Lame duck session includes changes to LIRC Redux

As a followup to my previous post about the lame duck changes to the Labor and Industry Review Commission, I have some more information.

First, here is what we know about Commission appointments during the lame duck:

• Laurie McCallum put in her retirement papers BEFORE the election.
• In those papers, Jan. 6th was her designated last day.
• Evers won the election.
• Walker appointed Georgia Maxwell to McCallum’s seat on Nov. 30th (but formally indicated the appointment is for Jan. 6th).

Yes, you are reading this info correctly. It says on p.1 that the nomination is dated on Jan. 6th but the actual nomination letter is dated Nov. 30th. “Let’s do the time warp, yeaaahhh.”

• The Senate approved her appointment and 80 others in its lame duck session.
• The Maxwell for McCallum appointment is allegedly legal because: (1) the Senate can determine for itself what appointments are proper, and (2) an Atty Gen. opinion indicates that appointments in a current term are legit.
• The Atty General opinion — 76 Op. Att’y Gen. 272 — is rather ambiguous on this appointment. The opinion is essentially saying that a governor and the senate cannot fill future positions. Here, the position does NOT become vacant until 1/6/2019, the last day of the current legislative session. The problem is that Maxwell’s “appointment” is occurring now, before the position is actually vacant. So, the appointment is for a future vacancy in the current (by one day) legislative session — a situation not quite covered by the AG opinion.

Second, the Commission is “securing” a job for its current general counsel.

Recall that the general counsel was previously a person hired by the Commission. When the Commission starting ruling against DWD over unemployment concealment, a provision in the budget was suddenly added to strip some funding from the Commission and make the general counsel an appointee of the governor (and, Senate confirmation for this appointment is not required).

Maria Gonzales Knavel served admirably as the first governor appointee, but she left the job when Gov. Walker proposed eliminating the Commission. When the Commission survived that attack, Gov. Walker appointed Georgia Maxwell as a Commissioner and Karl Dahlen as the new general counsel.

Apparently with the rush of new appointments during the lame duck session, Dahlen’s position was missed.

So, now the Commission has posted for one week, closing on Dec. 21st, a position for a new staff attorney that is apparently a way for Dahlen to remain at the Commission.

And, who thought Gov. Walker was not serious about creating jobs? Here, not even holiday breaks stop his administration from creating jobs for those who might be out of work soon. The big question remains, however: will Dahlen get to keep his six-figure salary of around $120,000 in his new job?

What is happening with FoxConn?

With the end of 2018 approaching, the first measures for the FoxConn deal are coming into play.

Note: A tip of the hat to PixelEnvy for a post about the effect of FoxConn on Mount Pleasant and links to some of the examination discussed below.

Recall that, for $3 billion in direct transfers and around another $1.5 billion in infrastructure and other improvements, FoxConn promised to build a cutting edge LCD display manufacturing facility that could someday employ up to 13,000 people at an average (not a median wage) of $53,875.

Note: Here is the first flyer about FoxConn. The number and size of all the incentives makes it impossible to find a single document that describes them all. For starters, here is a rundown of the direct financing contained in the FoxConn legislation, and here is a description of the transportation funding for FoxConn. My thanks to the Wheeler Report for first posting these documents and others.

Note: The distinction between average and median is important. Of the following numbers — 10, 10, 100, 100, 100,000, 100,000, 100,000 — there is a median of 100 and an average of 42,888. That is quite the difference.

There is an amazing podcast from the folks at Reply All about Mount Pleasant and FoxConn. And, there is an article in the Verge with reporters from Reply All and others about how FoxConn came to be in Mount Pleasant.

What comes across over and over again in these reports is how negotiations behind closed-doors and astro-turfing served to push an agenda that very few seem to want. With all the lame duck shenanigans of late in Wisconsin and other states, it seems that this FoxConn deal was just more of the same: a lot of promise, few to no details, and the great likelihood that reality will not match up at all with what was promised.

As these reports indicate, much of what was going on with the FoxConn was hidden from the public. Eventually, the contract with FoxConn and WEDC (the state agency responsible for the FoxConn subsidies) was made public. Here are the job numbers that FoxConn actually has to meet:

Ex.A of FoxConn-WEDC contract. Notice that FoxConn qualifies for these credits if it has just 260 employees on payroll by the end of 2018. At the end of 2019, the minimum threshold doubles to 520 employees.

Note: these low numbers make sense in light of reports that the factory will not be operational until 2020 at the earliest.

Each December, the employees at FoxConn are counted for the purpose of determining how many “credits” will be returned to FoxConn for those employees. Here is how those credits are calculated:

As under the enterprise zone program, “full-time employee” would mean an individual who is employed in a regular, nonseasonal job and who, as a condition of employment, is required to work at least 2,080 hours per year, including paid leave and holidays. However, WEDC could grant exceptions to the requirement that a full-time employee means an individual who, as a condition of employment, is required to work at least 2,080 hours per year if: (a) the individual is employed in a job for which the annual pay is more than the amount determined by multiplying 2,080 by 150% of the federal minimum wage ($22,620); and (b) the individual is offered retirement, health, and other benefits that are equivalent to the retirement, health, and other benefits offered to an individual who is required to work at least 2,080 hours per year.

A claimant [i.e.. FoxConn] could claim as a refundable income or franchise tax credit an amount calculated as follows:

a. Determine the zone payroll for the taxable year for full-time employees whose annual wages are greater than the amount determined by multiplying 2,080 by 150% of the federal minimum wage ($22,620) in a tier I county or municipality or greater than $30,000 in a tier II county or municipality.
b. Multiply the amount determined under “a” by 17%.

WEDC could not issue certifications to claim payroll tax credits under these provisions that total more than $1.50 billion.

Bob Lang, “August 2017 Special Session Assembly Bill 1: Foxconn/Fiserv Legislation,” (8 August 2017) at 3.

Notice that these “credits” are NOT based on actual work and pay for the previous year. Rather, they are based on who is on payroll in December for those employees who have been hired on a full-time basis (i.e., they will work 2080 hours), have benefits, and earn at least $22,620 for those 2080 hours they will possibly work. The state then returns to FoxConn in April of the next year 17% of these wages as calculated (not as actually paid).

Note: So, there is NO accounting for employee turnover at FoxConn. Given the stories of worker suicides at FoxConn’s facilities in China, this loophole is staggering.

Some of you may be asking about where is that $53,875 figure that was and is touted so much. Here is what is going on with that number.

First, this number possibly includes the job benefits employees are receiving.

Second, this number is only an average. Another provision of this deal caps the wages at issue at $100,000. So, the execs like Chairman Gou (who is also an employee of FoxConn Wisconsin) only have the first $100,000 of their salaries counted for these job subsidies. But, as noted above, that $100,000 figure will go a long way to making the average salary seem much higher than what is actually being paid to the other 259 employees needed to qualify for the subsidies. If there are 50 employees at $100,000 each and another 50 at $1,000 each, the average is $50,500.

Moreover, understand that these job subsidies are only a small part of the package handed to FoxConn. For instance, Jake has some additional news about the land purchases and prep work going on right now on behalf of FoxConn ($60 million from FoxConn has been matched by $147 million from Wisconsin and Mount Pleasant).

Given this FoxConn “deal,” it is not surprising that other companies are pushing for similar handouts. Kimberly-Clark asked for comparable job subsidies to keep two factories open, and has settled for a pro-rated financial handout to keep one factory open.

And, that last part about “keeping” a factory open is the kicker. Wisconsin is essentially paying here to NOT lose jobs. As a result, manufacturing job growth in Wisconsin has been shoddy and continues to be so. DWD pushes gushing estimates about jobs in Wisconsin, but the actual numbers indicate Wisconsin is lagging behind all the mid-western states but Minnesota (a state with a growing economy, as Minnesota’s economy is not nearly as dependent on manufacturing as Wisconsin’s is).

So, Wisconsin is handing money out hand over fist to companies that don’t really need it and not seeing much of a result from all that effort. In the meantime:

Jud Lounsbury @JudLounsbury Dec 13

Instead of sabotaging the incoming gov, maybe @ScottWalker could finally address the dairy farm crises in Wisconsin. Nearly half of Wisconsin dairies have gone under during Walker’s two terms. #walkerlegacy

The problem now is that Wisconsin is committed to these corporate deals where the return is mostly to the benefit of the company. Profits may be soaring for these companies, but actual economic growth in the state and among the middle-class is flat-lining.

Lame duck session includes changes to LIRC

As there is now some time to review what has been happening with the lame duck session, there are more and more changes to figure out. Some of these changes are at the Labor and Industry Review Commission and involve the three Commissioners there.

Prior to the lame duck session, Georgia Maxwell’s appointment expired in March 2019, Dave Falstad’s appointment expired in 2021, and Laurie McCallum’s appointment expired in 2023.

NOTE: Falstad was appointed in 2015. McCallum was appointed in 2011 and then again in 2017. Bill Jordahl was appointed in 2013 for a term expiring in 2019. When he left LIRC in 2017 (when Gov. Walker proposed eliminating the Commission) for the Public Service Commission, Maxwell replaced him.

But, Laurie McCallum has indicated she is retiring from the Commission in very early January 2019. So, Gov. Walker apparently proposed and the Senate approved on Dec. 4th to appoint Maxwell to fill the remainder of McCallum’s term:

Executive Appointment: Maxwell, Georgia – Georgia E. Maxwell, of Madison, as Commissioner of the Labor and Industry Review Commission, to serve for the term effective January 6, 2019 and ending March 1, 2023.

How can Maxwell be re-appointed to a new term when her current term has not expired and McCallum’s term has not yet expired? And, how can all of this occur in a legislative session that ends this year for service in 2019? Good questions. I do not know the answers.

For comparison to these shenanigans, here is Governor-elect Walker’s letter to then Gov. Doyle. In this letter, Walker asks that political appointees be prevented from returning to their civil service positions. That is, Walker was asking Doyle to stop state employees from exercising their civil service rights under state law to serve in their civil service jobs outside of political influence. Wow.

Note: there was no request from Walker to NOT make any political appointments, because there were none at issue back then. How times have changed. As Bruce Murphy indicates, Doyle essentially did what Walker wanted other than try to get year-late 2009-2011 collective bargaining agreements enacted.

So, Governor-elect Evers will get one appointment to the Commission in 2019. That appointment will require Senate approval, and that person will need to leave that position immediately should the Senate reject him or her under lame-duck SB884 (LRB 6071/1 and 6076/1), if that specific provision is not vetoed by Gov. Walker.

And so, the cautionary notes from Bruce Thompson deserve repeating:

For Vos and Fitzgerald [democracy] is not a consideration: their answer is to establish two sets of laws, one for Republican administrations, a different set for Democrats. They neither understand nor support the concept embodied in John Adams’ comment “For as in absolute governments the King is law, so in free countries the law ought to be king; and there ought to be no other.”

They also undermine democracy by assuring that the democratically elected government is a weak government, a government unable to fulfill its promises to the electorate. They are doing their utmost to turn the Evers administration into a Republican administration when it comes to policy, in effect trying to annul the election. They want to force Evers’ first term to duplicate Walker’s intended third term.

USA Today article about work search difficulties

Paul Davidson of USA Today has a feature story about how record low job numbers are due in part to the hurdles states have enacted to get unemployment benefits.

The article describes how only around 60% of those eligible for unemployment benefits are applying, down from the 75% portion “during the last two economic expansions in the late 1990s and mid-2000s.” Such obstacles are a main reason why low unemployment rates have not led to an increase in wages for working folk.

Besides folks not receiving the unemployment benefits due them, the article notes, the perception of the nation’s economic health is also being distorted.

The upshot: The economy is in good shape, but not that good. The low share of laid-off workers seeking jobless benefits also raises concerns about the social safety net in coming years as the economy shows early signs of wobbling. The stock market has retreated from its October peak, oil prices have tumbled and General Motors announced about 14,000 layoffs last week. Many economists predict a recession in 2020.

In other words, during this economic boon(?), there is actually more unemployment not showing up in the economic measurements. And so, this unmeasured unemployment is leading to less unemployment benefits being paid out to folks and to downward pressure on wages.

Lame duck session

There is a lame duck session next week, the first week of December. The Wheeler Report has the bills that will be passed.

• LRB-6074
• LRB-6073
• LRB-6072
• LRB-6071
• LRB-6070

These bills are a mess. The Legislative Reference Bureau evidently has been responding to multiple demands and then rushed all those demands together into these bills. As a result, the same changes are included in multiple bills. For instance, the elimination of the solicitor general’s office is in both LRB 17-6074 and 17-6071. Many other changes are double-listed in these bills.

The media is focusing on the simpler changes to when the 2020 Supreme Court election will occur and changes to WEDC appointments.

Those are small potatoes to what is going on with these bills, however. These bills represent a massive expansion of legislative oversight alongside sharp limitations on executive discretion and authority through administrative agency action.

In this light, the changes in unemployment law are relatively minor. They are included in both LRB-6073 and LRB-6074. In these provisions, the legislature is moving current work search and job registration requirements from Department of Workforce Development administrative rules into statutory language. It seems the legislature wants to take ownership of these changes. So, the hated 8+4 week limits on work search waivers, the requirement to register at the job center of Wisconsin website, and the requirement to provide job search verification will now be statutorily required. It seems that the legislators behind these changes do not understand how most employees and employers in Wisconsin dislike and even hate these requirements.

NOTE: This legislation still allows the Department to modify the availability of work search waivers and establish additional work search waivers. See, e.g., section 37 of LRB-6073 and section 113 of LRB-6074. So, the transfer of these rules into statutory language seems pointless, confusing, and ambiguous. The scope of these possible waivers also seems questionable in light of the other changes discussed below.

In regards to the Department of Workforce Development, these bills (see LRB-6074) also sharply curtail Fast Forward funding for job training. Under Gov. Walker, Fast Forward funding was provided in a lump sum and parceled out by the Department to awardees as needed. The Legislature now both designates where these funds are to go (teacher grants are zeroed out, for instance) and overall funding is cut immediately by $7,345,900.

But, these changes are minor compared to the other administrative changes being proposed.

The legislature is greatly expanding its role in legal oversight of the state’s laws. Lawyers in the state as well as its courts need to know that when a party claims a statute is unconstitutional, that party will not only need to serve the state Attorney General but now also the Speaker, the senate president, and the senate majority leader (and all three will have a right to appear and make legal argument in the case). The solicitor generals who, as noted above, are losing their jobs with the Attorney General are probably getting new jobs with the legislature.

Deference to administrative agencies is also greatly limited. First, there will no longer be a presumption that an agency has followed rule-making procedures for a rule in dispute. See LRB-6074. So, agencies will now need to demonstrate compliance with rule-making requirements whenever those rules are challenged.

Second, the legislature is going further than the Wisconsin Supreme Court in Tetra Tech, 2018 WI 75. In that case, the court allowed some deference for agency experience, technical competence, and specialized knowledge. Now, there is simply no deference whatsoever, and it is illegal for an agency to assert otherwise. See section 126 of LRB 6074.

Third, the legislature will mandate that “guidance” documents must be submitted for review and public comment and that the agency must keep those documents available for public comment when used by the agency. “Guidance” documents are a new category of legal documents that contain information for how or why a state agency acts a certain way but which are not a “standard, requirement, or threshold that is not explicitly required or explicitly permitted by a statute or a rule that has been lawfully promulgated.” LRB 6074/1 at 99 (new Wis. Stat. § 227.112(6)). In other words, guidance documents are the kind of internal manuals and public pamphlets an agency has to guide its own operations and educate the public about what it is doing.

The Department’s disputed claims manual, for instance, provides guidance to Department adjudicators for how to resolve unemployment claims. It would seem that this new statutory language would require the Department to make this document public and even include it in every unemployment hearing.

An agency that proposes to rely on a guidance document to the detriment of a person in any proceeding shall afford the person an adequate opportunity to contest the legality or wisdom of a position taken in the guidance document.

LRB 6074/1 at 98 (new Wis. Stat. § 227.112(3)).

NOTE: Guidance documents can also be transformed into rules per new Wis. Stat. § 227.112(5) by any group or five or more individuals.

Finally, these “guidance” documents must be properly enacted as guidance documents within six months of passage of this new law. LRB 6074/1 at 99 (new Wis. Stat. § 227.112(7)). It is unclear whether already existing “guidance” documents will be grandfathered in or if documents concluded to be “guidance” documents after the six month deadline will be considered legal nullities in some way.

There is much more in these bills. But, these four changes to administrative law represent a far-reaching change in how state agencies operate and what the public can expect from them. As written, there will be litigation and then more litigation just to figure out what all of these changes mean.

For instance, with no deference and the ability of any person to contest the “legality or wisdom” of a guidance document, could every action of a state agency be subject to heightened scrutiny and challenge? It seems so.