Department investigators are NOT true and accurate

At almost every unemployment hearing there will be document in the hearing packet that pretends to be a claimant statement. This “statement” pretends to represent what the claimant told a Department investigator in a phone call, and at the hearing the administrative law judge will almost always ask the claimant, “Is this statement true and accurate?”

Note: Many people tell me about their phone interviews being recorded. Phone interviews are never recorded, because then the pretend claimant statements describe here would not be possible.

No, a claiman statement is not true and accurate. It never is. If the statement was true and accurate it would be a transcript of the phone conversation. Or, it would at least be the original notes, without any editing, of the entire and complete phone conversation (and so qualify, for legal purposes, as contemporaneous notes, when the person who wrote those notes testifies at the hearing).

What these “claimant statements” are actually are just pretend confessions, as the only information in these statements is the information the investigator wants to include to establish the claimant’s fault or mistake.

To understand what is going on here, below is a claimant statement/confession prepared by Department investigator Anastasia-1437 and then the contemporaneous notes written by the claimant herself during that phone conversation (the claimant was a former paralegal, who made it a habit to take notes of her phone conversations with Department staffers).

Pretend claimant statement

Note: Outside of changes to names and identifying information, below is a verbatim copy of the claimant statement.

6/28/22: I call it the claimant at 8:30 AM, identify myself, indicated that I received a call from her and am presuming it is due to the “Call Me” letter that I have sent her, identify the issues and requested that the call me back no later than 8:30 AM on 6/30/22. I indicated that if she does reach my voicemail that she please leave a message indicating the best times to reach her. I provided my name, title and telephone number and explained that if I did not hear from her by the deadline, a determination will be made based on best available information.

6/28/22: I understand Pandemic Unemployment Assistance provides for the repayment of all overpaid benefits, penalties, and that I may lose Pandemic Unemployment Assistance or be referred for prosecution if it is determined I made a false statement, misrepresentation, or omitted facts in order to receive benefits not due.

I understand that the statement I am making will be used to determine my eligibility for Pandemic Unemployment Assistance (PUA) benefits. I understand that any false statement I make may result in overpayment of benefits, penalties, loss of future unemployment benefits and possible prosecution.

My name is CLAIMANT. My date of birth is XX/XX/59 . I have a Master’s Degree in YYYYYY/years of education. It was a long time ago but think that I have read the “Notice to All PUA Applicants” and “PUA Rights and Responsibilities.” I filed my own claims. I live in Walworth County. I filed my claims online from Walworth County.

I have refused the notice that you have sent me and the wages, vacation pay and holiday pay from ACME CORP looks accurate and the wages for one day of work with the GROVER’S CORNERS are accurate.

The claimant was asked why she did not report the work and wages, vacation, and/or holiday pay in each of the weeks in which she worked and/or received vacation pay and/ or received holiday pay when filing her weekly claims for PUA benefits.

Let me explain this… I have a voice studio [MARIA CALLAS Productions Inc] which is my main source of income and I only work at ACME CORP to get health insurance. I work full time at ACME but only get paid $13.50 per hour which is far less than what I make in my voice studio. Because of COVID-19, I was unable to give voice lessons because the schools have closed due to the pandemic. Even now, we may plan and an event but we have COVID outbreaks and place is still closed down. My business never recovered from the COVID-19 pandemic.

I explained to the claimant that I was not questioning as to why she filed for PUA benefits; my question is different. I explained that in order to receive pua benefits weekly, the claimant has to file a weekly claim certification in which each week she is asked if she worked in employment. I explained that in each week in which she worked for ACME CORP and/or GROVER’S CORNERS She reported that she did not work in employment and certified each week that her responses were accurate and correct.

I understand what you’re saying. I misunderstood and I thought they were only talking about my studio, my self-employment.

Explained to the claimant that the weekly claim certification system asks two questions; it asks if she worked in employment and separately asks if she worked in self-employment in which she answered no to both and asked why she answered no to both.

It was an honest and stupid mistake. I was filing for PUA for my business only, not for the job where I worked full time and I thought they were asking about my business, my voice studio [MARIA CALLAS Productions Inc].

I have nothing further to add; I have no questions

Contemporaneous notes (what was actually said)

Note: Outside of changes to names and identifying information, below is a verbatim copy of the claimant’s contemporaneous notes.

6/28/22 — 42 minutes, 35 seconds.

An adjudicator arranged a telephone conversation with me at 8:30 AM. Her name was Anastasia. We exchanged greetings and then she notified me that she was calling to discuss the benefits that I applied for and received through the PUA Unemployment Program. She told me that this conversation was to determine if I made false statements, omitted facts in a fraudulent manner, etc.

I asked her if the conversation was being recorded and she said no. Then I asked if I was being accused of a crime and should I hire a lawyer to represent me before I had any further discussions with her. She stressed that that would not be necessary, that she was just collecting information at this time, that there was no determination against me.

She asked me why I didn’t report my employment at ACME Corp.

I told her that I had never tried to conceal my job at ACME and all she had to do was read my initial application for PUA benefits and she would see that I had ACME listed as an employer.

I went on to explain to her that my small business was my major source of income and that was shut down as soon as the schools and universities were shut down- that I was a sub-contractor at those schools. I pointed out again that this was explained in initial application.

She said that they weren’t questioning if my small business was legit . . . and I interrupted her and said I hope not because during my initial application, I had to upload several years of tax returns to prove my business was legit.

She said that no one was questioning my business MARIA CALLAS Productions existed and that I definitely qualified for PUA benefits.

She then explained that I didn’t qualify to be paid any benefits because I was working at ACME.

Then I asked her then why was I paid?

She replied that I answered specific questions incorrectly and therefore was concealing the fact that I was working full time at ACME.

I asked her what question did I answer weekly that is being considered concealment?

She read me a question that I explained to her after was always unclear to me and I answered it in accordance with the facts of my business that was shut down. There was never any intent to conceal facts in order to collect the $173.00 per week.

She said that it was my responsibility to read and interpret correctly the PUA Rights and Responsibilities.

I told her that I had read those and that they were also unclear and left me more confused than before so I started calling PUA agents several times (9 all together) to ask them to interpret the rules of PUA — specifically about my situation with the ACME job. Each and every one of these agents — who supposedly are professionals and know PUA benefits thoroughly — told me that I should keep claiming weekly just like I had that the ACME job was totally separate from PUA benefits. That PUA was being paid to me for my lost self-employment.

Anastasia said that that was most unfortunate, but unfortunately, I, the claimant, was responsible for knowing what to do, not the agents.

I got angry and said, Are you trying to tell me that your agents aren’t responsible for giving the correct answers to the claimants?

Then she got nervous. And gave me an 8-minute speech on the conditions for the workers at Unemployment. “CLAIMANT, I have been working 7 days a week since the pandemic started in 2020. I was here before the pandemic. No one could have been prepared for what happened and how we were grossly under-staffed and how our technology was way outdated to handle the numbers of claims that came in on a daily basis. We had to hire scores of workers and we had no time to train any of them. It usually takes one whole year to fully train a worker here. What we ended up doing is training groups of people for a part of the system and then other groups for another part of the system and so on. So none of these new workers could begin to answer questions outside of their area that they were trained. The best one could do is transfer the call to another new agent, hopefully that was trained in the area that the claimant needed to get info.

I interrupted her and told her that on one of the calls I made, I talked to three agents and never got my question answered.

She said, yes, that she believed me. Then I asked her — then why are you trying to accuse me or charge me with concealment when I just told you that I tried to get the correct instructions from your department.

She told me that it all came down to how I answered the questions.

I said but the question wasn’t clear. The questions are not clearly stated. She said that she disagreed with me.

I asked her if there were other PUA claimants that were tripped up on some of the questions and also answered regarding their self-employment. I said you know Anastasia, a lot of people have two jobs, it is very common. Especially with single people.

I then asked her if any suits had been filed against the DWD Unemployment Dept. for giving false information, or not being able to give any information, or for harassment and punitive damages to an already terribly stressed and financially devastated population of self employed and small business owners.

She said she wasn’t aware of any such suits.

And I said, I believe that there may be some in the future. I think what has happened today is illegal, unethical and down right criminal. If you ask me the State is trying to get their money that they gave during the pandemic to pay for the new computer system they had to get because the one they had was not able to handle the number of claims. WI made us wait much longer than other states to get our first payments which made great hardship on many folks. And now WI is going to get it all back and jack up a lot of fines so they can get even more money. Shame on them. And Anastasia, you are wrong, I do need to lawyer up. Big time.

She replied, Oh no not necessarily. Lawyers are very expensive. Look you need to go to your portal and appeal everything. I’m sure if you do, you can represent yourself and have the concealment lifted because you did not intend to conceal. I believe that, CLAIMANT. I figure they’ll drop also drop all of the 40% penalties as well. I figure you will be looking at around $6000.00 that you’ll have to pay back.

I said, Hm, that’s about what I got paid all together. She said yes, you shouldn’t have been paid anything because you were working at ACME.

I said, I wish I’d quit claiming when I couldn’t get a straight answer. Well, I have to get back to work. And she said that she did too but she had decided to retire at the end of this year. She said that the stress was getting to her because she was one of the very few that actually knew the system and the workload was killing her.

I said good luck and happy retirement. I have to go back to work but I will appeal every count against me and I will hire a lawyer.

The takeaway

Naturally, the claimant was charged with concealment, and supposedly owed $29,992.20 ($20,223.00 in PUA, LWA, and PUC benefits she was paid + $9,769.20 in concealment administrative penalties). But for her contemporaneous notes and the fact that she had other notes of when she told Department staffers about her work at ACME and they told her to ignore that work when filing PUA claims the concealment allegations were tossed at the hearing.

But, notice what Anastasia is doing in her “claimant statement.”

First, she presents a statement that the claimant has complete understanding of what is going on. Second, Anastasia establishes that the claimant is highly educated and has no disabilities, so cannot claim a lack of understanding in some way.

Third, Anastasia sets forth that the claimant provided wrong information on her weekly certifications, namely wages that went unreported.

Fourth, Anastasia indicates that the claimant understand that she failed to report wages accurately.

For the Department, unemployment fraud — aka concealment — is now established. That is all that is needed, as far as the Department is concerned (for why, see The profit in unemployment concealment.

But, Anastasia — being an experienced investigator — goes a step further and “engages” the claimant on why wages were not reported correctly. The confession for having fraudulent intent is this quotation:

It was an honest and stupid mistake. I was filing for PUA for my business only, not for the job where I worked full time and I thought they were asking about my business, my voice studio [MARIA CALLAS Productions Inc].

For the Department, the admission of an unintentional/negligent claim-filing mistake, for purposes of unemployment concealment, establishes an intent to commit fraud.

Of course, this admission is fabricated and what was actually said during this phone call was much, much different. In place of this alleged confession, the claimant presented solid evidence about how she told Department staffers about her work at ACME and was mistakenly told by them to NOT report those wages and hours of work when filing her weekly certifications for PUA benefits. Anastasia was not interested in that information about how the claimant was misled by the bad advice of Department staffers, however. Anastasia’s goal was to draft a “confession” to committing unemployment fraud, and so that is what Anastasia drafted.

At the hearings in these cases, administrative law judges are trained to follow the same agenda that Anastasia is following: the claimant understood what was going on, the claimant provided wrong information, the claimant admitted to being responsible for that wrong information, and the claimant was negligent. Should the claimant admit at the hearing to the “claimant statement” being true and accurate, the case is closed, and that is why claimants are almost always asked at these hearings about these statements being true and accurate. Without that admission, a “claimant statement” does not count as any actual evidence.

The saddest part of this episode is that what Anastasia did here is all too common. Indeed, the “advice” Anastasia offered about how the concealment charges would easily be dismissed at a hearing and that legal representation was completely unnecessary is something I often hear from claimants about these investigations. The only unique facet to what happened here is that the claimant herself took contemporaneous notes of her conversation with Anastasia and so could present those notes at her hearing about what really was said.

Note: And, those notes allowed the claimant to recall the details of that phone conversation that had taken place months prior to the unemployment hearing.

So, all parties to the unemployment process need to understand that truthfulness and accuracy are NOT the responsibility of the Department. As a result, you need to track independently what information is told to you and to be prepared to challenge at any time what a Department investigator or administrative law judge is telling you about what “actually” happened.

Claim filing after the pandemic

In late 2022, it is time to see what has happened in Wisconsin with unemployment claim-filing.

Note: The charts presented here are from the Unemployment Insurance Data Explorer, which takes DOL unemployment data obtained from the states and provides a quick way to see what this data means.

Why claims are denied

First, some basic facts need to be introduced. Far too many people think that unemployment claims are approved or denied because of a dispute over a job separation between employee and employer.

That has not been the case since the Great Recession, however. Since before 2014, most initial determinations have denied a claim for reasons that have nothing to do with a job separation reason.

The green line on this chart shows the proportion of initial determination denials that are based on a job separation reason. From 2013 to 2015, roughly 20% of denial reasons were because of a dispute over the job separation. By 2016, that percentage was down to just over 10% and stayed there until the pandemic. Then the percentage climbed steadily to around 30% of all denials. This increase was because the Department examined all lay-offs arising from the pandemic for a prior disqualifying separation within a claimant’s benefit year to find a reason for denying that pandemic-related layoff claim. Yes, even though experience-rating charges were supposed to be waived during the pandemic, the Department still looked for disqualifying reasons from a prior job loss in which to deny eligibility.

So, with the pandemic now over, denials based on separations have declined markedly. With the hot job market, separation reasons are now below 10%.

So, the real story of why claims are denied has nothing to with a dispute between employer and employee over the job separation. The red line showing non-separation reasons is where most denials now happen. In 2013, over 40% of the initial determinations denying a claim were for reasons that had nothing to do with a job separation, and this percentage began climbing steadily due to new job search requirements, the move to on-line only claims-filing for initial claims and weekly certifications, and confusing and legalistic guidance about claim-filing. By 2016 to 2017, that percentage had climbed to 60%, but fell back down to just over 50% by 2018 (with no change in the law, election year anyone?). In 2019, still without any changes in law, the percentage began climbing again and was back at around 60% when the pandemic started. Yikes.

With the pandemic, this percentage declined back down to 2013 levels of just over 40%. In 2021 and 2022, however, there has been a rapid rise in these non-separation denial reasons, and Wisconsin is back at around 60% of all initial determination denying eligibility for non-separation reasons.

So, for many years now, the hurdle for eligibility has had little to do with job separation reasons and much to do with satisfying Department claim-filing requirements.

The true significance of the role of non-separation reasons can be seen in what happens per initial claim.

Note: An initial claim is what a claimant files to report a job loss for which he or she wants to claim unemployment benefits. No benefits are paid, however, based on an initial claim. Claimants must then file weekly certifications (called continuing claims in other states) for each week they want to be paid unemployment benefits. Because initial claims start an unemployment claim, they measure job losses and the claimants affected by those job losses. Weekly certifications, on other hand, only measure the number of people still successfully filing unemployment claims or who are still seeking to file such claims.

Outside of a slight dip in the pandemic and a recent increase in 2022, the green line for separation reasons hardly changed at all. The red line for non-separation reasons, however, began to nearly double in 2015 from 25% to almost 50%. By 2018, this denial rate for initial claims had declined slightly to just over 40%. And, there was a steep decline that began in 2019 just before the pandemic struck, and that steep decline continued into the pandemic, such that in 2020 the denial rate was almost the same as the denial rate for job separations. Since then, however, the denial rate for non-separation reasons for initial claims has sky-rocketed and is nearing 80% by the end of 2022. Together with the separation denial rate for initial claims climbing slightly to 15% at the end of 2022 (a seasonal climb every fall because, you know, winter), nearly 95% of initial claims were being denied at the end of 2022. Wow!

Just what are non-separation reasons

So, separation reasons (misconduct, substantial fault, or quitting a job without good cause) are not why the Department is finding the vast majority of claimants not eligible for unemployment benefits. The real reason the Department is finding claimants not eligible for unemployment benefits has to do with non-separation reasons.

Non-separation reasons usually are reasons directly related to a claimant not satisfying Department-mandated eligibility requirements. Other than an increase in job searches (from two to four in 2011) and the Department-initiated end of winter work search waivers, these mandates have been unchanged legally since before 2010. What has changed significantly is how the Department has implemented these requirements. Here is what has been happening since 2013.

The red (able and available for work), yellow (satisfying job search requirements), and green (other) have gone up and down dramatically over the past ten years.

Since 2016, able and available requirements have led to nearly 30% of all determinations being a denial. This large number of denials is happening because the Department ignores its own legal requirements for determining able and available.

Since 2015, denials because claimants fail to satisfy job search requirements have hovered over 40% and even over 50% except for a rock-like drop at the end of 2021 (discussed below). The job search requirements are leading to all of these denials through a combination of factors, notably the fact that all job searches must be reported on weekly certifications, and that mandated RESEA training and job registration are on-line only, even though the on-line guidance and assistance for accomplishing these goals are meager at best.

Other denial reasons — a catchall category — was at an over 40% denial rate in 2013, but declined steadily to around 15% by 2017 outside of a significant bump to around 25%/30% when the pandemic started. This denial category has been declining since then, however, and is approaching 10% by the end of 2022.

The impact of these changes can truly be seen when looking at these reasons per initial claim.

Both the job search (yellow line) and able and available (red line) plunged when the pandemic started, only to begin steep climbs in 2021. By the end of 2022, able and available reasons were leading to the disqualification of nearly 25% of all initial claims and job search issues were leading to the disqualification of over 45% of initial claims. These two reasons alone account for approximately 65% of all initial claims being denied at the end of 2022.

To understand just what is going on with these numbers, here are Wisconsin’s actual numbers for the second quarters of 2020 (57,466 initial determinations issued) and 2022 (59,564 initial determinations issued).

        Able/Avail        Income    Suit.Work         Jobs          Referal     Other
         Eli   Den        Eli   Den     Eli Den     Eli        Den     Eli Den   Eli  Den
2020 133   9,195     0  5,095     169  59   112      33,623   0   0     282    8,798
2022 2,809 10,339  0    581      119  91   15,129 21,586   0   0     4,777 4,133

Thousands of claims were denied at the start of the pandemic because claimants failed to register themselves at the jobcenter website. See “Missed job center registration” at Unemployment delays, part 2. While Wisconsin waived actual job searches, the state did not waive this registration requirement, and so far too many people had their claims denied for this reason. With this data, we now have a number for those denied for failing to register: more than 33,000. Only at the end of 2020 did the Department realize this job registration snafu was its own fault and stopped processing denials for this reason for a short time (until job searches were re-instated). What happened in mid-2020 was an tidal wave of determinations on this one issue of failed job registration.

By the second quarter of 2022, job search requirements and RESEA training were back in place, so job registration is again just one of many ways a claimant can be disqualified. When they complete these requirements, an initial determination finding them eligible as of the date the requirement is completed is issued. Hence, there are thousands of initial determinations now finding claimants eligible after they are originally denied eligibility for a few weeks.

As obvious in this data, a great deal of work and effort by both the Department and claimants is being spent on these requirements because claimants do not understand what is required of them in the first place.

And, as for the able and available disqualifications, in these situations the Department is simply ignoring its own law and applying a disqualification as it understands it — a claimant must be able to work 32 or more hours in a week in order to qualify for unemployment benefits — rather than what the actual requirements pursuant to unemployment law are — a claimant must be able to work as many hours in a week as physically or mentally capable of working, and will be able and available for work even if that number is less than 32 hours in a week. Most claimants in Wisconsin with a disability are being denied eligibility for no legal reason.

Overall, what this data shows is that the vast majority of people in Wisconsin filing unemployment claims today are being denied eligibility, and these denials almost always are based on claimants failing to satisfy Department claim-filing requirements. That is the story of unemployment in Wisconsin.

Unemployment public hearing in 2022

The Department has announced three hours of public hearing on November 17th from 2 to 4 pm and from 5 to 6 pm for unemployment comments and feedback.

Prior registration for a specific session is required.

Comments can also be submitted by e-mail message to UILawChange@dwd.wisconsin.gov, an e-mail address that will only be active from November 9th to 18th.

Comments by regular mail can be mailed to:

Janell Knutson, Chair
Unemployment Insurance Advisory Council
P.O. Box 8942
Madison WI 53708

While not stated, it is apparent that these comments MUST be received by Nov. 18th.

Note: In either written or e-mailed comments, do NOT include social security numbers, birth dates, or phone numbers. As indicated below, no one from the Department will be following up with you, and these public hearing comments are not the forum for hoping that someone will address issues directly connected to your specific situation. In these public comments, you can explain your situation or the situation of others and how unjust or ridiculous it was and what needs to be fixed with claim-filing in general.

Past public hearings have seen an outpouring of public commentary. The 2016 public hearing was the first opportunity for public comment on the end of winter work search waivers.

A total of 295 people provided 307 comments by letter, e-mail or at the public hearing. The department received the majority of correspondence by letter (158 letters) or through e-mail (123 emails). A total of 51 people attended the public hearing in which 19 people testified, 6 people testified and provided written correspondence and 1 person registered an opinion, but did not speak. A majority of the correspondence was specific to an employer or industry and contained the same text. A tally of the comments showed 246 comments received related to [winter] work search waivers for recalled employees.

There was no reaction or recommended change to these hundreds of complaints at the Advisory Council meeting when these comments were presented, other than an explanation later posted on the Department’s work search FAQ (that has since been removed; PDF of original available here):

What is the policy basis for the requirement change?

The requirements are a result of a change in DWD’s administrative rules. These rules not only bring Wisconsin in line with more than half of all U.S. states and reaffirm the purpose of UI as delivering short-term assistance, but they also respond to employer concerns regarding the solvency of the UI Trust Fund’s balancing account. The change assures that Wisconsin’s UI law conforms to the federal requirement that state UI programs provide for an experience-rated UI tax system. This ensures fair and equitable financing of the payment of benefits among employers. By encouraging employees to find employment during their industry’s off season, fewer benefits are paid. This assists employers who have negative account balances and are taxed at the maximum UI tax rate. DWD, with the support of three separate committees in the Wisconsin State Legislature, restored the waiver limits that were in place prior to their repeal in 2004.

In short, winter work search waivers were ended because this change reduced the available unemployment benefits to claimants and so, in turn, reduced the unemployment taxes employers pay (less benefits paid means employers’ unemployment tax rates do not increase or even decline, since unemployment tax rates are based on the benefits paid out to the employees of an employer).

The 2018 public hearing was a tepid affair, with winter work search waivers again attracting the most attention.

As compared to the public hearing in November 2016 in which there were 300+ comments from 295 individuals, at the 2018 public hearing there were only 21 comments in toto. Given these few comments, the summary presented to the council at this meeting included not only a summary but the actual 21 comments that were made.

The November 2020 public hearing, on the other hand, was raw, emotional, and upsetting.

Numerous attendees indicated that Department staffers are hostile to claimants by always doubting what is being told to them, and that the whole process is simply dehumanizing. More than few attendees had to stifle tears in the midst of their testimony, in light of their anguish and desperation.

Questions cannot be answered, these attendees indicated, and answers when provided are too often contradictory. As one attendee described, the burden of proof is on her, and she is presumed to be attempting to scam the system until she can show by clear and convincing evidence that her claim for unemployment benefits is forthright.

The picture painted in this testimony is a Department no longer functioning as an unemployment agency but instead as a kind of welfare office trying to correct the “immorality” of claimants who want unemployment benefits rather than a job.

The enormous delays in eligibility determinations, how obvious pandemic-related claims were being denied, language and technology barriers to claim-filing, the SSDI eligibility ban, winter work search waivers, and the confusion between eligibility based on PUA benefits versus regular unemployment benefits also drew widespread concern and outrage at this public hearing.

Members of the Unemployment Insurance Advisory Council received these 2020 public hearing comments at their January 2021 meeting. By August 2021, that outpouring of grief and outrage had still led to no action or even acknowledgment from council members:

To date, a Department summary and the actual written comments from the November 2020 public hearing were reported to council members at the 21 January 2021 council meeting. There has yet to be any discussion or even acknowledgment by council members of the concerns raised at that public hearing.

So, at present, while I encourage everyone concerned about unemployment to testify at the November 2022 public hearing coming up, I fear that all of that testimony and commentary will still be for naught. The last three public hearings have in general been ignored, and there is no indication that this practice will change suddenly.

Unemployment legislation that failed to pass in Wisconsin

The state legislature has been pushing a host of unemployment reforms that actually make unemployment worse or provide little more than a talking point. See, e.g., Replacing unemployment with reemployment or Carrots or Sticks? Lawmakers can’t agree on how to help employers who can’t fill jobs.

The things that might make unemployment better, however, were almost universally ignored. Thanks to the Legislative Reference Bureau and its legislative tracking services, here are most of the bills that have now “died” in this legislative session.

• AJR149 and AJR24: Relating to: declaration of an Economic Justice Bill of Rights.
• SB547 and AB542: Relating to: eligibility for unemployment insurance benefits in the case of an unwillingness to receive a vaccine. See also No vaccine unemployment bill introduced for issues much more pressing than vaccine refusals.
• AB1128 and SB1053: Relating to: new enforcement mechanisms and penalties for misclassifcation of employees as independent contractors.
• AB294: Relating to: recovery of unemployment insurance benefit over-payments. This legislation would have applied an equity and good conscience standard to determine if a claimant could afford to repay overpaid unemployment benefits.
• AB380: Relating to: mandating the return of job search requirements for unemployment insurance and the suspension of the Department’s emergency job search waiver rule. Unnecessary in light of Job Searches are back.
• AB307: Relating to: unemployment insurance work-share programs. Work share was one of the few unemployment programs that Wisconsin did relatively well, and so failure to make some of the pandemic-related changes permanent is a major failure.
• AB268 and SB267: Relating to: providing a temporary state tax exemption for unemployment compensation for 2020 and 2021 state income taxes. Because far too many claimants were not paid until 2021 or are still waiting in 2022 for unemployment benefits dating from 2020, this income tax problem is becoming a major headache. The only relief available to claimants is at the federal level and only applies to those paid unemployment benefits in 2020. See Tax matters.
• AB206 and SB224: Relating to: extending waiver of the unemployment insurance one-week waiting period to Sept. 5, 2021, to take advantage of federal financing of these benefits for employers.
• SB138: Relating to: extending eligibility for federal extended unemployment benefits in Wisconsin.
• SB140: Relating to: creating a presumption that all initial claims are pandemic-related for the purposes of charging relief so as to provide tax relief for employers.
• SB899: Relating to: various changes proposed by the Department to the unemployment insurance law and making an appropriation. See the discussion of Proposals D21-02 and D21-03 at Department proposals, 2021 edition, and going back to 2019. Note: the rest of the Department’s proposals, contained in AB910, were passed by the legislature. For the questions that remain unanswered regarding these proposals, see D21-01 and D21-04 to D21-08 discussed in Department proposals, 2021 edition, and going back to 2019, a veto of AB910 should be forthcoming. These proposed changes are more “stick” than “carrot.”

Council meetings in the new year — January 2022

When the Unemployment Insurance Advisory Council last met on 21 October 2021, not much was decided or even reckoned with.

Other than the trust fund balance being $963 million and approval of a draft UI bill, LRB 4438 (unchanged from what was introduced in the September 2021 meeting), nothing much was discussed or decided. Council members even decided to cancel their remaining meetings for November and December.

The big news was that Mark Reihl, UI division head from before the pandemic started, announced his retirement, as of early November 2021.

The pattern continues into 2022, when the council met on January 20th.

Job centers need to be open to the public

A letter from a resident of the southern Lake Winnebago area about job centers being closed to the public and how public libraries are inadequate was met with a reference to how Wisconsin libraries received a grant to do advertising and additional support for job support services at Wisconsin libraries. Ignored in this response is the actual complaint in the letter about how job search support at libraries is inadequate and not meeting the Department’s statutory responsibility to provide support at its own job centers. Furthermore, the confusion and inadequacies of the on-line claim-filing system makes turning to librarians extremely difficult — both for claimants and librarians — when unintentional claim-filing mistakes lead to concealment charges from the Department.

Covid-19 is perhaps worse now than when the pandemic started. But, if job search requirements and claim-filing are to continue pretending that the pandemic does not really exist anymore, then the least the Department can do is open its job centers so that claimants can get the help they actually need. I know that people are leaving jobs because some (maybe more than some) employers are ignoring safety standards and pretending the pandemic no longer exists. The Department is making things worse for claimants struggling in this atmosphere by pushing claimants to on-line only claim-filing, and ill-equipped librarians who do not understand all the complexities and confusions of the on-line claim-filing process is simply asking too much of people who are not directly involved.

For instance, the Department’s job search requirements are quite specific, and many actions people think as qualifying as a job search do not actually qualify. Unless the Department is going to demonstrate how it is training librarians about how to assist confused claimants with understanding the Department’s very specific job search requirements (let alone all of the other “issues” that can catch claimants into making mistakes), then saying talk to a librarian is little more than Calvinball.

Financial report

The unemployment trust fund is back over a billion (indeed, $1.1 billion). Left unremarked on was that in 2021 payment of regular unemployment benefits plummeted to nearly one-third of what was seen in 2020: $583.1 million versus $1,464.7 million. Given that the pandemic still exists and that employees — even in Wisconsin — are leaving jobs at record numbers in 2021, this startlingly drop in payment of regular unemployment benefits indicates that many of the old practices at the Department are re-asserting themselves.

Job searches, as noted above, are extremely difficult to complete to the Department’s satisfaction. Furthermore, all claimants will have their job searches eventually audited (claimants must keep their job searches for one year, and Department staffers tell me that they are under pressure to make sure every claimant gets some of his or her job searches audited within that one-year time frame).

New faces

Jim Chiolino, a mainstay in all kinds of Department operations for the last several decades, is now head of the UI division. Tom McHugh, treasurer of the unemployment trust fund, retired as of January 10th. He will be missed.

Also, Kathy Thornton-Bias joined the council as a management representative for non-profits, replacing Theresa Hillis from the Eau Claire YMCA.

New rules

EmR2125 for waiving benefit charges related to pandemic job losses and for compensating reimbursable employers for their pandemic-related job losses (reimbursable employers like non-profits and government entities pay dollar-for-dollar for unemployment benefits paid to their former employees) continues to be in effect until March 2nd/April 24th of this year.

The Department presented Council members with a highly technical rule change for switching Wisconsin’s regulations from the Standard Industrial Classification (SIC) industry classification codes to North American Industry Classifications System (NAICS) industry classification codes — the stuff that labor economists dream about — as well as several other technical changes and corrections.

After caucusing, Council members approved of this new rule.

The Labor and Industry Review Commission also presented to Council members the Commission’s proposed new rules. These proposed rules mostly update Commission procedure in light of all the procedural changes to unemployment law the past few years as well as some less extensive changes to workers’ compensation law during these past years. The only change of note in the unemployment context is that answers to petitions for review in unemployment cases now need to be filed in 14 days rather than 21 days. As answers are rarely filed and usually unnecessary, this change does not raise major concerns (unless increasing delays in mail service make the 14 day window unworkable).

New laws

There was a short presentation on AB691, a bill that would declare that the required use of any safety equipment could not serve as evidence that an operator of a motor vehicle (yes — any motor vehicle, not just truck drivers) could be classified as an employee for purposes of workers’ compensation law, unemployment law, minimum wage law, and wage law. Yikes.

Finally, after caucusing, Council members provided their stamp of approval on two other LRB drafts of the agreed upon bill, LRB-5584 and LRB-5585.For what these bills do, see Advisory Council meeting in August 2021. After caucusing, Council members approved of these draft bills.

Advisory Council meeting in September 2021

At the September 16th Advisory Council meeting, a new employer representative appeared, as David Bohl, general counsel to J. H. Findorff & Sons, replaced John Mielke of ABC-Wisconsin.

Note: As of October 18th, however, John Mielke is still listed as a council member.

At this meeting, the Department provided the following information to council members:

• A letter from Secretary-designee Pechacek asking the Advisory Council to approve another program integrity assessment (estimated to be $3.3 million). Left out of this letter is that the program integrity fund, as of August 2021 (see line 228), already has $19,444,000. Regardless, the council approved of this additional assessment.
• Presented SB545, a proposed bill to legalize marijuana. Under this bill, employees who test positive for marijuana use and who are then discharged would not be disqualified from receiving unemployment benefits.
• Presented SB547, a proposed bill to allow people who refuse vaccinations to qualify for unemployment benefits (discussed here).
• Introduced a future emergency regulation (now available as EmR2125) that extends the time for recharging of unemployment benefits to employers’ accounts or the balancing account until 30 June 2022 and continues to waive any interest charges for reimbursable employers. After caucus, Council members voiced their support for this new emergency regulation. In general, charging relief for pandemic-related job losses needs to be requested because only a few kinds of job losses are presumed to be pandemic-related. But, the deadline for those requests expired as of 14 May 2021. Only for new, back-dated pandemic-related claims are charging relief requests still viable,
• A draft of the proposed unemployment bill, based on what council members previously agreed on at their August 2021 meeting.
• An updated research response addressing management concerns raised at the August Council meeting regarding the labor reps’ proposed increase in the weekly benefit amount.

The Financial Report for this month indicates that benefit payments are now around half of what they were a year ago, that the unemployment taxes employers pay continue to decline because of fewer claims being paid, and that the unemployment trust fund balance was nearly $950 million.

At the end of the meeting, Council members informed the Department that the remaining Department proposals would NOT be enacted and that agreement on the labor and management proposals was not likely as well.

More Department proposals for 2021

At the 18 March 2021 meeting of the Advisory Council, the Department presented its first eight proposals. These first eight proposals included the proposals that the Advisory Council originally approved of in 2019 (but which were not enacted because of the pandemic).

At the 15 April and the 20 May 2021 meetings of the Advisory Council, the Department presented another 18 proposals — D21-09 thru D21-26. Yikes. Here are those proposals, with links to the actual proposals that appeared at the May 2021 Advisory Council meeting.

D21-09, Employee Status solely determined by unemployment law

The Department seeks to amend the definition of employee and self-employment.

The Department proposes to amend sections 108.09(2)(bm) and 108.09(4s) to provide that all issues of unemployment insurance employee status may only be determined under Wisconsin unemployment statutes and rules. This proposal will provide consistency in determining individuals’ eligibility for unemployment benefits and employers’ unemployment insurance tax liability by limiting the employee status inquiry to the provisions of the unemployment insurance law.

D21-09 at 2. The actual proposed changes seem to do little more than re-arrange statutory wording, however. At present, current unemployment law prohibits consideration of licensing requirements or other state or federal law in determining employee status. So, there is a change in wording being proposed, but I cannot determine what substantively is being changed. The Department’s rationale seems to be that administrative law judges are over-turning initial determinations that held claimants to be employees (and so, concluding that the claimants truly were independent contractors) because those administrative law judges were looking to laws outside of unemployment law.

Yet, Wis. Stat. § 108.09(4s) currently holds that (emphasis supplied):

the appeal tribunal shall not take administrative notice of or admit into evidence documents granting operating authority or licenses, or any state or federal laws or federal regulations granting such authority or licenses.

So, the actual goal of this proposed change is unclear at the moment.

D21-10, SUTA dumping

This proposals adds a provision — required by federal law — to prevent employers from re-organizing themselves and thereby reducing their tax rate significantly and restoring a positive account balance as a “new” employer — a practice called SUTA dumping.

SUTA dumping is a major problem that can easily “cost” thousands of dollars (and maybe even tens of thousands) per employer, especially when extended beyond one year. The proposed penalties are a $5,000 forfeiture, a possible $10,000 civil penalty, and possible criminal charges as a class A misdemeanor (up to 9 months in jail and up to a $10,000 fine).

So, these penalties are chump change and unlikely to discourage any employer but the smallest from SUTA dumping. A large employer who might save $70,000 or more in three years will not bat an eye at these proposed penalties.

Moreover, the penalties for claimant concealment are much more severe. Alongside the financial penalties that claimants incur for the claim-filing mistakes, per 2017 Wis. Act 147 the criminal penalties for claimant concealment are:

• For benefits up to $2,500: An unclassified misdemeanor with a fine up to $10,000, imprisonment up to nine months, or both.
• For benefits up to $5,000: A Class I felony, for which the penalty is a fine upto $10,000, imprisonment up to three years and six months, or both.
• For benefits up to $10,000: A Class H felony, for which the penalty is a fine up to $10,000, imprisonment up to six years, or both.
• For benefits over $10,000: A Class G felony, for which the penalty is a fine up to $25,000, imprisonment up to 10 years, or both

And, unlike claimant concealment, actual and specific intent to commit SUTA dumping needs to be proven. Proposed Wis. Stat. § 108.16(8)(mm)3 will read:

For the purposes of this paragraph and par. (m), “knowingly” means having actual knowledge of or acting with deliberate ignorance of or reckless disregard for the statute violated.

D21-10 at 3. Claimant “intent” for the purpose of unemployment concealment is shown for any claim-filing mistakes by the following factors:

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.

Wis. Stat. § 108.04(11)(g)2 (setting forth a claimant’s duty of care to provide accurate and complete responses to Department inquires).

These standards are hardly comparable. They should be. They need to be.

D21-11, Work-share modifications

Work-share has been one of the few unemployment success stories in Wisconsin during this pandemic. In light of federal changes to work-share programs during the pandemic, this proposal seeks to expand work-share options and flexibility in light of those federal changes so that more employers and employees can take advantage of these benefits.

This proposal is a no-brainer and should have been adopted months ago.

The Department wants to hear about other changes needed to work-share efforts in Wisconsin. Other than a reduction in the complicated paperwork (a universal complaint for work-share), contact me with your suggestions. I will pass them on to the Advisory Council.

D21-12, Secretary waiver of provisions for the sake of funding flexibility

This proposal expands the general savings clause (the Department’s secretary can waive compliance with any specific state requirement should that state requirement be found to conflict with federal law) to also allow the Department secretary to waive requirements that prevent the state from taking full advantage of federal funding opportunities (like immediately waiving the waiting week when the pandemic struck, as the legislative delay costs Wisconsin employers’ millions of dollars).

Given the current actions of the legislature, this proposal is probably dead on arrival no matter what the Advisory Council recommends.

D21-13, Initial tax rates for construction employers

Unemployment taxes have been declining so rapidly in Wisconsin that the initial tax rates for construction employers — one of the few booming industries from before and during the pandemic — are now lower than the initial rates of non-construction new employers.

2021 tax rates   Non-construction   Construction
Payroll<$500,000   3.05%              2.90%
Payroll>$500,000   3.25%              3.10%

D21-13 at 1. Because construction work is generally seasonal work, initial tax rates in construction should in theory be higher than for general, non-construction employers. The Department’s solution is to amend “the initial tax rate for construction employers to be the greater of the initial rate for non-construction employers or the average rate for construction industry employers as determined by the department on each computation date, rounded up to
the next highest rate.” D21-13 at 2.

Until construction work no longer has seasonal layoffs because of winter, this proposal makes sense.

D21-14, Phone hearings prioritized

Prior to the pandemic, the Department closed hearing offices and forced claimants and employers into phone hearings. An outcry ensued, but the pandemic made phone hearings a necessity.

Current regulations, however, still prioritize in-person hearings over hearings by phone. In this proposal, the Department wants:

to amend chapter DWD 140 to provide that, while parties may continue to request in-person hearings, it is the hearing office’s discretion whether to grant that request. The Department also proposes to clarify language in DWD chapter 140 regarding hearing records, Department assistance for people with disabilities at hearings, and to correct minor and technical language in DWD chapter 140.

D21-14 at 2. As currently worded, the proposal simply justifies what the Department wants to do and provides no actual reasons or justification for these changes. For instance, the Department lacks space for in-person hearings because the Department previously closed three out of four hearing offices.

Even more troubling, the substances of the proposed changes is lacking. Wis. Admin. Code § DWD 140 is THE set of regulations for how hearings are conducted. Any changes to this chapter could have long-term repercussions to claimants and employers about what happens at unemployment hearings and their access to the hearing files connected to these cases.

When presenting this proposal, the Department indicated that the changes to DWD 140 are needed as well as to DWD 149 to reflect the Department’s current practices in responding to open records requests. So, it begs the question of what exactly is in conflict between these regulations and the Department’s current hearing practices. Wis. Admin. Code DWD 149.03 provides:

(1)  Claimants and employing units. Except as otherwise provided under s. DWD 140.09, the department shall make the following records available to the following persons upon request:

(a) An unemployment insurance record concerning an individual is available to that individual.

(b) An unemployment insurance record concerning an individual’s work for an employing unit is available to that employing unit.

(c) An unemployment insurance record concerning a determination to which an employing unit is identified as a party of interest under s. 108.09, Stats., is available to that employing unit.

(d) An unemployment insurance record concerning an employing unit’s status or liability under ch. 108, Stats., is available to that employing unit.

In legal circles it is generally understood that phone hearings favor employers, as employer witnesses can gather in one room and share a set of notes during their testimony without an administrative law judge witnessing those notes being passed.

Finally, for comparison, here is a 1998 Department notice (from a 2000 training about unemployment hearings) about opting for a phone hearing. If the Department is going to go forward with this change, it should address these points it put forward in 1998 for why phone hearings are problematic.

D21-15, Camp counselor employer exclusion

Currently, summer camp counselors are generally ineligible to receive unemployment benefits because they are usually full-time students. But, summer camps must still pay unemployment taxes for the wages paid to summer camp counselor.

This proposal applies the federal definition of excluded employment for camp counselors to state law.

The result of this change is that summer camps will no longer pay unemployment taxes for the wages paid to their summer camp counselors. And, some summer camp counselors who are not students may lose the ability to include their summer camp wages in establishing a benefit year.

D21-16, Repeal of drug testing requirements

This proposal repeals the drug testing provisions the Walker administration kept trying to institute. Recall that the drug testing efforts came in three parts: (1) voluntary employer testing and reporting, (2) mandatory testing of claimants based on to-be-determined federally designated occupations for testing, and (3) mandatory testing of claimants based on a future, state-based list of designated occupations. Only the voluntary employer testing and reporting was ever implemented.

The big news here is that as of 31 March 2021, the Department has received 171 drug test reports (either a failed test or failing to take a test) from potential employers. Previously, the Department had reported none or just a couple of voluntary testing reports from employers. In any case, the impact of these 171 voluntary employer reports remains nil. “No claimants have been determined to be ineligible for UI benefits under the pre-employment drug testing statutes and rules and denied benefits because of the employers’ reports of a failed or refused drug test as a condition of an offer of employment.” D21-16 at 1. So, there has been no opportunity for claimants to maintain their eligibility by enrolling a drug treatment program at the state’s expense.

Because employers have no idea of whether a job applicant is receiving or not receiving unemployment benefits OR because employers are failing to provide the necessary drug-testing paperwork and follow the necessary protocols for reporting a drug test OR a combination of these two factors, the voluntary drug testing has been a complete bust. In more than five years, this effort has not led to a single disqualification or enrollment in a drug treatment program. Ending a program that is doing nothing should make sense.

D21-17, Repeal of the substantial fault disqualification

This proposal seeks to repeal the substantial fault disqualification. There are two issues with this proposal, however.

First, the Advisory Council previously rejected substantial fault when it was originally proposed. It was the Joint Finance Committee that went around the Advisory Council and which included substantial fault in the state budget. So, the Advisory Council does not need to approve of this repeal. It was already rejected, and the rejection should be included as a matter of course.

Second, court decisions in Operton v. LIRC, 2017 WI 46, and Easterling v. LIRC, 2017 WI App 18, have limited the scope of substantial fault in important ways from how the Department applies this disqualification. But, the Department continues to ignore those court precedents. Indeed, as of May 2021, I have come across two cases of employees disqualified for substantial fault because of unintentional mistakes where the mistakes in question are nearly identical to the mistakes in Operton (inadvertent job mistakes) and Easterling (unintentional mistakes while attempting to satisfy employer demands).

D21-18, Expansion of the relocating spouse quit exception

This proposal restores this quit exception to allow any claimant who has to quit a job because his or her spouse has to relocate. Prior to 2013, Wisconsin allowed claimants to receive unemployment benefits when they had to relocate because of a spouse transferring to another job for any reason. In proposal D12-19, the Department limited this quit exception to the spouses of military personnel who had to relocate.

So, this proposal restores the expansive nature of this quit exception.

The problem here, like with substantial fault, is that the Advisory Council previously rejected this Department proposal to limit this quit exception to the spouses of military personnel. Here is what the Advisory Council actually agreed to back in 2013. So, this proposed change should be included as a matter of course in the council’s agreed-upon bill.

D21-19, Repeal of the waiting week

The waiting week was enacted as part of the 2011 budget act, 2011 Wis. Act 32 and without any input from the Advisory Council.

The concept of a waiting week exists because state unemployment agencies originally could not act quickly on a claim for benefits, and so a waiting week was needed to give the state agency time to process the necessary paperwork. With the advent of claim-filing by phone, however, that additional time was no longer needed. The waiting week effectively became a vehicle for reducing the total amount of benefits paid out to a claimant, since claimants did not receive any unemployment benefits for the first week of their claim.

The Department estimates that the waiting week costs claimants $26.1 million each year. D21-19 at 3. Given the purpose of unemployment benefits to provide immediate economic stimulus to workers in time of need after losing their jobs, a waiting week makes no sense.

D21-20, Repeal of the lame duck work search and work registration changes

The lame duck laws, see 2017 Wis. Act 370 for the unemployment changes, that were enacted after Scott Walker lost his re-election bid, moved the Department’s work search and work registration requirements from Department regulations and into statutory law. That is, Republicans were so concerned about making sure these obstacles for unemployment eligibility remained in place that they made them statutory rather just a regulation that the new administration might then revise.

So, this proposal restores what existed before the lame duck changes and gives the Department some additional flexibility in how work search and work registration requirements are administered.

D21-21, Repeal of the wage cap on benefit eligibility

Right now, a hard cap of $500 per week is written into unemployment law. This cap was first proposed by the Department in D12-18, which the Advisory Council adopted at their 21 Feb. 2013 meeting.

In light of Wisconsin’s partial wage formula, a claimant with a weekly benefit rate of $370 could in theory have as much as $574 in wages and still qualify for at least $5 in unemployment benefits. D21-21 at 1. In other words, the partial wage formula indicates that anyone with $575 or more in wages would NOT receive any unemployment benefits.

As a consequence, the $500 cutoff actually discourages some work, as any employee who receives $500 or more in wages loses all unemployment benefits. For instance, a person with a WBR of $370 who earns $550 in wages would receive $22 in unemployment benefits that week, if the $500 wage cap was eliminated.

In other states, the gap between earnings and unemployment eligibility is called an “earnings disregard.” In some of these states, a worker who earns just $200 in a week loses unemployment eligibility dollar for dollar, so the earnings disregard in those states is sizable. See Massachusetts, for example, in this table. Because of Wisconsin’s partial wage formula, the earnings disregard in Wisconsin is limited to this $500 wage cap and only applies for claimants receiving the highest weekly benefit rate.

So, at present this $500 wage cap has a very limited effect. But, should the weekly benefit even be increased, it will become a major problem. And, as indicated in the next proposal, Wisconsin now has the second-lowest weekly benefit rate in the mid-west. So, this artificial cap needs to go if Wisconsin is going to raise its weekly benefit rate.

Finally, as noted by the Department, D21-21 at 3, the eligibility ban when working 32 or more hours in a week remains in place.

D21-22, Raising the weekly benefit rate

Currently, Wisconsin has the second-lowest maximum weekly benefit rate in the mid-west.

State   Max. WBR    Max. w/ dependents
IL        $484           $667
IN        $390           $390
IA        $481           $591
MI        $362           $362
MN        $740           $740
OH        $480           $647
WI        $370           $370

A listing of the weekly benefit for all the states is available here.

Note: this data is different from what the Department reports in its proposal, and these numbers are current as of October 2020. These numbers have changed since then. Ohio, for instance, currently has a maximum WBR of $498 and $672 with dependents.

The highest WBR available is in Massachusetts, at $823 ($1,234 with dependents). The second highest is in Washington state at $790.

This proposal sets forth a series of increases in the weekly benefit rate.

1. For benefits paid for weeks of unemployment beginning on or after January 2, 2022, but before January 1, 2023, the maximum weekly benefit is capped at $409.
2. For benefits paid for weeks of unemployment beginning on or after January 1, 2023, but before December 31, 2023, the maximum weekly benefit is capped at 50% of the state’s annual average weekly wages.
3. For benefits paid for weeks of unemployment beginning on or after December 31, 2023, the maximum weekly benefit is capped at 75% of the state’s annual average weekly wages, or the maximum weekly benefit amount from the previous year, whichever is greater.

Wisconsin’s weekly benefit rate relative to the wages being paid in this state has never been all that good and has become essentially a token reimbursement in the last few decades.

Using the average weekly Wisconsin wage of $951 in 2019, the maximum WBR in 2023 would be $475, and in 2024 the maximum WBR would be $713. So, this proposal would basically make the maximum weekly benefit rate actually useful and relevant again in Wisconsin.

D21-23, Expanded flexibility in searching for suitable work

Here, the Department proposes two changes. First, the Department wants to expand the canvassing period from six weeks to eleven weeks.

The canvassing period is the time when you can reject a job offer which is a lower grade of skill or at a significantly lower rate of pay (less than 75%) than you had on one or more recent jobs without losing your eligibility for benefits. See Tips for filing for unemployment benefits in Wisconsin for more information about your canvassing period.

Second, the Department proposes expanding the trial time period for quitting a job without being disqualified from receiving unemployment benefits from 30 days to ten weeks (the original time period). The Advisory Council originally approved of the change from ten weeks to 30 days.

This trial time period provides various ways for an employee to still qualify for unemployment benefits when quitting a job regardless of the employee’s actual reason. The main reason found in this category usually is that the job fails to meet established labor market standards (e.g., wages are 25% or less than what is normally paid in that specific labor market for that occupation). But, any reason that would have allowed the employees to refuse the job offer in the first place as well as any reason for quitting the job with good cause applies here. Only the last reason — having good cause for quitting the job — is still available to employees after the trial period has expired.

D21-24, changing the SSDI eligibility ban to an offset

This proposal was previously discussed here, along with the entire history of the Department’s SSDI eligibility ban qua offset. Whether as an eligibility ban or an offset, it still makes no sense. There should be no SSDI offset, just like there should be no SSDI eligibility ban.

Here is hoping the Advisory Council can fix this crazy proposal and end this discrimination against the disabled.

D21-25, Mandatory e-filing for employers

At present, large employers (those with annual unemployment taxes of $10,000 or more) must e-file their reports and e-pay their unemployment taxes.

This proposal would mandate e-filing and e-pay for ALL employers.

The problem is that many one or two person LLCs and other self-employed individuals have no conception of unemployment taxes and the reports that need to be filed. Given the lack of broadband access in the state, this mandate for these small employers is likely difficult to impossible to implement.

Without a broad-based, educational media campaign, this mandatory e-filing will accomplish little more than allowing the Department to levy administrative penalties against small employers who have no idea what is going on and fail to provide their forms and payments via e-file and e-pay. The fact that implementation will be delayed until the Department actually has the technology in place to support this proposal offers little assurance. In short, this proposal should be rejected out-of-hand. After all, those who push for ease-of-use indicate that multiple kinds of access need to be maintained and fully supported. So, mandatory e-filing and e-pay actually runs counter to making unemploymeny more modern and easier-to-use.

D21-26, New worker mis-classification penalties

This proposal seeks to replace the token employer penalties for mis-classifying construction workers (1) with penalties that at least some have some dentures to them and (2) to expand this issue to all industries rather than limiting it to just construction.

The Advisory Council at the urging of Mark Reihl, then the head of the carpenters’ union in Wisconsin (and now division director for unemployment) originally approved the original penalties proposed by the labor caucus.

1. $500 civil penalty for each employee who is misclassified, but not to exceed $7,500 per incident.
2. $1,000 criminal fine for each employee who is misclassified, subject to a maximum fine of $25,000 for each violation, but only if the employer has previously been assessed a civil penalty for misclassified workers.
3. $1,000 civil penalty for each individual coerced to adopt independent contractor status, up to $10,000 per calendar year.

D21-36 at 1.

With this proposal, the Department explains:

The proposal removes the $7,500 and $10,000 limitations on these penalties and provides that the penalties double for each act occurring after the date of the first determination of a violation. The proposal also removes the limitations on the types of employers to which the penalties apply, allowing them to be assessed against any type of employer that violates the above prohibitions.

D21-26 at 4.

BUT, the intent that needs to be shown for these mis-classification penalties remains unchanged. Per Wis. Stat. § 108.221(1)(b):

(b) The department shall consider the following nonexclusive factors in determining whether an employer described under par. (a) knowingly and intentionally provided false information to the department for the purpose of misclassifying or attempting to misclassify an individual who is an employee of the employer as a nonemployee:

1. Whether the employer was previously found to have misclassified an employee in the same or a substantially similar position.
2. Whether the employer was the subject of litigation or a governmental investigation relating to worker misclassification and the employer, as a result of that litigation or investigation, received an opinion or decision from a federal or state court or agency that the subject position or a substantially similar position should be classified as an employee.

Under this standard, it is well nigh impossible to charge an employer with mis-classification for a first-time violation. On the other hand, claimants are given no such leeway for their claim-filing mistakes. As noted above with proposal D21-10 (SUTA dumping), claimants who have filed for unemployment insurance previously and been given notice to read the claimants’ handbook are presumed to know everything about how to file an unemployment claim and to not make any claim-filing mistakes. But, here, employers are not liable for mis-classification (a far more serious problem economically) until after their first instance of mis-classification. In other words, these mis-classification penalties can only apply to employers when prosecuted a second time for the same mis-classification. Having two bites of the apple sure is nice.

Either employers should be held to the same claim-filing standards as employees, or the intent requirements used against employees for their claim-filing mistakes needs to be seriously redone.

Being able and available when disabled: getting worse in the weekly certifications

In September 2020, I described how the able and available questions on the weekly certification ignored actual Department regulations. In short, the questions about being able or available for full-time work ignored key regulations that allow claimants to answer “yes” if they could work to the best of their ability the number of hours they were capable of working. So, a claimant who can only work 20 hours in a week because of a physical or psychological disability should answer yes to these questions as long as they are capable of working 20 hours in a week and do not restrict their ability or availability even further.

Rather than incorporating these regulatory requirements into these questions, the Department has doubled down on ignoring its own regulations.

Here is how the ability to work question read in July 2020.

And, here is how the question read in October 2020, a few weeks after my original post on this issue.

A fourth bullet point concerning childcare issues has been added, but the question itself is otherwise unchanged. As indicated previously, restrictions on an ability to work do NOT make someone unable to work full-time, especially when those restrictions arise from physical or psychological conditions.

Here is how the Department further revised these questions in April 2021. First the ability to work question.

The explanatory bullet points concerning the pandemic have been reduced to just two and the question itself has been changed to turn entirely on whether a person can work 32 hours in a week or not.

Nearly identical changes have been made to the available work question:

So, now the Department is requiring people to answer “no” if they cannot work 32 or more hours in a week, including when a person has medical restrictions that limit an ability to work. This question is legally wrong.

The relevant unemployment regulations do NOT reference medical restrictions. There is no reference at all in Wis. Admin. Code § DWD 128 to a claimant’s medical restrictions. Section DWD 128.01(3)(a) explicit states that the factors to be considered by the Department may include:

2. The nature of the restrictions caused by the claimant’s physical or psychological condition.

Per this regulation, an ability to work and a disabled claimant’s availability for work are based on whether a claimant has physical or psychological restrictions that mean he or she cannot work 32 or more hours in a week. And, according to these regulations, as long as that claimant is able and available to work that number of hours, he or she is able and available for full-time work. Again, from these same regulations:

Example 1: A claimant has a number of physical restrictions due to recent surgery, including a restriction to work no more than 20 hours per week for 2 months. With the restrictions, the claimant cannot perform the duties of his or her usual occupation but is able to perform a number of jobs for which he or she has prior training and experience. The claimant is willing to do these jobs and is willing to work 20 hours per week. The claimant has no other restrictions to availability. Benefits will not be denied solely because of the inability to work full−time [32 or more hours in a week].

So, these new questions are in direct violation of the Department’s own unemployment regulations.

Even worse, administrative law judges at unemployment hearings are asking disabled claimants for “evidence” regarding their “medical restrictions,” as if these weekly certification questions stated actual unemployment law and over-ruled the actual regulations that directly relate to this issue.

Understand as well that answering “no” to these questions based on what is being asked means that all benefit payments are on hold until the Department “investigates” this issue, which now takes around three to five months.

So, not only does this question not follow the Department’s own regulations, but it also now runs afoul of federal requirements for unemployment benefits to be paid “when due.” A recent federal court decision explains the nature and importance of this requirement:

It has long been recognized that protracted denial of subsistence benefits constitutes irreparable harm. See Morel v. Giuliani, 927 F.Supp. 622, 635 (S.D.N.Y. 1995) (finding irreparable harm where New York City regularly failed to provide “aid continuing” benefits, in violation of federal and state law), amended, 94-CV-4415, 1996 WL 627730 (S.D.N.Y. Mar. 15, 1996). To indigent persons, the loss of even a portion of subsistence benefits results in injury that cannot be rectified through the payment of benefits at a later date. See id. (collecting cases). The reason for this should be obvious. Subsistence benefits by definition are those that provide for the most basic needs. As such, when the outright denial or undue delay in the provision of subsistence benefits is at issue, courts have not hesitated to utilize the extraordinary remedy of preliminary injunctive relief. See, e.g., Willis v. Lascaris, 499 F.Supp. 749, 759–60 (N.D.N.Y. 1980) (enjoining reduction in food stamp allowances); Hurley v. Toia, 432 F.Supp. 1170, 1176–78 (S.D.N.Y. 1977) (granting preliminary injunction and staying enforcement regulation authorizing termination or reduction of public assistance benefits prior to affording hearing), aff’d, 573 F.2d 1291 (2d Cir. 1977); Boddie v. Wyman, 323 F.Supp. 1189, 1193 (N.D.N.Y. 1970) (“There is no doubt . . . that the differences sought in payments by the plaintiff are extremely important in respect to these things daily and in that sense when the day passes the injury or harm that may occur is irreparable.”), aff’d, 434 F.2d 1207 (2d Cir. 1970), aff’d, 402 U.S. 991, 91 S.Ct. 2168, 29 L. Ed. 2d 157 (1971).

That unemployment insurance benefits fall into the category of subsistence benefits cannot be credibly disputed. Indeed, the vitalness of unemployment insurance benefits is codified in New York Labor Law, which recognizes that “[e]conomic insecurity due to unemployment is a serious menace to the health, welfare, and morale of the people of this state.” N.Y. Labor Law § 501. This is all the more true against the backdrop of the current health crisis ravaging this nation—a crisis which has led to almost unprecedented unemployment across various sectors, including the app-based FHV industry.

Islam v. Cuomo, 475 F.Supp.3d 144, 153 (E.D. N.Y. 2020). Note: Wisconsin has similar statutory language concerning the economic insecurity created by unemployment in Wis. Stat. § 108.01(1).

Unemployment in Wisconsin is recognized as an urgent public problem, gravely affecting the health, morals and welfare of the people of this state. The burdens resulting from irregular employment and reduced annual earnings fall directly on the unemployed worker and his or her family.

Making the claim-filing questions worse — further ignoring unemployment law and adding additional delays to benefit payments — is ignoring how vital unemployment benefits are to those who have lost jobs through no fault of their own.

Note: my thanks to various workers for bringing these changes to my attention. Keep the tips coming.

The DWD budget

The Joint Finance Committee met yesterday for the 2022-2023 fiscal budget. At this meeting, there were many complaints about job shortages and how “unemployment” was keeping the people collecting benefits from working. Rep. Zimmerman even described how he had to close his winery early on one Saturday because of a lack of workers. How terrible.

Apparently, no one on this committee understands that Wisconsin’s partial eligibility formula for unemployment benefits encourages people who are collecting benefits to accept part-time work and to work part-time.

Sigh. Under the partial wage formula, part-time weekend work is a financial boon for those collecting unemployment benefits. So, the real problem Rep. Zimmerman is having for finding weekend workers for his winery is that he is not offering a high enough wage to attract applicants. In other words, being unemployed does not mean that a person is not working. Indeed, in Wisconsin prior to the pandemic and outside of the winter months when many jobs shut down, most unemployed workers are actually still working.

As usual, Jake has the details on what the Joint Finance Committee did and did not do.

The LFB also mentions that the Evers Administration could use some of the $2.5 billion in discretionary money that the state will receive over the next 2 years, but much of those funds have already been planned on to be spent for other needs, such as $420 million in grants to small businesses.

So Evers was planning to use $15 million in state money in 2022 and 2023 to make up the deficit that exists in unemployment administration. And now the GOPs say “no,” which means that we will have to find somewhere else to make up the money, or eventually lay off a sizable amount of the staff that was added to take care of the delays in getting people their benefits, and in clearing up questions about their applications.

And did the WisGOPs remove any of the barriers and added paperwork that made getting benefits such a pain in the backside for so many state residents? OF COURSE NOT, and in fact, they’re bringing back more of this idiocy.

“Also Wednesday, the Republicans voted to reinstate a drug testing policy for some recipients of unemployment benefits.”

“In addition, they approved commissioning a study that would link how long Wisconsinites can receive benefits to the state’s unemployment rate. Under that system, the unemployed would qualify for benefits for a longer period when jobs are harder to find.”

Of course, the flip side is that they also can cut off people faster if the unemployment rate goes down. Even if the number of jobs remains significantly below where they were at the peak (which is the situation we are in today).

This connecting of unemployment benefits to the unemployment rate is a favorite mechanism for making unemployment that much more worse in times of an economic downturn. Legislators have been pushing this idea since 1 April 2013 (see #30). In Florida when the pandemic struck, Floridians were only eligible for 12 weeks of regular unemployment benefits (special legislation was passed to increase the number of weeks to 19). So, while the unemployment system in Wisconsin has been bad, the system in Florida has been even worse. This Florida “solution” — Wisconsin ended work search waivers during the winter off-season because of another Florida innovation — should be rejected out-of-hand.

As the Political Environment sums up the whole process:

[The Joint Finance Committee] just blocked funding for a UC system upgrade.

As I recently wrote, Wisconsin’s GOP leaders are running a pain and suffering operation out of the State Capitol that deliberately keeps low-income and disadvantaged citizens trapped in poverty, bad health and powerlessness.

Department proposals, 2021 edition, and going back to 2019

At the 18 March 2021 meeting of the Advisory Council, the Department began introducing its own proposals for changing unemployment law. More proposals are expected. These first proposals are appearing first because they were originally put forward during the last legislative session. The pandemic, however, meant that these proposals were never acted on.

Some of these proposals are innocuous. Others combine difficult and complex issues with a less than forthright explanation. What follows are these first proposals, their 2019 versions, and an assessment of what is going on.

D21-01, Creating an administrative fund

Here, as in D19-09, the Department seeks to create a permanent administrative fund for its own use.

As explained in the 2021 and 2019 proposals on this issue, there already exists an administrative account under Wis. Stat. § 108.20 that contains the interest and penalties paid by employers who fail to submit timely tax reports and payments.

This account, however, “lapses” at the end of a legislative session, and so any funds in this account gets transferred to general state funds rather than remaining a specific unemployment income/expense item.

The proposal here is to change the administrative account into an administrative fund that cannot “lapse,” so that these funds remain available to the Department. As explained in the fiscal impact:

The most recent lapse expenditures of employer interest and penalties monies occurred in SFY16 and SFY17 of approximately $2.67 million and $2.23 million respectively. This proposal would result in an additional $2 – $3 million in funds remaining within the UI program during years where lapse is in effect.

D21-01 at 3.

In past years, the interest and penalties employers paid were apparently so small that a lapse into the general fund was inconsequential. Now, with these interest and penalties numbers over $2 million, the amount is sizable and worth hanging on to.

Left unexplained by the Department here is why the interest and penalties paid by employers have of late increased so much. The Department’s targeting of small employers for unpaid tax liabilities has noticeably increased the last few years. But, members of the Advisory Council are left to guess why the Department now has $2+ million in this administrative account.

Note: The administrative fund/account here is separate from the Program Integrity Fund under Wis. Stat. § 108.19(1s) and the interest payment fund under Wis. Stat. §§ 108.19(1m) to (1q) when paying interest on federal loans to the unemployment trust fund. As of February 2021, the Department’s program integrity fund was nearly $16 million.

D21-02, Appropriations and technical fixes

This proposal and is predecessor, D19-08, involve hundreds of small changes in wording and statutory references.

In part, these changes are needed in light of the creation of an administrative fund in D21-01. This 2019 memo lists the changes being proposed.

D21-03, REDA for reimbursable employers

Through D15-04, the Department created a reimbursable employer fund to cover benefit charges that arise from identity theft. Because reimbursable employers pay dollar-for-dollar for any benefits paid to a claimant, benefits paid because of identity theft mean that there is no actual claimant from whom the stolen benefits can be recouped. See The first of the DWD-sponsored proposals have appeared in legislation (22 Oct. 2015), DWD/Advisory Council bill going forward (29 Jan. 2016), and 2015 Wis. Act 334 § 73.

From an initial set aside of $2 million for this identity theft fund, there is today around $1.9 million still available.

The Department now proposes here and in D19-01 to use some of these funds to reduce the taxes reimbursable employers pay for covering situations when other reimbursable employers lack the available funds for covering the unemployment benefits owed to claimants.

Note: These shortages from reimbursable employers most often arise when the reimbursable employer closes unexpectedly, leading to its former employees filing claims for unemployment benefits but no employer available for reimbursing the Department for the benefits paid out.

When such shortages arise, the remaining reimbursable employers are charged an additional fee called the reimbursable employer debt assessment or “REDA” to cover this shortage.

The Department proposes that a limited amount of the reimbursable employer identity theft fraud funds set aside in the balancing account be made available to recover uncollectible reimbursements instead of assessing the REDA (or to reduce the amount of the REDA). This would greatly reduce administrative costs to the Department and non-profit reimbursable employers and relieve those employers of having to pay the REDA. The Department proposes that the identity theft fraud funds be used to pay the REDA only if the use of those funds would not reduce the balance of the funds below $1.75 million. This would ensure that the bulk of the identity theft fraud funds are available for restoring identity theft charges.

The Department also proposes to increase the minimum amount of the REDA from $10 to $20, which would reduce the administrative costs of assessing the REDA.

What is left unsaid in this proposal is whether the Department will stop its collection efforts against reimbursable employers who have defaulted and created the uncollectible debt in the first place.

D21-04, Changing the timing of DWD reports

This proposal and its predecessor, D19-19, are less complicated than they seem.

The Department is responsible for releasing three reports and conducting one event — the public hearing. Here is the current schedule:

• public hearing every two years (usually in November) of even numbered years
• fraud report released annually in March of each year
• financial outlook report released in April on odd years every two years
• Advisory Council report released in May on even years every two years

Essentially, the Department wants to shift the financial outlook report to being released in May every two years on even numbered years. Because the financial report is shifted to even-numbered years, the Department wants to move up the Advisory Council report to January. The new schedule would be:

• public hearing every two years (usually in November) of even numbered years
• Advisory Council report released in January on even years every two years
• fraud report released annually in March of each year
• financial outlook report released in May on even years every two years

The impetus for this change is so that most of the reports and information become available when unemployment legislative proposals are brought before the legislature. Right now, an odd-numbered year, is when those proposals first appear and are developed. Next year — an even-numbered year — is when those proposals are likely to be brought before the legislature. Apparently, the Department wants to use the Advisory Council report and the financial outlook report to support whatever proposed legislative changes are being pushed for at the time.

As a consequence, the focus of the Department’s efforts with this change is being pointed to a specific legislative session, rather than any general, long-term view of the unemployment system as a whole.

D21-05, Avoiding DOR debt collection

As many claimants can already attest, the Department is incredibly effective at debt collection.

In this proposal and its 2019 version, D19-22, the Department proposes to exempt itself from Wis. Stat. § 71.93(8)(b), which requires state agencies to enter into an agreement with the Department of Revenue for collecting long-term debts.

Given how effective the Department has been at collecting unemployment debts and the tools available to it — offsets against unemployment benefits, interception of tax refunds, liens against real estate and cars, wage garnishments, levies of bank accounts, and re-payment plans — debt collection by the Department of Revenue adds unnecessary layers and additional fees. So, this proposal makes sense.

D21-06, Excluding appeal tribunals from the definition of departmental error

Revamping departmental error has been a constant item on the Department’s agenda. Over the past decade, the Department has changed unemployment law to excuse its mistakes rather than actually correcting its actions and policies. Here is what the Department has done so far:

• D12-06 (many new errors excluded from being considered as departmental error and a cause of action created for recovering monies paid out in non-departmental error errors), discussed in Memorandum RE: 27 November 2012 DWD legislative proposals to Advisory Council (13 Jan. 2013), Advisory Council Meeting — 1 April 2013 (1 April 2013), and Advisory Council — 2 May 2013 meeting — and legislative actions today (29 May 2013).
• D15-11 (among other changes, reversing the Department’s loss in DWD v. LIRC (Hogan), 2016 WI App 21 (circuit court venue procedure in unemployment cases), discussed at Changes to unemployment venue now and in the future (1 Oct. 2015), UI jurisdiction changes going forward (15 Dec. 2015), and Update on UI legislation (16 March 2016).
• D17-07 (changing collection law to overturn a federal bankruptcy case that the Department lost), discussed at Department unemployment proposals in 2017 (24 May 2017) and Update on 2017 unemployment legislation (4 Oct. 2017).

This new proposal dates back to when the SSDI eligibility ban was enacted and was originally set forth in D19-07.

Recall that the original SSDI eligibility ban was poorly drafted, see D12-05, and the Commission held in Gary Kluczynski, UI Hearing No. 14400214AP (30 May 2014) that this original ban on receiving unemployment benefits only applied to the week in which SSDI benefits were received. In D15-01, the Department proposed the eligibility ban that we have today.

Between D12-05 and D15-01, the Department challenged the Commission over Kluczynski and other SSDI recipients it and appeal tribunals had originally found eligible for unemployment benefits under D12-05. The Department won many of those cases in circuit court, and the Commission then changed its mind and agreed with the Department that SSDI recipients were not eligible for unemployment benefits.

But, when the Department began seeking to recoup unemployment benefits against SSDI recipients, the Commission held that it and appeal tribunals had gotten the law wrong and so these SSDI claimants did not need to repay the unemployment benefits they had received. The Department then took this repayment issue to the appeals court and lost decisively in DWD v. LIRC (Morse), 2017 WI App 68:

DWD’s argument is that it should be permitted to recover the overpayments if there was a reasonable basis for DWD’s mistake. In essence, DWD contends that a departmental error stemming from a misinterpretation of law should not preclude overpayment recovery if the misinterpretation was reasonable.

As stated, Wis. Stat. § 108.02(10e)(am)1. defines “[d]epartmental error,” in part, as follows: “A mathematical mistake, miscalculation, misapplication or misinterpretation of the law or mistake of evidentiary fact, whether by commission or omission.” Nowhere in the statute do the words “reasonable” or “unreasonable” appear. We may not add words to the statute’s text. Words excluded from a statutory text must be presumed to have been excluded for a purpose. Heritage Farms, Inc. v. Markel Ins. Co, 2009 WI 27, ¶14 & n.9, 316 Wis.2d 47, 762 N.W.2d 652. “One of the maxims of statutory construction is that courts should not add words to a statute to give it a certain meaning.” Fond Du Lac Cty. v. Town of Rosendale, 149 Wis.2d 326, 334, 440 N.W.2d 818 (Ct. App. 1989). We deduce the legislature’s intent from the words it has chosen. See id. at 332. We reject DWD’s invitation to add additional requirements to these existing statutes. The legislature did not choose to insert adjectives such as “reasonable” or “unreasonable” or “longstanding” to limit the statutory terms “misapplication or misinterpretation of the law.” We have no power to insert what the legislature chose to omit.

Even if we did have such power, we would not exercise it here. First, we see no benefit to the claimants, DWD, LIRC, or the courts, in imposing DWD’s proposed “reasonable misinterpretation” exception to the waiver statute. Such an addition would result in additional litigation about whether an interpretation, though pronounced an error of law by a court, was still “reasonable.” Such a debate would inevitably cause unnecessary and unproductive expenditure of agency and judicial resources. It is a court’s job to interpret statutes. See Ott v. Peppertree Resort Villas, Inc., 2006 WI App 77, ¶11, 292 Wis.2d 173, 716 N.W.2d 127 (describing what a court must do when interpreting statutes). Courts should not be drawn into collateral litigation about whether a wrong interpretation was nonetheless “reasonable.” One person’s “reasonable” (e.g., an agency that wants its money back to pay other benefits) can be another person’s “absurd” (e.g., an unemployed claimant who really needed the money, did not misrepresent anything, was entitled to the benefits under the prevailing statute interpretation, and spent it before the court decision). DWD’s approach, if adopted, would produce the opposite of the certainty and predictability that the administrative system of unemployment benefits was designed to produce. We cannot conclude that DWD offers a more reasonable interpretation of Wis. Stat. § 108.02(10e)(am)1. than LIRC. See DWD, 375 Wis.2d 183, ¶11.

Morse at ¶¶22-4.

So, in D19-07 and now D21-06, the Department wants to overturn Morse without mentioning this court decision at all (and instead indicating that this issue is only a minor and technical dispute between it and the Commission) in order to make sure that any unemployment benefits that ever go to SSDI recipients in the future will always have to paid back. The Department’s explanation for the fiscal effect of this change reveals that this change in the law is very much about SSDI benefits:

To determine the impact of the proposed change, 2015-2017 data was reviewed for LIRC determinations that found departmental error based on appeal tribunal determinations. There were no LIRC decisions that found departmental error in 2016 or 2017 and in 2015, there were approximately 10 determinations. The total overpayment for all affected determinations was approximately $6,560, which claimants would now be required to pay back if departmental error could not be found on appeal tribunal determinations. At an 80% collection rate, this results in an average savings to the Trust Fund of $5,200 annually. Since there were no LIRC decisions that found departmental error [by an administrative law judge] in 2016 or 2017, the Trust Fund savings may be less going forward.

As this explanation indicates, the only cases at issue here are the 2015 and earlier SSDI cases for which the Department wanted to recoup unemployment benefits.

The other problem with this proposed legal change that is not mentioned at all is that the current understanding of departmental error has been in existence for decades and serves as an important check against appeal tribunals for getting basic unemployment law wrong. See, e.g., Parker v. Cady Cheese Factor Inc., UI Hearing No. 05200982EC (12 Aug. 2005) (an interpretation of a statutory provision which disregards a contrary long-standing interpretation by the commission constitutes departmental error).

Essentially, the Department’s proposed change to departmental error would mean that administrative law judges could ignore longstanding Commission precedent, and the consequences of that ignorance would fall exclusively on claimants. Under the Department’s proposed change in the definition of departmental error, waiver of any over-payments for the actions of administrative law judge’s would no longer be available to claimants who rely on administrative law judge’s getting unemployment law right in the first place.

I cannot think of anything more detrimental to the cause of justice and the purpose of unemployment benefits as vital economic assistance than this proposed change.

D21-07, Clarifying the effect of criminal convictions when charging concealment

In this proposal, the Department seeks to address the situation of a claimant who is charged criminally for unemployment fraud before the Department has alleged unemployment concealment.

In some circumstances, however, criminal prosecution may result in a court-ordered restitution order or judgment when the Department has not issued an administrative determination that a debt is owed. Examples could include submitting forged documents to the Department with the expectation that the forger would receive a benefit; submitting false unemployment benefit claims by using a fictitious employer scheme; or filing benefit claims using stolen identities.

D21-07 at 1. This concern is at present completely hypothetical, but the Department’s ever zealous push for pursuing unemployment concealment against claimants means that it is always thinking through the angles and procedures for these kinds of cases.

So, the Department wants to make sure that its concealment cases are NOT affected by any criminal cases and that claimants criminally guilty of concealment can not later contest that guilt to the Department. To accomplish this goal, the Department wants a change in law so that any criminal proceeding will serve as issue preclusion for the Department’s own concealment case against the claimant.

Section 108.101(5) of the statutes is created to read:

Notwithstanding sub. (4) [no other legal matter is binding for purposes of unemployment law], a final order or judgment of conviction for a crime entered by a court is binding on the convicted person in an action or proceeding under this chapter that relates to the criminal conviction. A person convicted of a crime is precluded from denying the essential allegations of the criminal offense that is the basis for the conviction in an action or proceeding under this chapter.

D21-07 at 1. In making this proposal, the Department does not intend “this proposal to change the Department’s practice with respect to nearly all cases referred for criminal prosecution. The Department intends to continue to refer most cases for prosecution after its administrative determination is final.” D19-20 at 2 (emphasis supplied).

Given that a person found guilty of criminal unemployment fraud will likely face prison as well as steep financial penalties, the goal here of later going after the claimant administratively for unemployment concealment seems to either be overkill or an admission that the Department cannot coordinate a criminal prosecution with prosecuting attorneys to make sure that the criminal case includes all relevant administrative issues from the Department’s perspective.

D21-08, Fiscal agents and family care employment

Like the departmental error proposal, this proposal hides a great deal of complexity and numerous other issues.

The aging of boomers and the push in Wisconsin for family members to provide care for their aging parents through numerous state support programs has led many, many folks to obtain “work” as family caregivers or to hire in-home caregivers to supplement what the children are doing.

A quirk in state law, however, allows the companies that facilitate this family care to avoid being identified as employers. Instead, the parents who are receiving this care are identified as the employers of their children and other caregivers for the purpose of unemployment law.

Note: This quirk in state law also applies to parents providing care of their adult children, though the specific statutes at issue are different.

Most parents and their children never know about the parent being the employer of record because the “notice” of this issue is provided in small print on one of many forms they complete when starting out with this family care. Because the parents are the employer of record, however, they are supposed to pay unemployment taxes for the wages paid their caregivers. Needless to say, most of these “employers” never pay the unemployment taxes that are owed.

For the most part, no one discovers this problem until after the parent has passed away. Then the children and hired caregivers file unemployment claims because they are now out of a job and looking for new work.

The family members who provide care to their parents are excluded from receiving any unemployment benefits pursuant to Wis. Stat. § 108.02(15)(km), which defines excluded employment as a family member providing personal care or companionship to another family member.

Many, many family members are only finding out about this exclusion when they file for unemployment benefits. And, given the arcane nature of this exclusion, many are paid unemployment benefits by mistake, only to have the Department recoup those unemployment benefits at a later date.

Understandably, non-family members are still eligible for unemployment benefits. But, the parent-as-employer has passed away without paying the unemployment taxes that were due, and any claim against the “estate” for unpaid unemployment taxes is unlikely to get anywhere given that these estates are usually meager to begin with and already claimed by other debts.

In D17-02, the Department addressed this lack of liability for the unpaid unemployment taxes by making the fiscal agents joint and severally liable for the unemployment taxes that are still owed. See also the discussion of D17-02 in Department unemployment proposals in 2017 (24 May 2017). As the Department explained for why joint and several liability for fiscal agents was needed:

Individuals who receive long-term support services in their home through government-funded care programs are domestic employers under Wisconsin’s unemployment insurance law. [Wis. Stat. § 108.02(15)(km)] 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. [Wis. Stat. § 46.27(5)(i)] 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. [As of July 2016, the receivables for domestic employers is $44,709.02] It is difficult to collect delinquent tax from domestic employers who use fiscal agents because these employers are typically collection-proof.

D17-02 at 1 (footnotes inserted into text). These numbers — 16,000 out of 19,000 domestic employers — indicate just how significant this issue is.

In D19-03 and now D21-08, the Department is proposing to change the law so that fiscal agents could optionally elect to be the employer-of-record for family members caring for others in their family. That is, family members would no longer be prevented from receiving unemployment pursuant to Wis. Stat. § 108.02(15)(km).

The fiscal impact of this proposed change based on the claim-filing problems that occurred when claims were at a near-record low is sizable.

In 2018, there were approximately 93 determinations excluding wages from benefit claims under 108.02(15)(km). Assuming the individual had no other base period wages this would result in approximately $354,330 in additional benefits paid annually (assuming an average weekly benefit amount of $300 and average weeks paid of 12.7). Adjusting for taxes, this would result in an approximately $233,857 cost to the Trust Fund. However, this does not take into account the additional tax revenue on employee whose wages would no longer be excluded from UI coverage.

In summary, this proposal could result in:

• More tax revenue received and more benefits paid based on previously excluded wages under 108.02(15)(km); however, this amount cannot be established.

• Fewer benefit overpayments based on the 108.02(15)(km) exclusion estimated at $100,000 annually. This is because under this proposal these benefits would now be payable. However, most overpayments are collected (at least 80%) thus this would not have a significant impact on the Trust Fund.

D21-08 at 5-6.

The problem with this proposal is that the change in who is the employer in these cases is an optional change done at the discretion of the fiscal agent. Given how confusing, unknown, and ambiguous this issue is already for parents and their family care-givers as well as what the Department is encouraging here (that fiscal agents voluntarily take on an additional expense at their discretion), this proposed change seems highly unlikely to lead to any practical change at all in regards to family members currently being placed in excluded employment.

Right now, almost all family members think that these fiscal agents are their employers. Family members as caregivers report their hours of work to these fiscal agents, and these fiscal agents are the entities that pay family members for their hours of care for their elderly parents and relatives. Almost none of them understand at all that the parents receiving care are legally an employer responsible for paying unemployment taxes.

So, if this proposal is going to have any actual impact on a very confusing and difficult situation, the switch from parent-as-employer to fiscal agent-as-employer needs to be a mandatory change, not optional.