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.

History of the weekly benefit rate relative to wages paid in Wisconsin

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.

Discrimination against the disabled continues

Wisconsin Watch describes the continuing delays and denials by the Department in approving PUA benefits for SSDI recipients.

In this article, the delays that now stretch on for months as well as denials are described in detail.

WPR and Wisconsin Watch spoke to nine disability recipients who applied for PUA months ago. DWD as of Tuesday had yet to deliver on eight of their claims. But Wickman [the only one of the nine to receive any benefits] on Tuesday [that is, yesterday] woke up to six months of backpay in her bank account, following a four-month wait — capped by two weeks of lengthy phone calls, technology glitches and 32 emails to agency administrators.

The article does a good job describing the delays and denials the disabled are continuing to experience.

But, the article seems to accept at face value the explanations put forward by the Department for why these delays and denials are not really its fault.

The agency employs 1970s-era technology to process unemployment insurance claims, and PUA claims are particularly taxing on an already backlogged system, [DWD spokesman Ben Jedd] said.

“The payment of PUA is extremely manual and depends on qualifying for the program, addressing any associated eligibility issues, and how quickly that person files weekly claims after their PUA (qualification) is established,” Jedd wrote in an email.

* * *

Jedd said his agency will prioritize claims from SSDI recipients who were already denied regular unemployment aid. But the agency does not track how many PUA claims it has processed from people on disability.

DWD can’t just rubberstamp those claims, Jedd added. Staffers must ensure applicants meet a range of eligibility requirements. But that human review is not foolproof, applicants say.

REALLY? Mistakes being made because the system is not foolproof is an acceptable explanation?

Let’s look at one of the claimants featured in the article: Duane Adams. He applied for regular unemployment benefits and was denied because he receives SSDI benefits. He applied for PUA benefits, and nothing happened with that application for months.

Then, on July 27th, the Department gets word that it can now pay out PUA benefits to the disabled. Mr. Adams even received a form letter from Sec. Frostman apologizing for the delay and encouraging him to apply for PUA benefits if he had not already done so.

But, that same week, Mr. Adams also received an initial determination denying his claim for PUA benefits, explaining:

The claimant has not exhausted all unemployment insurance, pandemic, emergency unemployment compensation, and extended benefits payable for the benefit year ending 05/02/2020.

In other words, according to the Department Mr. Adams cannot receive PUA benefits until he has received all of the regular unemployment benefits he cannot under state law actually receive. Huh? According to the Department, Mr. Adams is NOT eligible for regular unemployment benefits in the first place because of his disability. How can he be expected to exhaust regular unemployment benefits that he cannot legally receive? This denial makes absolutely no sense. Legally, it is idiotic.

So, previously the Department was discriminating against the disabled. Now, the Department is making idiotic decisions in still denying their claims.

And, Mr. Adams is not alone. Other disabled folks are being denied their PUA claims for the same reason — failing to exhaust their regular unemployment benefits — or because they do not have a Covid-19 related reason for their layoff despite losing work because of the pandemic.

So, as the article makes clear, the Department is NOT following through on what happened on July 27th: the disabled are NOT receiving PUA benefits even after the policy that denied those claims has changed. De jure discrimination may no longer be Department policy, but de facto discrimination continues.

As evident in the article, reporters should NOT be accepting claims about the process not being fool-proof while also not wanting to “rubber-stamp” claims in light of a heavy workload. The “carefulness” being claimed by the Department is in reality a defense of idiocy. And, when confronted by idiotic decision-making, most people conclude the idiocy is hiding something more sinister. In this case, the idiocy is emblematic of continued hostility towards the disabled.

If there is some other viable explanation for continuing to deny claims for idiotic reasons other than discrimination, then the Department needs to be pushed to provide that explanation. As it stands now, the only viable explanation is continued discrimination against the disabled.

Putting the disabled in a catch-22 is exactly the kind of double-standard that has been the earmark of discrimination for centuries. All of us should know better by now to push back almost immediately against such double-standards.

And, certainly Wisconsin should not be continuing with this discrimination against the disabled. That this discrimination is continuing is the story.

SSDI budget cuts in Trump’s proposed budget

Wisconsin Workers’ Compensation Experts has a good blog post about the proposed cuts in Social Security Disability Income (“SSDI”) benefits in the proposed Trump budget.

The claimed cuts are allegedly about fraudulent SSDI claims by people who can supposedly work. Actual SSDI fraud is minuscule, however.

Furthermore, SSDI benefits represent crucial wages for disabled individuals based on their prior earnings. As the blog post explains:

Through their contributions to Social Security, workers earn a measure of protection against disability retirement and death. (Disability insurance protects a worker against loss of earnings due to a significant work limiting impairment, and workers earn this protection by having worked and contributed to Social Security.) Many of my work-injured employees ultimately end up on Social Security Disability and this protection is particularly important to older Americans. Most people receiving Social Security Disability benefits are in their 50s or early 60s and most had only unskilled or semi-skilled jobs. Without a college degree, benefits are not significant (averaging about $1,200 per month). However, over half of Social Security beneficiaries rely on these benefits for 75% or more of their total income.

There is also already an existing and widespread program in place to encourage and facilitate SSDI benefit recipients returning to regular work. Ticket to work is a free and voluntary program by the Social Security Administration to assist SSDI benefit recipients with returning to the workforce. The employment support efforts available for SSDI benefit recipients are extensive. Presentations and training about the program are also available. The budget proposal from the current President appears to be little more than a massive cut to benefits and training and support without any acknowledgment of the difficulties disabled folk have in the workplace. Because of Ticket to Work efforts, many SSDI benefits recipients are already working limited jobs. They just cannot find the kind of full-time, regular work they once had prior to their disabilities.

Note as well that in Wisconsin, SSDI benefit recipients are prohibited from receiving unemployment benefits. Federal law, however, prohibits a similar disqualification for individuals receiving regular Social Security benefits.

NOTE: Because prohibitions on regular Social Security benefits are not allowed, the prohibition on unemployment benefits when receiving SSDI benefits also ends when an individual’s SSDI benefits become regular Social Security benefits — i.e., when the claimant reaches his or her Social Security retirement age.

Accordingly, Wisconsin employers have a financial incentive to hire SSDI benefits recipients, as these employees are prohibited from receiving unemployment benefits when laid off regardless of the layoff reason.

For those receiving SSDI benefits, however, the budget proposal represents a second strike: having already lost eligibility for unemployment benefits in Wisconsin, they are now slated to lose their SSDI benefits as well.

Letter to Governor Walker

In light of the Senate passage of AB819 on Tuesday of this week, I am sending a letter to Governor Walker urging him to line-item veto four provisions in the bill.

Dear Governor Walker:

I represent in my legal practice numerous employees and employers in unemployment law matters, and I urge you to line-item veto various provisions in AB819.

The provisions at issue consist of proposals by the Department of Workforce Development (“DWD” or “Department”) that create marked, unpredictable, and undesirable changes in unemployment law for the employees and employers of Wisconsin.

Changes to the definition of unemployment concealment

Sections 18 and 19 of the bill essentially make claimants strictly liable for their claim-filing mistakes. The proposed changes state that concealment is intentional but then disclaim that the Department does not have to prove that a claimant has such an intent. Furthermore, the proposed changes specify ways for a claimant to show no concealment that are so limited or specific that they essentially mean that concealment will be presumed.

This strict liability standard creates due process issues in unemployment law as well as significant problems for any criminal sanctions against claimants for actual concealment. The implications in criminal cases are especially problematic. While the intent requirement for concealment is being removed, criminal prosecutions for unemployment concealment still need mens rea to be shown. Because the mens rea is being administratively presumed rather then proven, claimants who commit actual concealment could likely avoid criminal prosecution for their fraudulent acts in light of this missing mens rea.

Creating a slush fund for Department expenditures

Sections 83-87 of the bill creates a fund for perpetually funding the Department’s program integrity efforts. This funding mechanism, however, lacks any criteria regarding this spending or legislative oversight and so allows for Department hiring and expenditures that are arbitrary. Accordingly, this program is the antithesis of small government .

Re-doing the prohibition on receiving unemployment benefits when receiving Social Security Disability Income (“SSDI”) benefits

Sections 20-25 of the bill re-write the prohibition on receiving unemployment benefits when already receiving SSDI benefits. An earlier and similar prohibition was enacted as part of 2013 Wis. Act 36. The Labor and Industry Review Commission (“LIRC” or “Commission”) initially held that the original prohibition only applied for the week when the claimant received his or her SSDI benefit check. Four circuit courts, however, reversed the Commission’s reasoning. As a result, there is now no legal need for re-writing this prohibition.

Furthermore, this new prohibition will, pursuant to section 103 of the bill, be retroactive to January 2014, the same time when the original prohibition became effective. Because of this retroactive application, this new prohibition creates a constitutional problem that will lead to a new round of litigation for the three to five claimants who received a few hundred dollars of unemployment benefits before the Commission decisions regarding the first prohibition were over-turned. The Department will end up spending thousands of dollars in litigation expenses and staff hours over a few hundred dollars in unemployment benefits. Since the first prohibition is now being enforced, there is simply no legal or economic need for this second retroactive prohibition.

Changing the procedures for obtaining review of a LIRC decision in circuit court

Sections 54 and 55 of the bill substantially alter the process, venue, and parties involved in appeals of Commission decisions. Among these proposed changes, the Department will have the right to file unemployment appeals in any county it chooses regardless of where employees or employers reside. Furthermore, because these changes presume that any party in an unemployment case risks default judgment when not answering a complaint, employers will need to file answers in claimant appeals of Commission decisions. Since Wisconsin requires any company to have an attorney representing it in court, employers will have to spend several hundred dollars for an attorney to file an answer on their behalf. Right now, employers can rely on the Commission to defend these cases and have no need for separate representation and the filing of answers.

The Commission tried to discuss these changes with the Department and the Advisory Council but was ignored. Without a voice in the process, the Commission formally opposed these changes at public hearings for this bill.

There are notable improvements in unemployment law in this bill. For instance, the provisions for protecting reimbursable employers from identity theft in section 73 of the bill are useful and well-done.

But, the four provisions mentioned here create confusion and legal complications about what unemployment law means and how to apply it. Please line-item veto these provisions.

Update on UI legislation

Advisory Council Bill AB819
Yesterday, the state senate passed the bill and messaged it to Governor Walker for his signature. This law consists of the following proposals:

  • A second SSDI prohibition, D15-01, to replace the current prohibition was approved in April 2015 and back-dated in May 2015. But, after the Department started winning the court cases challenging the old SSDI prohibition (see this post for the details), this proposal disappeared from the Department’s legislative draft at the council’s September 2015 meeting. But, after the Labor and Industry Review Commission ruled in November 2015 that departmental error had occurred when appeal tribunals (but not the Commission) had originally ruled in favor of claimants regarding dual receipt of SSDI and UI benefits (and so no repayment of UI benefits previously received was proper), this proposal re-emerged at the November 2015 council meeting in the Department’s legislative drafts. Why? This second SSDI prohibition is back-dated to January 2014, the effective date of the original SSDI prohibition.
  • D15-04 sets up essentially a backup insurance program for reimbursable employers who get their unemployment accounts swindled by identity fraud (and so have little to no hope of ever recovering the stolen benefits). The final recommendation from the council was for reimbursable employers to be taxed initially in order to create a fund of $1 million for covering themselves against identity fraud, essentially the second option of the three presented.
  • D15-05 corrects a hole in the statutes that accidentally left LLPs out of the definition of employer (see also this DWD memo on this issue).
  • The Advisory Council approved the Department’s appeals modernization proposal, D15-06, at the 7 January 2016 meeting. LRB draft language was prepped soon thereafter. Perhaps the most significant change in this proposal — notice by Internet in place of postal mail — has NOT received any discussion of comment from council members, however.
  • Proposed changes to the definition of claimant concealment in D15-08 are described in this previous post and described in a Department memo (discussed in this post), Additional criminal penalties for concealment in AB533 passed the Assembly but has yet to be passed by the Senate. To see what all the fuss is about, take a look at this January 21st Assembly Committee on Public Benefit Reform hearing regarding AB533 and other UI bills or read this LIRC memo on the proposed concealment changes. You can see and hear testimony against these concealment changes via this previous post.
  • Technical changes in D15-09 will allow the Department to distinguish able and available determinations from separation determinations.
  • D15-10 eliminates the publication of the claimant benefit tables within the statutes.
  • Major changes to the process for getting unemployment decisions reviewed in circuit court are set forth in D15-11. These changes were previously described here and here. The Labor and Industry Review Commission opposed these changes, which essentially reverses the 2016 Appeals Court decision in DWD v. LIRC.
  • D15-12 allows the same protocols for unemployment taxes in regards to fiscal agents in adult care to apply to fiscal agents in child care situations.
  • D15-13 ends the sunset date in 2034 for the program integrity fund (i.e., the fund for receiving some of the monies from concealment enforcement) since the Department now expects concealment monies to continue in perpetuity. See the next two proposals for why.
  • The Department’s proposals for a program integrity slush fund, D15-14 and D15-15.

Labor and Management Proposals
The Advisory Council bill also includes management and labor proposals.

On the management side, there will be significant changes to what will be considered suitable work:

  • During the first six weeks of a job search, suitable work that a claimant MUST accept will be those jobs that (1) do not have a lower grade of skill than one or more of his or her most recent jobs and (2) have had an hourly wage that is 75 percent or more of what the claimant previously earned in his or her most recent, highest paying job.
  • After the first six weeks, suitable work means any work the claimant is capable of performing regardless of prior experience, skills, or training, as long as the wages for that job are above the lowest quartile wage-level in the claimant’s relevant labor market.

Once a job offer is considered suitable work for a claimant, then the claimant only has good cause for declining the job offer if the claimant’s personal safety is at risk, the claimant’s sincerely held religious beliefs conflict with the work, the work entails an unreasonable commuting distance, or some other compelling reason makes accepting the offer unreasonable. These changes to what will be considered suitable work will also apply to those who tentatively accept a job and then quit within the first thirty days.

In addition, this accepted management proposal will either eliminate unemployment eligibility entirely for anyone receiving temporary or partial workers’ compensation benefits or mandate offsets against UI benefits for those receiving these kind of workers’ compensation benefits (the specific type of workers’ compensation benefit being received leads to the different kinds of treatment). In other words, the SSDI prohibition is being expanded to workers’ compensation benefits. Also, anyone making a mistake in how they report their specific workers’ compensation benefits will, under the new on-line filing system, likely face a concealment charge for his or her mistake in reporting the kind of workers’ compensation benefits he or she is receiving.

These management-sponsored changes will take effect four weeks after enactment.

The labor proposals that the council agreed to include:

  • repealing the mis-classification prohibitions in workers’ compensation and fair employment law,
  • creating an administrative penalty for mis-classification for unemployment purposes of $500 per employee (capped at $7,500) when construction employers (and only construction employers) knowingly and intentionally provide false information to the Department (NOTE: compare this definition with the proposed changes to claimant concealment) for the purpose of misclassifying or attempting to mis-classify an employee,
  • fining employees in painting and sheetrock work $1,000 per incident (capped at $10,000 per calendar year) when coerced into accepting non-employee status for unemployment purposes, and
  • fining construction employers $1,000 per employee (with a maximum of $25,000) for subsequent violations as well as possible referral for criminal prosecution.

These mis-classification changes will take effect six months after passage.

Budget Bill Fixes
The LIRC funding fix bill, discussed here, was enacted as 2015 Wisconsin Act 194.

The call in the budget bill for the Department to create suitable work rules for claimants has been eliminated by the management-sponsored changes to suitable work described above.

Other unemployment-related legislation
A bill to address an NLRB decision about frachisors and franchisees was signed into law as 2015 Wisconsin Act 203. I previously noted that:

unemployment is not mentioned once in the [Browning-Ferris Industries decision this law is intended to undo], so the applicability and purpose — let alone its effectiveness — of the state law changes in this proposed legislation are muddled at best. And, as DWD notes in its memo, the changes could be extremely problematic for some Wisconsin employers.

A re-writing of real estate agent law in Wisconsin has been enacted via 2015 Wisconsin Act 258. The original bill, AB456, was intended, in part, to remove real estate agents completely from unemployment coverage. Even though real estate services are not considered covered employment for unemployment purposes, agents who qualify for unemployment benefits through other work they do outside of real estate sales found themselves and their brokerages being brought into unemployment hearings whenever there was a change in their relationship. In short, even though there is no covered employment or even an employer, the real estate agent is still treated as an employee who must either quit with good cause or be discharged without misconduct or substantial fault from a brokerage firm in order to keep receiving unemployment benefits connected to non-real estate work. The legislation as-passed leaves this process in place. Real estate agents, however, will be excluded as employees from workers compensation coverage, workplace discrimination law, and other workplace laws. See Section 174 of the new Act.

Previously enacted legislation
2015 Wisconsin Act 86 contained the following three Department proposals:

  • D15-02 is a house-keeping change that allows the Department to issue determinations against out-of-state employers in combined wage claims for being at fault for an erroneous benefit payment to a claimant.
  • D15-03 applies the Treasury offset program to employers, as described previously in this post.
  • A renewed work-share program, D15-07.

DWD/Advisory Council bill going forward

The official Advisory Council/DWD bill has just been introduced, AB819. So, here is a rundown of what has been happening with unemployment law over the last several months, organized by proposal.

Department Proposals

  • A second SSDI prohibition, D15-01, to replace the current prohibition was approved in April 2015 and back-dated in May 2015. But, after the Department started winning the court cases challenging the old SSDI prohibition (see this post for the details), this proposal disappeared from the Department’s legislative draft at the council’s September 2015 meeting. But, after the Labor and Industry Review Commission ruled in November 2015 that departmental error had occurred when appeal tribunals (but not the Commission) had originally ruled in favor of claimants regarding dual receipt of SSDI and UI benefits (and so no repayment of UI benefits previously received was proper), this proposal re-emerged at the November 2015 council meeting in the Department’s legislative drafts and is now part of AB819. Why? This second SSDI prohibition is back-dated to January 2014, the effective date of the original SSDI prohibition.
  • D15-02 is a house-keeping change that allows the Department to issue determinations against out-of-state employers in combined wage claims for being at fault for an erroneous benefit payment to a claimant. This proposal is part of AB416 and has been enacted in 2015 Wisconsin Act 86.
  • D15-03 applies the Treasury offset program to employers, as described previously in this post. This proposal is part of AB416 and has been enacted in 2015 Wisconsin Act 86. Because of this quick enactment, employers will be subject to treasury offsets for their 2015 tax returns for any unemployment taxes for which they have been found individually liable.
  • D15-04 sets up essentially a backup insurance program for reimbursable employers who get their unemployment accounts swindled by identity fraud (and so have little to no hope of ever recovering the stolen benefits). The final recommendation from the council was for reimbursable employers to be taxed initially in order to create a fund of $1 million for covering themselves against identity fraud, essentially the second option of the three presented. This proposal is part of AB819.
  • D15-05 corrects a hole in the statutes that accidentally left LLPs out of the definition of employer (see also this DWD memo on this issue). This proposal is part of AB819.
  • The Advisory Council approved the Department’s appeals modernization proposal, D15-06, at the 7 January 2016 meeting. LRB draft language was prepped soon thereafter. Perhaps the most significant change in this proposal — notice by Internet in place of postal mail — has NOT received any discussion of comment from council members, however. This proposal is now part of AB819.
  • A renewed work-share program, D15-07, is part of AB416 and has been enacted as 2015 Wisconsin Act 86.
  • Proposed changes to the definition of claimant concealment in D15-08 (described in this previous post and described in a Department memo (discussed in this post) are part of AB819. Additional criminal penalties for concealment in AB533 continue to advance in the legislature. To see what all the fuss is about, take a look at this January 21st Assembly Committee on Public Benefit Reform hearing regarding AB533 and other UI bills or read this LIRC memo on the proposed concealment changes.
  • Technical changes in D15-09 and included in AB819 will allow the Department to distinguish able and available determinations from separation determinations.
  • D15-10 eliminates the publication of the claimant benefit tables within the statutes and is included in AB819.
  • Major changes to the process for getting unemployment decisions reviewed in circuit court, set forth in D15-11, are part of AB819. These changes were previously described here and here.
  • D15-12 allows the same protocols for unemployment taxes in regards to fiscal agents in adult care to apply to fiscal agents in child care situations. This proposal is part of AB819.
  • D15-13 ends the sunset date in 2034 for the program integrity fund (i.e., the fund for receiving some of the monies from concealment enforcement) since the Department now expects concealment monies to continue in perpetuity. See the next two proposals for why.
  • The Department’s proposals for a program integrity slush fund, D15-14 and D15-15, are part of AB819.

Labor and Management Proposals
At the Advisory Council’s 19 January 2016 meeting, the council took action on various management and labor proposals and the agreed-to changes have been incorporated in AB819.

The management proposals that the council agreed to include significant changes to what will be considered suitable work:

  • During the first six weeks of a job search, suitable work that a claimant MUST accept will be those jobs that (1) do not have a lower grade of skill than one or more of his or her most recent jobs and (2) have had an hourly wage that is 75 percent or more of what the claimant previously earned in his or her most recent, highest paying job.
  • After the first six weeks, suitable work means any work the claimant is capable of performing regardless of prior experience, skills, or training, as long as the wages for that job are above the lowest quartile wage-level in the claimant’s relevant labor market.

Once a job offer is considered suitable work for a claimant, then the claimant only has good cause for declining the job offer if the claimant’s personal safety is at risk, the claimant’s sincerely held religious beliefs conflict with the work, the work entails an unreasonable commuting distance, or some other compelling reason makes accepting the offer unreasonable. These changes to what will be considered suitable work will also apply to those who tentatively accept a job and then quit within the first thirty days.

In addition, this accepted management proposal will either eliminate unemployment eligibility entirely for anyone receiving temporary or partial workers’ compensation benefits or mandate offsets against UI benefits for those receiving these kind of workers’ compensation benefits (the specific type of workers’ compensation benefit being received leads to the different kinds of treatment). In other words, the SSDI prohibition is being expanded to workers’ compensation benefits. Also, anyone making a mistake in how they report their specific workers’ compensation benefits will, under the new on-line filing system, likely face a concealment charge for his or her mistake in reporting the kind of workers’ compensation benefits he or she is receiving.

These management-sponsored changes will take effect four weeks after enactment.

The labor proposals that the council agreed to include:

  • repealing the mis-classification prohibitions in workers’ compensation and fair employment law,
  • creating an administrative penalty for mis-classification for unemployment purposes of $500 per employee (capped at $7,500) when construction employers (and only construction employers) knowingly and intentionally provide false information to the Department (NOTE: compare this definition with the proposed changes to claimant concealment) for the purpose of misclassifying or attempting to mis-classify an employee,
  • fining employers in painting and sheetrock work $1,000 per incident (capped at $10,000 per calendar year) when coercing employees into accepting non-employee status for unemployment purposes, and
  • fining construction employers $1,000 per employee (with a maximum of $25,000) for subsequent violations as well as possible referral for criminal prosecution.

These mis-classification changes will take effect six months after passage.

Budget Bill Fixes
The LIRC funding fix bill, discussed here, is also right now being considered by the legislature.

The call in the budget bill for the Department to create suitable work rules for claimants has been eliminated by the management-sponsored changes to suitable work described above.

Update (12 June 2021): Fixed broken DWD links to labor proposals and management proposals that the Advisory Council agreed to.

Retroactive SSDI

The Department of Workforce Development continues to pursue its cause celebré of keeping recipients of Social Security Disability Income (“SSDI”) from receiving unemployment benefits based on their work. As noted previously, the number of claimants affected by this issue keeps increasing (originally 50 and now numbering around 3,500 claimants), a recent court case agreed with the Department about the prohibition on receiving all unemployment benefits allegedly set forth in current unemployment law, and new legislation accomplishing this complete ban on unemployment benefits that will be retroactive to 5 January 2014 has been adopted by the Advisory Council and the Department.

At the 18 June 2015 Advisory Council meeting, a draft of Department-sponsored legislation (see pp. 7-9) was distributed. In this draft legislation, Wis. Stat. § 108.04(12)(f)1 is re-numbered (f)3 and amended to read:

(f)3. a. Any Except as provided in Subd. 3. b. to d., an individual who actually receives social security disability insurance benefits under 42 USC ch. 7 subch. II in a given week is ineligible for benefits paid or payable in that same week under this chapter for each week in the entire month in which a social security disability insurance payment is issued to the individual.

Wis. Stat. § 108.04(12)(f)1m is created and reads:

The intent of the legislature in enacting this paragraph is to prevent the payment of duplicative government benefits for the replacement of lost earnings or income, regardless of an individual’s ability to work.

Wis. Stat. § 108.04(12)(f)2 is re-numbered (f)4 and amended to read:

Information that the department receives or acquires from the federal social security administration that an individual is receiving regarding the issuance of social security disability insurance benefits under 42 USC ch. 7 subch. II in a given week payments is considered conclusive, absent clear and convincing evidence that the information was erroneous.

Wis. Stat. § 108.04(12)(f)2m is created and reads:

In this paragraph,”social security disability insurance payment” means a payment of social security disability insurance benefits under 42 USC ch. 7 subch. II.

Wis. Stat. § 108.04(12)(f)3, with sub-sections b, c, and d, are created and read:

b. In the first month a social security disability insurance payment is first issued to an individual, the individual is ineligible for benefits under this chapter for each week beginning with the week the social security disability insurance payment is issued to the individual and all subsequent weeks in that month.

c. Following a cessation of social security disability insurance payments to an individual and upon the individual again being issued a social security disability insurance payment, the individual is ineligible for benefits under this chapter for each week beginning with the week the social security disability insurance payment is issued to the individual and all subsequent weeks in that month.

d. Following cessation of social security disability insurance payments, an individual may be eligible for benefits under this chapter, if otherwise qualified, beginning with the week following the last Saturday of the month in which the individual is issued his or her final social security disability insurance payment.

As evident in this draft language, the general prohibition current set forth in unemployment law and based on “receiving” SSDI benefits (see Kluczynski) is replaced with specific language that applies SSDI monthly benefits across all weeks of unemployment eligibility. While not the most artful , this proposed language most likely will accomplish its goal of making SSDI recipients ineligible for any unemployment benefits for as long as they are receiving monthly SSDI checks.

NOTE: Obviously, this proposal still does nothing to address the problem on the employer end that will make them immune to any unemployment-related consequences — i.e., changes to their experience ratings — when laying off SSDI recipients. Moreover, this change is still making an artificial distinction between SSDI benefits and regular social security benefits. For instance, SSDI recipients have their SSDI benefits become regular social security benefits upon reaching retirement age and no longer receive “SSDI” benefits.

Finally, this draft language contains the startlingly retroactive application to 5 January 2014 of this prohibition (see pp.14 and 13):

(1) CONCURRENT RECEIPT OF SSDI AND UI BENEFITS. The treatment of section 108.04(2)(h) and (12)(f)1., 1m., 2., 2m., and 3. b. to d. of the statutes and SECTION 27(2) of this act take effect retroactively to January 5, 2014.

[SECTION 27] (2) CONCURRENT RECEIPT OF SSDI AND UI BENEFITS. The treatment of section 108.04(2)(h) and (12)(f)1., 1m., 2., 2m., and 3. b. to d. of the statutes first applies retroactively to determinations issued under section 108.09 of the statutes on the effective date of this subsection.

SSDI and unemployment: recent developments

A previous post in April 2015 described how the Department of Workforce Development is attempting to get around the Labor and Industry Review Commission’s decision in Kluczynski.

Since that post, there has been a series of new developments.

The number of SSDI claimants keeps increasing

When the Department first proposed eliminating eligibility for unemployment benefits for all those receiving SSDI benefits, the Department indicated that the prohibition was likely to affect no more than fifty claimants.

In February 2015, the Department informed the Advisory Council that the SSDI ban affected 687 claimants in January 2014 when enforcement began.

In May 2015, this number has increased even further. The Advisory Council’s 2015 report at p.8 has the following update on the SSDI prohibition:

SSDI and UI Payments

2013 Wisconsin Act 36 provides a claimant cannot simultaneously collect both Social Security Disability Insurance (SSDI) benefits and UI benefits.

Primary Statute Created: Wis. Stat. §§108.04 (2) (h) and 108.04 (12)(f).

The ban on simultaneously collecting both Social Security Disability Insurance (SSDI) benefits and UI benefits saved hundreds of thousands of dollars for the UI Trust Fund as close to 3,500 UI claims have been denied through early May 2015.

DWD wants to back-date its new SSDI legislation to 4 January 2014

As previously noted, in April 2015 the Advisory Council approved a new prohibition on SSDI benefits intended to fix the poor drafting of the original SSDI prohibition.

At the May 19th council meeting, the Department announced that this new SSDI prohibition would be back-dated to 4 January 2014, the date of the original SSDI prohibition. This back-dating is already included in the DWD-sponsored bill being drafted.

A recent court case found in favor of the Department

A few cases continue to be appealed concerning claimants receiving SSDI benefits who still want their unemployment benefits because of their prior work. Here is an excerpt from a recent letter I sent the Commission in one of those cases. In this letter, I describe a circuit court decision that found Kluczynski unpersuasive.

This appeal to the Commission concerns the Commission’s understanding of Wis. Stat. § 108.04(12)(f)(1), enacted pursuant to 2013 Wis. Act 36, and as detailed in Kluczynski, UI Hearing No. 14400214AP (30 May 2014).

In Kluczynski, the Commission held that this statute unambiguously restricted receipt of unemployment benefits to the “given week” a claimant “actually receives” his or her SSDI benefits. In other weeks where unemployment benefits can be received and for which no disability benefits are actually received, claimants are still eligible for their unemployment benefits.

As the Commission and the Department are aware, Judge Neiss recently held in DWD v. LIRC, Dane County Circuit Court Case No. 2014-CV-3249 (27 May 2015) that the statutory text at issue here was ambiguous because two state agencies — the Commission and the Department — offered opposing interpretations of the statute. The court then goes on to observe that an intransitive definition of “receives” means the act of receiving, and so a person who “actually receives [SSDI benefits] in a given week” is, pursuant to Wis. Stat. § 108.04(12)(f)(1), someone who is identified as an SSDI recipient for each week of their unemployment eligibility. As a result, Judge Neiss concluded, this prohibition on receiving unemployment benefits applied constructively to all the weeks in a month despite the modifiers “actually . . . in a given week” in the statute about “receiving” SSDI benefits. In reaching this conclusion, Judge Neiss has seemingly stretched statutory text to create an ambiguity and reach an intended outcome rather than first reading the text itself as part of the state’s unemployment law as a whole.

NOTE: As noted in Kluczynski, constructive receipt of one-time payment across several weeks in order to determine eligibility for unemployment benefits is provided for in Wis. Stat. § 108.05(7)(d) regarding pension payments. So, there is no need to find ambiguity in one provision of unemployment law to reach a result for which another provision of unemployment already offers unambiguous language regarding the constructive receipt of payments. As proffered by the Commission in Kluczynski, this language could have accomplished the intended result simply by replacing “shall allocate and attribute” with “shall deem and attribute” in this constructive receipt language.

The Commission should not adopt this outcome in this appeal but instead affirm its analysis in Kluczynski. The Commission’s explanation of its analysis in Kluczynski did NOT imply that this statutory text was actually ambiguous, as Judge Neiss holds. Rather, the Commission explained in its memorandum opinion in Kluczynski why the Department’s arguments for its proffered interpretation of unambiguous text are mistaken and why its arguments about the statute being ambiguous were insufficient. Because the statutory text as written does not accomplish its intended result, it should not be rewritten by the Commission or the courts to do so.

JFC (really DWD) targets LIRC

Workers compensation administration is NOT being transferred from DWD. The workers compensation ALJs are being moved to the Division of Hearings and Appeals, however.

In unemployment, the Joint Finance Committee is approving an increase in the concealment surcharge to 40%. At present, this surcharge is 15%. The additional 25% will be used for program integrity purposes — i.e., auditing claimants. Additional criminal penalties for concealment are being deleted.

And, for the Labor and Industry Review Commission, a budget cut of $434,900 (out of a total budget of $3,612,000 and a sizable chunk of the Commission’s UI budget), transferring the cut funds to DWD for additional “program integrity,” and making the general counsel a political appointment by the governor:

18. Labor and Industry Review Commission (LIRC). Transfer the limited administrative attachment for LIRC from the Department of Workforce Development (DWD) to the Department of Administration (DOA). Further, transfer LIRC’s appropriations to be budgeted separately under Chapter 20 of the appropriation schedule. Reduce LIRC federal unemployment administration funding by $434,900 FED annually and, to the extent allowable under federal unemployment insurance (UI) law, provide these funds for UI program integrity purposes. DWD’s UI administration appropriation would be increased by $434,900 annually to reflect this provision. [Under the motion, LIRC would be attached to DOA under s.15.03 for limited administrative purposes, but would have its own appropriation schedule (currently LIRC is budgeted as a program under DWD). The provision that the Department (currently DWD, DOA under the motion) submit LIRC’s budget to the Governor without change would remain] Additionally, convert 1.0 position from classified to unclassified, and specify the Governor appoint the LIRC general counsel position.

Apparently, this provision is payback for the Commission’s red-flag memos about SSDI and concealment. These budget shenanigans raise obvious questions about how independent the Commission can really be.

SSDI benefits and unemployment

In 2012, the Department of Workforce Development introduced numerous proposed changes to unemployment law, and one of those proposals, D12-05, sought to ban recipients of Social Security Disability Income (SSDI) from receiving unemployment benefits.

After back and forth between the members of the Advisory Council and the Department, a new version of the Department’s proposed ban on unemployment benefits when receiving SSDI benefits was drafted, supported by the council, and passed by the legislature.

In 2014, however, the Labor and Industry Review Commission found that the actual statutory language did not accomplish what the Department intended and held that the ban on receiving unemployment benefits only applied for the week in which a person’s monthly SSDI benefits were paid. Since then, the Department has appealed each and every Commission decision allowing claimants receiving SSDI benefits to continue receiving some unemployment benefits (about eleven such cases in total). An amicus brief being filed in some of these circuit court cases has the details about these events and issues.

This amicus brief also demonstrates the fundamental flaw in the Department’s push to keep SSDI recipients from receiving unemployment benefits, namely the Department’s presumption that SSDI recipients do not work and leave the labor market. As detailed in this amicus brief, not only do folks receiving SSDI benefits continue to work in numerous kinds of jobs, they are also encouraged to do so.

Undeterred, the Department explained at the 19 February 2015 Advisory Council meeting that a proposal for eliminating all unemployment eligibility for those receiving SSDI benefits was being developed. At the 19 March 2015 council meeting, the Department presented this new language in D15-01 to make the ban on unemployment eligibility apply to all weeks SSDI recipients receive unemployment benefits.

To establish why this new and total ban was needed, the Department informed council members that in January 2014, when the first ban on unemployment eligibility for SSDI recipients was instituted, 687 claimants were immediately disqualified because they notified the Department that month that they were receiving SSDI benefits. This 687 number bears repeating: the SSDI ban as implemented by the Department stopped unemployment benefits for nearly 700 claimants. And, only eleven or so claimants who appealed their cases to the Commission managed to retain some eligibility.

The Department’s recently released Financial Outlook Report at p.34 shows the financial impact this ban on unemployment benefits for SSDI recipients has had: nearly $1.5 million annually is not being paid to claimants based on the work they have performed the previous year.

Staffers in the Secretary’s office of DWD recently asked the Commission to identify possible legal problems in the Department’s unemployment proposals. The Commission did so, and reported to the Advisory Council the problems with the Department’s SSDI proposals arising from the Commission’s legal analysis. The Commission’s memo reveals three basic problems with the Department’s SSDI efforts:

  • a total ban on unemployment eligibility discriminates against the disabled
  • a ban on unemployment eligibility because of disability is inconsistent with other provisions of unemployment law
  • a complete ban on unemployment eligibility is far too broad relative to the income and eligibility of many if not most individual claimants

In response, at the April 2015 council meeting the Department lambasted the Commission’s memorandum as driven by a political agenda rather than legal analysis. Scott Manley, WMC vice-president, chimed in to endorse the Department’s criticism of the Commission’s “political” opinions. These conclusions were especially remarkable when the Commission’s memorandum represents the first time that council members were presented with the Kluczynski decision at issue in these SSDI cases.

The Advisory Council, however, apparently accepted the Department’s conclusion about SSDI benefits. After the members caucused, they indicated that they approved of the newly proposed statutory language in D15-01 and that the Department could go ahead and present this proposal to the legislature.