Unique among the states, Wisconsin implemented PUA benefits during the Covid-19 pandemic with specific restrictions that did NOT match any actual statutory or regulatory requirements. One of these was a primary income test to deny PUA benefits to part-time workers who had other sources of income outside of their pandemic-related job losses.
The Commission’s argument was that the “primary income” of 20 CFR § 625.2(n) is not the same as the “principal income” in 20 CFR § 625.2(s) and (t), that the definition of self-employed individual in 20 CFR § 625.2(n) trumps the definition of an unemployed worker, 20 CFR § 625.2(s), and an unemployed self-employed individual, 20 CFR § 625.2(t), and that the federal program letters continue to maintain the primacy of the “primary income” test for PUA eligibility because subsequent program letters did not directly repeal this “essential” DUA eligibility requirement and because the requirement was still referenced in a US Dep’t of Labor reporting form in UIPL No. 16-20 Change 6 (3 Sept. 2021) at IV-5.
Contra the Commission’s claims, PUA eligibility did not wholesale incorporate DUA regulations. The CARES Act, Pub. L. 116-136, § 2102(h), 134 Stat. 281, 317, codified at 15 USC § 9021(h), indicated that DUA regulations only apply where expressly provided for in this sub-section of the CARES Act, where there was no conflict between the DUA regulations and this sub-section concerning PUA benefits, and then by substituting the terms “COVID–19 public health emergency” for “major disaster” and “pandemic” for “disaster.” In calling for the primary income test from DUA regulations to still apply for self-employed individuals, the Commission ignored the fundamental issue that PUA benefits were explicitly created, in large part, for part-time self-employed individuals who were not eligible for regular unemployment benefits because of their part-time, self-employed status.
When the CARES Act was enacted, eligibility for self-employed individuals was a specific eligibility category left to the discretion of the US Dep’t of Labor to define. See Pub. L. 116-136, § 2102(a)(3)(A)(ii)(I)(kk), 134 Stat. 281, 314, codified at 15 USC § 9021(a)(3)(A)(ii)(I)(kk) (“the individual meets any additional criteria established by the Secretary for unemployment assistance under this section”). This category was first set forth as follows in UIPL No. 16-20 (5 April 2020):
The Secretary has determined that, in addition to individuals who qualify for benefits under the other criteria described above, an individual who works as an independent contractor with reportable income may also qualify for PUA benefits if he or she is unemployed, partially employed, or unable or unavailable to work because the COVID-19 public health emergency has severely limited his or her ability to continue performing his or her customary work activities, and has thereby forced the individual to suspend such activities. For example, a driver for a ridesharing service who receives an IRS Form 1099 from the ride sharing service may not be eligible for PUA benefits under the other criteria outlined above, because such an individual does not have a “place of employment,” and thus cannot claim that he or she is unable to work because his or her place of employment has closed. However, under the additional eligibility criterion established by the Secretary here, the driver may still qualify for PUA benefits if he or she has been forced to suspend operations as a direct result of the COVID19 public health emergency, such as if an emergency state or municipal order restricting movement makes continued operations unsustainable.
UIPL No. 16-20 at I-6 (emphasis supplied). As set forth here, this new category was intended as a catch-all to provide PUA benefits to individuals, particularly self-employed individuals, who could not claim regular unemployment benefits and who might not be eligible for PUA benefits for any of the reasons listed in the statute. Accordingly, the US Dep’t of Labor explained:
The eligibility criteria for PUA are different from DUA. An individual, in addition to having no entitlement to regular UC or EB, must also have no entitlement to Pandemic Emergency Unemployment Compensation (PEUC) under section 2107 of the CARES Act. An individual must self-certify that he or she is unemployed, partially unemployed, or unable or unavailable to work because of a COVID-19 related reason listed in section 2102(a)(3)(A)(ii)(I) of the CARES Act. Unlike DUA, an individual filing for PUA does not need to provide proof of employment or self-employment to qualify, nor does PUA take into account the individual’s principal source of income as part of the self-certification process.
UIPL No. 16-20 Change 1 (27 April 2020) at I-1 (italics supplied). Furthermore:
42. Question: UIPL No. 16-20 provides an example of a driver for a ridesharing service who is forced to significantly limit his or her performance of customary work activities because of the COVID-19 public health emergency, such as if a state or municipal order restricting movement makes continued operations unsustainable, indicating that he or she may be eligible for PUA under section 2102(a)(3)(A)(ii)(I)(kk) of the CARES Act. Does this apply to other types of independent contractors?
Answer: Yes. An independent contractor may be eligible for PUA if he or she is unemployed, partially unemployed, or unable or unavailable to work because of one of the COVID-19 related reasons listed in section 2102(a)(3)(A)(ii)(I) of the CARES Act. This includes an independent contractor who experiences a significant diminution of work as a result of COVID-19.
UIPL No. 16-20 Change 1 at I-11. As indicated here, self-employed individuals with a significant loss of work because of the Covid-19 pandemic could qualify for PUA benefits. There was no mention or requirement here concerning a primary or principal income test. Indeed, as explained in this same program letter, a person could be eligible for PUA benefits without any prior income at all.
Even with no wages in the base period, the individual must meet the requirements under section 2102(a)(3)(A)(ii)(I) of the CARES Act — he or she must be unemployed, partially unemployed, or unable or unavailable to work because of one of the COVID-19 related reasons. The individual must have an attachment to the labor market and must have experienced a loss of wages and hours or was unable to start employment following a bona fide job offer.
UIPL No. 16-20 Change 1 at I-6 (emphasis supplied). As stated here, there is no requirement that the pandemic-related job loss be to the individual’s primary or principal source of income. Indeed, it is explicit here that a PUA qualifying individual could even have no previous (base period) income at all from their “part-time” work but still be eligible for PUA benefits.
In two circuit court decisions — one in Vernon county and another in Milwaukee County — circuit courts have now ruled that there is no legal basis whatsoever for a primary income test.
Williams v. LIRC, Milwaukee County Circuit Court Case No. 2022-CV-5868 (slip op., 31 May 2023), provides the most detailed explanation of why the primary income test is wrong for PUA eligibility. Judge Colon (recently appointed to an appeals court position) concludes:
In this case, LIRC erroneously interpreted the applicable statutes in a manner that thwarts the full purposes and objectives of Congress. At all relevant times Williams remained attached to the job market and was able and willing to continue working, but was unable to do so for reasons related to the COVID-19 pandemic. As “an individual who works as an independent contractor with reportable income, she was a self-employed individual within the meaning of the CARES Act. When LIRC applied its overly narrow definition of self-employed individuals, it ignored the Secretary’s criterion that one’s principle source of income has no bearing on PUA eligibility, in direct conflict with the text and purpose of the CARES Act. To hold otherwise would make the language regarding independent contractors superfluous, contrary to legislative intent to provide benefits for workers who “otherwise would not qualify for regular employment,” and contrary to the canon against surplusage.
Williams, slip op. at 12-13.
So, any decision that denied PUA benefits pursuant to a “primary income test” should be revisited. Whether the Department will do so remains unknown. Also unknown is whether the Commission or the Department will appeal these circuit court decisions. Appeals are due the end of August.
Wisconsin Unemployment 