Replacing unemployment with reemployment

Rep. Petryk, Rep. Penterman, and Sen. Roth have proposed a major revamp of unemployment support that would re-make the Department of Workforce Development into a government-sponsored job coach that would, presumably, guide claimants to new jobs.

In place of a free labor market, where claimants get to make their own decisions about which jobs to apply to and how to go about searching for work, these politicians want to mandate government involvement and even control of claimants’ job search efforts. Here is what they propose.

• The Department must provide claimants with four potential job opportunities, one or more of which could be a temporary help company. Claimants who do not apply for work with that temp company are likely to lose their eligibility for unemployment benefits.
• RESEA training will be mandatory for all claimants. This requirement is already understood as required by the Department, but this proposal removes any discretion and makes attending a job search training seminar mandatory for all claimants who seem likely to exhaust their eligibility.
• That drug testing for claimants must be implemented by the Department. As previously noted, this drug testing would require the Department to provide drug treatment counseling as well for those who test positive or fail to appear for a drug test.
• As of a claimant’s second weekly certification, claimants must have a resume on the Job Center of Wisconsin website. This requirement already exists for every claimant’s benefit year, however, per the job registration requirement. See Laura Hoffman, UI Hearing No.17002961MW (16 Nov. 2017) (claimant must complete job registration requirement within 14 days of initiating a claim for unemployment benefits). So, this proposal is nothing more than shortening the requirement to seven days.
• Starting with the third week claimed, two of a claimant’s four job searches must be job applications or job interviews.
• When there are three weeks of unemployment benefits left in a claimant’s benefit year, the claimant must attend a reemployment counseling session with a Department staffer.
• The Department must compile reports regarding claimants’ job experience for the three years after the claimant first receives unemployment benefits. This part of the proposal is likely to run afoul of federal claimant confidentiality requirements. To the extent that this request reflects general job experience and claimant experience broken down by county or region, there is nothing preventing such a general report from being prepared by the Department right now.

As the sponsors of this proposal explain in their introductory memo about the changes they propose:

* Requiring the Department of Workforce Development to engage in universal workforce assessments and reemployment services by providing individuals early access to customized workforce services to get them access to employment services at the start of the UI claim.

o This means claimants will receive an online career readiness assessment when starting their claim to identify their career skills and talents.

o DWD will then use this information to develop a personalized employment plan for the individual.

o Require the claimant to participate in services to help complete their employment plan, like resume writing workshops, soft-skills training, and employment workshops.

Perhaps the most odious change being proposed is to add the following language in a proposed Wis. Stat. § 108.01(2m) as a fundamental goal of unemployment benefits:

The Social Security Act requires that, in order for an individual to be eligible for reemployment assistance benefits, the individual must be able to work, available to work, and actively seeking work. The reemployment assistance program in Wisconsin should enact and focus on policies that complement individuals’ efforts to find employment.

There has been a great deal of litigation in other states who ended their PUC and PUA and PEUC benefits prematurely under the pretense that these programs kept the unemployed from finding jobs. Litigation has been lost in some of those states that had a reemployment provision similar to the one being proposed here. Courts found that reemployment, rather than financial support after a job loss, meant that states had to end these programs prematurely. So, this proposal in essence is to make it easier for a state to end future federal emergency benefits under the guise of reemployment.

Note: To reinforce the importance of reemployment over unemployment, the majority of the proposed bill is concerned with changing the name of unemployment to reemployment.

The only helpful change in this proposal is to expand the earnings disregard to $30 or 40% of a claimant’s weekly benefit rate, whichever is greater, for calculating a claimant’s partial benefit. For example, a claimant with a weekly benefit rate of $250 would have an earnings disregard $100 rather than the current $30. So, weekly earnings of $90 would mean the claimant would keep all $250 in unemployment benefits that week, and weekly earnings of $400 would mean the claimant would still receive $49 in unemployment benefits that week. Unfortunately, this proposal keeps the $500 wage cap in place, so a claimant still loses all eligibility when earnings wages of $500 or more.

Note: The proposal also includes bonuses to employers for hiring long term unemployed workers. Such efforts are generally considered ineffectual or even foolish.

In short, this proposal seeks to make a government agency into an entity that micro-manages claimants’ job search efforts. Free-market Republicans are certainly not behind this proposal. Rather than creating an environment by which claimants could educate themselves and improve their job skills, this proposal is mainly concerned with forcing job searches down the throats of claimants so as to create a pool of labor for temp companies to draw on. Say what you want about the big government plans of Ted Kennedy, but he never sought to turn government into a mechanism for attacking working people when they are down and jobless.

Drug testing for unemployment benefits is back

The US Dep’t of Labor has released new drug testing regulations (after the prior regulations were annulled).

These new regulations differ from the prior federal regulations in that they grant states much more leeway in determining occupations for drug testing. States can decide to test applicants for unemployment benefits where:

• state law requires employees in that occupation to be tested, or
• the state has a “factual basis” for concluding that employers are drug testing applicants or employees in that occupation.

As documented in the comments to this regulation, there are numerous problems to this new testing, ranging from legal (no new law has been passed since the previous regulation was voted down) to economic (the testing will cost more than any possible savings in unemployment benefits) to just plain stupid (one more hurdle for obtaining unemployment benefits is being created when unemployment benefits are already at record lows in part because of the obstacles already in place for such claims).

Here are some comments from NELP on the new regulations:

NELP on the Trump DOL Final Rule Allowing for Drug Testing for Unemployment Benefits

Following is a statement by Michele Evermore, Senior Researcher and Policy Analyst at the National Employment Law Project (NELP):

“Today, the Trump Administration released a final rule to allow expanded drug testing for unemployment insurance applicants. The Administration clearly overstepped its authority. We urge states not to act to pass legislation based on this regulation for several reasons: it is a costly solution in search of a problem; it violates Fourth Amendment protections against suspicion-less search; it unfairly stigmatizes receipt of an earned benefit; and it sets lawmakers up for the perception that the massive drug testing industry is influencing policy in a way that hurts state coffers, unemployment recipients, and the larger economy in case of an economic downturn.

“As part of a bipartisan compromise to pass the Middle Class Tax Relief and Job Creation Act of 2012 (MCTRA), Congress agreed to allow states to test unemployment insurance claimants for drugs under two narrow circumstances: if a worker was discharged for use of controlled substances, or when a worker is only available for work in professions that regularly conduct drug testing. The Obama Department of Labor crafted a regulation that closely adhered to that language, but upset with the bargain it struck, Congress then repealed this regulation, arguing that in spite of the clear language in the MCTRA, states should be allowed to drug test in broader circumstances.

“Not only does this rule exceed the authority Congress allowed in MCTRA, it may violate the Fourth Amendment’s prohibition of unreasonable searches and seizures. The final rule gives states broad authority to determine which jobs “regularly drug test.” Subjecting broad categories of workers, who do not work in occupations that the government has a particular safety or other interest in keeping drug-free, to invasive testing amounts to unconstitutional searches. Applying for earned benefits does not provide grounds to reasonably suspect a person of drug use. Indeed, when states such as Michigan and Florida tried to impose mandatory suspicion-less drug testing on all TANF applicants and recipients, federal courts intervened to stop them, finding such testing unconstitutional.

“States are experiencing record low administrative funding based on historically low unemployment levels. Federal law prohibits assigning this cost to claimants, so states would have to absorb the full cost of drug testing thousands of unemployed workers. Hopefully, states will see this as the costly and unnecessary burden that it is.

“Finally, this final rule represents a not-so-subtle attack on the character of unemployed Americans. This intrusion into the privacy of workers who were unlucky enough to lose their job seems rooted in a blanket assumption that they themselves are to blame. It could also discourage workers from completing applications – some unemployed workers may not be able to travel to a testing center to undergo an invasive test to receive benefits. Drug testing is simply a lazy way of blaming the victims of larger economic trends or corporate practices such as downsizing, outsourcing, and offshoring.

“Unemployment insurance is an important economic tool to help workers, their families, and their communities deal with involuntary job loss. NELP will continue to lead the fight to stop this expensive and ill-conceived effort to erode this key protection for people who are involuntarily unemployed and for the broader economy, if states attempt to implement it.”

Wisconsin was one of three states to implement drug testing in anticipation of these federal rules. It will be interesting to say the least how the Evers administration reacts to this drug testing push in light of the regulations and testing Wisconsin has already put into place in anticipation of this federal regulation.

NOTE: The Department of Workforce Development has reported to the Unemployment Insurance Advisory Council this summer 2019 that: of the voluntary employer reporting of failed drug testing currently available in Wisconsin, not one, single case has been reported. It seems that drug testing really is NOT that important.

And, one more issue of note with this new testing: marijuana. The new regulations indicate that the testing is for controlled substances that are banned federally. So, in states that have legalized marijuana to some extent — Michigan for instance — employees will lose unemployment benefits for testing positive for marijuana despite recreational or prescription use of marijuana being allowed in that state. As Wisconsin has done nothing to legalize marijuana, this state will not have to deal with that problem with these new regulations.

Drug testing is making a comeback

Brand new proposed regulations are now available. Here is the initial reaction from NELP:

Washington, D.C. — Following is a statement from Christine Owens, Executive Director, National Employment Law Project:

“Today, the Trump Department of Labor (DOL) released a proposed rule giving states fairly broad authority to conduct mandatory drug testing of unemployment benefit claimants and recipients. The proposal not only suffers from a number of fatal legal flaws, but more to the point, drug testing of UI applicants–when there is no basis for suspicion–is a gross insult to unemployed Americans everywhere, and a costly solution in search of a non-existent problem. Clearly, this proposal is designed to stigmatize use of an important layer of our social safety net.

“As part of a bipartisan compromise to pass the Middle Class Tax Relief and Job Creation Act of 2012 (MCTRA), Congress agreed to allow states to conduct drug testing of unemployment insurance claimants under two exceedingly narrow circumstances: if a worker was discharged for use of controlled substances, or when a worker is only available for work in professions that regularly conduct drug testing. The Obama Department of Labor crafted a regulation that closely adhered to the statutory language, but upset with the bargain it struck, Congress then used the Congressional Review Act to repeal this regulation, arguing that in spite of the very narrow language in the MCTRA, states should be allowed to drug test in broader circumstances.

“State-mandated drug testing may well violate the Fourth Amendment’s prohibition of unreasonable searches and seizures. The mere act of applying for a government program does not provide grounds to reasonably suspect a person of drug use. Indeed, when states such as Michigan and Florida tried to impose mandatory suspicion-less drug testing on all TANF applicants and recipients, federal courts intervened to stop them, finding such testing unconstitutional.

“In addition, when Congress passed the MCTRA, it not only articulated very narrow circumstances under which drug testing could be conducted, but it delegated to DOL the authority to define which occupations were covered under the law. The Trump DOL has instead essentially granted states broad authority to determine which occupations regularly conduct drug testing beyond that which is required by law, a delegation of authority not authorized by the MCTRA.

“As the proposed regulation acknowledges, the expense of such drug testing is considerable, while states’ funding to run their UI programs is at a historic low. Expanding drug testing would drain critical resources from programs that are already strapped for funds. In 2015, for example, states spent more than $850,000 on testing TANF applicants, and 321 people tested positive–a cost of approximately $2,650 per positive test. Indeed, all testing regimes yield positive results at rates substantially below the Centers for Disease Control’s estimate of 8.5 percent drug-use rate in the general population.

“Finally, this misguided proposal represents a not-so-subtle attack on the character of unemployed Americans. This intrusion into the privacy of Americans who just happen to be unlucky enough to lose their job seems rooted in a blanket assumption that unemployed workers are to blame. Drug testing is simply a lazy way of blaming the victims of larger economic trends or corporate practices such as downsizing, outsourcing, and offshoring.

“Unemployment insurance is an important economic tool to help workers, their families, and their communities deal with involuntary job loss. And NELP will lead the fight to stop this expensive, illegal, ill-conceived effort to erode this safety net.”

As noted in this newly proposed rule, Wisconsin, Texas, and Mississippi are the only states that have passed drug-testing laws for unemployment claimants that seek to implement drug-testing of some kind. The proposed rule also “claims” that drug testing will have minimal costs. Really?

If this new proposal survives court challenges, expect Wisconsin to expand drug-testing for any job sector for which the state thinks drug-testing is important in some way. I fully expect Gov. Walker to expand testing to include school employees whenever they apply for unemployment benefits. Indeed, I would not be surprised if Gov. Walker determined that every unemployment claimant should be drug-tested. After all, such tests would simply be one more obstacle claimants would have to jump through as part of the initial claim-filing process.

Federal drug testing is trying for a comeback

The current administration is trying to bring back drug testing. As of Oct. 24th, the Office of Management and Budget has approved new, proposed regulations:

As indicated here, these proposed regulations are strangely NOT economically significant, do NOT affect small entities, and have NO federalism impacts (i.e., state sovereignty remains intact). The whole point of drug testing the unemployed was to reduce the “terrible” effects of drug use on workplace productivity and safety, that this federal drug testing requirement would empower small businesses to take up this testing and thereby get a drug-free workforce at much lower costs, and that the regulation would allow states the “freedom” to implement specific drug-testing requirements. Essentially, this conclusion of NO effect on these issues is proclaiming that drug-testing the unemployed is of no importance, financially or otherwise.

The new, proposed regulations should appear in the Federal Register in the next few weeks. Only then will we know what the substance of these new requirements are.

As I noted previously here and here, there are serious problems with any new drug testing regulations given how Congress nixed the prior regulations via the Congressional Review Act. Under that law, new regulations are verboten if they are in “substantially the same form” as the disapproved regulations unless they are specifically authorized by a subsequent federal law.

In other words, these new, proposed regulations MUST be substantially different from the prior drug-testing regulations, as Congress has passed no law authorizing new regulations.

Bad drug testing advice from DWD

The Department of Workforce Development has another newsletter for employers (here is a link to a PDF version). Understandable, the Department lets employers know about the deep decline in unemployment taxes for employers the last few years, pushes its new on-line portal for employers, publicizes the upcoming public hearing, and other employer-centric issues.

Surprisingly, the Department also states:

Pre-Employment Drug Testing Program Helps Strengthen Wisconsin’s Workforce

With a record low unemployment rate, the prevalence of substance abuse is a growing problem for employers who are already struggling to find qualified workers. As part of DWD’s commitment to ensuring no talent is left on the sidelines, the Department’s Pre-Employment Drug Testing Program is a way employers can help grow Wisconsin’s pool of work-ready job seekers while fostering a drug free workplace within their business.

Provisions included in the UIAC agreed-upon bill, effective April 1, 2018 provide that an employer that submits the results of a positive test or notifies DWD of an individual’s refusal to take a pre-employment drug test is immune from state civil liability for its acts or omissions with respect to the submission of the reported information (Wis. Stat. § 108.133(4)(c)). Go to https://dwd.wisconsin.gov/ui/pre_employment_drug_testing to find additional information, forms, and resources on how to participate in the program.

This advice is plain silly and borderline malpractice. Immunity from civil liability in state law is basically meaningless in the area of medical privacy law. Almost any and every law suit a person might file will be based on federal laws that protect an individual’s medical privacy. Obviously, federal law against disability discrimination may apply in these situations. While HIPAA does not cover employers, it does cover health care providers and all of the entities that contract with those providers, including drug-testing labs. Moreover, a self-insured employer who has an ERISA plan (which pretty much covers all large employers in the state) will mean that employer liability can probably ONLY occur through an action based on federal law. Finally, an employer who fails to follow federal drug-testing requirements will most-likely open themselves up to liability and even bars against future contracts for federal work.

In other words, state law has limited relevance here, and so an immunization from civil liability in state law simply does not mean all that much. Any employer that thinks otherwise is being misled. In actuality, no matter what might be said in state law, an employer essentially has NO immunity from a law suit alleging an invasion of medical privacy at the federal level.

NOTE: drug tests of employees or potential hires are usually NOT an invasion of medical privacy because of federal laws that allow such testing or waivers that the employees sign as part of their employment contract. The problem with reporting failed drug tests of applicants, however, is that neither probably applies. After all, an applicant is not yet an employee and has received nothing of consequence accept a contingent offer of employment.

No more drug testing this year for claimants

As indicated in an earlier post, the repeal of federal drug testing regulations put in jeopardy any further drug testing of unemployment claimants until new congressional legislation is enacted.

A Bloomberg article by Josh Eidelson confirms that observation:

The effort backfired. Because the 2012 law let states test people suited for jobs specified by federal regulations, now that those regulations have been scrapped, there are no jobs for which states are able to test for drugs. Before Congress revoked Obama’s rules, states could have tested aspiring pipeline operators and commercial drivers; now they can’t.

* * *

Jeffrey Lubbers, a law professor at American University and special counsel for the Administrative Conference of the United States, says if he were the Labor Department’s lawyer, he would warn against attempting any new drug testing regulation without Congress passing a law first. “They’d be doing it under a cloud of uncertainty,” Lubbers says. “The irony of it is, now that they’ve disapproved this law, they’re in a worse position than they were before.”

As noted in the previous post, voluntary testing of job applicants by employers can still occur, as that testing is being done by employers of job applicants (and so is not Department testing of unemployment claimants). But, employers have no reason to bring the Department into the loop of applicant drug testing and to make themselves a party to litigation which does not really involve them.

Department unemployment proposals in 2017

At the 19 January 2017 meeting of the Unemployment Insurance Advisory Council, the Depatment introduced nine proposals. At the 16 March 2017 Advisory Council meeting, the Department introduced a tenth proposal. Here is a rundown of those proposals and their current status as of 23 May 2017.

D17-01 Charging benefits to employers in concealment cases, revised

This provision will allow the Department to charge any benefits paid out in concealment cases to employers who do not provide wage information to the Department rather than charging the allegedly concealed unemployment benefits in question to the balancing account. The problem the Department is trying to address is that employers who are not being charged for unemployment benefits being paid out do not have a financial incentive to respond to Department inquiries.

For example, an employee gets laid from her full-time factory job. After a few weeks, she lands a part-time gig waiting tables on weekends at a banquet/wedding establishment. The employee makes a mistake about reporting her part-time tip income from the banquet employer, however. A year later, that employer does not respond to the Department’s inquiries for that tip income. The Department charges concealment against the employee anyway, and the employee does not appeal the determination for some reason (for example, she never received the concealment determination). Under this proposal, the banquet employer will now have the concealment over-payment lodged against its unemployment account, even though this employee never collected any unemployment benefits from that employer’s account.

As the February 16th meeting of the Advisory Council, the Department revised the proposal so that employers failing to provide the requested wage information would be fined $100 and those fines would be used for program integrity. As the Department explains, this additional funding would provide the Department with more than $100,000 for additional “concealment” prosecutions (footnotes omitted):

Based on 2016 data, there were 5,038 work and wage determinations with an overpayment due to concealment that were detected from a cross match or by the agency. These were chosen as these investigations rely heavily on employer information for the determination to be accurate. According to subject matter experts within the Benefit Operations Bureau, approximately 20% of work and wage information verification forms are not received or are incomplete. That results in approximately 1,007 work and wage concealment determinations made annually when employers fail to respond or fail to provide complete information. A total of 1,007 determinations with a $100 civil penalty would result in up to $100,700 annually in recouped penalties that would flow to the UI Program Integrity Fund.

At the 11 May 2017 Advisory Council meeting, the Department made the surprise announcement that IT changes would be needed to address the council’s questions and concerns (there was no description provided about what those questions and concerns were) and that the proposal was being withdrawn until the Department could implement the needed IT changes necessary for this proposal.

D17-02 Joint and several liability for fiscal agents

The Department memo explains the problem being addressed here (footnotes omitted):

Individuals who receive long-term support services in their home through government-funded care programs are domestic employers under Wisconsin’s unemployment insurance law. These employers receive financial services from fiscal agents, who directly receive and disperse government program funds. The fiscal agent is responsible for reporting employees who provide services for the domestic employers to the Department, and for paying unemployment tax liability on behalf of the employer. Currently, approximately 16,000 of the 19,000 domestic employers in Wisconsin receive government-funded care and use a fiscal agent. These employers incur tax liability when fiscal agents fail to file quarterly reports or fail to make tax liability payments. It is difficult to collect delinquent tax from domestic employers who use fiscal agents because these employers are typically collection-proof.

The goal here is to make the fiscal agents liable for the unemployment taxes at issue.

Because elder care services are statutorily distinct in Wisconsin from child care services connected to special needs or special education, it is not clear whether this proposal encompasses both programs. Also, while the proposal only speaks about government-funded care, much care (especially elder care) is paid for through fiscal agents without any government funds (many who have or are caring for elderly parents do so without government assistance at least initially). So, the proposal could be much more significant than originally framed.

It is also not all that clear what this proposal actually accomplishes. The Commission has explained that, before the question of employee status can be addressed, the issue of which employing unit (and hence employer) for which the services at issue are being provided must be examined.

This said, the commission would emphasize that as a general matter, an issue of whether a claimant provides certain services as an “employee” should not be resolved — indeed, often can not be resolved — without first deciding, expressly, what employing unit the claimant provides those services “for” within the meaning of Wis. Stat. § 108.02(12)(a). For the reasons discussed above, this is just as true in a § 108.09 claimant benefit entitlement case as it is in a § 108.10 employer tax liability case.

Dexter-Dailey v. Independent Disability Services Inc, UI Hearing No. 07002206JV (2 November 2007) (finding in the unique circumstances of this case that an individual’s status as an employee could be determined without first considering who the employer in question was); see also Community Partnerships Inc., UI Hearing No. S0600013MD (22 February 2008) (while caregivers were undeniably providing services “for” the individual clients and their families, these caregivers were also providing services “for” the named employer by discharging its obligation to see to it that these services were provided).

In County of Door, the Commission examined at length the circumstances of support services being offered to a disabled individual through a county program and discussed numerous cases that all indicated the county and not the disabled individual was the employer of record.

These decisions are persuasive. While the specific programs under which the funds originated and the care was provided were somewhat different in these cases than in the case of Hoosier and Paul [the claimants], the general principles are the same. These cases establish that, notwithstanding that a disabled person derives a benefit from care being provided to them under the auspices of a county program, it is appropriate to conclude that in such cases the services are being provided “for” the county — which bears the responsibility for seeing to it that such care is provided, and which arranges for and oversees the provision of such care. Here, as in the cases just discussed, the County benefited from the services being provided by Hoosier and Paul, in that pursuant to its application for the BIW funds, the County had assumed an obligation to see to Susan’s care. The care provided by Hoosier and Paul to Susan met the County’s obligation.

County of Door, UI Hearing No. S0500025AP (28 March 2007). Given this complexity in how the services are being provided, joint and several liability may only serve as a band-aid to the much more complicated problem of getting fiscal agents to comply with their legal requirements and making those using those services aware of what is actually going on legally about employment coverage. As the Commission noted in Community Partnerships Inc.:

That is precisely the reason that the “fiscal agent” provisions were created. In the absence of such provisions, the disabled individual (or their legal guardian), would bear the burden of having to handle all of the normal responsibilities of a UI-covered employer, including filing required reports and remitting required contributions on the “payroll” paid to the caregiver, and dealing with investigations and hearings on appeals. What §§ 46.27(5)(i) and 47.035 allow is for a social service agency to take over that administrative role, which disabled individuals (and their guardians and or family members) are ill-equipped to handle. What § 108.02(13)(k) in turns allows is for this to happen without the social service agency thereby being considered to be the actual “employer”.

So, the real problem at issue is that the fiscal agents in question are not actually performing their responsibilities as fiscal agents for their clientele, i.e., paying the unemployment taxes that are due.

The council approved of this measure at the April 20th meeting.

D17-03 Employer assessment for failing to provide records

The Department memo provides a good explanation of what this proposal seeks to accomplish (footnotes omitted).

Under current law, employing units are required to maintain work records and must allow the Department to audit those records. When the Department intends to audit an employer, it sends a written notice to the employer requesting information regarding the employer’s employment records. If the employer does not respond, the Department issues a second written request to the employer. If the employer fails to respond to the second written request, the Department issues a subpoena to the employer. When the Department issues a subpoena, the Department must pay a fee to have the subpoena served.

About 40% of employers served with subpoenas provide an inadequate response or fail to respond to the subpoena. When an employer fails to comply with a subpoena, the Department’s remedy is enforce the subpoena in Circuit Court requesting that the employer be held in contempt. This is a time-consuming process that the Department has not historically used.

The Department proposes to change the law to assess an administrative penalty of $500.00 for a person’s failure to produce subpoenaed records to the Department. The Department will rescind the penalty if the employer fully complies with the subpoena within 20 calendar days of the issuance of the penalty. The intent of this proposal is to ensure employer compliance with requests for wage data.

D17-04 Ineligibility for concealment of holiday, vacation, termination, or sick pay

This proposal expands the zero eligibility for concealment that presently takes place when wages are not reported to any failure to report vacation or holiday pay. Charles O’Neill v. Riteway Bus Service Inc., UI Hearing No. 15600518MW and 15600519MW (16 May 2015) at n.4 explains:

Vacation pay and holiday pay are treated as “wages” for purposes of the partial benefit formula, but they are not wages. See Wis. Stat. § 108.05(3); UID-M 13-26, issued Dec. 6, 2013, and revised Dec. 9, 2013. If a claimant conceals vacation or holiday pay, it is considered concealment of a material fact under Wis. Stat. § 108.04(11)(a), and the partial wage formula applies. Concealment of wages, on the other hand, falls under Wis. Stat. § 108.04(11)(b). If a claimant conceals wages in any given week, the claimant is ineligible to receive any benefits for that week.

The Advisory Council approved of this measure at the April 20th meeting.

D17-05

This proposal is similar to one the Advisory Council previously rejected, D12-08, at the 1 April 2013 council meeting. In this version, the Department explains (footnote omitted):

The department may request information from unemployment benefit claimants in order to ensure that they are eligible for benefits. Under current law, a claimant is ineligible for benefits for the week in which the claimant fails to answer the department’s eligibility questions, and any subsequent weeks, until the claimant responds. A claimant who later answers the department’s eligibility questions is retroactively eligible for benefits beginning with the week in which they failed to answer the questions, if otherwise eligible.

The department proposes to amend the law to provide that claimants who fail to answer eligibility questions are ineligible beginning with the week involving the eligibility issue, not the week in which the claimant fails to answer the department’s questions. This proposed amendment clarifies that, if the department questions a claimant’s eligibility, the department will hold the claimant’s benefits until the claimant responds in order to reduce improper payments.

The council approved of this measure at the April 20th meeting. This proposal may conflict with the holding in California Department of Human Resources Development v. Java, 402 U.S. 121, 91 S.Ct. 1347, 28 L.Ed.2d 666 (1971) that unemployment benefits be paid “promptly.” See also UIPL-1145 (12 Nov. 1971) (“Determinations on issues arising in connection with new claims may be considered on time within the meaning of the Court’s requirement for promptness if accomplished no later than the second week after the week in which the claim is effective.”) and UIPL No. 04-01 (27 Oct. 2000) (similar).

D17-06 Changing the standard of proof in all UI cases, revised

This proposal seeks to make preponderance of the evidence the burden of proof for all unemployment cases. At present, claimant concealment cases require that the concealment at issue be proven by clear and convincing evidence. See, e.g., Holloway v. Mahler Enterprises Inc., UI Hearing No. 11606291MW (4 Nov. 2011). This proposal would undo the holdings in these cases as well as in misconduct cases involving theft. See, e.g., Kircher v. Stinger Tackle, UI Hearing No. 92201671RH (24 June 1994). Cases concerning whether an employer’s failure to pay unemployment taxes was willful or not would also be affected. See. e.g., Henry A. Warner, UI Hearing No. S9100679MW (16 July 1993) (clear and convincing evidence needed for showing the kind of fraudulent conduct at issue for a willful failure to pay unemployment taxes).

The only rationale provided by the Department is that Minnesota has a universal standard of proof in its unemployment cases. The Department fails to note that numerous other states do NOT have a universal burden of proof in their unemployment cases. The proposal also does not deal with Wisconsin court decisions that hold that fraud must be proven by clear and convincing evidence, a higher degree of proof than in ordinary civil cases. Kamuchey v. Trzesniewski, 8 Wis.2d 94, 98, 98 N.W.2d 403 (1959), citing Schroeder v. Drees, 1 Wis.2d 106, 83 N.W.2d 707 (1957), Eiden v. Hovde, 260 Wis. 573, 51 N.W.2d 531 (1952). As the Wisconsin Supreme Court explained in Wangen v. Ford Motor Co., 97 Wis.2d 260, 299-300, 294 N.W.2d 437 (1980):

This court has required a higher burden of proof, i.e., to a reasonable certainty by evidence that is clear, satisfactory and convincing (Wis. J.I. — Civil Nos. 205 and 210), “[i]n the class of cases involving fraud, of which undue influence is a specie, gross negligence, and civil actions involving criminal acts.” Kuehn v. Kuehn, 11 Wis.2d 15, 26, 104 N.W.2d 138 (1960). See, e.g., Klipstein v. Raschein, 117 Wis. 248, 253, 94 N.W. 63 (1903) (whether fraud occurred); Lang v. Oudenhoven, 213 Wis. 666, 668, 252 N.W. 167 (1934) (whether moral turpitude existed in cases of fraud); Martell v. Klingman, 11 Wis.2d 296, 310-311, 105 N.W.2d 446 (1960) (whether gross negligence existed); Comment to Wis. J.I. — Civil No. 2401, Misrepresentation: Intentional Deceit (whether intentional deceit occurred); and Poertner v. Poertner, 66 Wis. 644, 647, 29 N.W. 386 (1886) (factual issue of adultery in divorce action). This burden of proof, referred to as the middle burden of proof, requires a greater degree of certitude than that required in ordinary civil cases but a lesser degree than that required to convict in a criminal case.

NOTE: there are generally three standards for the burden of proof in legal matters: preponderance of the evidence, clear and convincing, and beyond a reasonable doubt.

D17-07 Revisions to collections statutes, revised

This proposal seeks to make numerous changes to the Department’s collection efforts.

• Attempts to undo a recent holding in Wisconsin bankruptcy court, In re Beck (Bankr. E.D. Wis., 2016), that the personal unemployment debts of claimants are not to be treated as “secured” debts for bankruptcy purposes. Under this decision, unemployment debts can be discharged or written off and considered un-collectable, unlike employer debts. The Department wants to reverse that result by rewriting how claimant over-payments are described in state law. The proposal seeks to accomplish this change by removing references to employer, employing units, and s.108.10 and thereby making unemployment collection provisions generic to any and all “persons.”
• Increasing the penalty for third-parties who do not cooperate with the Department’s collection efforts (such as employers for wage garnishment or banks for account liens) to 50% of the amount at issue and adding those penalty amounts to the Department’s “program integrity” fund.
• Removing the 20% threshold for personal liability for an employer’s unpaid unemployment taxes.
• Expand the scope of state payments eligible for an intercept to satisfy delinquent employer taxes. Currently, these intercepts only occur for claimant over-payments.

A May 23rd revision to this proposal included new language on pp.6 and 8 so that liens can be recorded even when an appeal is pending and indicated on p.10 that the Department would provide ten days notice for any warrants or liens it was seeking (in essence, codifying the Department’s current practice)

The Advisory Council approved of this measure at the 23 May 2017 meeting with one change: the ten day notice for warrants and liens would instead be fifteen days notice.

D17-08 Many miscellaneous changes, revised, revised again

This catchall proposal contains numerous technical changes. The Advisory Council approved this proposal at the 23 May 2017 meeting.

Noticeably, this proposal is the first which provides some fiscal numbers on the number of positions to be funded from the Department’s program integrity slush fund that are outside of the state’s normal biennial budget:

In the schedule under section 20.005 (3) of the statutes for the appropriation to the department of workforce development under section 20.445 (1) (v) of the statutes, as affected by the acts of 2017, the dollar amount is increased by $1,630,000 for the first fiscal year of the fiscal biennium in which this subsection takes effect for the purpose of increasing the authorized FTE positions for the department of workforce development by 5.0 SEG positions annually and providing additional funding for the purpose of conducting program integrity activities, investigating concealment, and investigating worker misclassification. In the schedule under section 20.005 (3) of the statutes for the appropriation to the department of workforce development under section 20.445 (1) (v) of the statutes, as affected by the acts of 2017, the dollar amount is increased by $1,630,000 for the second fiscal year of the fiscal biennium in which this subsection takes effect for the purpose of increasing the authorized FTE positions for the department of workforce development by 5.0 SEG positions annually and providing additional funding for the purpose of conducting program integrity activities, investigating concealment, and investigating worker misclassification.

The Advisory Council gave its go-ahead for this proposal on May 23rd.

D17-09 Miscellaneous rule changes

This proposal is a catch-all of various rule changes. The Department did not provide actual language of the proposed changes. Perhaps the most significant change here is that the wait-time for unemployment hearings will be ten minutes for all parties (at present, the appealing party has fifteen minutes to arrive before the hearing is closed, while the non-appealing party has five minutes to arrive late before the hearing starts). That is, under this new rule, an appealing party will need to arrive for a hearing set to start at 10:30am no later than 10:40am before that hearing will be closed and dismissed because the appealing party failed to appear.

The council approved of this measure at the March 16th meeting. As a result, the scope statement is now available.

D17-10 Drug testing changes, revised

Voluntary reporting by employers of either positive drug test results by job applicants or the applicants’ refusal to take a drug test has not been happening. And so, the Department has proposed various changes to make this voluntary reporting by employers more palatable.

The proposal cleans up some of the statutory language from the original drug-testing provisions. It also adds some options for how the Department will apply occupational drug-testing (when federal rules are finally put into place), reinforces the confidentiality of the drug testing at issue, and attempts to immunize employers from liability for reporting applicants’ drug test results.

NOTE: the liability immunization is more talk than substance, as federal ERISA and HIPAA laws that govern self-insured employers will preempt any and all state laws.

Finally, to take advantage of unspent funds, the Department proposes that leftover monies for drug testing and treatment be transferred to the Department’s program integrity efforts. So, the $500,000 slated for testing and treatment in FY2017 will be added to the Department’s mushrooming slush fund for finding claimant mistakes and charging them with concealment.

The council approved of this measure at the April 20th meeting.

Unemployment drug testing in 2017

Where other states are debating legalization of marijuana, in Wisconsin drug-testing has been the hot topic.

NOTE: Drug-testing is by-far the topic that attracts the most public attention. On this blog, traffic jumps 4X on average whenever I post something about drugs. For whatever reason, drugs are perpetually generating interest and concern.

The 2015 budget included various drug-testing efforts. As I originally described them, this testing can be divided into three parts:

1. Allowing employers who conduct pre-employment drug screenings of job applicants to report failed tests to the Department.
2. Requiring drug tests for claimants “for whom suitable work is only available in certain occupations that are federally approved for benefits eligibility testing.”
3. Requiring drug testing for claimants “for whom suitable work is only available in an occupation that regularly conducts drug testing, as determined by the Department.”

The drug testing will be described below for item 1 and then items 2 and 3 in separate sections.

Item 1: Employers’ voluntary reporting

The Department enacted emergency regulations and additional emergency regulations and then permanent regulations for the testing in Item 1. As of 28 April 2017, the Department even has a website page describing this voluntary reporting with links for the reporting forms.

These rules create DWD 131 for governing this voluntary reporting by employers. In general, these regulations create two kinds of potential disqualification for job applicants: when they test positive or when they refuse a drug test. These potential disqualifications, however, only apply when:

• the job applicant is receiving unemployment benefits at the time,
• the employer voluntarily submits the required information to the Department,
• the employer participates in an unemployment hearing should the job applicant challenge the potential disqualification,
• and, if the job applicant loses the hearing, he or she declines to participate in government-funded drug treatment/counseling.

As I explained in May 2015:

during the debate over this drug testing the Democratic members of the Joint Finance Committee were the ones pointing out the wasteful, big government spending at issue with this drug testing. The estimates were low-balled, these Democrats exclaimed, the testing and treatment will accomplish nothing, and government bureaucracy will only make finding work that much harder. WisPolitics budget blog smartly featured the Republicans’ response to these criticisms. Rep. Dale Kooyenga, R-Brookfield, explained: “There’s a tremendous opportunity through good public policy to make a community better.” In 1975, Ted Kennedy could not have said it better, and that is what makes this drug testing one of the strangest pieces of legislation I have ever seen.

Despite the Department’s push for this voluntary drug-testing by employers, the Department has yet to report any employer actually submitting a failed drug test or an employee refusing a drug test. It appears that this new reporting option is still a big zero, or much ado over nothing.

Items 2 and 3: Required drug-testing for federally-approved occupations and state-determined occupations

Rather than voluntary reports by employers, the drug testing for items 2 and 3 would be done by the Department as part of certain claimants’ initial claim for unemployment benefits. The questions were which claimant occupations would be subject to such drug testing, how would a claimant’s occupation be determined, and what kind of drug testing protocols would be required.

Recall that federal law is what made this drug testing possible. So, federal regulations were first needed before a state could go forward with its own testing efforts, and final regulations did not emerge from the US Dep’t of Labor until 1 August 2016. These final rules limited the occupations for drug testing to those occupations required under state or federal law for drug testing (e.g., airline pilots and inter-state truck drivers) and indicated that state law about a claimant’s occupation and suitable work would govern for determining whether that claimant was in an occupation for which testing would be required. Hence, this rule limited drug testing to occupations required under state or federal law for such testing and did not allow state agencies on their own initiative to designate occupations for drug testing.

That limitation was not to the liking of Republicans in Congress, and so they passed a joint resolution overturning these new rules, which the current President then signed into law. So, there are now no rules at present, and drug testing by the Department itself is back to square one. Indeed, drug testing for unemployment claimants when they file their initial claims is now not likely at all this year.

When new federal rules do emerge, expect the reach of drug testing to be expansive and discretionary. But, for now the only drug-testing at issue in unemployment matters are employers’ tests of job applicants that are voluntarily turned over to the Department.

NOTE: New federal rules, moreover, may not be forthcoming at all. The mechanism used to repeal the August 2016 rules — the Congressional Review Act — provides that a new rule may not be issued in “substantially the same form” as the disapproved rule unless it is specifically authorized by a subsequent federal law. See The Congressional Review Act: Frequently Asked Questions for all the details. So, without a new law by Congress, new rules for expansive drug testing are unlikely.

Medical marijuana UI decision in Michigan stands

The Michigan appellate court decision (previously noted here) holding that the use of medical marijuana does not qualify as misconduct in Michigan will not be reviewed by the Michigan Supreme Court. Rick McHugh of NELP has the details:

In October 2014, the Michigan Court of Appeals held that denying UI benefits to claimants who were registered medical marijuana users and who were fired when they tested positive for marijuana was a prohibited penalty under Michigan’s Medical Marijuana Act. Under the facts of this case, there was no allegation that any of the claimants were in possession of, intoxicated, or under the influence of marijuana while at work. All testified that they had used marijuana away from work pursuant to their medical marijuana cards. Despite this, the administrative appellate body, the Michigan Appellate Commission, had imposed misconduct disqualifications upon the claimants. Three separate trial courts then reversed and the cases were consolidated in the state court of appeals.

The favorable reported ruling is found in Braska v. Challenge Manufacturing, 861 N.W.2d 289 (2014). While the agency’s petition for appeal was pending, Mr. Braska passed away, so the Supreme Court order denying review last week was issued under the caption Janine Kemp v. Hayes Green Beach Memorial Hospital, one of the two remaining cases.

Here is a news article that gives further background about the case.

NELP had filed an amicus brief with the Michigan ACLU and Michigan UI Program in the Court of Appeals. The favorable holding is based upon explicit language contained in the Michigan Medical Marijuana Act — which was passed as a result of a voter referendum. And the act was very skillfully drafted.

Drug testing for Temporary Assistance for Needy Families (TANF) recipients

UPDATE (9 Nov. 2015): The new drug testing regulations actually only apply to Temporary Assistance for Needy Families (TANF) programs. Food stamp recipients may be covered at some later date if Wisconsin wins a law suit against the federal government to allow drug testing in food stamp programs.

Emergency regulations that were only recently proposed on October 19th have this week been quickly approved by the governor (the comment period closed this week on Monday, November 2nd) and will take effect this upcoming Monday, November 9th.

While this drug testing has nothing to do with unemployment benefits (unemployment testing cannot even be considered for implementation until federal authorities issue final regulations and then state regulations for the testing pass federal review), this testing of food stamp Temporary Assistance for Needy Families (TANF) recipients includes some wrinkles — or rather a lack of specificity — that everyone should take note of.

In particular, the criteria and the nature of the drug testing that will be used is essentially “to be determined.”

NATURE OF TESTING REQUIRED. Testing shall consist of laboratory analysis of a specimen collected from an individual. The department shall provide to each administering agency a list of all controlled substances or metabolites of controlled substances that must be included in the test and cutoff levels for the test and any confirmation test that may be used. The department may add or delete controlled substances or metabolites that must be included in the laboratory test to reflect changes in pre-employment drug testing practices of Wisconsin employers. Any positive test shall be confirmed through a confirmation test from the original specimen collected from the individual. Methods of analysis for the confirmation test may include quantification by gas chromatograph-mass spectrometer, liquid chromatography-mass spectrometry, tandem mass-spectrometry, or another analytical method approved by a medical review officer for the drug testing vendor.

ADM DCF 105.05(2) [pp.8-9 of the emergency regulation].

What information about the drug testing standards at issue here indicate that open-ended criteria will be used to determine both what kinds of tests will be used as well as the criteria at issue in those tests. Rather than the urine testing that is standard in most workplace drug testing, the Department of Children and Families could well order up saliva, sweat, blood, or even hair testing (see, for instance Brandt v. Scot Forge Co., UI Hearing No. 09006150MD (18 July 2013) for a discussion of some of the problems with hair testing). At present, the federal agency responsible for drug testing has still only approved of urine or blood tests as legitimate tests for use of illegal drugs. In addition, this new regulation allows the Department of Children and Families to set cutoff levels for revealing drug use that may differ or even conflict with federal requirements for establishing a positive test result. It is the “drug testing practices of Wisconsin employers” rather than established scientific standards that will govern what cutoff levels will be used for a positive test result.

Finally, these regulations are completely silent about inspection and certification requirements for the drug testing laboratories themselves. The federal standards for drug testing and certification are thorough and fair. Other standards for drug testing laboratories, however, can leave out quite a bit. And so, any lab that is not federally certified might not have much validity at all to its tests. But, without a thorough understanding of the science and laboratory techniques at issue with that test and the lab conducting the test, a challenge about a fake-positive will be difficult if not impossible to mount.