Despite Operton and Easterling, no change with substantial fault at DWD

The Easterling and especially Operton decisions should indicate that inadvertent — i.e., careless or unintentional mistakes — on the job should not disqualify someone from unemployment benefits.

The Department, however, is not happy with these outcomes. At the Advisory Council’s 16 March 2017 meeting, the following public comments were made about Easterling:

Ms. Knutson stated the decision in this case will provide general guidance to adjudicators and ALJs; however, cases are very fact-intensive to determine if it is truly an inadvertent error or substantial fault. Mr. Manley stated there should be a way to sharpen the definition of substantial fault to leave less gray area for interpretation and would not allow exceptions that disregard the entire rule. An employee that signed an employer policy of expectations that were not followed should not be able to claim that those policies were not followed because of a mistake to claim benefits. Mr. Manley expressed concern that the decision by the Court of Appeals is not within the spirit of what the Legislature intended to be as the definition of substantial fault. If decisions are based on this conclusion because the statute is not worded as clearly as it should be, it should be revisited.

Meeting Materials at 12.

NOTE: Both the Department and the Advisory Council have apparently forgotten that the council rejected substantial fault. Mr. Manley’s comments, moreover, ignore the basic requirements in unemployment law that employees NOT be disqualified for their unintentional, performance-related mistakes.

Inside the Department, however, the comments have not been so sanguine. In mid-May after Operton was decided, a Department insider explained to me:

The Operton decision went to the adjudication staff soon after it was issued. At a staff meeting a few days later, a supervisor said that there would be no new training on substantial fault despite the decision.

This lack of re-training in light of Operton is important. After Easterling, Ms. Knutsen simply noted that substantial fault involved a fact-intensive inquiry but provided NO explanation about what the Department would do to implement and follow Easterling. Now, a Department supervisor is indicating that there would be NO new training in how to follow the Wisconsin Supreme Court precedent in Operton. In other words, the Department is continuing to apply its pre-Operton and pre-Easterling standards for substantial fault.

A recent clinic case confirms this observation. In this case, the Department denied unemployment benefits to a teller discharged for cash-handling errors. The initial determination stated:

The employee was discharged because her performance did not meet the employer’s expectations. Her final incident was within her control; her actions do not rise to the level of misconduct. It was within the employee’s control to meet the reasonable requirements; therefore, her discharge is considered to be for substantial fault on the part of the employee.

Here, the Department is still applying its pre-Operton and pre-Easterling analysis of determining whether the employee was in control of the action in question. Under this framework, inadvertent errors only occur when employees lack control over their actions. The unintentional or accidental nature of the errors does not matter at all under this analysis.

NOTE: At the 17 November 2016 Advisory Council meeting, the Department presented a memorandum describing some misconduct and substantial fault decisions. The decisions covered in the substantial fault section of the memorandum describe only a few Commission decisions over whether the employee’s actions were major or minor infractions of company rules or involved absenteeism issues. There is no discussion of what constitutes reasonable employer expectations, what actions are reasonably in an employee’s control, what actions are inadvertent errors, and what actions are the result of an employee’s lack of skill, ability, or equipment.

Marilyn Townsend, Operton’s legal representative, took the teller’s case on and over-turned the initial denial of unemployment benefits at the hearing stage. The decision of the appeal tribunal, however, did not apply Operton despite the obvious similarities. At the hearing, there was no indication whatsoever that the teller’s errors were anything other than unintentional and accidental. Yet, the administrative law judge found that the teller essentially lacked the skills to do the work assigned her after a promotion (another exception to substantial fault) and then committed no errors after being demoted which would justify the discharge.

the record reveals that the employee requested additional training and support for her work performance issues. She did not receive the additional training and support which leads to the conclusion that she lacked the skill and ability to perform the job. The employee also struggled to perform the Phase II role and was demoted back to a Phase I role. While working in a Phase I role, the record demonstrated that the employee didn’t have any work performance matters. If she did have infractions in her Phase I role, those matters were not raised on the record by the employer.

So, there are decisions from the Court of Appeals and the state Supreme Court that explain that, pursuant to the statutory language for substantial fault, accidental or unintentional mistakes on the job are inadvertent errors and do not qualify as substantial fault. As of June 2017, however, the Department is ignoring these court decisions when applying what it believes substantial fault should or should not include.

What should claimants do? Appeal. As the Department and the Department’s administrative law judges are NOT following court precedent, claimants have to appeal initial determinations denying them unemployment benefits to appeal tribunals and then the Commission. The Commission will follow court precedent about inadvertent errors and reverse disqualifications based on accidental and unintentional errors on the job.

Operton oral argument

Today, the Wisconsin Supreme Court held oral argument in Operton about whether substantial fault disqualifies employees from receiving unemployment benefits because of their inadvertent mistakes and what standard of deferral courts owe the Labor and Industry Review Commission in deciding unemployment cases.

Substantial fault is defined in Wis. Stat. § 108.04(5g)(a) as:

those acts or omissions of an employee over which the employee exercised reasonable control and which violate reasonable requirements of the job but shall not include:

  1. Minor infractions of rules unless such infractions are repeated after a warning was received by the employee,
  2. inadvertent mistakes made by the employee, nor
  3. Failures to perform work because of insufficient skill, ability, or equipment.

The history of this provision is described in an amicus brief I filed on behalf of the Wisconsin Employment Lawyers Association. Basically, the Unemployment Insurance Advisory Council had rejected this change in unemployment law, but the Department worked with the Joint Finance Committee to add this provision to the 2013 budget bill.

Prior to Operton, the Commission had held that substantial fault equals negligence and that the only way to avoid disqualification for a work-related mistake was for the claimant to demonstrate he or she lacked the skills or equipment to do the required work or that there was no prior warning from the employer about avoiding the mistake at issue. The claimant in Operton failed to meet this standard, according to the Commission, because her few cash-handling mistakes (eight over 20 months of employment) occurred after a warning and were not because of a lack of skill, ability, or equipment. Whether these errors qualified as inadvertent or not was never specifically addressed. The appeals court in Operton addressed exactly what is meant by an inadvertent mistake in the statute by holding that: (1) some kind of employee intent behind the mistakes at issue was necessary to show that the mistakes were more than inadvertent and (2) employer warnings did not automatically transform an inadvertent mistake into an intentional act.

Because the claimant won at the appeals court, argument started with counsel for the Commission, William Sherlin Sample. He began with an explanation about the Commission’s dispute with the appeals court over how the Commission’s prior misconduct decisions should be addressed. After a few comments or queries from the justices, that was all that was said directly about the deferral question. The rest of the oral argument featured questions about what the substantial fault disqualification meant and how to apply it.

Chief Justice Roggensack wanted to know whether the appeal tribunal held that there was no inadvertent error because the claimant was aware of the employer’s cash handling policies. In other words, did an inadvertent error turn on a lack of awareness of the employer’s job requirements? The appeal tribunal had stated:

[Operton] was aware of the employer’s policies, including the cash handling and WIC check procedures, but continued to make cash handling errors resulting in actual financial loss to the employer, after receiving multiple warnings. The record does not establish that the employee lacked the ability or skill to perform her work. As such, this appeal tribunal must find that her discharge was for substantial fault connected with her employment

The Commission disagreed with this equivalency. Simple awareness of an employer policy went to whether the employer’s job requirements were reasonable and did not address whether the actual on-the-job error was inadvertent or not.

NOTE: Indeed, to do otherwise would essentially mean that inadvertent mistakes on the job only occur when employees have no knowledge of what is required of them. It would essentially limit inadvertent errors to unreasonable job requirements and call into question why the provision for inadvertent errors existed in the first place.

In framing this question this way, Roggensack was essentially making the awareness of a rule the same as an intent to violate that rule. Awareness of an employer policy is not the same as being aware of the errors as they occur, however. Someone running a register that comes up short, for instance, may know that she should not come up short at the end of the day. But, the short register by itself does not indicate she had an intent to steal from the employer. There needs to be evidence that her intentional or grossly negligent actions were responsible for the register shortage. By equating mistake in this way with following an employer requirement, Roggensack is essentially doing what the Department has done with unemployment concealment.

Sample also explained to the justices that there was no express finding by the appeal tribunal or the Commission that the errors in question were NOT inadvertent errors. And, that explanation dovetailed with an issue that threaded through the oral argument: whether a finding that an employee’s mistake was inadvertent or not qualified as a finding of fact or a legal finding. For the Commission, this finding was strictly factual because it only touched on the “intent” of the employee when making the mistakes in question. As noted below, the justices had a different take.

Justice Kelly asked Sample about the relationship between unintentional mistakes for misconduct purposes versus inadvertent mistakes for substantial fault. While the dictionary definitions of inadvertent and unintentional rely on each other, Sample explained, the number of warnings Operton received transformed her mistakes from unintentional to intentional.

Justice Ann Bradley then tipped her hand and pointed out that Sample was making the same claim here that the court of appeals had rejected in its decision: namely that the Commission was merging the inadvertent errors provision with the infractions repeated after warning provision. For the Commission, this analysis by the appeals court did not apply because each successive warning to Operton made a claim of inadvertence less and less credible. Whereas the appeals court did not see any evidence of intent or willfulness by the employee in the appeal tribunal or Commission decision, Sample demurred, there was in actuality such evidence because a finding of no intent for misconduct purposes was NOT the same as a finding of unintentional conduct for the purposes of substantial fault.

Justice Gableman asked whether the number of errors can establish intent. Sample answered that such matters were handled on a case-by-case basis and that in Operton the “intent” in question arose from the series of errors the employee made.

Chief Justice Roggensack then pointed out that it appeared that the Commission was determining whether or not certain facts met a particular legal standard. During rebuttal, Sample again explained that there was no specific analysis of the errors as inadvertent and, that if such analysis was needed, a remand for additional evidence would be appropriate. Justice Abrahamson observed that when the facts are not in dispute — as in this case — the issue is usually whether those facts satisfy a particular legal standard. Where the facts are in dispute, she added, then the court is confronted with a mixed question of fact and law.

Marilyn Townsend represented Operton. After describing how unemployment benefits helped businesses, communities, and workers, Townsend faced questions from Justice Kelly about how to apply substantial fault. Did each mistake have to be analyzed in isolation or should they be examined as a group, he asked. Townsend answered both types of analysis could be applied, depending on the circumstances of each case. And, in Operton’s situation, she reported, each single mistake had to be examined separately from the others because of the amount of time between the mistakes and the distinct nature of the mistakes. The question was largely academic, however, as Townsend pointed out that the Commission never did an inadvertent error analysis for any of the eight errors in question.

Chief Justice Roggensack then returned to her earlier proposition concerning the portion of the appeal tribunal decision quoted above: should an awareness of a policy mean that the mistakes in violation of that policy constitute the required intent?

NOTE: Neither the parties nor the court addressed the issue that there can be degrees of intent. At present, the Commission generally requires a much higher level of intent for a finding of misconduct than it does in substantial fault cases. And, in Operton’s case, it is clear from the appeal tribunal decision and the briefing that she was unaware of the errors as they were being made. That is why the errors were inadvertent.

Justice Abrahamson asked Townsend which holding she preferred: the main holding in Operton or the holding by Justice Lundsten in his concurrence in which he observed that misconduct and substantial fault have important differences around the number of acts at issue and that each act has to be analyzed to determine whether it is something more than inadvertent. Townsend responded that, if forced to choose, she preferred the analysis in the concurrence.

Townsend also agreed with Chief Justice Roggensack that a temporal component had to be applied to each error at issue in the case.

NOTE: That is, each error had to be examined relative to other errors and what else was happening in the workplace in general.

Near the end of the oral argument, Justice Gableman observed that perhaps the case was about infractions and not inadvertent errors at all. In response, Justice Abrahamson posited that any of the three caveats to substantial fault could apply, and it was up the employee simply to show that he or she qualified for unemployment benefits under one of these three provisions.

NOTE: Gableman’s observation missed the distinction between an infraction and inadvertent error over which the appeals court hinged its decision. Infractions are acts over which a person has some control, like whether to call in when late to work, whereas inadvertent errors are accidental mistakes over which a person has no control, such as mis-dialing a phone number. Abrahamson’s response was also somewhat misleading, as it presumed that employees have to establish their eligibility for unemployment benefits rather than the employer demonstrating a disqualification.

Overall, the parties and the justices were effective in getting their points across. Probably the earliest for a decision is April 2017, and there should be a decision no later than June of next year.

The actual financial impact of substantial fault

Back in April 2016, I described the confusion about the two versions of the Department’s substantial fault proposals and calculated the financial impact of substantial fault based on that estimate.

But, there is actual data available for determining the financial impact of substantial fault. Wisconsin reports its handling of unemployment claims to the Employment & Training Administration of the United State Department of Labor. This federal agency then makes this data available to the public, and quarterly numbers regarding the number and outcome of non-monetary determinations is available via the ETA 207 series.

NOTE: Non-monetary determinations are those determinations that do NOT involve calculations to determine eligibility based on prior earnings or other kinds of monetary calculations. The data for non-monetary determinations includes determinations regarding discharges, voluntary leaving (i.e., quitting), and determinations regarding claimants’ able and available status, refusals of suitable work, adequate job search efforts, and other eligibility status issues. There is both a short description and a long description of this data.

Accordingly, this data can indicate specifically the kind of impact the substantial fault disqualification standard has on unemployment claims in the state of Wisconsin.

NOTE: The misconduct label for this data is used nationally because historically misconduct was the only disqualification standard used in discharge cases. But, starting in 2014, the misconduct data here for Wisconsin includes both misconduct and substantial fault determinations.

The substantial fault disqualification began to be applied by the Department in initial determinations issued on or after 5 January 2014. See 2013 Wis. Act 20 § 9351(1q) (new misconduct and substantial fault provisions “first apply with respect to determinations issued under section 108.09 of the statutes on January 5, 2014”).

Until the first quarter of 2014, the Department denied on average about 26% of all claimants who were discharged from their jobs. From the first quarter of 2014 until the latest available (the quarter ending June 2016), however, the number of discharge cases being denied jumped to 38.47% of all discharge determinations. This increase nearly doubled the number of denials from before 2014 — a stunning and remarkable jump in the number of claims being denied.

Percentage of discharge claims being denied

NOTE: The actual data for creating these charts is set forth in a table, WI Separation Data, compiled from the ETA 207 data.

This jump is even more shocking in light of the decline in discharge determinations since the start of 2014.

Number of Discharge Determinations over time From 2007 to the end of 2013, the number of discharge determinations averaged 19,462.43 per quarter. Not surprisingly, during the height of the last recession in 2009 and 2010, there were discharge determinations in some quarters that numbered over 21,000 or even 22,000. See Table: WI Separation Data. But, in general the number of discharge determinations per quarter hovered around 17,000 to 19,000. In the first quarter of 2014, however, the number of discharge determinations plummeted to under 14,000. And, the number of discharge determinations has continued to decline since then. From the start of 2014 to June 2016, the Department has issued on average only 12,605.50 discharge determinations per quarter.

NOTE: The total number of determinations being issued by the Department has not declined, however. Prior to 2014, the number of determinations issued per quarter averaged 58,945.25. From 2014 on, the average number of determinations being issued increased to 59,668.60 per quarter. As indicated in the table for WI Non-Separation Data, the number of determinations not connected to separation issues being issued jumped from 46.87% of all determinations per quarter prior to 2014 to 64.01% after 2014. In particular, much if not all of this increase in non-separation determinations concerns an approximately 26% increase in determinations regarding a claimant’s able and available status, a five-fold increase in determinations (from just over 3,000 determinations prior to 2014 to almost 16,000 determinations on average after the start of 2014) over a claimant’s failure to follow the Department’s reporting requirements, and a nearly 100-fold increase in determinations (around 13 cases per quarter prior to 2014 to nearly 1,200 per quarter after 2014) over a claimant’s failure to follow the Department’s job profiling services. In all three of these categories, the percentage of benefit denials has also jumped at least 10 percentage points on average after 2014.

It should also be noted that these non-separation denials generally do not disqualify a claimant for an extended period of time. For instance, a denial of benefits because of failing to report to Department-mandated profiling services or provide requested information is usually cured by reporting for those services or providing the needed information. As a result, the disqualifications from receiving unemployment benefits pursuant to these denials are generally short-term denials. A denial of benefits because of substantial fault or misconduct, on the other hand, lasts 7 weeks at a minimum and requires new earnings of 14X a claimant’s weekly benefit rate in order to re-qualify for unemployment benefits.

This decline in discharge determinations, however, does not indicate that the impact of substantial fault should be discounted in some way. Quarterly reports on each state’s unemployment system from the Employment & Training Administration indicate both the average weekly benefit rate for claimants during the previous twelve months and the average number of weeks unemployment benefits are being received during the last twelve months. The report for Wisconsin for the first quarter of 2015 indicates an average weekly benefit rate of $288.04 for the previous twelve months and an average duration for benefits of 14.8 weeks, leading to $4,262.99 in unemployment benefits at issue. Applying the pre-2014 25.99% denial ratio to the post-2014 12,605.50 discharge determinations that take place on average in each quarter means only 3,276.17 cases would be denied rather than the 4,852.00 being denied with substantial fault in place — a difference of 1,575.83 cases. Multiplying this number of cases by the $4,262.99 of unemployment benefits at issue leads to an amount of $6,717,747.53 per quarter being denied claimants currently under this new substantial fault standard. As substantial fault has now been in effect for ten quarters, the amount of unemployment benefits “saved,” or not paid to claimants, amounts to $67,177,475.32.

It is expected that substantial fault will also, on the whole, lead to employees filing fewer claims because claimants will learn how broad the substantial fault disqualification is and stop filing claims altogether. The data supports this trend. In the second quarter report in 2016, the weekly benefit rate for the last twelve months is $306.43, and the average duration of benefits for the previous year is 13.3 weeks. With these figures, the amount of benefits at issue is $4,075.52. Multiplying this amount by the 1,575.83 average number of cases per quarter denying unemployment benefits to claimants because of substantial fault leads to an amount of $6,422,326.68 per quarter being denied to claimants and a ten quarter amount of $64,223,266.82. As a result, the range of lost benefits because of substantial fault is between $67 and $64 million.

NOTE: The Department’s original estimate of $19.2 million per year, after 2.5 years, amounts to $48.4 million — approximately $15-$20 million less than what the actual data reveal.

So, even as fewer and fewer discharged employees are filing claims for unemployment benefits, the new substantial fault standard that become effective in 2014 is leading to thousands of claimants being denied millions in unemployment benefits.

Employer UI taxes declining because more UI claims being denied

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

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

Is job growth booming in Wisconsin?

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

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

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

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

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

Why are unemployment claims so low?

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

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

Denial rates for all initial determination issued

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

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

Ratio of Separation IDs to All IDs

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

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

Percentage of discharge claims being denied

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

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

Percentage of quit claims being denied

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

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

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

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

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

UI solvency done on backs of the unemployed

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

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

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

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

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

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

The financial impact of substantial fault

A document available on this blog is cited by the Appeals Court in Operton v. LIRC, namely the original Department proposal for substantial fault — D12-01.

The appeals court observes at n.5 on p.6 of its decision that this document does not quite match the version of D12-01 supplied by the Commission in its briefing. Even though both versions are dated 24 October 2012, the copy produced by the Commission has an actual number for the fiscal impact of the proposed addition of substantial fault and the changes to misconduct — $19.2 million per year. The original D12-01 document introduced at the 27 November 2012 Advisory Council meeting only stated that the fiscal impact was yet to be determined. From my records of the Advisory Council meetings, it appears that the Department made this revision to D12-01 at the 21 February 2013 council meeting.

Obviously, the Department added this fiscal impact information without otherwise noting this change. Certainly, this number reveals a staggering impact on Wisconsin claimants when UI data from 2013 is considered. In the fourth quarter of 2013, the average weekly benefit claimants received in Wisconsin that year was $276.14, and those unemployment benefits lasted 15.9 weeks on average (see p. 64 of the data report). Multiplying these numbers together leads to a total benefit amount received of $4,390.63. Divide this number into the proposed $19.2 million fiscal impact from substantial fault, and 4,510 claimants end up being disqualified under these changes in unemployment. Each year.