very recent development. In January 2017, the story in Wisconsin was the flat wage growth in this state.

Finally, this lack of unemployment benefits is affecting everyone — employers and employees — when the record low in continuing claims is considered. This statistic indicates that even when employees file a claim for unemployment benefits, that claim is stopped shortly thereafter because they are either denied benefits because of substantial fault or misconduct or because they fail to meet some new job registration requirement that Department has enacted. With no unemployment benefits available, the unemployed are out searching for jobs or they are leaving this state for greener pastures where jobs and unemployment benefits are available. The state’s relatively flat population growth the last few years — a 0.6% growth rate in 2010 is 0.2% in 2016 — bears this point out. Because of the Department’s drastic changes to unemployment, the state is certainly not becoming business friendly for most employers.

LIRC’s elimination

Governor Walker’s proposed FY2018-FY2019 budget includes the startling elimination of the Labor and Industry Review Commission.

Previously in 2015, DWD raided the Commission’s budget and had its general counsel demoted and replaced.

This attack was apparently not enough. All sources available to me indicate that DWD’s unemployment division pushed for the Commission’s elimination, and Governor Walker acceded to DWD’s demands (more on this issue below).

The agency description document reveals basic numbers about this elimination: the Commission is only funded for six months into the next budget year, and so the Commission will cease to exist on midnight, 31 December 2017. More than 26 staffers will be let go, including three Commissioners (only two currently appointed, as Commissioner Jordahl saw the writing on the wall and jumped to the Public Service Commission). As almost all the Commission’s funding is from federal sources or specific fees, only $265,500 in actual state tax revenue is being saved by the Commission’s elimination.

The budget bill, AB64, has the details about what is happening. For unemployment, see pp.663-74 of the bill.

In general, the budget bill makes a division head (who is a political appointee serving at the pleasure of the governor) as the appellate review authority in place of the Commission.

• For workers’ compensation cases, that person is Brian Hayes, head of Division of Hearings and Appeals.
• For discrimination cases, that person is Robert Rodriguez, head of DWD’s Equal Rights division.
• For unemployment, that person is Joseph Handrick, head of DWD’s unemployment division.

In this proposed budget bill, these division heads will take over for the Commission effective on July 1st of this year. In other words, on July 1st or afterwards any appeals filed with the Commission will no longer be valid. As a result, these division heads will need to provide notice about appeal rights to parties in workers’ compensation, equal rights/discrimination, and unemployment cases perhaps as early as June 1st. And, they will need to do so regardless of when the budget bill is actually passed.

Neither the workers’ compensation or equal rights divisions have staff attorneys on hand to handle these appeals. In 2015 (the latest year case load data is available), there were 214 workers’ compensation cases filed with the Commission, 230 decisions issued, and 32 cases appealed to court that the Commission had to defend. As there were 422 workers’ compensation decisions by administrative law judges that year, over 50% of those decisions were appealed to the Commission in 2015.

For equal rights cases that same year, there were 77 appeals filed with the Commission, and it issued 94 decisions, of which 19 were appealed to court and hence defended by the Commission. The 239 decisions by administrative law judges include many kinds of cases for which there is no appeal to the Commission (such as fair employment or medical leave cases), only appeal to circuit court. So, the percentage of discrimination cases appealed to the Commission is probably much higher than the 32% suggested by this raw data and is probably close to 50% of the cases for which appeal rights to the Commission exist.

In 2015, there were 59 appeals of employer tax cases to the Commission. The Commission issued 49 decisions that year, and three of those were appealed into circuit court. Administrative law judges issued 397 employer tax decisions that year.

The unemployment numbers are eye-popping for claimants. Unemployment appeals involving claimants numbered 1,735 in 2015 (~144 a month), and the Commission issued 1,773 decisions (~147 a month). Forty-eight of these cases were appealed to circuit court. Administrative law judges issued 18,172 claimant benefit decisions that year.

None of these division heads is loosing any of their current job duties, and there appears to be no provisions for hiring additional staff to handle their new appellate review duties. So, appellate review by division heads will have to occur when they find the time. As obvious from these numbers, that review will be perfunctory at best. For workers’ compensation and discrimination cases, the budget bill is simply shifting the responsibility for review into circuit and appellate courts. These division administrators are likely to rubber stamp all appeals that arrive on their desks (at least initially). Of course, costs to employers and employees associated with this move to court review will be increased, because they will need to pay for attorneys and filing fees after going through the motions for the perfunctory division review. As a result, the number of cases being appealed will likely decline because employers and employees simply cannot afford the additional costs that court review entails. In other words, injustices and basic mistakes at the hearing stage will likely go uncorrected and lawyers will have fewer paying clients.

The unemployment review process represents a slightly different picture from the other agencies. DWD’s unemployment division already has six to eight staff attorneys available to it. Indeed, it is these attorneys who prosecute employer tax cases, who conduct training of administrative law judges, and who occasionally prosecute claimants in unemployment concealment cases. These staff attorneys will most likely take on the task of reviewing the 1,700+ division appeals that land on Joe Handrick’s desk. So, employers will face an attorney prosecuting the tax cases against them and then having that same attorney or a co-worker of that attorney reviewing the merits of any appeal. Indeed, the same DWD attorney who lost a decision before an administrative law judge could appeal that lost decision and then conduct or advise on the division review.

NOTE: under this budget bill, DWD also retains the ability to appeal any decision of the division administrator to circuit court. DWD, in essence, can appeal itself. Huh?

Recall that the Commission was created as an independent agency in the late 1970s. Previously, the Commission managed the entire Department of Industry, Labor, and Human Services (DWD’s previous incarnation) and also handled appellate review of discrimination, workers’ compensation, and unemployment cases. At the time, there were concerns raised about staff attorneys and administrative law judges who were involved in cases having a hand in the appellate review of those cases by the Commission, even though at that time there was a separate division dedicated to appellate review. To address those concerns, in part, the Commission and the staff section dedicated to appellate review were separated and made into a distinct agency. In this way, the Commission would be insulated from political concerns and improper communications among attorneys who were connected to the parties in a case.

As obvious, the proposed budget bill reverses this change and does so without any of the protections needed for keeping Department attorneys who handle a case before an administrative law judge or who advise that judge about how to handle cases on a certain topic from also having a voice in the appellate review of that case. Furthermore, without additional staff, this proposal essentially makes the Department’s concerns about how a case should be resolved of primary importance. After all, cases have to be decided in a timely manner, and the increased case loads from this change will focus attorney’s attention pretty much on the Department’s own substantive goals rather than on the concerns of the parties for a fair and impartial hearing free of any thumbs on the scales.

And, this thumb on the scales leads to why the Commission is being eliminated in the first place. My sources indicate that the unemployment division of DWD is furious with the Commission because it has not accepted the Department’s push to charge claimants’ simple mistakes with concealment. The Commission continues to follow the statutory requirements that for the Department to demonstrate claimant concealment the Department must present evidence that the claimant made a mistake on his or her weekly claim certification and that the claimant understood or knew by making that mistake she or he would get extra unemployment benefits beyond what he or she should have received.

NOTE: the purported rationale for the Commission’s elimination is to get the average age of the Commission’s pending unemployment decisions at or below 40 days. That is, the Commission on average should issue an unemployment decision within 40 days of the appeal. Through September of 2016, the average age of the Commission’s unemployment cases was 37 days. So, the Commission is ALREADY meeting this requirement. See p.2 of the agency description document.

Here is a run-down of some of the concealment issues the Department wants over-turned:

• The Commission refuses to accept financial need as a reason for finding a claimant intended to steal unemployment benefits (unemployment benefits are by their very nature intended to address a financial need). Wallenkamp v. Arby’s Restaurants, UI Hearing No. 13607281MW and 13607282MW (15 May 2014), aff’d DWD v. LIRC, 367 Wis.2d 749, 877 N.W.2d 650 (2 February 2016); Gussert v. Springhetti Landscaping and DWD, UI Hearing Nos. 16400598AP-16400609AP (27 January 2017).
• The Commission refuses to find concealment for non-reported wages when claimants subsequently report those wages a few weeks later. Bilton v. H & R Block Eastern Enterprises, Inc., UI Hearing Nos. 13605766MW and 13605682MW (9 Jan. 2014); Perlongo v. Joey’s Seafood & Grill, UI Hearing Nos. 13610060MW & 13610061MW (22 July 2014).
• The Commission continues to find that an October 2012 transformation of a weekly claim certification question into a compound question was confusing and did not warrant a finding of concealment for mistaken claims based on that confusion (beginning in week 43 of 2012, the week ending 27 October 2012, Question No. 4 was modified from “Did you work?” to “During the week, did you work or did you receive or will you receive sick pay, bonus pay or commission?”). Harris v. Arandell Corp., UI Hearing Nos. 13606535MW and 13606536MW (9 Jan. 2014); Henning v. Visiting Angels, UI Hearing Nos. 13606277MW and 13606278MW (9 Jan. 2014); Chao v. Eagle Movers Inc., UI Hearing No. 13607069M and 13607071MW (17 Jan. 2014); Maurer v. Manpower US Inc., UI Hearing No. 13607416MW and 13607417MW (28 Jan. 2014); Wallenkamp v. Arby’s Restaurants, UI Hearing No. 13607281MW and 13607282MW (15 May 2014), aff’d DWD v. LIRC, 367 Wis.2d 749, 877 N.W.2d 650 (2 February 2016); Audwin Short, UI Hearing No. 14600693MW (10 July 2014); Smith v. Journal Sentinel, Inc., UI Hearing Nos. 13610174MW (31 July 2014); Jackson v. Securitas Security Services, Inc., UI Hearing Nos. 14606875MW and 14606876MW (9 June 2015).
• The Commission continues to raise questions about the conduct of administrative law judges who take it upon themselves to chastise claimants for their presumed concealment rather than hearing the evidence as presented and presuming claimant eligibility as the law requires. Henning v. Visiting Angels, UI Hearing Nos. 13606277MW and 13606278MW (9 Jan. 2014); Fera v. South East Cable LLC, UI Hearing Nos. 13607375MW (31 July 2014); Vasquez v. Fedex Smartpost Inc., UI Hearing Nos. 14602073MW and 14602074MW (24 September 2014).
• The Commission continues to find that claimants who are confused about what needs to be reported are just making mistakes and not committing concealment. Hollett v. Douglas Shafler, UI Hearing Nos. 13003690MW and 130003691MW (8 May 2014); Dabo v. Personalized Plus Home Health, UI Hearing No. 14609522MW and 14609523MW (16 April 2015); O’Neill v. Riteway Bus Service Inc., UI Hearing No. 15600518MW and 15600519MW (28 May 2015); Gussert v. Springhetti Landscaping and DWD, UI Hearing Nos. 16400598AP-16400609AP (27 January 2017).
• The Commission continues to find that claimants who are confused about their status as employees or independent contractors are not committing concealment. Haebig v. News Publishing Co. Inc. of Mt. Horeb, UI Hearing Nos. 13000910MD, 13000911MD, and 13000912MD (31 January 2014); David Mumm, UI Hearing No. 13003988MD (28 Feb. 2014); Martin R. Lash, UI Hearing No. 13403269AP (30 May 2014).
• The Commission refuses to give the Department three chances to prove concealment against claimants. Terry v. Jane Schapiro, UI Hearing Nos. 14601971MW and 14601972MW (12 Sept. 2014).
• The Commission refuses to find concealment for claimants who fail to report wages they do not know about when they file the weekly certifications. Bilton v. H&R Block Eastern Enterprises Inc., UI Hearing Nos. 13605766MW and 13605682MW (9 January 2014).
• The Commission refuses to find concealment for claimants who mistakenly report their earnings when received rather than when earned. Waoh-Tobin v. Banana Republic, UI Hearing No. 16602900MW (18 October 2016).
• The Commission even refuses to allow a finding of concealment when there is no information in the record about whether the employee worked any specific weeks, received any wages in those weeks, filed possible claims for those weeks, and then possibly provided information on those non-existent claims that were somehow mistaken from the unknown work and wages allegedly done. Fera v. South East Cable LLC, UI Hearing Nos. 13607375MW (31 July 2014).

The Department disagrees with the Commission on all of these concealment issues. So, the Department has decided to have the Commission eliminated and anoint itself as the Commission’s replacement. Anyone interested in the impartial rule of law should be aghast at this development. Review will by design be done by political appointees whose job is to accomplish the political objectives of the governor who appointed them.

If this change goes forward, no one — not employer nor employee — should expect a fair hearing in any DWD case.

The problems in unemployment matters will appear almost immediately. First and foremost, the Commission is being eliminated because it disagrees with the Department about concealment issues. So, the message is clear and direct that disagreement with the Department puts a person’s job in jeopardy. When the Department can eliminate an independent agency, administrative law judges certainly will understand that they must do what the Department wants or face similar elimination.

In workers’ compensation and equal rights cases, the political influence arising from division review will take a few months or perhaps even a year to make itself felt. But, it will be obvious to all at some point that the administrative law judges in these areas of law are following a requirement that exists outside of the hearing itself. Just as private arbitration has been rightly criticized as favoring repeat players over one-time complainants, so too will administrative law judges find themselves knowing how their bosses want cases decided and acting on that knowledge in order to keep their employment. After all, the division administrator will get to declare in every appeal what his or her opinion on the issues are. And, certainly any case that has political repercussions will be decided by those politics rather than the merits. These division administrators are political appointees, after all, who serve at the pleasure of the governor. As a result, the governor is free to inquire of them about how an appeal will be decided and inform that division administrator of the outcome the governor desires.

[UPDATE 7 March 2017: added citations to Gussert case regarding discussion of concealment cases the Department wants overturned.]

Employer misclassification videos

The Department has new videos about worker mis-classification — mistakenly employing someone as an independent contractor rather than as an employee for unemployment purposes.

The original mis-classfication website is still available and very much worth checking out by employers and employees to see whether someone really is an employee under the various tests for workers’ compensation, labor standards, unemployment, and discrimination law.

For a gander at legal strategy employers should consider, especially when the independent contractor issue is being litigated in an employee benefits hearing (as opposed to an employer tax hearing), see this prior post.