Winter work search concerns

As they say on a popular television show, “Winter is coming.” For Wisconsinites, winter means seasonal layoffs, as Wisconsin for the time being still has a winter.

Seasonal layoffs, however, no longer mean seasonal unemployment with work searches waived for the snowy months. Rather, DWD has instituted an 8 week + additional 4 week work search waivers that are complicated to follow and difficult to get. The Department’s work search FAQ has the needed information about the new work search requirements and the end of seasonal work search waivers.

Keep in mind that the end of seasonal work search waivers came when DWD adopted a proposal based in part on how Florida limited its work search waivers; see also this direct link to my comments on the proposed regs. Obviously, DWD did not consider that Florida has a much different winter than Wisconsin.

The limited work search waivers were enacted in 2013 but not put first into effect until the 2015-16 winter season.

So, the first time the public could respond to these new waivers was at the 17 November 2016 public hearing, and hundreds voiced their displeasure to this change in waiver practice.

As the minutes for the 19 January 2017 Advisory Council meeting explain (p.5 of the pdf):

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

These minutes leave out, however, that almost all of the comments — similar or not — were from employers. The 43 pp. summation of those comments show that employers were deeply concerned over retaining skilled and dedicated seasonal employees who were now at risk of leaving due to the new work search requirements that force employees during winter layoff months to search for and accept work with other employers and thus disrupt the operations of the original employer. Letters from Sen. Erpenbach, Sen. Harsdorf, and Sen. Carpenter also raised these concerns about employers losing valuable employees.

NOTE: Sen. Harsdorf’s bill to restore seasonal work search waivers, SB83, has not gone anywhere.

Apparently, nothing was done for the upcoming winter season that is now approaching. The only official response to this uproar is set forth in the last Q&A in the work search FAQ (emphasis supplied):

What is the policy basis for the requirement change?

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

The concerns of employers about keeping valuable employees through winter layoffs in a state that has a winter and staying competitive when work returns in the spring apparently mattered for naught.

But, employees are not simply thrown to the winter wolves or wampas. Here are three things claimants should keep in mind when performing their four jobs searches a week.

Canvassing periods In Wisconsin, claimants have during their first six weeks — their canvassing period — the right to refuse work outside of their typical job experience. For instance, if the claimant is a nurse, he or she can decline a McDonald’s job during the first six weeks of his or her job search. See, e.g., Einerson v. Milwaukee Institute of Art & Design, Inc., UI Hearing No. 09610221MW (29 April 2011) (employee properly declined to accept the newly created position during her canvassing period because the new position required non-professional responsibilities that encompassed significantly less skills than were required in her most recent employment).

Protection of labor standards After their six week canvassing period, employees must accept ANY job offer as long as it meets labor market criteria (not less than 25% of the average wage for that job during that shift in question in the local labor market — aka the relevant county). So, a person can decline a nursing job if the $8 an hour pay is less than 25% of the average, local labor market rate. See, e.g., Hemenway v. Life Style Staffing, UI Hearing No. 12002612MD (9 Jan. 2013) (employee entitled to refuse offers of new work from the employer if the conditions were substantially less favorable to him than those prevailing for similar work in the locality). These labor standards protections arise from long-standing federal requirements described in UIPL No. 41-98 (17 August 1998).

Unreasonable job offer conditions A claimant can turn down job offers if the commute or shift is not reasonable for the applicant. Commute is relative to the area (a twenty-file mile commute in Milwaukee could be too long but normal and expected in rural Wisconsin). And, a shift not previously worked by the claimant can also be grounds for declining the job. So, a nurse who typically worked first shift can decline a third shift job offer if she has little to no experience working third shifts. See DWD 128 for the details.

WinterWampa

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Update on 2017 unemployment legislation

The first and probably only hearing on the Advisory Council agreed-on bill, SB399, is slated for 12:30 today, 4 October 2017, at the Committee on Labor and Regulatory Reform in 201 Southeast of the Capitol.

This bill contains the Department’s proposals that the Advisory Council has approved (previously described in this post). Prior drafts of the bill are available here and here.

NOTE: The Advisory Council rejected Department proposals D17-03 (assessing employers for failing to provide employee records) and D17-06 (changing the burden of proof in certain unemployment cases) at the 9 August 2017 council meeting.

During discussions, management members of the Advisory Council made the following proposals:

  • Repeal the quit exception in Wis. Stat. § 108.04(7)(e). Under this provision, a claimant who quits a job within 30 days of being hired may retain their eligibility for unemployment benefits if the job that the claimant quit was not “suitable work” to begin with under Wis. Stat. § 108.04(8) OR the claimant could have refused to accept the under the federally-required labor standards provisions of Wis. Stat. § 108.04(9).
  • Treat state and federal holidays as working days for partial benefits if the employer is closed on those holidays. This provision is similar to what the Governor previously vetoed when added to the 2013 budget bill and which the council declined. See this post and this post.
  • Reduce the maximum number of benefit weeks based on the unemployment rate to 22 weeks when the unemployment rate is below 7% and 18 weeks when the unemployment rate is below 5%. The Council previously rejected this proposal from legislators. See this post and this post.
  • Amend definitions of misconduct and substantial fault in some way.

Labor representatives on the council made the following proposals:

  • Increase maximum weekly benefit rate (WBR) by $10 in 2018 and by another $10 in 2019.
  • Amend the trigger for tax schedule D to $1.8 billion. The current threshold for schedule D (the schedule with the lowest unemployment taxes) is $1.2 billion in the trust fund as of June 30th of the proceeding tax year.
  • Increase the taxable wage base in 2019 to $16,500 and then index that wage base in subsequent years.

The only available information about these proposals is available from this Department memorandum and a limited fiscal analysis. The Management proposals are not detailed in either document, and the description of the labor proposals is very general.

NOTE: An explanation for why management wanted changes to substantial fault and misconduct is provided, however:

Due to recent decisions of the Wisconsin Supreme Court and Court of Appeals regarding discharge for misconduct and substantial fault, the Management members of the Council propose to amend the definitions of “misconduct” and “substantial fault” in order to clarify legislative intent.

At the 9 August 2017 council meeting, the Advisory Council decided that none of these proposals would be taken up.

Finally, the fiscal estimate from the Department for SB399 has this information:

Assumptions Used in Arriving at Fiscal Estimate The bill makes various changes in the unemployment insurance (Ul) law, which is administered by the Department of Workforce Development (DWD). Compliance to the bill’s components will require one time IT work of 3,930 hours and one time administration work of 1,180 hours costing a total of $444,500. The funding will come from the UI Federal Administration grant. It is expected that the proposed changes will increase collections and save the UI Trust Fund $1,250,000 annually.

Long-Range Fiscal Implications It is expected that the proposed changes will increase collections and save the UI Trust Fund $1,250,000 annually.

These savings are largely due to the changes set forth in proposal D17-07 regarding new mechanisms for intercepting tax refunds, lottery payments, state vendor payments, and unclaimed property of taxpayers. See D17-07 at 19 (but note that the original estimates in D17-07 called for much more debt collection from employers to the tune of ~$3 million in light of all the changes being enacted in that proposal).

Department unemployment proposals in 2017

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

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

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

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

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

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

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

D17-02 Joint and several liability for fiscal agents

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

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

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

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

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

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

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

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

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

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

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

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

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

D17-03 Employer assessment for failing to provide records

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

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

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

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

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

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

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

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

D17-05

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

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

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

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

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

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

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

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

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

D17-07 Revisions to collections statutes, revised

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

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

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

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

D17-08 Many miscellaneous changes, revised, revised again

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

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

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

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

D17-09 Miscellaneous rule changes

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

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

D17-10 Drug testing changes, revised

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

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

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

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

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

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.