Despite Operton and Easterling, no change with substantial fault at DWD

The Easterling and especially Operton decisions should indicate that inadvertent — i.e., careless or unintentional mistakes — on the job should not disqualify someone from unemployment benefits.

The Department, however, is not happy with these outcomes. At the Advisory Council’s 16 March 2017 meeting, the following public comments were made about Easterling:

Ms. Knutson stated the decision in this case will provide general guidance to adjudicators and ALJs; however, cases are very fact-intensive to determine if it is truly an inadvertent error or substantial fault. Mr. Manley stated there should be a way to sharpen the definition of substantial fault to leave less gray area for interpretation and would not allow exceptions that disregard the entire rule. An employee that signed an employer policy of expectations that were not followed should not be able to claim that those policies were not followed because of a mistake to claim benefits. Mr. Manley expressed concern that the decision by the Court of Appeals is not within the spirit of what the Legislature intended to be as the definition of substantial fault. If decisions are based on this conclusion because the statute is not worded as clearly as it should be, it should be revisited.

Meeting Materials at 12.

NOTE: Both the Department and the Advisory Council have apparently forgotten that the council rejected substantial fault. Mr. Manley’s comments, moreover, ignore the basic requirements in unemployment law that employees NOT be disqualified for their unintentional, performance-related mistakes.

Inside the Department, however, the comments have not been so sanguine. In mid-May after Operton was decided, a Department insider explained to me:

The Operton decision went to the adjudication staff soon after it was issued. At a staff meeting a few days later, a supervisor said that there would be no new training on substantial fault despite the decision.

This lack of re-training in light of Operton is important. After Easterling, Ms. Knutsen simply noted that substantial fault involved a fact-intensive inquiry but provided NO explanation about what the Department would do to implement and follow Easterling. Now, a Department supervisor is indicating that there would be NO new training in how to follow the Wisconsin Supreme Court precedent in Operton. In other words, the Department is continuing to apply its pre-Operton and pre-Easterling standards for substantial fault.

A recent clinic case confirms this observation. In this case, the Department denied unemployment benefits to a teller discharged for cash-handling errors. The initial determination stated:

The employee was discharged because her performance did not meet the employer’s expectations. Her final incident was within her control; her actions do not rise to the level of misconduct. It was within the employee’s control to meet the reasonable requirements; therefore, her discharge is considered to be for substantial fault on the part of the employee.

Here, the Department is still applying its pre-Operton and pre-Easterling analysis of determining whether the employee was in control of the action in question. Under this framework, inadvertent errors only occur when employees lack control over their actions. The unintentional or accidental nature of the errors does not matter at all under this analysis.

NOTE: At the 17 November 2016 Advisory Council meeting, the Department presented a memorandum describing some misconduct and substantial fault decisions. The decisions covered in the substantial fault section of the memorandum describe only a few Commission decisions over whether the employee’s actions were major or minor infractions of company rules or involved absenteeism issues. There is no discussion of what constitutes reasonable employer expectations, what actions are reasonably in an employee’s control, what actions are inadvertent errors, and what actions are the result of an employee’s lack of skill, ability, or equipment.

Marilyn Townsend, Operton’s legal representative, took the teller’s case on and over-turned the initial denial of unemployment benefits at the hearing stage. The decision of the appeal tribunal, however, did not apply Operton despite the obvious similarities. At the hearing, there was no indication whatsoever that the teller’s errors were anything other than unintentional and accidental. Yet, the administrative law judge found that the teller essentially lacked the skills to do the work assigned her after a promotion (another exception to substantial fault) and then committed no errors after being demoted which would justify the discharge.

the record reveals that the employee requested additional training and support for her work performance issues. She did not receive the additional training and support which leads to the conclusion that she lacked the skill and ability to perform the job. The employee also struggled to perform the Phase II role and was demoted back to a Phase I role. While working in a Phase I role, the record demonstrated that the employee didn’t have any work performance matters. If she did have infractions in her Phase I role, those matters were not raised on the record by the employer.

So, there are decisions from the Court of Appeals and the state Supreme Court that explain that, pursuant to the statutory language for substantial fault, accidental or unintentional mistakes on the job are inadvertent errors and do not qualify as substantial fault. As of June 2017, however, the Department is ignoring these court decisions when applying what it believes substantial fault should or should not include.

What should claimants do? Appeal. As the Department and the Department’s administrative law judges are NOT following court precedent, claimants have to appeal initial determinations denying them unemployment benefits to appeal tribunals and then the Commission. The Commission will follow court precedent about inadvertent errors and reverse disqualifications based on accidental and unintentional errors on the job.

SSDI budget cuts in Trump’s proposed budget

Wisconsin Workers’ Compensation Experts has a good blog post about the proposed cuts in Social Security Disability Income (“SSDI”) benefits in the proposed Trump budget.

The claimed cuts are allegedly about fraudulent SSDI claims by people who can supposedly work. Actual SSDI fraud is minuscule, however.

Furthermore, SSDI benefits represent crucial wages for disabled individuals based on their prior earnings. As the blog post explains:

Through their contributions to Social Security, workers earn a measure of protection against disability retirement and death. (Disability insurance protects a worker against loss of earnings due to a significant work limiting impairment, and workers earn this protection by having worked and contributed to Social Security.) Many of my work-injured employees ultimately end up on Social Security Disability and this protection is particularly important to older Americans. Most people receiving Social Security Disability benefits are in their 50s or early 60s and most had only unskilled or semi-skilled jobs. Without a college degree, benefits are not significant (averaging about $1,200 per month). However, over half of Social Security beneficiaries rely on these benefits for 75% or more of their total income.

There is also already an existing and widespread program in place to encourage and facilitate SSDI benefit recipients returning to regular work. Ticket to work is a free and voluntary program by the Social Security Administration to assist SSDI benefit recipients with returning to the workforce. The employment support efforts available for SSDI benefit recipients are extensive. Presentations and training about the program are also available. The budget proposal from the current President appears to be little more than a massive cut to benefits and training and support without any acknowledgment of the difficulties disabled folk have in the workplace. Because of Ticket to Work efforts, many SSDI benefits recipients are already working limited jobs. They just cannot find the kind of full-time, regular work they once had prior to their disabilities.

Note as well that in Wisconsin, SSDI benefit recipients are prohibited from receiving unemployment benefits. Federal law, however, prohibits a similar disqualification for individuals receiving regular Social Security benefits.

NOTE: Because prohibitions on regular Social Security benefits are not allowed, the prohibition on unemployment benefits when receiving SSDI benefits also ends when an individual’s SSDI benefits become regular Social Security benefits — i.e., when the claimant reaches his or her Social Security retirement age.

Accordingly, Wisconsin employers have a financial incentive to hire SSDI benefits recipients, as these employees are prohibited from receiving unemployment benefits when laid off regardless of the layoff reason.

For those receiving SSDI benefits, however, the budget proposal represents a second strike: having already lost eligibility for unemployment benefits in Wisconsin, they are now slated to lose their SSDI benefits as well.

Trump’s UI budget proposals

Hat tip to Daniel J.B. Mitchell for this article discussing how the current President’s budget proposal could affect unemployment funding:

Trump’s budget presents new challenge to California’s long suffering unemployment fund

John Myers LA Times    5-28-17

After years of the state being deep in debt to the federal government for a loan covering the unemployment benefits of millions of Californians, state government officials have been promising the system was well on its way to stability.

And then came President Trump’s federal budget plan, with new rules and penalties for states whose jobless benefits outpace available dollars.

To understand what might be coming, it’s important to see where we’ve been. Unemployment insurance (UI) offers a weekly stipend of up to $450 for most workers who lose their job. The payments, for a maximum of 26 weeks, are paid from a payroll tax charged to employers.

Not surprisingly, unemployment payments rise and fall with the economy. In 2009, during the worst part of a recession when the unemployment rate hit 12.5% that October, state and federal government money was needed to keep California’s UI fund solvent. Payroll taxes simply couldn’t keep up with demand.

It’s worth noting that analysts saw this problem coming. State lawmakers made unemployment checks larger and raised the minimum wage in recent years, but the state portion of employer contribution rates hasn’t changed since 1984. The recession turned the problem into a crisis.

By the end of 2012, California owed $10.2 billion to the federal government for loans to the state’s UI trust fund. The debt has slowly been paid off, thanks to economic improvement that’s cut unemployment to 4.8% as of April. There’s also been a temporary surcharge on the federal government’s portion of the employer payroll tax. Current estimates are that the state’s UI fund will again be solvent in 2018.

But the president’s budget may present a new wrinkle. The Trump proposal specifically calls for a new “solvency standard” for unemployment funds, a requirement that states keep enough cash in their UI funds to avoid going into the red.

Here’s where things could get dicey. Because California’s UI fund remains in the red, any new federal mandates would almost certainly mean a new short-term cost to employers. The president’s budget suggests states should have enough money to pay unemployment benefits for six months of an “average recession,” though it doesn’t define what that means. States failing to meet the standard would have new limits on loans— the same kind of loans that kept jobless Californians with money in their pockets during the last recession.

Then there’s the reality that the only real solutions for California’s unemployment fund are to permanently raise the employer payroll tax, shrink the benefits or eligibility rules for workers or some combination of the two. An overhaul suggested by the state’s independent Legislative Analyst’s Office last fall included possibly cutting maximum jobless benefits by $75 a week and denying eligibility to some of the state’s lowest income workers.

So what’s driving the effort in Washington? It doesn’t look as ifit’s about being fiscally conservative. The Trump administration budget suggests new rules on state unemployment funds are in preparation for a proposal to create a federal mandatory paid leave of at least six weeks for workers — similar to California’s existing program, and a new mandate to likely be paid out of state UI funds.

Few state officials would disagree that California’s system for helping millions of unemployed workers was unprepared for the last economic downturn and that big changes to its financing system are long overdue. And so maybe the president’s budget plan — even if it fails to fully take effect — could be the needed spark for Sacramento lawmakers to roll up their sleeves on a long-term fix.

This proposal could well affect Wisconsin as well, despite Wisconsin’s unemployment fund being $1.2 billion in the black at the moment. This danger exists because the fund is still historically underfunded, according to the latest Department presentation. As explained in this presentation, the fund’s current “health” is due not to adequate funding so much as to record lows in benefit payments to claimants. Accordingly, modeling how the fund will behave in the future is difficult at best, and three possibilities are available: the historically low benefit payment levels continue, benefit payment levels return to normal, or something in between. Wisconsin’s unemployment fund only avoids danger with the first possibility.