Lab test subjects as employees

(Update: 2 April 2024): Gov. Evers vetoed AB398.

I am vetoing Assembly Bill 398 in its entirety.

This bill specifies that compensated participants in clinical research trials shall not be treated as employees for purposes of minimum wage, worker’s compensation, and unemployment insurance laws.

I am vetoing this bill in its entirety because I object to potentially depriving clinical research trial participants from receiving the protections and benefits to which employees are generally entitled, as well as related legal remedies. Additionally, the changes in this bill create a specific carveout from provisions that could otherwise classify an independent contractor as an employee for purposes of worker’s compensation protections. There continues to be a well-established process that the Department of Workforce Development uses to navigate employee and contractor determinations on a case-by-case basis. The department uses a six-part test for minimum wage, and a nine-part test for unemployment insurance and worker’s compensation benefits. These tests provide a guideline and consistency for classification between the relationships of individuals and employers.

I object to providing a specific carveout for clinical research trials, which may signal to other employers that they may seek similar special treatment for other work or services that would otherwise qualify for worker’s compensation benefits under the law, which may further limit employee protections.

Moreover, I am concerned this bill may cause Wisconsin to fail to conform with federal requirements. Specifically, it could put Wisconsin in nonconformity with the Federal Unemployment Tax Act which may put employer tax credits and Unemployment Insurance administrative grant dollars at risk of terminating.

Finally, neither the Worker’s Compensation Advisory Council nor the Unemployment Insurance Advisory Council has taken a position on the changes in the bill, and these councils should be key stakeholders for recommending such policy changes for enactment.

As evident here, Gov. Evers largely accepts what the Department is proclaiming about this bill. The problem here is that no one but the Department thinks that people involved in lab testing are employees. Does Gov. Evers really think that my daughters, when they participated in UW-Madison College of Education experiments about teaching math, were employees of UW-Madison because of their participation in those experiments? That is the position Gov. Evers has adopted here.

This bill is needed to correct what the Department is doing. The bill, however, needs to be amended, as indicated below, so that it actually accomplishes what it sets out to do.

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Update (21 March 2024): I have asked Gov. Evers to veto AB398, which the legislature has sent to the Governor.

Update (23 Feb. 2024): There has been legislative action on the assembly companion bill, AB398, as the Assembly has passed this bill and sent it to the Senate for action.

I would encourage passage IF the bill was amended to actually exclude lab tests subjects as employees in unemployment law. For example: an amendment to the definition of employees in Wis. Stat. § 108.02(12) to exclude from the definition of employee an “individual who receives remuneration, a stipend, or 6compensation for being a participant in a clinical research trial as described in s.108.02 (15) (ko).” This exact provision is included in the proposed change to workers compensation law, and so there is no reason why it should not be applied in unemployment law.

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In late 2022 and early 2023, a few folks started contacting me about being disqualified or having to repay unemployment benefits they received during the Covid-19 pandemic because of their participation in lab testing studies.

Then at the July 2023 Unemployment Insurance Advisory Council meeting, a coalition of lab testing companies and Rep. Gundrum asked the council to support a change in the law to exempt lab testing as covered employment. According to the minutes of that meeting:

State Representative Rick Gundrum addressed the Council regarding a proposed bill to clarify the employment status of participants in clinical research trials. Rep. Gundrum stated that participants in clinical research trials are volunteers and are not employees of the research organization. Participants receive a stipend for their participation. Rep. Gundrum stated that a clinical trial lasts between three and six months, with the typical participant’s length of stay at the research facility being three to four days. Rep. Gundrum stated that he has heard that DWD considers research trial participants to be employees. Rep. Gundrum stated that the research companies cannot enroll their own employees as participants.

Rep. Gundrum stated that that the draft of LRB 1462 seeks to clarify the relationship between participants and research companies. Under the proposed bill, participants would not be considered employees for purposes of Unemployment Insurance, Workers Compensation, and minimum wage. Rep. Gundrum stated that research organizations in Wisconsin are at a competitive disadvantage with similar firms in other states. The new bill addresses federal conformity issues raised by the Department in last session’s version of the bill.

Ms. Knutson stated that a copy of the LRB Draft is included in members’ packets.

Mr. Manley asked if a participant who is laid off and collecting UI benefits would lose their benefits.

Representative Gundrum stated that he does not think that participants would lose their benefits but will check further and get back to the Council.

Ms. Knutson stated she would check with staff to determine if the stipends would be considered reportable wages.

At the September 2023 Advisory Council meeting, SB387 was introduced to council members along with the Department’s fiscal estimate.

This bill proposes that a participant in a clinical trial is not an employee for purposes of state wage law and workers’ compensation law and is not in covered employment for purposes of state unemployment law. The Department’s fiscal estimate mostly indicates that the financial effects of the bill are indeterminate (other than an annual loss of $2.8 million in unemployment tax revenue to the unemployment trust fund).

This fiscal estimate also indicates that clinical lab companies would lose their FUTA tax credits because those companies would no longer be in compliance with federal unemployment law, unless those companies voluntarily agreed to have their clinical subjects listed as their employees for purposes of unemployment eligibility (and so, undoing the purpose of this proposed law).

As for unemployment purposes, this bill only addresses half of the problem — covered employment — and ignores the issue of employee status. As I wrote in an e-mail message to Rep. Gundrum in Sept. 2023:

I don’t think think SB387 will work as currently drafted. While it excludes employment for UI purposes, it does not address employee or wage coverage. Per the definitions of wages and employee in 108.02, a person qualifies for UI coverage if he/she performs services for pay for an employer/employing unit.

So, even if there is no employment, these lab volunteers will still have to report their wages and any separations to DWD-UI for these lab experiments. So, while the employer may no longer be paying UI taxes for their lab volunteers, the employers will still have to answer questions about all of their lab volunteers and still report all of these employee issues and wages for anyone who is claiming UI at the time of these experiments.

That is, for this proposal to exclude lab participants in all unemployment matters, the exclusion needs to be in both covered employment and in whether laboratory participants still qualify as employees for purposes of unemployment law.

Note: the definition of employee in Wis. Stat. § 108.02(12)(a) is expansive and applies to any person who performs services for pay for another. So, a lack of covered employment does not mean that unemployment is not involved. See Piontek v. Cooper Spransy Realty Inc, UI Hearing No. 09003831MD (17 March 2010), aff’d Piontek v. LIRC, 340 Wis.2d 742, 813 N.W.2d 248 (app. Ct. 2012) (a realty agent’s decision to transfer brokerages — i.e., quit one brokerage — disqualified him from receiving unemployment benefits because of his prior layoff from a factory as he was also an employee of the brokerage despite his realty services to that brokerage being in excluded employment).

I also had questions about the $2.8 million in unemployment tax revenues and the FUTA tax coverage problem mentioned in this fiscal estimate. Federal unemployment law does not really address this issue/problem of FUTA tax coverage, and I suggested that specific directive/advice from Region 5 of US Dep’t of Labor on this loss of FUTA tax credits question be sought out.

And, the $2.8 million figure in annual unemployment tax revenue seems much too large and is somewhat unbelievable. Understand that unemployment taxes only apply to the first $14,000 paid to an “employee.” So, a tax payment of $1000 per “employee” would be an extremely high 14% tax rate (for comparison, the highest tax rate applicable in the current Schedule D tax schedule is 12%, and the new employer tax rate for a large business in that schedule is 3.25%).

But, using that $1000 in unemployment taxes per employee figure would mean that clinical lab companies have 2,800 clinical lab “employees” for which unemployment taxes are being paid. The November 2023 jobs report for Wisconsin has all of 416,900 employees in health care and social assistance in the entire state (every hospital, doctor’s office, social worker, and other health-related employee). Using a 3.25% tax rate to get $455 in unemployment tax revenue means that there are nearly 6,200 clinical research subjects in Wisconsin based on the Department’s $2.8 million figure. And, a likely tax rate of 1.05% (for $147 in revenue per “employee”) means there are just over 19,000 participants in lab tests in Wisconsin.

All three of these numbers of clinical research subjects would make them a major job sector of the state economy. Maybe there are a few hundred clinical lab test volunteers every year in Wisconsin. But, are there 2,800 let alone 19,000 such volunteers every year? Given that laboratory research has never been seen as an economic engine in the state’s economy, something is off with the Department’s $2.8 million annual tax revenue figure.

Finally, this whole issue turns on the Department treating participants in lab tests as employees because they are allegedly performing services for pay for another. But, the Department also has explicit guidance that payments for blood and plasma donations do NOT qualify as income. I have yet to see any explanation from the Department that explains how a payment for blood in general is not income but a payment for blood for a laboratory test does count as income for unemployment purposes.

A hearing on AB398, a companion bill to SB387 is scheduled for January 10th before the Assembly Committee on Health, Aging and Long-Term Care. Here is hoping that some of these issues can be ironed out and some real change made with this bill.

Claim-Filing questions in Wisconsin as of June 2022

Here is some updated information on the claim-filing questions in Wisconsin. You can find prior versions of these questions at this October 2020 post, which has the questions that existed as of September 2020.

This info is based on the Department’s initial claim questions that are available here, and the weekly certifications questions that are available here. These web pages have been consolidated into single PDF files:

• Initial claims questions in English — 61 pages long
• Weekly certification questions in English — 82 pages long

Keep in mind that you file an initial claim when you have suffered a job loss. An initial claim, however, does not pay you any unemployment benefits.

To be paid benefits for a particular week, you must then file a weekly certification that shows you meet all the eligibility criteria — able and available for work, searching for work, willing to accept any jobs offered you, not missing any work available to you, reporting all wages or pay for any services you have performed for another, and reporting other kinds of pay — for being paid unemployment benefits for that particular week.

This additional information being asked of you is why the weekly certification process is longer and more complicated. Any mistakes you make with the weekly certification questions will be presumed fraudulent, unless you can show that the mistake was not your fault (i.e., that you relied on mistaken advice from a Department representative). Keep in mind that the Department adjudicators doing any investigation are likely to be prosecuting you for those mistakes, and not actually listening to you.

So, keep you own records of what is told you and what you file (save PDFs of your own initial claims and weekly certifications as you file them by selecting that option at the end of each claim).

Comparison with what was

In 2007, here are ALL the questions that claimants were asked during their weekly certification (which they could even do back then through a technological marvel called a phone call):

1. During the week, were you able to work full-time and available for full-time work?
2. Did you contact at least two employers during the week to try to find work?
3. During the week, did you refuse an offer of work?
4. During the week, did you miss any work the employer had scheduled for you?
5. During the week, did you quit a job?
6. During the week, were you fired from a job?
7. Did you work during the week?
8. Did you receive or will you receive holiday pay for the week or any part of the week?
9. Did you receive or will you receive vacation pay for the week or any part of the week?
10. Did you receive or will you receive dismissal pay for the week or any part of the week?
11. Were you self-employed?

And, you could read in 2009 a Handbook for Claimants that went through each question and the answer the Department expected from you.

Jobs, the debt ceiling, and recession

The month of May is going to be eventful, as either a deal on the debt ceiling will be reached (i.e., raising it) or a massive recession and possible economic calamity will strike. Or, just maybe we will get a combination of both because a giant coin or issuance of fancy debt called premium bonds will not resolve all the worries in the world about the United States no longer paying its debts from previous expenditures.

Layoffs, whether few or many, will follow pretty quickly, simply because businesses will lack access to any funds for making payroll.

And, unemployment benefits — the main mechanism available to the government for fighting a recession — will NOT be available. Despite unemployment benefits being paid for by unemployment taxes that employers pay (and Wisconsin having over $1.2 BILLION in its trust fund as of March 2023), the actual trust funds for all US states and terrotories are managed by the federal government. So, come June 1st, all of these trust funds in Wisconsin’s may no longer be accessible for paying out unemployment benefits to anyone.

The irony here is that unemployment claim-filing in Wisconsin continues to disappear. As noted previously, claim-filing in Wisconsin set a new record low in 2022, and that pattern was continuing into 2023:

In 2022, new record lows for claimants paid benefits and for initial claims filed in the state were set. Initial claims in 2022 were roughly 89% of the number of initial claims filed in 2019, and paid claimants in 2022 were under 90% of 2019 levels. And, this trend of ever declining unemployment has continued into 2023. As of week 13 of 2023, initial claims are running at around 84% of 2022 levels. So, 2023 is likely going to set still another record low for initial claims and in benefits paid to claimants.

As of week 18, initial claims in 2023 are running at 86.7% of 2022 levels, so the spring weeks of April and May seem to have hit the minimum number of initial claims in Wisconsin given the size of the state’s workforce.

In other words, unemployment claim-filing no longer practically exists in Wisconsin. Around 3,500 initial claims a week out of workforce of around 2.8 million workers for which unemployment taxes are paid — 0.1% — is a paltry amount that hardly even registers. Job growth continues to be climbing nationally, and in Wisconsin. So, the labor shortage in the state is because there is an actual shortage of workers.

If we fail to fix the debt ceiling, however, hundreds of thousands of workers will soon need unemployment benefits. Unfortunately, because the debt ceiling has not been fixed, unemployment benefits will NOT be available to all of those suddenly out of work, making the resulting recession that much worse.

Update (16 May 2023): Brookings offers a useful explainer about what the debt ceiling is, what is being done right now to pay off debts, and why not fixing the debt ceiling is BAD.

Update (23 May 2023): Jean Ross at the Center for American Progress has additional information on what a debt ceiling crisis could mean. Through my own contacts, it seems that states with positive balances in their unemployment trust funds will still have access in the first weeks of any debt ceiling crisis to those funds to pay out unemployment funds. As the unemployment trust fund in Wisconsin is nearly $1.5 billion as of April 2023, the first few weeks should mean that unemployment benefits are available in this state at least. So, a change in the text above has been made by striking through the NOT in unemployment benefits NOT being available in Wisconsin during the first few weeks of a debt ceiling crisis.

Update (30 May 2023): A possible deal has been reached, and David Super has the scoop on what this resolution means.

Legislature pushes a bunch of no-reform unemployment proposals

Update 11 July 2023: Jacob Resnick of Wisconsin Watch has done some digging on the billionaire lobbying groups pushing these no-reform proposals. One of the key quotations from the article:

“One of the fastest ways that we can deal with Wisconsin’s ongoing workforce shortage is to keep people who are still in the labor market, those recently unemployed, productively engaged in the workforce,” Gibbs told members of the Assembly Committee on Workforce Development and Economic Opportunities.

The problem that this billionaires’ lobbyist fails to acknowledge, as noted below, is that unemployment has nothing to do with any worker shortage.

Update 17 April 2023: I testified at the committee hearing on April 12th for most of these bills. For some unknown reason, my written testimony has not been included in the committee materials for any of the bills.

Updated 12 April 2023 (added links to various policy briefs from NELP and a quotation from the 2023 fraud report).

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With the April 2023 election, an incredibly general, state-wide advisory ballot question about people on welfare needing to work passed by wide margins.

The Wisconsin legislature has taken that passage as a message to suddenly revamp and fine tune unemployment eligibility without actually fixing any of the problems with unemployment claim-filing in this state.

First some background.

It is vital to know that unemployment claim-filing is now in 2023 much, much different from what used to occur.

Year    Claimants Paid Benefits     Initial Claims
2007    332,982                     638,548
2008    386,574                     736,245
2009    566,353                   1,125,127
2010    530,886                     826,872
2011    445,538                     722,018
2012    366,829                     613,667
2013    312,325                     550,050
2014    233,129                     488,472
2015    197,070                     423,858
2016    168,006                     385,405
2017    144,727                     305,813
2018    130,710                     279,912
2019    129,888                     287,043
2020    603,459                   1,202,700
2021    295,249                     529,476
2022    116,302                     263,248

As this data reveals, claim-filing in Wisconsin had plummeted just before the Covid-19 pandemic in 2020. In 2018, there was a record low of initial claims filed by individuals, and in 2019 there was a record low in the number of people who were paid unemployment benefits in Wisconsin.

Compare these numbers with what existed in 2007, a “normal” economic year when initial claims and weekly certifications were around 10 questions each and could be filed via a phone call. In that year, there were 638,548 initial claims, and 332,982 claimants were paid benefits that year (more than one out of every ten workers received unemployment benefits that year).

Obviously, the Covid-19 pandemic reversed that trend. But, that reversal was incredibly short-lived. In 2022, new record lows for claimants paid benefits and for initial claims filed in the state were set. Initial claims in 2022 were roughly 89% of the number of initial claims filed in 2019, and paid claimants in 2022 were under 90% of 2019 levels. And, this trend of ever declining unemployment has continued into 2023. As of week 13 of 2023, initial claims are running at around 84% of 2022 levels. So, 2023 is likely going to set still another record low for initial claims and in benefits paid to claimants.

At the same time that unemployment claim-filing has declined and declined and then declined some more, the labor force in Wisconsin has been relatively stagnant and unchanging throughout this time period.

In 2007, there were 2,732,290 workers in Wisconsin, and in 2022 there were 2,754,514 workers, an increase of only 22,224 after 15 years.

So, unemployment has become less and less an issue for Wisconsin workers. The data right now indicates that the vast majority of claims are filed in the winter months, when scores of businesses like landscaping, road building, some construction, and others cannot operate because of winter conditions.

Into this picture of unemployment claim-filing comes the state legislature now with a bunch of sticks to beat over the head of the few people still seeking unemployment benefits. Here is a rundown of these proposals.

AB147

This bill provides new ways to disqualify claimants for misconduct for:

• any damage to employers’ property and records done unintentionally, by accident,
• possible violations of employers’ social media policies, and
• violations of employers’ absenteeism policies pursuant to Beres.

This expansion of Beres and accidental damage raise a serious risk of Wisconsin employers losing their FUTA tax exemption, because the misconduct penalty of lost wages in a benefit year can only be applied to intentional employee conduct.

As noted by the Commission in its briefing in Beres, this employer-determined misconduct for non-intentional absences (in both Beres and Stangel, the employees were absent because of illnesses over which they had no control) ran the risk of Wisconsin being found by the US Department of Labor to no longer be in compliance with federal requirements for unemployment. That lack of compliance could well lead to Wisconsin employers losing a tax credit and seeing their federal unemployment taxes jumping from a 0.5% to 7.0% tax rate — quite a jump.

As to the social media violation, this proposed change is basically incomprehensible. As written, this proposed statute makes any social media violation by an employee into misconduct. Accordingly, any employer discharge for a social media policy can now subject an employee to a misconduct disqualification. Hence, this provision is also likely to put state employers at risk of losing their FUTA tax exemption.

AB147 also mandates that employees with combined wage claims (also called interstate claims) who live outside of Wisconsin must register with the job center in their state. The problems with this proposed change are two-fold. First, the Department already requires claimants to do this registration. Second, this requirement ignores the fact that not all states and territories have job registration systems. Indeed, Minnesota, just next door, has no such requirement or system. As a result, Wisconsin is requiring claimants to do something that cannot actually be done in a state that lacks a job center like Wisconsin’s.

AB147 continues with still more nonsense. At present, the Department audits about 10% of all work searches. This proposal wants to increase the number of work searches being audited to 50%. As a result, it would either require the Department to quintuple its workforce or force current employees to do nothing but work search auditing.

Finally, in a pique over the PUA and MEUC benefits and supplemental PUC benefits that were made available during the pandemic, the legislature wants the Joint Committee on Finance to have a voice in whether similar funds and benefits become available in the state in the future. As evident here, the legislators simply fail to understand that Wisconsin has a partial wage formula that encourages people to work while claiming unemployment benefits. Indeed, raising the benefit levels and removing the current $500 cap would probably lead to more people working while collecting unemployment, not less. Apparently, basic economics is not needed for unemployment legislation.

AB149

• Requires the Department to allow employers to report people who do not show up for interviews, who declines a job interview, who miss an interview, who miss work, or who fail to return to a job after being recalled. The Department, however, already encourages employers to report this information. See, e.g., Refused Work, Work Available with Current Employer, and Report Unemployment Fraud. All of these employee actions would also lead to a loss of benefits, IF the person was claiming benefits at the time.

So, this portion of the bill changes nothing that it purports to do. Claimants who fail to attend a job interview for reasons that do not relate to illness or finding another job are likely to be found ineligible for benefits and perhaps even guilty of fraud/concealment. Indeed, this proposal actually makes claim-filing less onerous by allowing a person to have one such report as NOT counting against their eligibility (when right now, all such reports are investigated and ineligibility found if the claimant lacks the required legal justification).

Furthermore, this proposal ignores the fact that claimants are already doing four job searches a week in an economic climate where employers are desperate for finding employees to hire. Accordingly, employees may well find new jobs and skip interviews or offers to return to jobs after finding new jobs that pay more. And, as shown already, in 2022 and 2023, claim-filing is at record lows. In short, this proposal pretends that the labor supply is growing and that there are numerous unemployed people looking for jobs while claiming unemployment benefits, when the claim-filing data indicates the exact opposite.

• Require the Department to provide various employer information in its fraud reports and job search information to claimants.

This proposal adds: (a) some mandatory employer-reporting information to future Department Fraud Reports about missed job interviews and the like to the Department, and (b) a requirement to provide claimants with vital work search information that they now have to search for on their own.

As NELP points out, work search requirements have become an incredibly effective mechanism for keeping benefits out of claimants’ hands. Job searches themselves are easy, but the online-only reporting requirements are difficult to satisfy. As the 2023 Fraud Report at 6 reveals:

In 2022, DWD completed 22,012 work search audits. The audits resulted in 9,045 adverse decisions with benefits denied, including when claimants failed to conduct four valid work search actions. An additional 27,404 adverse determinations were issued for failure to answer the work search question or failure to provide required information on the weekly claim before the claim paid.

Nearly 28,000 claimants in 2022 (out of 263,248 initial claims, or one out of every nine claimants) lost out on benefits because they did not supply required job search information in the first place, even before an audit took place. When one out of every nine people fail to finish something, that reporting requirement is, by definition, NOT easy and understandable.

AB150

This bill is a repeat of the re-employment bill from the previous session, and is still misguided, liberal, big government intervention into micro-managing people’s work lives.

AB152

This bill appears to be a Department-sponsored initiative and mandates things already being done by the Department or which the Department would like to do.

• Identity verification — mandates identity verification for claimants (currently based on Wisconsin-issued IDs).
• Mandatory unemployment training for employers that are free to attend and videos for claimants. What should be required here is that the Department again mail out printed copies of the claimants’ handbook rather than just a sheet of paper — a claim confirmation — with a URL for the handbook on it.
• Expanded call center hours whenever there is a declared state of emergency or call volume has increased by 300% from the previous level of a year ago. At present, numerous claimants are reporting to me that 15-20 phone calls a day are all leading to busy signals, so perhaps an increase of 50% should lead to expanded call center hours.
• Mandatory comparison with death records, new hire reporting, and prison records on a weekly basis. The Department already does this cross-match, though delayed by weeks or months.

What should be required is that DWD be mandated to do cross-matches with the quarterly unemployment tax reports the Department receives from employers in April, July, October, and January of each year for all weekly certifications filed during the previous four months (the Department’s current practice is to do a cross match on employer’s quarterly unemployment tax reports from nine to twelve months after the weekly certifications have been filed).

The Department should also be mandated to do cross-matches with employer’s payroll tax withholding reports submitted to the Department of Revenue on a monthly basis. In this way, any over-payments of unemployment benefits would be minimized to a month or less. Moreover, employers would no longer need to submit UCB-23 Wage Verification/Eligibility reports, as the Department would already have this information from the wage/tax withholding reports from the Department of Revenue.

• Unilateral transfer of administrative law judges from other state agencies to DWD for handling unemployment hearings.

Rather than hiring and training attorneys properly, the Department wants to force attorneys who handle environmental regulation cases, discrimination matters, or workers compensation cases into hearing and deciding unemployment cases. What the Department should be focused on is adequate training and hiring, not another kind of quick fix. As I have pointed out elsewhere, the skyrocketing number of denials and over-payments is largely because of inadequate information available to claimants. So, getting claimants educated with concrete, specific advice in place of legalisms so as to avoid all the denials in the first place is what is needed here.

AB153

This proposal seeks to limit the number of weeks of unemployment benefits available according to the state unemployment rate. An unemployment rate of 3.5% or less would mean only 14 possible weeks of unemployment benefits would be available. Only when the unemployment rate was higher than 9% would the full 26 weeks of benefits be available.

This proposal fundamentally misunderstands how unemployment works and why it exists. Unemployment benefits are not something that workers earn. Rather, unemployment is an insurance benefit for maintaining consumer demand for which employers pay a premium, based on their experience rating. As explicitly stated in Wis. Stat. § 108.01 (emphasis supplied):

(1) Unemployment in Wisconsin is recognized as an urgent public problem, gravely affecting the health, morals and welfare of the people of this state. The burdens resulting from irregular employment and reduced annual earnings fall directly on the unemployed worker and his or her family. The decreased and irregular purchasing power of wage earners in turn vitally affects the livelihood of farmers, merchants and manufacturers, results in a decreased demand for their products, and thus tends partially to paralyze the economic life of the entire state. In good times and in bad times unemployment is a heavy social cost, directly affecting many thousands of wage earners. Each employing unit in Wisconsin should pay at least a part of this social cost, connected with its own irregular operations, by financing benefits for its own unemployed workers. Each employer’s contribution rate should vary in accordance with its own unemployment costs, as shown by experience under this chapter. Whether or not a given employing unit can provide steadier work and wages for its own employees, it can reasonably be required to build up a limited reserve for unemployment, out of which benefits shall be paid to its eligible unemployed workers, as a matter of right, based on their respective wages and lengths of service.

(2) The economic burdens resulting from unemployment should not only be shared more fairly, but should also be decreased and prevented as far as possible. A sound system of unemployment reserves, contributions and benefits should induce and reward steady operations by each employer, since the employer is in a better position than any other agency to share in and to reduce the social costs of its own irregular employment. Employers and employees throughout the state should cooperate, in advisory committees under government supervision, to promote and encourage the steadiest possible employment. A more adequate system of free public employment offices should be provided, at the expense of employers, to place workers more efficiently and to shorten the periods between jobs. Education and retraining of workers during their unemployment should be encouraged. Governmental construction providing emergency relief through work and wages should be stimulated.

(3) A gradual and constructive solution of the unemployment problem along these lines has become an imperative public need.

In other words, unemployment is a lot like automobile insurance. The more accidents you have (i.e., more layoffs and claims), the higher your insurance premium. And, just because a driver may have been “accident-free” for some time does not mean the driver should then cut coverage — especially just before the driver hits a busload of school children on the highway. This proposal is essentially pretending that Wisconsin will forever in the future be “accident-free.”

NELP has some excellent information on unemployment financing and why limits on the number of weeks makes no sense and is actually harmful:

Business interests often overlook the vital stabilizing effect UI has on local economies, even though this is also a foundational purpose of the program. UI is an automatic stabilizer: by temporarily replacing some of the lost wages of unemployed workers, it automatically fuels overall economic demand when private spending declines during a national recession or local downturn. Cutting benefit duration reduces this stabilizing function, making layoffs more harmful to the economy.

Unemployment Delays, part 9 — The portal is NOT accurate

Note: Previous posts detailed the length of time and number of cases in the unemployment backlog in part 1, some of the mistakes by the Department that allow cases to be re-opened in part 2, a place for stories and advice about how to find assistance in part 3, how most claims in Wisconsin — and unlike in other states — are being denied and thereby creating a ginormous backlog in hearings in part 4, in part 5 how the Department’s big push to fix the backlog in December 2020 was creating a hearings backlog and not addressing the root causes of all the delays, in part 6 how a December 2020 push had cleared some of the back log with issuing initial determinations but that the hearings backlog was growing because most claims were being denied and that claimants were losing most of their hearings, how the phone support system still fails to operate effectively a year later in part 7, and a summary in part 8 of how poor policy choices and guidance by the Department have led to numerous delays and confusion.

Claimants ask me nearly every day about something appearing on their portal and wanting me to explain this portal issue. Frankly, no one can explain the portal because the information presented there is just NOT accurate or even understandable. Only if you understand unemployment law and what has happened in your case can the portal begin to make sense, and even then that outcome is a long shot.

To illustrate this confusion, let me present a pretty typical example of what claimants are experiencing and seeing with their unemployment claims.

Claimant Sue filed an initial claim for PUA benefits when her work schedule was reduced in April 2020 because of the pandemic. She had to apply for PUA benefits because she could not establish a benefit year (i.e., monetary eligibility) for receiving regular unemployment benefits, as she had not worked enough in 2019 (only a few weeks at a job before quitting).

A PUA benefit year calculation was issued on 24 July 2020 finding that her earnings were so low that she qualified for the minimum PUA weekly benefit rate of $163. She then filed a PUA weekly certification for the week her work was reduced, the week ending 4/11/2020, reporting 16 hours of work and $200 in earnings that week.

As with most PUA claimants, her PUA initial claim was then denied in a second initial determination that she appealed. The hearing in that case did not occur until May 2021. In that case, the administrative law judge ruled that she had a pandemic-related job loss but indicated that she might qualify for regular unemployment based on an alternative benefit year calculation and that she had to file a new initial claim for regular unemployment benefits back-dated to the week ending 4/11/2020. So, she “won” the hearing but no payment would be forthcoming until she did as directed.

Dutifully, that same month she called a claim specialists and filed an initial claim for regular unemployment benefits and then waited for a resolution.

In the meantime, however, the Department issued two more determinations finding (1) that the job she quit in July 2020 disqualified her from receiving unemployment benefits and (2) that the quit in July 2020 also disqualified her from receiving PUA benefits. Confused over what these new initial determinations meant, she appealed both and had hearings on both. The administrative law judge ruled against her in both cases and she appealed to the Labor and Industry Review Commission.

And, it turned out that the May 2021 attempt to file an initial claim for regular unemployment did not work (a second weekly certification for the same week was filed instead by mistake). So, in September 2021, when that mistake was discovered, another regular unemployment initial claim was filed.

Then, in November 2021, two benefit year calculations were issued, one for a traditional benefit year and another for an alternative benefit year. The traditional benefit year calculation found no eligibility for regular unemployment benefits. But, the alternative benefit year calculation found that Sue had established a benefit year with a weekly benefit rate of $71. Because her earnings in the week ending 4/11/2020 were $200, she earned too much that week relative to her $71 weekly benefit rate to receive any unemployment benefits that week. So, no PUA eligibility (because she had established eligibility for regular unemployment benefits) and no regular unemployment benefits paid out because she had too much earnings for the week being claimed.

The claimant’s portal, on the other hand, does not reflect this information. Here is the determinations history for Sue

There are six entries here, and this information is both incomplete and misleading. From top to bottom, here are the problems:

1. Determination for UI week 15/2020: This information is for the traditional benefit year calculation that found Sue did not establish a benefit year. There is no ability to see the actual document being described here. Furthermore, this document is moot, since an alternative benefit year calculation found Sue eligible for regular unemployment benefits with a weekly benefit rate of $71. But, there is no listing of that determination here.
2. Determination for UI week 31/2020: This determination is for the alleged denial of PUA benefits for a quit that occurred in July 2020. The text about “reviewing for additional wages to satisfy a suspension/denial” is a legalism that only makes sense to a person who knows that a quit without good cause means eligibility for unemployment benefits is suspended until a claimant earns 6x his or her weekly benefit rate in subsequent work. This legalism is nonsensical because the denial here is for PUA eligibility — whether a person has a qualifying pandemic-related job loss. So, none of this explanation provides any information that is helpful.
3. Determination for UI week 31/2020: This determination is for Sue quitting a job in July 2020 and that the Department found that she quit for reasons that would not allow for payment of regular unemployment benefits. The Department is NOT reviewing this information. It issued an initial determination finding that Sue quit without good cause, which Sue appealed, lost at a hearing, and which Sue then appealed to the Labor and Industry Review Commission.
4. Determination for UI week 15/2020: This determination is for PUA eligibility and reflects the decision of the administration of the administration law judge that was issued in May of 2021. The determination linked to here, however, found that the claimant did not have a pandemic-related job loss. The actual hearing decision, on the other hand, found Sue eligible for PUA benefits IF she could not establish benefit year eligibility for regular unemployment benefits. That hearing decision is NOT available on the portal. Sue just has to know that an appeal tribunal decision reversed this initial determination and that the reference to PUA eligibility in this entry is because of that hearing decision. The same confusing description of the issue from determination #2 is repeated here and is just nonsensical.
5. Determination for UI week 36/2019: Recall that Sue had a previous job for a few weeks in 2019 that she quit. As stated here, the Department concluded that Sue earned 6x her weekly benefit rate so that the disqualification no longer mattered. There is no actual initial determination document that can be viewed, however, and no way to know what weekly benefit rate was used by the Department in determining that this quit disqualification no longer mattered.
6. Determination for UI week 15/2020: The determination here is the one that found the claimant had no earnings and so qualified for the minimum PUA weekly benefit rate of $163. Determination #4, however, had over-turned this initial determination, but then a decision by an administrative law judge had over-turned that initial determination. So, this entry indicates that the claimant is eligible for PUA benefits and has not established enough earnings to qualify for regular unemployment benefits without dealing with any of the “issues” that came after it.

Because these entries are listed by UI week and not the actual initial determination numbers or in some kind of chronological ordering that connects to claimant’s actual work history or claim-filing history (rather than, as is happening here, when the Department first “decided” the issue), claimants can think all of these issues still apply to them in some way.

For instance, the Sues of the world will ask me to explain why they are not receiving PUA benefits because of entry #6 or entry #4 or entry #1. And, there is no way I can answer that kind of question without getting the actual history of what has happened with Sue’s claim-filing and unemployment litigation as initially described here.

But, the biggest problem here is that the alternative benefit year calculation that found Sue eligible for regular unemployment with a weekly benefit rate of $71 is missing in action.

The determinations and appeals information on the portal is just as confusing.

Recall that Sue filed three appeals of initial determinations and that one appeal was won in May 2021 at a hearing before an administrative law judge and that two other cases were appealed to the Labor and Industry Review Commission after she lost those hearings. This “appeals” page, however, has four entries: two determinations and two appeals. Here is how this information matches up with the determinations history page described above.

1. Determination for UI Week 31/2020: This entry matches entry #2 above under determinations history. As with that entry, the “quit” at the center of this case is nowhere to be found. This case, however, was appealed and, after a hearing, a decision by an administrative law judge affirming the initial determination was issued. That decision was subsequently appealed. See entry #3, below.
2. Determination for UI Week 31/2020: This entry matches entry #3 above under determinations history.
3. Appeal for UI Week 31/2020: This hearing information is for the PUA/quit case described in entry #1 of this page.
4. Appeal for UI Week 31/2020: This hearing information is for the quit case described in entry #2 of this page.

Notice that there is no information whatsoever about the PUA eligibility appeal and hearing decision in Sue’s favor’s in entry #4 under determinations history. Since this case is excluded from Sue’s portal, it is apparent that the Department has concluded that this case is no longer significant, even though it is this case which drives the Department to allow Sue to file late initial claims for regular unemployment benefits and to eventually find that she qualifies for regular unemployment benefits using an alternate benefit year calculation.

Indeed, Sue’s UI benefit summary only makes sense in light this missing appeal information.

Nothing on this UI Summary Page makes sense in light of the other two screenshots from the portal. Here, Sue can see that she qualifies for a weekly benefit rate of $71 for a benefit year that goes from 4/5/2020 to 4/3/2021 and that her “status” for the weekly certification filed for the week 4/5/2020 to 4/11/2020 is “Earned Too Much Money.” Interestingly, the statement here under “Issues and Determinations” about “You have determinations preventing payment.” is wrong. As stated under “Payment Information,” Sue would have received regular unemployment benefits if she had not earned too much money that week. The portal does not explain or identify in any way how she is now eligible for regular unemployment benefits at the rate of $71 per week.

All that Sue can see is that she is denied eligibility and that she has pending appeals. From this information, Sue thinks that her current appeals, if won, will lead to the payment of PUA benefits.

In another sense, all of this confusion and misdirection is to be expected. The Department itself declares that the portal cannot be relied on as accurate. Click on the link on the bottom of the screen for Legal/Acceptable Use. At this new page, scroll down to the disclaimers and read (emphasis supplied):

Disclaimer of Warranties And Accuracy of Data

Although the data found using the State of Wisconsin’s access systems have been produced and processed from sources believed to be reliable, no warranty, expressed or implied, is made regarding accuracy, adequacy, completeness, legality, reliability or usefulness of any information. This disclaimer applies to both isolated and aggregate uses of the information. The State provides this information on an “as is” basis. All warranties of any kind, express or implied, including but not limited to the implied warranties of merchantability, fitness for a particular purpose, freedom from contamination by computer viruses and non-infringement of proprietary rights are disclaimed. Changes may be periodically made to the information herein; these changes may or may not be incorporated in any new version of the publication. If you have obtained information from any of the State’s web pages from a source other than the State pages, be aware that electronic data can be altered subsequent to original distribution. Data can also quickly become out of date. It is recommended that careful attention be paid to the contents of any data associated with a file and that the originator of the data or information be contacted with any questions regarding appropriate use. If you find any errors or omissions, we encourage you to report them to Wisconsin.gov.

Here is a complete PDF of these policies. Through this disclaimer, the Department is specifically denying that any information on the portal can be considered accurate, complete, reliable, or even useful as to your unemployment claim or unemployment law in general.

Given how inaccurate the portal actually is, this disclaimer makes sense. Indeed, if the Department disclaims any requirement to provide claimants with accurate information, then why in the world should claimants think that this information is accurate in the first place? Maybe they shouldn’t.

SSDI recipients should now apply for regular unemployment benefits

A class action challenging the SSDI eligibility ban in Wisconsin that prevents disabled workers from receiving regular unemployment benefits has been filed. Note: A history of the SSDI eligibility ban in Wisconsin is available here.

With the end of PUA benefits after the week ending 4 September 2021, regular unemployment benefits are again the only option available to disabled workers in Wisconsin. The Department had previously concluded that PUA benefits were available to SSDI recipients because of the SSDI eligibility ban for regular unemployment benefits.

SSDI recipients interested in the class action and eventually receiving regular unemployment benefits for job losses that are not their fault need to do two things.

1. File an initial claim and then weekly certifications for regular unemployment benefits. Do not let Department staffers talk you out of filing these initial claims and weekly certifications. You will be denied, and you should appeal that denial. At your unemployment hearing submit a copy of this brief about why the SSDI eligibility ban discriminates against you because of your disability. Note: Prior to the hearing date, you will need to print and mail in to the hearing office a copy of this brief with your name, hearing number, and social security number on the first page.
2. Do not fall victim to the Department’s mishandling of its own able and available requirements. If asked by a staffer in a phone call or by an administrative law judge during a hearing or on an initial claim or weekly certification about your ability to work more than 32 hours in a week or your availability for more than 32 hours of work in week, answer “yes” to both questions. As currently being asked, these questions CONFLICT with Wisconsin unemployment law and so are invalid questions.

Because of the pandemic, you may lack sufficient earnings during the last year to establish a benefit year. But, you should still file initial claims and weekly certifications. When the SSDI eligibility ban is overturned and you finally can establish a benefit year, you will then be owed unemployment benefits for the weekly certifications now being denied by the Department. So, file away.

Class action law suit to end the SSDI eligibility ban

On Sept. 7th, Gingras, Thomsen & Wachs, LLP, Axley Brynelson, LLP and myself filed a law suit in federal court to eliminate the SSDI eligibility ban that keeps disabled workers from receiving regular unemployment benefits. A press release explains:

The eligibility ban means that the plaintiffs in the class action and disabled workers like them are being treated differently from non-disabled workers in Wisconsin. Because of their disability, these SSDI recipients are presently ineligible for unemployment benefits. This different treatment because of their disability status is de jure discrimination against the disabled, in violation of federal laws that prohibit discrimination based on disability.

Specifically, the class action and the motion for a preliminary injunction asks the Court to stop the current enforcement of the law and instead permit otherwise eligible disabled workers to receive benefits. The lawsuit also asks the court to provide plaintiffs with the opportunity to apply for benefits at any point over the past six years during which they would have been eligible but for their receipt of SSDI benefits. Finally, some class members received benefits but were compelled by the state to repay those benefits, usually with a penalty, because they were receiving SSDI benefits. The lawsuit seeks reimbursement for the benefits and penalties. This relief is required by the Americans with Disabilities Act, the Rehabilitation Act and the Due Process Clause of the United States Constitution.

SSDI recipients who may have questions about this case can call 608-841-2150.

A copy of the initial complaint is available, and media coverage is available at:

• CBS Channel 3000
• Fox 6
• Fox 6 podcast
• Milwaukee Journal Sentinel
• TMJ4
• Wisconsin Examiner
• Wisconsin Public Radio
• Wisconsin Watch

You can track the legal filings in the case via this link at court listener.

Update (18 August 2022): SSDI recipients should now start or continue to file initial claims and weekly certifications for regular unemployment insurance. Details on what to say when filing those initial claims and weekly certifications are available at SSDI recipients should now apply for regular unemployment benefits.

If a staffer representative tells you it is pointless to file these claims because of the SSDI eligibility ban, insist that you want to file anyway. The only reason you should stop filing is if you do not have monetary eligibility.

When you are denied eligibility for regular unemployment benefits because of the SSDI eligibility ban, appeal, and then appeal again. Cite the brief available at SSDI recipients should now apply for regular unemployment benefits for why the SSDI eligibility ban is wrong. To cite the brief, mail in a copy of the brief to your unemployment hearing. If you cannot mail it in, insist on reading the brief out loud at your hearing until the judge relents and will look it up on the Internet and enter it as an exhibit.

As always, take notes of all your phone conversations with Department representatives.

Tiger teams and unemployment reform coming to Wisconsin

The US Dep’t of Labor has announced the beginning of an effort to modernize unemployment claim-filing to make the process both more equitable and less susceptible to fraud.

This effort is centered around the creation of “tiger” teams that are “composed of experts across many disciplines including fraud specialists, equity and customer service experience specialists, UI program specialists, behavioral insights specialists, business intelligence analysts, computer systems engineers/architects and project managers.” These teams will not only work on hardening a state’s claim-filing system from on-line attacks but also in the creation of modular systems that can be deployed for making claim-filing both easier to use and manage.

Wisconsin is one of six states to receive initial funding and support for these tiger team reviews (the other states are Colorado, Washington State, Kansas, Virginia and Nevada).

This funding is a BIG deal. The Secretary’s office is to be congratulated for securing this funding and the arrival of a Tiger team in Wisconsin, as it represents the first major push to revamp the claim-filing process in this state.

Obviously, neither claimants nor employers will see any immediate changes with this tiger team. But, one of the major roadblocks for reform have been the upper-level staffers decrying any changes as impossible in light of current unemployment law and regulations. Those objections lack a factual or legal basis. See, for instance, how able and available questions have become more illegal over the last 18 months in the name of simplifying claim-filing requirements.

So, this tiger team represents for the first time a group of experts who can call out the bad advice and guidance being offered from the upper-level managers inside the Department. And, there certainly is a need to identifying some of the fundamental problems that have taken root in Wisconsin.

The University of Michigan Law School’s Workers’ Rights Clinic has released a report, Lessons From a Pandemic: The Need For Statutory Reform to Michigan’s Unemployment System, that reviews the claim-filing systems throughout the United States by awarding or subtracting points based on what a state is doing for claim-filing access and administration.

This report finds that Michigan did exceptionally well during the pandemic through temporary measures created for dealing with the pandemic but that long-term, state-based problems continue to make regular unemployment claims in that state insufficient and inaccessible.

The comparable data on Wisconsin is NOT good, especially when considering that the folks in Michigan under-reported many of the key problems in Wisconsin. In regards to regular unemployment claim-filing access, Wisconsin scored 318.5 out of 900 possible points, a number that puts Wisconsin towards the bottom in the mid-west (as well as nationally).

State          Score
Wisconsin      318.5
Illinois       544.0
Indiana        271.5
Iowa           530.0
Kansas         498.0
Maine          634.5
Michigan       269.5
Minnesota      517.0
Missouri       329.0
Nebraska       288.5
New Mexico     493.0
Ohio           376.0
Pennsylvania   471.5
North Dakota   463.0
South Dakota   404.0

Moreover, the data for Wisconsin under-sells the unemployment claim-filing problems in this state. There is no observation in this report about Wisconsin (and North Carolina as well) denying all regular unemployment benefits to disabled workers who receive SSDI benefits.

And, the Covid-19 response in Wisconsin is probably given too much credit, as the executive orders during the pandemic were, unlike what happened in other states, quite limited and left numerous claim-filing requirements in place (like job registration and attending RESEA training) while also NOT creating the kind of blanket experience-rating waiver that occurred in other states like Michigan and North Carolina.

Even with this inflated score including an additional 200 (out of a possible 500) points for the state’s Covid-19 response, Wisconsin still ends near the bottom of all the states.

In 2007, a weekly certification for regular unemployment benefits consisted of 11 questions. Since then, the only major legal change in unemployment law that would affect claim-filing requirements was the increase in weekly job searches from two to four. Yet, now a weekly certification requires answering 120+ questions. As I wrote previously:

Today, filing an unemployment claim is the equivalent of filing a full 1040 tax return but without any instructions or advice available about how to actually provide all of the required information.

Putting in the work to see what is going on reveals just how broken the claims-filing process truly is. The Department should know better but is pretending that a few creases and some folds there will smooth over all the problems and somehow transport the state back to what existed in 2007.

Unemployment was completely undone in the 2010s in this state, and pretending otherwise provides a monumental dis-service to all involved.

So, bringing tiger teams to Wisconsin to evaluate fully and revamp the claim-filing process is an essential and welcome step. Kudos again to the Secretary’s office for getting Wisconsin into this program.

No vaccine unemployment bill introduced

A few weeks ago there were media reports about legislators circulating a bill to allow employees who quit or are discharged for refusing a vaccine to qualify for unemployment benefits.

Well, they actually did it. Meet SB 547. The bill creates a host of exemptions for those workers who refuse vaccines and lose their jobs as a result to qualify for unemployment benefits. The legislators even included a provision automatically to waive charges to employer accounts for unemployment benefits paid out to those refusing a vaccine, something the legislators failed to do in 2020 for pandemic-related job losses.

Think of all the other issues that have been ignored by the state legislature during the past year and half that have made unemployment more difficult for Wisconsin workers.

• access to regular unemployment benefits for disabled workers,
• having to quit a job for lack of childcare, like when schools close (instead, workers who lose jobs because of childcare need to argue they quit for good cause because of the illegal actions of the employer, that the employer has violated a basic term and condition of employment established for the job, or give up on claiming regular unemployment benefits and shift to PUA benefits, which end this week),
• having to quit a job because the employer is ignoring public health orders (only available to PUA claimants),
• waiving requirements that employees who are quarantined or sick with Covid-19 symptoms must still be able and available for work and must still search for jobs (these requirements were part of the job search waiver emergency rule that the legislature went out of its way to nix),
• granting an automatic experience rating waiver for all job losses during the pandemic (as happened in nearly all other states) and which has been so messed up in Wisconsin that few employers even know about it, and
• forcing the state unemployment agency to adopt one of the quarterly benefit waiver provisions to ease the quarterly benefit year eligibility re-calculation problem that puts a halt to benefit payments each quarter

There are so many, many issues that could and need to be addressed. Unemployment benefits for those refusing a vaccine is NOT one of them.

Finally, there is a claim-filing snafu on the portal today. Claimants are being told that they have already filed their weekly certification for PUA benefits for the week ending 9/4/2021 on Sept. 3rd.

Normally, the laws of time are that future events need to occur in the future, not in the past. But, for some unknown reason, the claim portal is telling PUA claimants that they have already filed their weekly certification for a week not yet over — the last week PUA benefits are available.

Sigh.

The PUA phone support line is 608-318-7100.

In any case, if you have not done so already, make sure to read the post about filing a back-up PUA initial claim (not the same as a weekly certification).

Labor and Management proposals to “reform” unemployment in 2021

The Unemployment Insurance Advisory Council has been meeting in 2021 over how to reform unemployment in Wisconsin.

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

And, the Department has re-presented its proposals from 2019 and new proposals for 2021, including a revamped SSDI ban (a financial offset in place of an eligibility ban, even though the Department has switched its explanation from one to the other for its own convenience).

At the 15 July 2021 council meeting, labor and management representatives exchanged their own proposals. Labor representatives in general attempt to make unemployment somewhat financially viable in Wisconsin. Management representatives build on prior “reforms” to make unemployment even more difficult and rare. Here is a rundown of those proposals.

Labor proposals

1. Fix the funding for the unemployment trust fund by changing how tax schedules are applied. Currently, the tax schedule to be applied to employers is based on the amount of money in the trust fund (which was $919.2 million as of 10 July 2021). This labor proposal would change the criteria to using an unemployment trust fund health number called an Average High Cost Multiple or AHCM.

• Schedule A = When UI Trust Fund is below .5 AHCM
• Schedule B = When UI Trust Fund is between .5 – 1.0 AHCM
• Schedule C = When UI Trust Fund is between 1.0 – 1.25 AHCM
• Schedule D = When UI Trust Fund is above 1.25 AHCM

Prior to the pandemic, when the trust fund had nearly $1.7 billion, the average high cost multiple was just under 1. In April 2021, when the trust fund still had slightly over $1 billion, the multiple was around 0.5.

2021 Wis. Act 59 is unnecessarily keeping unemployment tax rates at Schedule D for 2021 and 2022, and this labor proposal would also keep the tax rates at Schedule D. Per Wis. Stat. § 108.18(3m), tax schedules are based on the following trust fund balances (as of June 30th of the preceding calendar year):

• Schedule A: less than $300 million
• Schedule B: less than $900 million
• Schedule C: less than $1.2 billion
• Schedule D: more than $1.2 billion

In general, the actual tax rates for Wisconsin employers continued to fall in 2021 from 2020 tax rates because of fewer claims being paid to employees of Wisconsin employers. With fewer claims being paid, employers’ account balances are growing. As a result, employers have been moving to lower tax brackets within Schedule D.

2. Gradually Increase the maximum weekly benefit rate for unemployment benefits to $450 per week.

This proposed change would not take effect for another two years, however.

Current weekly maximum UI benefit   $370
2023 Benefit Year   $20 increase    $390
2024 Benefit Year   $20 increase    $410
2025 Benefit Year   $20 increase    $430
2026 Benefit Year   $20 increase    $450

This increase is half of what the Department proposes in D21-22 and needs to include a repeal of the $500 or more earnings prohibition to be effective, which the Department also proposed in D21-21. For further explanation, see the examination of these Department proposals here. As already noted, Wisconsin’s weekly benefit rate is the second lowest in the mid-west:

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

3. Eliminate the one-week waiting period, which is also included in Department proposal D21-19 and previously discussed here.

4. Expand worker mis-classification to all industries and make the penalties identical to claimant fraud. Here, labor representatives support adoption of Department proposal D21-26 and the recommendations of the governor’s misclassificaton task force. As noted in this discussion of the Department’s 2021 proposals, there are administrative and criminal penalties for claimant fraud as well as a different standard of proof for claimant fraud versus mis-classification by employers. It is not clear what the labor representatives are referring to with their proposal about identical penalties.

5. Request the Department to review tax schedules to assess the tax equity of those schedules.

What the labor representatives mean by tax equity is unknown.

Management proposals

1. When upgrading the Department’s mainframe, make sure employers have the ability to verify immediately any work search information that refers to that employer as well as the ability to report immediately any kind of work refusal, a missed job interview, or a decline of a job offer.

Employer’s currently have the ability to report all of this information as well as other kinds of information through the Department’s fraud reporting system.

Also, job search audits done pursuant to Wis. Stat. § 108.14(20) catch the interview and job offer information. This proposal would essentially give employers a direct avenue for challenging claimant eligibility when those claimants are NOT their former employees. For temp companies that have already seen their unemployment tax bills markedly reduced, this proposal secures an additional tool for cutting that tax bill even further. When claimants cannot collect unemployment benefits, then unemployment tax bills decline even further.

2. End the exclusion of union members from weekly job search requirements. Claimants who are working part-time, starting a new job in four weeks or less, will return to their current employer in the next eight weeks or so, AND union members who register on their union’s out-of-work list are exempt from doing four job searches per week. This proposal would require union hiring halls and union members who are on out-of-work lists with their unions to do four job searches per week through the union hiring hall.

This proposal does not make sense in light of how union hiring halls work. Hiring halls function based on the employers who contact them for available workers. But, that is not the point. Rather, this proposal is to draw media attention to this benefit union members enjoy and thereby create a further divide between them and most other workers in the state.

3. Redefine who an employee and independent contractor is for all fields of law to apply a single, common definition built around gig-work.

This proposal would completely upend almost all workplace law in Wisconsin, as one of the main changes being proposed is a person would be an independent contractor whenever a person signs a contract with an employer that states it is their intent to be independent contractor. In contrast to current law that specifies that such an arrangement can NOT be decided subjectively by the parties to the agreement, the proposal here is to give the parties the unilateral authority to create an independent contractor relationship on their own through a services contract.

Note: In practical terms, this authority is unilateral in the sense that individual employees have little to no bargaining power to set the terms and conditions of their employment.

Various “factors” are proposed to assess if a person is an independent contractor or not, but these factors are written so broadly and with so many loopholes that independent contractor status is all but assured. For instance, the services contract can still include a final schedule for delivery and a range of work hours as long as the time personally spent on providing services is left open. And, if costs for licenses, insurance, and certifications are borne by the person, then all is dandy with this gig-worker arrangement. In short, these criteria are not limitations but a road map for how to craft this independent contractor agreement.

Moreover, only four out of ten of these “factors” are needed for an independent contractor relationship to be established. So, an employer can make plenty is mistakes and still succeed on making their employees into gig-workers. A garbage truck driver, a machinist in a metal shop, and even a police officer could easily meet at least four of these factors and so be classified as independent contractors under this proposal.

Finally, this proposal also contains a poison pill that prevents any county or municipality from limiting this sweeping change to employment status in Wisconsin.

Regardless of any state law, however, this proposal if implemented would be a massive headache for employers, as federal wage and hour law, discrimination law, and collective bargaining law would still classify numerous “independent contractors” as employees for federal purposes. This proposal, in other words, is just plain silly and not serious at all.

4. End the 30-day quit-to-try a new job provision.

This proposal is another change that would greatly benefit temp companies by eliminating one of the main mechanisms employees may still qualify for unemployment benefits after trying out a job and quitting within the first 30 days.

By eliminating this provision, employees of temp companies would have to remain at every assignment regardless of fit, skill, wage, and working conditions until the assignment is ended by the employer to retain any hope of qualifying for unemployment benefits at some future date. Indentured servitude, in short, is making a comeback with this proposal.

5. Link the number of weeks of unemployment benefits available to the unemployment rate.

This proposal has been a bugaboo since 2010, as it essentially undermines the ability and scope of unemployment programs to respond in times of crisis. States that have implemented this linkage, like Florida and North Carolina, have been unemployment disaster zones, in part, because regular unemployment benefits were cut off prematurely during the pandemic.

One major point to unemployment benefits — “The decreased and irregular purchasing power of wage earners in turn vitally affects the livelihood of farmers, merchants and manufacturers, results in a decreased demand for their products, and thus tends partially to paralyze the economic life of the entire state” — is ignored and completely undercut by this proposal. Who would think that the penalties for first degree murder, for instance, should be linked to a state’s crime rate? Yet, management representatives are making a similar linkage here.

6. Numerous misconduct and substantial fault modifications.

For misconduct, management representatives want to add additional disqualifications concerning employer or customer information while also removing a requirement that employees act intentionally for any alleged “violation.” Absenteeism and tardiness violations will also be both more stringent and applicable regardless of actual reason for the absence or tardiness. Finally, employees would be strictly liable for a violation of an employer’s social media policy, once the employees are made aware of that policy.

As previously noted, these changes would directly run afoul federal requirements and loose Wisconsin employers their federal unemployment tax (FUTA) credit.

Note: A state’s administration of unemployment is funded through the Federal Unemployment Tax Act on their payroll (the first $7000 paid to each employee) that employers pay, called FUTA. Should a state be found to be applying the loss of claimant wage credits for “unintentional” misconduct, Wisconsin employers would lose their FUTA tax credit and be subject to the full 6.0% unemployment tax rate rather than just 0.6%.

In regards to substantial fault, management reps want to undue the court decisions in Operton v. LIRC, 2017 WI 46, and Easterling v. LIRC, 2017 WI App 18, by redefining inadvertent error into harmless error that does not also violate an employer’s written policies. In other words, any error that does not qualify as misconduct would now almost assuredly qualify as substantial fault.

Given that the Department still pretty much ignores these court precedents, this substantial fault proposal repeats previous “reforms” that seek align unemployment law with the Department’s current practices rather than accomplish an actual change.