Absenteeism decision excludes zero-tolerance policy as misconduct

Today’s appeals court decision in DWD v. LIRC (hereafter referred to as Beres), Appeal No. 2016-AP-1365 (recommended for publication) holds that an employer’s absenteeism policy of one discharge in the first 90 days of a probationary period does NOT qualify as per se misconduct.

In this case, the employee landed a job at a nursing home. Flu-like symptoms, however, led her to miss work, and the employer let her go because she missed a day of work during her 90-day probationary period. When the employee filed a claim for unemployment benefits, the Department found misconduct because she violated the employer’s zero-tolerance absenteeism policy. Per Wis. Stat. § 108.04(5)(e) (emphasis supplied):

Absenteeism by an employee on more than 2 occasions within the 120-day period before the date of the employee’s termination, unless otherwise specified by his or her employer in an employment manual of which the employee has acknowledged receipt with his or her signature . . .

The Department has concluded that this italicized portion of this statute allows employers to decide for themselves how many absences will constitute misconduct for unemployment purposes.

NOTE: This position is a stunning development in contradiction of the rest of unemployment law that presumes employee eligibility for unemployment benefits and establishes the economic importance of unemployment benefits for addressing macro-economic issues in the state’s economy. The Department’s stance means that employers gain the unilateral ability under this provision to determine for themselves when an employee commits misconduct for unemployment purposes.

The Commission reversed, holding that the more than two absences in 120 days provisions without notice sets a floor for a finding of misconduct. The employee was not responsible for her illness, the Commission noted, and so she missed work through no fault of her own — the classic formulation about when employees are eligible for unemployment benefits.

After a circuit court over-turned the Commission’s decision and agreed with the Department, the Commission appealed the case to the appeals court. The appeals court agreed with the Commission that its interpretation of Wis. Stat. § 108.04(5)(e) was more reasonable than the Department’s. The appeals court in Beres at ¶¶18-20 explained:

The purpose of unemployment insurance benefits is to serve as a bridge for employees from one job to the next or “to cushion the effect of unemployment,” absent “actions or conduct evincing such willful or wanton disregard of an employer’s interests.” Wis. Stat. § 108.04(5); Boynton Cab, 237 Wis. at 258-59.

An example illustrates the reasonableness of LIRC’s interpretation that Beres’ actions did not rise to the level to deny benefits. Assume Beres was found to be in a tavern during her scheduled shift and, when called, lied about being sick. At the opposite end of the spectrum, assume that Beres was involved in a serious car accident within two hours of the start of her shift due to no fault of her own and required hospitalization. In both of these examples, Beres would be in violation of [the employer’s] attendance policy. LIRC’s interpretation of Wis. Stat. § 108.04(5) and (5)(e) allows an examination of the employee’s conduct in relation to both the employer’s policy as well as the policy that unemployment benefits should only be denied if the employee engages in actions constituting misconduct or substantial fault. The first example would likely qualify as misconduct under both § 108.04(5) and [the employer’s] written attendance policy, whereas the second example is a technical violation of [the employer’s] attendance policy, but is not an act of misconduct or substantial fault.

Employers are free to adopt a “zero-tolerance” attendance policy and discharge employees for that reason, but not every discharge qualifies as misconduct for unemployment insurance purposes. As our supreme court explained, “The principle that violation of a valid work rule may justify discharge but at the same time may not amount to statutory ‘misconduct’ for unemployment compensation purposes has been repeatedly recognized by this court.” Casey, 71 Wis.2d at 819-20. Similarly, this court found in Operton that employers have “the right to have high expectations of its employees and also [have] the right to discharge an employee for not meeting their expectations,” but we concluded that high expectations were insufficient to deny unemployment benefits. See Operton, 369 Wis.2d 166, ¶31.

A few additional comments about this decision are warranted. First, the appeals court gets the legislative history of this new absenteeism provision wrong. In Beres at ¶2, the appeals court describes the history this way:

Prompted by concerns within the employer community that eligibility for unemployment benefits was too generous, the legislature, in 2013, made wholesale changes to the unemployment benefit law, including modifying the absenteeism ineligibility criteria from “5 or more” absences without notice in a twelve-month period to “more than 2” absences without notice in a 120-day period, “unless otherwise specified by his or her employer in an employment manual.Compare Wis. Stat. § 108.04(5g)(c) (2011-12), with § 108.04(5)(e) (emphasis added). It is this final clause that is at the heart of the dispute.

In actuality, the concerns prompted by the employer community were only what the Department noted when it — on its own initiative — originated an extensive re-write of unemployment law. See D12-01. The Advisory Council actually rejected these proposed changes and instead put forward the following changes to the then existing absenteeism provisions in Wis. Stat. § 108.05(5g):

“(5g) DISCHARGE FOR FAILURE TO NOTIFY EMPLOYER OF ABSENTEEISM OR TARDINESS.

(a) If an employee is discharged for failing to notify his or her employer of absenteeism or tardiness that becomes excessive, and the employer has complied with the requirements of par. (d) with respect to that employee, the employee is ineligible to receive benefits until 6 weeks have elapsed since the end of the week in which the discharge occurs and the employee earns wages after the week in which the discharge occurs equal to at least 6 times the employee’s weekly benefit rate under s. 108.05 (1) in employment or other work covered by the unemployment insurance law of any state or the federal government. For purposes of requalification, the employee’s weekly benefit rate shall be the rate that would have been paid had the discharge not occurred.

(b) For purposes of this subsection, tardiness becomes excessive if an employee is late for 6 4 or more scheduled workdays in the 12 month 120 day period preceding the date of the discharge without providing adequate notice to his or her employer.

(c) For purposes of this subsection, absenteeism becomes excessive if an employee is absent for 5 2 or more scheduled workdays in the 12-month 120 day period preceding the date of the discharge without providing adequate notice to his or her employer.

(d) 1. The requalifying requirements under par. (a) apply only if the employer has a written policy on notification of tardiness or absences that:

a. Defines what constitutes a single occurrence of tardiness or absenteeism;

b. Describes the process for providing adequate notice of tardiness or absence, and, regarding tardiness, which gives the employee a reasonable time for providing notice and which at least allows the employee the opportunity to provide notice as soon as practically possible; and

c. Notifies the employee that failure to provide adequate notice of an absence or tardiness may lead to discharge.

2. The employer shall provide a copy of the written policy under subd. 1. to each employee and shall have written evidence that the employee received a copy of that policy.

3. The employer must have given the employee at least one warning concerning the employee’s violation of the employer’s written policy under subd. 1. within the 12 month period preceding the date of the discharge.

4. The employer must apply the written policy under subd. 1. uniformly to all employees of the employer.

(e) The department shall charge to the fund’s balancing account the cost of any benefits paid to an employee that are otherwise chargeable to the account of an employer that is subject to the contribution requirements under ss. 108.17 and 108.18 if the employee is discharged by that employer and par. (a) applies.

(em) If an employee is not disqualified under this subsection, the employee may nevertheless be subject to the disqualification under sub. (5). [general misconduct law]

As obvious, this proposal is not what ended up being enacted. SeeAdvisory Council Meeting — 1 April 2013” (council declined to adopt proposed substantial fault standard but recommended adding various examples of misconduct). The Department, however, never acted on the Advisory Council’s recommendations. Instead, on 29 May 2013 the Joint Finance Committee added the rejected substantial fault and misconduct standards to the budget bill that eventually became 2013 Wis Act 20. SeeAdvisory Council — 2 May 2013 meeting — and legislative actions today” and “JFC UI amendments” (JFC motion to amend budget bill included various unemployment financing provisions and rejected substantial fault, misconduct, and quit provisions; DWD drafted bills that eventually became 2013 Wis. Act 36 never included the Advisory Council’s agreed-upon misconduct and quit proposals). Accordingly, these changes to unemployment law went against the express recommendations of the Advisory Council.

Second, the appeals court reaches its holding with either a de novo or due weight standard of deference. Beres at n.5. The proposed elimination of LIRC will likely mean that the Department replaces the Commission to whom courts defer on unemployment matters.

Third, a dissent in Beres at ¶¶22-31 essentially accepts the Department’s position that employers get to enact their own misconduct standards per this new absenteeism provision.

Given this dissent and how this argument, if accepted, essentially would undo unemployment eligibility in Wisconsin, a certiorari petition from the Department to the Wisconsin Supreme Court is likely, and I suspect such a petition will be accepted.

Job search problems continue

At the 13 April 2016 Advisory Council meeting, the Council received two letters from state residents concerning the limitations on work search waivers that took effect this past winter.

The first, a 31 March 2016 e-mail message (originally sent to Sen. Harsdorf), explained:

Hi: I work for a concrete company that lays people off in early winter. I have been there for 10 years and have been laid off every winter since I started. Some winters I’m off longer than others, it just depends on different factors. This year (Dec 18th) I was laid off and longer than other winters, so that brings up the issue.

So with the new regulations in the unemployment I/we are suppose to look for work after 12 weeks. My employer does not like to loose workers (Drivers) because with my companies requirements it’s kind of hard to find drivers without accidents and DWIs and enough experience.

What I am trying to say is,there should be some stipulations put into place for (work search after 12 weeks) I’m on my 12th day over the 12 weeks. I was just informed Tuesday that I’m finally going back this next Monday the 4th. It was up in the air for the last few weeks, due to road restrictions and lack of business. Then to add insult to injury I find out my work truck is in the shop ((due to other drivers using it while on lay off)) and wouldn’t be road worthy for another week.

I did not do the job service thing and in turn I’m going to loose $1110. I was suppose to sign up with [DWD] and start applying @ 4 places a week. I did not do this because, If I was offered a different job I would probably have to turn it down, and I will explain why. I worked a job back in 1995 to 2002 and I left for more $ and I ended up making less than the other job. I should have made $500–$600 more a month but it didn’t work out that way. Hence the phrase (the grass isn’t always greener on the other side of the fence) Since I have good benefits and wages with this job, I plan on staying for quite a while. So as far as the [job search requirements and work search waivers], there should be some changes made. I hope that I made sense… Please reply Thank You.

The second was a letter to the Council received on 28 March 2016:

Unemployment Insurance Advisory Council

I write this letter to each and every one of you, with hope it may do some good for the future beneficiaries, herself included.

My opinion; Whoever wrote and voted for this bill must be brain-dead, or forgot the reason for U.I. Without U.I. there would be many thousands of people on welfare. Do the math, which would be the most inexpensive way to go for the State and the U.S.government?

About me!

In my younger years I had a construction business in the Twin Cities area I struggled for years to build it into a profitable business. Than a recession hit. I was forced to sell. I began a new career with Glastron boat co. and later with Bombardier. Again, another recession. Bombardier closed all its facilities in the U.S. and again I was out of work. I than moved here to northwestern Wisconsin and started a new career with Burnett county Hiway dept. I worked there for 22 years. One day going home from work a lady ran over me on my motorcycle. It took two years to recover and of course I lost my job, as I didnt have enough sick leave to cover two years. I took an early retirement receiving only a small percentage of retirement income I had hoped for. When I was able I tried farming but that was a disaster, with prices what they are.

For the past two years I have worked for a dirt contractor as a dump truck driver. Last year they had there worst year in a decade, so my time was cut in half. My income from them was just over $6000. I filled for bankruptcy in 2015, something I will never get over. Through all of this I can’t recall ever drawing U.I. except for last year and this year. I must have a boatload of money paid on my behalf but yet I only draw $125 a week and have to jump your rope to even get that. Something is drastically wrong here. Its no wonder Donald Trump is so far ahead in the polls. WE NEED A CHANGE, A BIG CHANGE.

Let me tell you how this bill effects me and thousands just like me

I don’t have a computer and don’t even know how to operate one. My nearest job center is 42 miles away. I have signed up with them as requested, that is I think I have. I have had no confirmation of that. I have contacted employers within a reasonable distance. No response as of yet. I have to wonder what they will say when I tell them I have a job?

This, to me, seems like effort and money I don’t have down the drain, too accomplish nothing. Nothing fraudulent here:

I am CONFUSED and ANGRY

P.S. Maybe you should take off your high heels and come here for a couple of days. See how we live!

Notice that in both of these letters neither person has actually received all the unemployment benefits due them because of issues relating to registration at the job center of Wisconsin website, searching for jobs that likely pay less or have fewer benefits than their seasonal laid-off position, or jumping through hoops without feedback about which Department requirements are successfully completed.

In response to these letters, Janell Knutson explained to Council members that the writers of these letters were not asking for any specific changes and so she was just forwarding their concerns to the Council. Council members asked that she write the authors to let them know that the Advisory Council had received their letters.

“Substantial” changes to substantial fault

Last week, the Appeals Court issued a decision in Operton v. LIRC that significantly changes how the Labor and Industry Review Commission and the Department of Workforce Development have been applying the substantial fault disqualification put into affect in 2014 by the Legislature over the rejection of the Advisory Council.

The Commission had previously 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. Operton significantly changes what employees need to show about their alleged lack of skills or whether their mistakes were inadvertent or not.

The case arose from a Madison unemployment clinic client that Marilyn Townsend took on. She and her partner, Fred Wade, made a crafty, inside attack into what substantial fault means and broke it apart from within. The appeals court held in Operton that: (1) some kind of employee intent behind the mistakes at issue were 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. As a result, accidental qua inadvertent actions should not disqualify claimants any more.

NOTE: Accidents that cause substantial damage to an employer’s property, however, can still qualify as misconduct under another change passed by the legislature over the rejection of that change by the Advisory Council. See Hamson v. Ozark Motion Lines, UI Hearing No. 14004168MD (5 March 2015).

As noted previously, substantial fault led to sharp decline in benefit payments. Given how important unemployment benefits are to those who need to pay rent and buy food, this decision should have a significant impact for many. But, that impact might only play out for those realizing they need to appeal initial denials of their benefit claims. As has emerged with how the Department applied concealment law the past several years, the Department will simply ignore legal precedents with which it disagrees and then re-write the law to match the outcome it desired.

UPDATE (19 Sept. 2016): After numerous legislators wrote the Advisory Council in a letter dated 1 April 2013 containing 33 proposed changes to unemployment law, the Department drafted a table detailing these proposals relative to the Department proposals that the council had before it already. See alsoAdvisory Council Meeting — 18 April 2013” (describing events of the April 18th Advisory Council meeting and linking to certain documents relevant to this meeting, including the April 1st letter and the DWD table). In this table, the Department projects missed savings of $17 million through the substantial fault and new misconduct disqualifications that the Advisory Council had declined to adopt. No explanation is available regarding why this amount differs from the earlier $19.2 million figure in the February 2013 version of D12-01. As indicated here, the financial impact of substantial fault has actually been much greater: between $67 to $64 million.

 

AB819 signed into law

The Advisory Council Bill, AB819, was signed into law by Governor Walker and published on March 31st as 2015 Wis. Act 334. Details of this new law were described in this previous post about the bill.

The concealment changes will probably have the biggest impact on unemployment law. As noted previously, these changes mean that the Department will no longer need to show an intent to conceal when alleging concealment against claimants. Claimants will essentially be strictly liable for their mistakes and subject to steep and unforgiving concealment penalties.

Given the risk of making a mistake when filing an unemployment claim (especially as the claim filing process becomes increasingly complex), NO ONE SHOULD EVER FILE FOR UNEMPLOYMENT CLAIMS ANY LONGER. Since any mistake can now lead to a charge for concealment, claimants will be at the mercy of Department whims about when to consider a mistake as concealment or not.

If a person has no other choice but to file an unemployment claim, the only way to escape a concealment charge is to demonstrate that the mistake occurred because of advice from a Department representative. So, claimants should call up a Department representative and have that person walk him or her through the entire claim-filing process for EVERY weekly certification. Make sure to ask questions about everything that could possibly be an issue in your claim and to document the advice you receive from the representative about those issues. Note that is common for one representative to contradict the advice of a prior representative, so your notes about the advice you receive will be crucial to surviving a concealment charge.

Keep in mind that the Department has numerous notices during the claims-filing process about how folks should contact the Department with any questions they might have. So, take the Department up on this offer and actually ask for the kind of detailed advice you need to complete a successful unemployment claim.

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.

Criminalization and strict liability for concealment: moving forward

The official Advisory Council/DWD bill, AB819, passed the Assembly yesterday and is now ready for the Senate to take up (as reported previously, both the Assembly and the Senate had committee hearings on their respective versions of the DWD-UI bill; so far, only one elected official — Sen. Chris Larson — has voted against these changes to unemployment law).

Meanwhile, the criminalization of unemployment mistakes — aka concealment which will soon be redefined as strict liability — via AB533 was also passed by the Assembly this week. This bill even gained a sponsor — Rep. Rohrkaste. It was also significantly amended to criminalize individuals acting on behalf of employers who:

knowingly makes a false statement or representation in connection with any report or as to any information duly required by the department under this chapter, or who knowingly refuses or fails to keep any records or to furnish any reports or information duly required by the department under this chapter and who, as a result of that false statement or representation or knowing refusal or failure, avoids liability to the department for contributions, reimbursements, assessments, or other amounts under this chapter . . .

In other words, employers and their agents who make “knowing” mistakes on their unemployment reports may face the same criminal penalties that claimants do for their mistakes on their weekly claims. Watch out employers.

NOTE (19 February 2016): Mike Ducheck from LRB points out a major mistake of mine: the substitute amendment was NOT passed but tabled. Instead, the Assembly passed an amendment that deleted several lines from the bill, including the requirement that a “person knowingly made false statements or representations” for these new criminal penalties to apply. In other words, there is no criminalization for employers’ mistaken unemployment reporting, only claimants’ mistaken unemployment reporting once the recommended changes to concealment in AB819 pass.

Note as well that these new criminal penalties will only apply for the “mistakes” that occur after this bill becomes law.