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:

UI claim initial 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.

  • 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.

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.]

Unemployment criminalization in court

Back in December 2016 I described how the state’s justice department announced its expanded effort to prosecute unemployment concealment.

That effort is showing results. The entire caseload for two DOJ prosecutors — Annie Jay and Devra Ayala — is apparently just for prosecuting claimants for past unemployment concealment.

UPDATE (8 Nov. 2016): I have learned that a third prosecutor, Amber Hahn, has another sixteen cases alleging criminal theft for unemployment concealment. That means there are 48 criminal cases for concealment in Dane County.

For Ms. Jay, all of her criminal felony cases from 2015 on in Dane County involve unemployment concealment. For Ms. Ayala, all of her criminal felony cases in 2016 in Dane County involve unemployment concealment. Combined, there are 32 cases in total (each prosecutor has 16 cases).

It appears that all of the defendants in these cases originally lived in Milwaukee. These cases are being filed in Dane County, however, because the alleged “crime” happened in Madison. The claimant’s allegedly false unemployment claims were made on the Department’s computers here in Madison.

In some of these cases, the claimants have paid back all of the monies connected to their alleged concealment. Still, DWD and DOJ have turned around and charged them criminally for that same alleged concealment

It appears that the Department of Workforce Development and the Justice Department are prosecuting these cases in order to lay the groundwork for adding new criminal penalties to unemployment claims in 2017. In 2015, there were several bills intended to add new and significant criminal penalties for unemployment concealment that were not passed by the legislature. I expect that these criminal prosecutions by DOJ will serve as “evidence” for why the legislature needs to take up these bills again in 2017 and make felony prosecutions that much easier. After all, if criminal concealment is happening, the reasoning will be, then prosecutors should have all the tools available for going after that concealment.

So, if anyone needs another reason NOT to file for unemployment benefits, here is one more: facing felony convictions and jail time for nothing more than a mistake on your unemployment claim.

Darth Maul is your claim adjudicator

Employer UI taxes declining because more UI claims being denied

Wisconsin employers are having their unemployment tax rates slashed in 2017 because the fund from which unemployment benefits is reaching ever higher solvency metrics. The Walker administration is heralding this news here and here.

Understandably, there are two possible explanations for what is going on with the state’s unemployment fund. The state’s unemployment funds are positive because either job growth is booming or because fewer folks are claiming benefits despite NOT having jobs.

Is job growth booming in Wisconsin?

The July state jobs report reveals that job growth in Wisconsin continues to be anemic. This report indicates that, initially, in July 2016 5,000 private-sector jobs were added to Wisconsin payrolls. But, June 2016 numbers for private-sector job growth were revised downward, from 10,900 to 5,600. This loss of 5,300 jobs from the June report means that the initial number for July does not even get the state back to what was first reported for June 2016.

Neither does the quarterly data offer any better news. From March 2015 to March 2016, the quarterly data indicates that the state added 37,432 jobs during that time frame. But, this number is a few thousand less than what was reported for the March 2015 to March 2015 time frame in the July 2015 jobs report: 39,652 private-sector jobs.

So, without adding new jobs to the state’s economy, the decline in unemployment claims must be coming from fewer folks claiming unemployment benefits. In two bullet points, the July 2016 jobs report actually acknowledges this development.

  • Year 2016 initial UI claims are running at their lowest level since 1989.
  • Continuing unemployment claims in Wisconsin are running the lowest in at least the past 30 years.

But, the question remains: if jobs are not being created, why are claims now so low?

Why are unemployment claims so low?

Actual claims data is available from ETA 207, Non-monetary Determinations Activities Report. See DOLETA data downloads generally for UI data. The 207 data series has all determinations issued by a state compiled on a quarterly basis going back several decades until the most recently completed quarter, June 2016.

Here are some charts from that data for Wisconsin starting in the first quarter of 2007 through the second quarter of 2016.

Denial rates for all initial determination issued

This chart shows that most initial determinations issued by the Department lead to the denial of unemployment benefits. But, starting in the first quarter of 2014, the denial rate for initial determination jumped markedly. Prior to 2014, 59.90% of all initial determinations denied benefits to claimants. Since the start of 2014, 77.45% of all initial determinations issued by the Department have been to deny unemployment benefits. In other words, currently only one of four initial determinations being issued by the Department allows unemployment benefits, and three out of four initial determinations deny unemployment benefits in some way.

Keep in mind that these numbers are based on the initial determinations issued by the Department in regards to a new unemployment claim. In most states, these determinations would consist almost entirely of separation determinations — whether claimants are disqualified because their discharge was their fault in some way or they lacked good cause for quitting their jobs. In Wisconsin, these separation decisions are only a part of what the Department decides. And, increasingly separation decisions are becoming a smaller and smaller part of what the Department does in disqualifying claimants.

Ratio of Separation IDs to All IDs

Here, initial determination concerning separation issues (i.e., quits and discharges) were around 60% of all initial determinations until 2009, when they declined and hovered around 50% of all initial determinations until the first quarter of 2014. At that point, the percentage of separation initial determinations being issued by the Department plummeted to 40% of all initial determinations. In the last two quarters of 2015, the number of separation initial determinations fell again to under 30% of all initial determinations. So at present, less than 30% of the initial determinations being issued by the Department concern separation issues related to a discharge or a quit. And, since most of these other determinations (and probably all of them given the analysis below) are denying unemployment benefits, many of these probably include some kind of concealment allegation, given the Department’s push to allege concealment against claimants.

In regards to denying claimants unemployment benefits, the Department consistently denied about 26% of all claimants who were discharged from their jobs until the first quarter of 2014.

Percentage of discharge claims being denied

From the first quarter of 2014 until the latest, however, the number of discharge cases being denied jumped to 38.47% of all discharge determinations. This increase nearly doubled the number of denials from before 2014 — a stunning and remarkable jump in the number of claims being denied.

The magnitude of this jump is seen when it is compared the number of quit denials over this same time frame.

Percentage of quit claims being denied

Here, a slight increase in denials occurs in the first quarter of 2014. But, this increase is part of a general increase in denial rates that appears to have started in the second half of 2010. So, while denial rates for those quitting their jobs are high and gradually increasing, there is no sudden or striking shift in denial rates in quit cases at any one point in time.

Now, consider that in the last two years only about 30% of all initial determinations concern separation issues and that only 1 out of 4 initial determinations is allowing unemployment benefits at all. In this light, it appears that the only initial determinations right now allowing benefits are the discharge and quit separation determinations that are NOT denying benefits. Everything else the Department is doing is to deny unemployment benefits to claimants.

What these numbers reveal is that most folks applying for unemployment benefits are being denied those benefits, that essentially the only folks qualifying for unemployment benefits are those laid off from their jobs by their employers, and that numerous denials of unemployment benefits have nothing to do with separation issues. These non-separation initial determinations most likely are part of the Department’s program integrity efforts and most likely lead to charges of unemployment concealment, especially under the Department’s new strict liability standard for concealment.

So, unemployment claims and benefits are at record lows in the state because the state is making it difficult to impossible for claimants to receive benefits and charging the few that collect unemployment benefits with unemployment concealment. Essentially, employers are paying unemployment taxes for a benefit almost no one is using. Pretty soon, folks will start calling for eliminating the unemployment system entirely, as who wants to pay a tax that does nothing.

UPDATE (14 Sept. 2016): Fixed links so that a click on a chart brings up a full-sized version.

UI Presentations: Don’t file for UI

Over the last several months, I have made two presentations about unemployment law. On 16 May 2016, I explained to the South Central Federation of Labor about “Misconduct, substantial fault, and concealment: presuming employee fault.” For the 4 August 2016 meeting of the Wisconsin Association of Worker’s Compensation Attorneys, I offered a more detailed presentation about “Misconduct and substantial fault: presuming employee fault.”

The concealment changes that went into effect in April of 2016 cannot be emphasized too much. Here is what changed via 2015 Wis. Act 334:

Section 18. 108.04 (11) (g) of the statutes is renumbered 108.04 (11) (g) 1. and amended to read:

108.04 (11) (g) 1. For purposes of In this subsection, “conceal” means to intentionally mislead or defraud the department by withholding or hiding information or making a false statement or misrepresentation.

Section 19. 108.04 (11) (g) 2. and 3. of the statutes are created to read:

108.04 (11) (g) 2. A claimant has a duty of care to provide an accurate and complete response to each inquiry made by the department in connection with his or her receipt of benefits. The department shall consider the following factors in determining whether a claimant intended to mislead the department as described in subd. 1.:

a. Whether the claimant failed to read or follow instructions or other communications of the department related to a claim for benefits.

b. Whether the claimant relied on the statements or representations of persons other than an employee of the department who is authorized to provide advice regarding the claimant’s claim for benefits.

c. Whether the claimant has a limitation or disability and, if so, whether the claimant provided evidence to the department of that limitation or disability.

d. The claimant’s unemployment insurance claims filing experience.

e. Any instructions or previous determinations of concealment issued or provided to the claimant.

f. Any other factor that may provide evidence of the claimant’s intent.

3. Nothing in this subsection requires the department, when making a finding of concealment, to determine or prove that a claimant had an intent or design to receive benefits to which the claimant knows he or she was not entitled.

At the same time this new law took effect in April 2016, the Department also instituted its new on-line claim-filing process that turned 11 or so questions into a 40+ question marathon.

These two changes go hand in hand. First, this new definition of concealment makes claimants liable for unemployment fraud for their unintentional mistakes on their claims. Second, the new on-line process is so complicated and cumbersome that a mistake is now incredibly easy to make (e.g., by reporting income in the wrong category or failing to check a definition relating to a question that you don’t think applies to your situation — $10 from a parent for taking care of the laundry or cutting the grass counts as babysitting income that should be reported).

Accordingly, given the ease of making a mistake and the consequences for concealment related to that mistake, no one should be filing for unemployment benefits anymore.

If you absolutely must file for unemployment benefits, do NOT file via the on-line process but make all your weekly claims by phone. And, try to get a DWD specialist on the phone when filing your weekly claim certifications and take detailed notes of any advice your receive from that DWD representative. That advice is probably your only avenue for escaping a concealment charge from DWD when you make a mistake.

UI solvency done on backs of the unemployed

The CapTimes and Madison.com just published my letter to the editor about a recent AP report on the solvency of the state’s UI fund.

Dear Editor: Recent concerns over the solvency of the Unemployment Insurance fund are misplaced.

As stated in a recent article, “The state could also further cut down on benefit payments to address the fund’s solvency,” and the state has been doing just that. Benefit payments in Wisconsin have plummeted to record lows. In early 2013, the Department of Workforce Development projected UI benefits to be $797 million in 2014 and $696 million in 2015. The actual benefit payments in 2014 were $732,327,104 and only $605,481,027 in 2015, $91 million less than expected.

Why have benefit payments plunged from what was expected? First, the department has set up a series of obstacles for folks to overcome when filing their claims, including poor phone support, mandatory internet registration, cumbersome job search busy work, and an increasingly complex filing process. Second, until the recent appeals court decision in Operton v. LIRC, substantial fault allowed DWD to disqualify claimants for inadvertent mistakes they make on the job. Finally, DWD has been charging claimants with unemployment fraud for making mistakes when trying to follow the increasingly complex process DWD has set up.

Recent DWD statistics showcase how unemployment fraud is becoming a major operation within DWD. In 2014, unemployment fraud charges jumped 44 percent from the previous year even as benefit payments markedly declined. For 2015, collection for unemployment fraud was up nearly 81 percent from 2013 collection efforts.

Since it is now so oppressive and dangerous to collect unemployment benefits, the risk of the fund going insolvent is minimal. But this concern for fund solvency ignores the whole point of unemployment benefits: to help those in need (and the state as a whole) when folks lose jobs through no fault of their own. In place of employers paying their taxes, the state has essentially achieved solvency on the backs of the unemployed.