No PUC for you: DWD denies a federal $600 payment when there is a “BAR”

CBS 58 has a report about how Wisconsinites with a BAR are not receiving any of the $600 PUC payment despite guidance that they should receive at least $300 PUC payment each week. The key paragraph from the story:

“We have received verification [from the US Dep’t of Labor] that if somebody has a BAR fine, which is a benefit amount reduction, they are not eligible to receive Federal Pandemic Unemployment Compensation, which is the acronym FPUC or the additional $600 a week, and basically it’s because this person was found to have committed fraud against the system and therefore they would not be able to get those additional benefits due to that bar penalty as a result of committing fraud,” said Emily Savard with the Department of Workforce Development.

Here is the May 8th e-mail message in which the Department announced this policy to its staffers:

From _, Melissa – DWD
Sent: Friday, May 08, 2020 10:46 AM
To: _
Subject: FPUC and BAR

If a claimant does NOT receive UI, PEUC or PUA payment for a week because the entire amount is applied to the Benefit Amount Reduction (BAR) the claimant will not receive Federal Pandemic Unemployment Compensation (FPUC) (extra $600).

Melissa _
IQ Supervisor (Integrity and Quality)

The Department’s own original April 20th guidance on PUC benefits did NOT have this exclusion (emphasis supplied).

Eligible to receive a payment under UI, UCFE, UCX, PEUC, PUA, EB, STC, TRA or DUA. FPUC is added after all debts are offset, forfeited, or applied to a benefit amount reduction from the individual’s UI. Individuals whose UI payments are intercepted to pay debts (child support or pverpayments) are eligible for the $600 FPUC payment, even if 100% of their weekly benefit amount is intercepted.

What changed?

According to the CBS 58 report, the Department asked for additional guidance from the US Dep’t of Labor on this issue. But, why would additional guidance be needed?

A BAR used to be called a forfeiture of future unemployment benefits. Here is how an initial determination in 2016 regarding a “BAR” read:

Effect

The claimant shall forfeit $12705.00 of unemployment compensation benefits that become payable during the six year period that ends 02/05/22.

Additionally, the Department may at a later date seek criminal prosecution under Wis. Stats. 108.24.


Forfeiture (the withholding of future payable benefits) is an administrative penalty for intentionally concealing information affecting your unemployment eligibility and is in addition to any overpayment caused by such concealment of information.


And, here is the relevant language for a “BAR” in an initial determination in 2018:

Effect

The claimant’s benefit amount shall have a reduction of $1480.00. This reduction remains in effect for benefits and weeks that become payable during the six-year period that ends 02/15/25.


This benefit reduction of future payable benefits is an administrative penalty for intentionally concealing information affecting your unemployment eligibility and is in addition to any overpayment caused by such concealment of information.


There has been NO change in this law, Wis. Stat § 108.04(11), during this time. The only change has been in how the Department characterizes this forfeiture of future unemployment benefits.

But, this change in terminology by the Department is important. Federal guidance for the payment of the $600 PUC payment has the following information about when there is an over-payment of benefits because of a forfeiture and whether the $600 PUC is still paid:

Question: Must FPUC payments be used to offset intrastate state or federal UC overpayments?

Answer: Yes. FPUC payments must be reduced to recover state and federal UC overpayments if the state has a cross-program offset agreement in place with the Secretary under Section 303(g)(2), SSA (42 U.S.C. § 503(g)(2)). However, a state may not offset more than 50 percent from the FPUC payment to recover overpayments for these unemployment benefit programs.

UIPL 15-20 PUC benefits, Change 1 (9 May 2020) at I-2 (emphasis supplied).

Essentially, the Department is claiming that this change in wording in how it calls this forfeiture of future unemployment benefits — from a forfeiture to a benefit amount reduction or BAR — means that the federal guidance about still paying $300 of the federal PUC payment (and earmarking the other $300 towards the remaining benefit amount reduction) does not apply.

Again, as with eligibility for PUA benefits for the disabled (see the discussion of SSDI in this post), the Department is going out of its way to stymie the whole purpose of the CARES Act: to stimulate the economy by giving folks needed cash to pay for rent and groceries.

As the federal guidance for PUC payments explains:

Question: When is an FPUC payment considered to be overpaid?

Answer: An FPUC payment is an overpayment any time an individual receives an FPUC payment for which the individual was not eligible. For example, if an individual is paid FPUC and the underlying UC benefit payment is subsequently denied and determined to be overpaid, then the FPUC payment is also overpaid. However, if an individual is eligible receive at least one dollar ($1) of underlying benefits for the claimed week, the individual is eligible to receive the FPUC payment for that week.

UIPL 15-20 PUC benefits, Change 1 (9 May 2020) at I-2 (emphasis supplied).

All the claimants currently under the BAR penalty are seeing in their benefit statements that they are being credited/reduced each week for these BAR/forfeiture penalties. Just like any forfeiture, these funds simply are not being paid out to them. So, why is the Department at least not paying out the $300 PUC as per federal guidance on this issue?

from a certain point of view

Drug testing for unemployment benefits is back

The US Dep’t of Labor has released new drug testing regulations (after the prior regulations were annulled).

These new regulations differ from the prior federal regulations in that they grant states much more leeway in determining occupations for drug testing. States can decide to test applicants for unemployment benefits where:

  • state law requires employees in that occupation to be tested, or
  • the state has a “factual basis” for concluding that employers are drug testing applicants or employees in that occupation.

As documented in the comments to this regulation, there are numerous problems to this new testing, ranging from legal (no new law has been passed since the previous regulation was voted down) to economic (the testing will cost more than any possible savings in unemployment benefits) to just plain stupid (one more hurdle for obtaining unemployment benefits is being created when unemployment benefits are already at record lows in part because of the obstacles already in place for such claims).

Here are some comments from NELP on the new regulations:

NELP on the Trump DOL Final Rule Allowing for Drug Testing for Unemployment Benefits

Following is a statement by Michele Evermore, Senior Researcher and Policy Analyst at the National Employment Law Project (NELP):

“Today, the Trump Administration released a final rule to allow expanded drug testing for unemployment insurance applicants. The Administration clearly overstepped its authority. We urge states not to act to pass legislation based on this regulation for several reasons: it is a costly solution in search of a problem; it violates Fourth Amendment protections against suspicion-less search; it unfairly stigmatizes receipt of an earned benefit; and it sets lawmakers up for the perception that the massive drug testing industry is influencing policy in a way that hurts state coffers, unemployment recipients, and the larger economy in case of an economic downturn.

“As part of a bipartisan compromise to pass the Middle Class Tax Relief and Job Creation Act of 2012 (MCTRA), Congress agreed to allow states to test unemployment insurance claimants for drugs under two narrow circumstances: if a worker was discharged for use of controlled substances, or when a worker is only available for work in professions that regularly conduct drug testing. The Obama Department of Labor crafted a regulation that closely adhered to that language, but upset with the bargain it struck, Congress then repealed this regulation, arguing that in spite of the clear language in the MCTRA, states should be allowed to drug test in broader circumstances.

“Not only does this rule exceed the authority Congress allowed in MCTRA, it may violate the Fourth Amendment’s prohibition of unreasonable searches and seizures. The final rule gives states broad authority to determine which jobs “regularly drug test.” Subjecting broad categories of workers, who do not work in occupations that the government has a particular safety or other interest in keeping drug-free, to invasive testing amounts to unconstitutional searches. Applying for earned benefits does not provide grounds to reasonably suspect a person of drug use. Indeed, when states such as Michigan and Florida tried to impose mandatory suspicion-less drug testing on all TANF applicants and recipients, federal courts intervened to stop them, finding such testing unconstitutional.

“States are experiencing record low administrative funding based on historically low unemployment levels. Federal law prohibits assigning this cost to claimants, so states would have to absorb the full cost of drug testing thousands of unemployed workers. Hopefully, states will see this as the costly and unnecessary burden that it is.

“Finally, this final rule represents a not-so-subtle attack on the character of unemployed Americans. This intrusion into the privacy of workers who were unlucky enough to lose their job seems rooted in a blanket assumption that they themselves are to blame. It could also discourage workers from completing applications – some unemployed workers may not be able to travel to a testing center to undergo an invasive test to receive benefits. Drug testing is simply a lazy way of blaming the victims of larger economic trends or corporate practices such as downsizing, outsourcing, and offshoring.

“Unemployment insurance is an important economic tool to help workers, their families, and their communities deal with involuntary job loss. NELP will continue to lead the fight to stop this expensive and ill-conceived effort to erode this key protection for people who are involuntarily unemployed and for the broader economy, if states attempt to implement it.”

Wisconsin was one of three states to implement drug testing in anticipation of these federal rules. It will be interesting to say the least how the Evers administration reacts to this drug testing push in light of the regulations and testing Wisconsin has already put into place in anticipation of this federal regulation.

NOTE: The Department of Workforce Development has reported to the Unemployment Insurance Advisory Council this summer 2019 that: of the voluntary employer reporting of failed drug testing currently available in Wisconsin, not one, single case has been reported. It seems that drug testing really is NOT that important.

And, one more issue of note with this new testing: marijuana. The new regulations indicate that the testing is for controlled substances that are banned federally. So, in states that have legalized marijuana to some extent — Michigan for instance — employees will lose unemployment benefits for testing positive for marijuana despite recreational or prescription use of marijuana being allowed in that state. As Wisconsin has done nothing to legalize marijuana, this state will not have to deal with that problem with these new regulations.

The new (actually old) restriction on travel abroad: concealment and departmental error

Insiders in the Department of Workforce Development tell me that in December 2015 the Department began tracking people who file on-line by their IP address. Because IP addresses identity the country from where a person connects to the Internet, the Department can now tell if a claimant is filing from outside the United States.

This new ability certainly helps in preventing identity theft against claimants or fake claim filing through fictitious companies and claimants — think Nigerian prince scandals with an entourage of suddenly laid-off staffers. But, this new ability also helps the Department enforce a 2012 law. Section 1 of 2011 Wis. Act 236 created a new Wis. Stat. § 108.04(2)(ae) that reads:

A claimant is not available for work under par. (a) 1. in any week in which he or she is located in a country other than the United States, as defined in s. 108.02 (15) (do) 2., or Canada for more than 48 hours unless the claimant has authorization to work in that other country and there is a reciprocal agreement concerning the payment of unemployment insurance benefits between that other country and the United States.

NOTE: Prior to this legal change, a claimant could still be eligible for benefits if his or her job market moved with her to the other country. See Honea v. Bou-Matic LLC, UI Hearing No. 11005590MW (13 June 2012).

Unfortunately, the Department has done nothing to tell claimants about this restriction. Indeed, the only information available about this categorical restriction on unemployment benefits is from p.27 of the Department of Workforce Development’s January 2013 Financial Outlook report to the legislature:

Act 236
Tighten Benefit Eligibility Requirements for Work Availability

Act 236 also changed various portions of UI law and operations. One change in the law brought about by Act 236 is to clarify the able and available provision of UI law. If a person is outside of the United States or Canada and is not there for a reason related to current employment they are not considered able and available for work and hence not eligible for UI benefits. This codifies what was existing UI procedure. As such this is not expected to have any effect on benefits paid or the UI Trust Fund. This went into effect on April 22, 2012.

Because the Department is now tracking IP addresses, it has begun enforcing this living abroad restriction against claimants. Not surprisingly, besides being declared ineligible for any unemployment benefits for the weeks living outside the US, claimants are also being charged with concealment for intentionally hiding their living aboard status (even though there is nothing from the Department indicating that this issue exists unless you happen to read unemployment statutes).

One of those recently charged with concealment was a claimant who traveled to Germany during the winter months of early 2015 to be with his girlfriend. He was there for love, not for a vacation. Furthermore, his job search was waived for these months, but he kept in contact with his employer on a weekly basis for when he should return to work. Regardless, the Department charged him with concealment for 22 weeks, demanding him to repay $8,140 in unemployment benefits, pay a 40% concealment penalty of $3,256, and forfeit $17,020 in future unemployment benefits because of that alleged concealment. In a lengthy and generally well-reasoned decision, the appeal tribunal tossed the concealment allegations. After observing that there “is no evidence that he was aware that there were geographic restrictions with respect to the availability question for unemployment purposes,” she found:

the mere fact that as a matter of law the claimant in this case is necessarily treated as having been “unavailable” for work while staying outside the United States does not obviate the literal truth that he was at all times ready, willing and able to accept fulltime suitable work during weeks 1 through 22 of 2015.

Because the Department has done nothing to notify claimants of this restriction, the issue of departmental error was also raised. The administrative law judge declined to find departmental error, explaining:

The claimant argues that the overpayment should be waived pursuant to federal law that requires state law to include provisions that reasonably affords those entitled to unemployment compensation benefits an opportunity to know, establish, and protect their rights under its unemployment compensation law. As such the department’s failure to include the geographical restriction in the Claimant Handbook or any other notice delivered to the claimant supports a waiver of the overpayment. However, the state law is in compliance with federal law because the unemployment insurance law is accessible publicly. The entirety of the unemployment insurance law simply cannot be reduced to the Claimant Handbook. Moreover, the department has provided its contact information in the Claimant Handbook with instructions to contact the department if there is a question concerning one’s eligibility for benefits. Accordingly, it was the claimant’s responsibility to report to the department that he would be traveling abroad and to ask whether his travel had any impact on his eligibility.

In other words, the appeal tribunal held that the Department satisfied its burden to explain unemployment law to claimants because the unemployment statutes can be read by the public and the claimant still had a duty to contact the Department about an issue he did not know was actually an issue and ask whether the problem he knew nothing about was actually a problem. To me, this conclusion means that claimants need to be both attorneys and fortune tellers.

White House announces new UI reforms

The President has announced several initiatives and proposed changes to unemployment law, including federally-funded wage insurance (up to $5,000 a year for two years available to workers who accept jobs that pay less than $50,000 and which is less than their previous position), expanding eligibility for unemployment benefits to part-time workers (many states, including Wisconsin, limit unemployment benefits only to those seeking full-time work), mandating 26 weeks of state UI benefits (several states have reduced the maximum weeks of available benefits), creating a trigger for federally-funded Extended Unemployment Compensation (EUC) benefits, and mandating employer’s UI taxes are sufficient to a certain extent. Initial details about these proposals are available here.

These proposals are for the most part limited tweaks to the unemployment system. The biggest changes are making wage insurance broadly available and making UI benefits available to those seeking part-time work.

The wage insurance proposal provides an economic stimulus at a time when consumer spending and wage gains remain flat. But, this insurance also provides structural support for pushing wages down by creating a cushion for workers’ loss of income in subsequent jobs.

Expanding unemployment benefits to those limited to part-time work is a boon for those in part-time jobs, including many women who can only work part-time because of family and child-care responsibilities.

Such a change, however, presumes that unemployment benefits are generally a benefit to folks making unemployment claims. As evident in Wisconsin (and other states such as Michigan), receipt of unemployment is too often leading to concealment charges and penalties that turn unemployment benefits into a millstone of debt. As the numbers in Wisconsin reveal, benefit payments are declining and now are at record lows. Because claimants in Wisconsin can no longer collect unemployment benefits because of easy disqualifications like substantial fault or end up repaying benefits they do receive because of concealment charges arising from simple filing mistakes, unemployment taxes are collecting into a fund and will never be paid out. Until the feds address these kinds of changes in state unemployment systems, any expansion of UI eligibility will likely only make things worse for most claimants.

LIRC funding fix

Recall that in the latest Wisconsin budget, not only was LIRC’s budget cut and its general counsel made a political appointee of the Governor, but the Labor and Industry Review Commission was also transferred from DWD to the Department of Administration for budgetary purposes.

The problem with this change is that administration of unemployment law is funded through a federal tax that employers pay. The funds are then channeled from the feds to the state agency responsible for unemployment law in the state, namely DWD in the case of Wisconsin. Since LIRC is now no longer part of DWD for budgetary purposes, LIRC faces the prospect of losing all of its federal unemployment funding (as well as some equal rights funding that also comes from the feds).

So, AB685 and SB560 create a mechanism for transferring federal funds from DWD to LIRC for its federally funded work.

As the LRB explains:

Under prior law, the Labor and Industry Review Commission (LIRC) was attached to the Department of Workforce Development (DWD) and moneys were appropriated to DWD for the activities of LIRC. 2015 Wisconsin Act 55 (the 2015-17 biennial budget act) attached LIRC to the Department of Administration and appropriated moneys directly to LIRC.

This bill provides for the transfer of federal moneys received by DWD to LIRC for unemployment administration and equal rights functions performed by LIRC and of other moneys transferred to LIRC for other purposes.

The mechanism for accomplishing this transfer of unemployment funds?

to transfer to the appropriation account under s. 20.427 (1) (k) an amount determined by the treasurer of the unemployment reserve fund. [emphasis supplied]

In other words, the treasurer of the unemployment reserve will now have the statutory authority to determine independently what LIRC’s funding from federal monies will be.

US DOL: 80 years of unemployment help

From an August 2015 post by Gay Gilbert on the 80th anniversary of the unemployment system:

Anniversaries are a chance to reflect on the work we’ve done and what we hope for in the future.  Reflecting on 80 years of the Unemployment Insurance program is especially poignant for me as the last five years (and more) have been marked by immense struggles and profound accomplishments. Our economy is recovering after the most difficult economic period in our lifetime. Millions of lives were turned upside down by rampant layoffs.

And through it all, the Unemployment Insurance system was there to lend a hand, offering support for individuals and families while they looked for a job. At a time when they needed it most, UI benefits helped put food on the table and a roof over the heads of millions of American families. 

The UI program is also credited by most economists as playing a vital role in stabilizing the economy.  The program provides money to the people who need it most and who in turn inject that money right back into the economy at a critical time. These dollars are spent on food, school supplies, rent and other vital products and services that help local employers remain in business – preventing further job losses.

And the backbone of the program are the men and women at the federal, state and local level who kept the program running smoothly – even in the face of unprecedented budget constraints and capacity challenges. They continue to be key partners as we enact reforms to develop a program that meets the needs of workers and employers in the 21st century.

And as we look to the future, we have more tools for laid-off workers that we didn’t have during the Great Recession. Recent legislation is helping to ensure that laid-off workers not only get the financial support they need, but are also connected to federal employment services to help them get back on their feet quickly. Employers also have tools like Short Time Compensation to help be avoid layoffs during temporary weak business cycles.

UI has a proud legacy and will continue to serve generations to come.

Gay Gilbert is the Director of Office of the Unemployment Insurance at the U.S. Department of Labor. 

UI helping hand

2014 State UI Tax Info Available

From Rick McHugh of NELP:

A useful report from U.S. Department of Labor is the Significant Measures of State UI Tax Systems. The 2014 edition has been released.

One of the useful features of this report is that USDOL calculates an “Adequate Financing Rate.” The bad news in the report is that most states are under-financing their UI programs using this benchmark: meaning they will not be prepared with trust fund reserves sufficient to ride out increased benefit costs during the next recession. Forty-four states had an average UI payroll tax below their minimum adequate financing rate in 2014. Yikes!

Business climate debates dominate UI discussions in the states. (Yes, I know these are not real world discussions. Ironically, business climate is viewed as real by the same folks who do not think climate change is real.) The Significant Measures report gives advocates key information about individual states as well as comparative information presented in tables. In addition, by selecting the United States as an “individual state” you will have a ready-reference to how your individual state compares to U.S. averages.

In terms of business climate claims, many employer groups will focus on average tax rates on taxable wages. The average taxable employer paid $398 per employee in 2014. This translates to 0.8% of total wages, or 80 cents of every $100 dollars of wages. Nonetheless, using average UI taxes on taxable wages exaggerates tax levels.

The Significant Measures report gives us some basic information on the distribution of taxes that usefully shows that most employers do not pay average UI taxes. Instead a few employers (6 percent in 2014) pay taxes at the highest rate and the rest pay lower taxes, many pay close to no UI taxes. Indeed, last year 37 percent of all employers paid the lowest state tax rate available (in five states this rate was zero) and 47 percent paid a tax rate of less than 0.5 percent of total wages (or less than 50 cents for every $100 dollars of wages). In some states, I have observed that up to 70 percent of employers paid minimum tax rates in some years. This tax distribution info is not routinely shared by state agencies in my experience, making this source of information the best we have in many states.

Yes, there are states where UI taxes are higher and perhaps a half-way credible business climate case can be made there. However, overall it is difficult to make out a case that UI payroll taxes make up a significant element of business climate. In the few states with higher UI taxes, I suggest comparing UI taxes to total wages and benefit costs (according to the 2015 National Compensation survey from BLS, UI taxes were $ 0.23 of the average hourly cost of labor ($33.49) in the private sector in 2014. Or, profits. Or, health care. Or, pensions.

Income tax intercepts coming to employers

Tax intercepts against claimants for recovering over-payments have been occurring for numerous years now. That is, a claimant who owes money to the Department of Workforce Development because of an over-payment has seen the Department intercept federal and state tax refunds due the claimant in order to recover that over-payment. The official name for these tax intercepts is the Treasury Offset Program, or TOP.

The 2013 budget act at the federal level required states to implement treasury offsets for ALL unemployment debts. Wisconsin has previously only applied treasury offsets for collecting claimants’ debts. To continue to receive federal grants for administering unemployment law, Wisconsin needs to make treasury offsets applicable to employers’ debts as well.

To that end, at the February 19th Advisory Council meeting the Department prepared a proposal, D15-03, for implementing a treasury offset against employers. Besides setting forth new and changed statutory language, this proposal explained:

Impact: This proposal is expected to save the Trust Fund approximately $4.3M annually via additional employer state Ul tax collections.

Summary of the Proposal: The Treasury Offset Program (TOP) is a Federal tax intercept collection tool used to collect unpaid debts owed to various government agencies. DWD UI previously implemented TOP to recover fraud and wage non-fraud overpayment debts from claimants. This proposal expands the use of the TOP program to unpaid employer contributions when personal and corporate liability can be assigned. However, the Federal government does not have the functionality to collect from corporate tax accounts at this time. The proposal is written to include corporate accounts for future enhanced Federal capabilities. Expansion of TOP is mandated by the Federal government. Fees are charged by the TOP program directly to the participant and would not affect the UI Trust Fund.

Methodology: Employer tax debt that would be certifiable for TOP is mainly debt from preliminarily closed and closed employer accounts. From 2010-2014 the average yearly amount of delinquent debt due to preliminarily closed/closed accounts is approximately $43M of which approximately 38% is recovered by Ul collections.

In 2012, TOP for claimant benefit overpayments was expanded to include fraud and non-fraud wage overpayments. From 2012—2014 the average annual amount of benefit overpayment debt certifiable for TOP was $25.2M of which approximately $12M was recovered by UI collections, or 48%.

At a 48% recovery rate, approximately $20.6M of employer debt certifiable for TOP would be collected annually. Much of the debt UI already recovered would now be collected with TOP; however, it would be collected more efficiently. Since UI can already collect approximately 38% of TOP certified debt using other collection tools, adding TOP as an additional tool would increase employer debt tax collections by approximately 10% of the certified debt annually. Ten percent of the average $43M employer debt certified for TOP would result in Trust Fund savings of approximately $4.3M annually via additional employer tax debt collections.

Note that while a federal process for applying treasury offsets against corporations is not yet in place, these treasury offsets will certainly take effect against employers whose businesses are included in their personal tax returns, such as limited liability corporations. Accordingly, the Department acknowledges that these offsets will have an immediate effect of $4.3 million in additional collections for employer debts.

At its March 19th meeting, the Advisory Council approved this proposal. As a result, it will be included in the Department’s UI bill along with other changes approved by the council. That bill should be presented to the legislature this fall or winter. So, for the 2016 tax year and perhaps for the 2015 tax year (if the bill is enacted in 2015), employers will have to face the loss of their state and federal refunds if they have unpaid unemployment taxes.

Feds release two important advisories about claimant access

On Friday, October 2nd, the Department of Labor issued two advisories — officially called program letters — about maintaining claimant’s access to their unemployment benefits.

The first concerns the due process protections claimants have when charged with concealment. In particular, this advisory spells out the requirement that whenever unemployment benefits are denied:

[T]he individual must receive a written copy of that determination and must have the right to appeal the denial. States are not required to conduct a full, formal evidentiary appeal hearing before determining that an individual was overpaid, but they must offer the individual an opportunity to know and rebut the information in fact finding before issuing a decision that the individual is not eligible and was overpaid.

UIPL 01-16 (1 October 2015) at 4. Furthermore, once a claim for unemployment benefits is underway, payment of those benefits cannot be stopped until a determination about the claimant’s eligibility has been issued.

If the state agency cannot make an eligibility determination before the date of a timely payment, the state agency “presumes the claimant’s continued eligibility until it makes a determination otherwise.” Additionally, a state must inform individuals that the pending eligibility issue may affect their entitlement to [unemployment compensation] and may result in an overpayment.

Id. And, in that investigation about the claimant’s continued eligibility for unemployment benefits, the unemployment agency must independently verify any computer match information casting doubt on the claimant’s continued eligibility, notify the claimant about the doubts on his or her continued eligibility, and give the claimant time to respond to the accusation.

States may not make determinations of overpayments and/or fraud using automated systems without the input of agency staff. The individual must also be informed of the information received as a result of the match with the Federal database and given the opportunity to be heard before a determination of an overpayment may be issued.

Id. at 5. This specific statement that fraud determinations CANNOT be based on automated systems seems specifically targeted against the fraud by algorithm process currently taking place in Michigan. The advisory closes with the requirements needed for any fraud notice.

[A] fraud determination notice must be sufficient to allow the individual to know the potential penalties or other consequences of a fraud determination as well as his or her rights with respect to an appeal. The individual must be provided additional information on the appeal process including the right to have representation; to present testimony and other evidence relative to the appeal; to subpoena witnesses and records; and to be apprised of the consequences of failing to attend an appeal if one is requested. Communications must be in plain language and using methods that ensure the communication is most likely to be successful for all populations, including individuals with limited English proficiency.

Id. at 6. Given the push in Wisconsin for pursuing concealment charges against claimants for claim-filing mistakes, this advisory applies with equal force to Wisconsin.

The second advisory concerns preventing program discrimination because of age, national origin, or language proficiency and making sure that new, computerized filing and notification procedures are as user-friendly as possible. This lengthy memorandum begins by spelling out the legal requirements for open access to claims information.

[S]tate UI agencies must ensure that use of new technologies and systems for administering UI programs and providing services do not create barriers (e.g., procedural, technological, or informational) that may prevent individuals from accessing UI benefits, such as by denying them a reasonable opportunity to establish their eligibility. The U.S. Department of Labor (Department) has determined that “access” for purposes of conforming to Section 303(a)(1) of the [Social Security Act] means individuals’ ability to complete, submit, and obtain information about their initial and continued claims, appeals, reemployment services, and any other information, program functions, or services available for all claimants.

* * *

Thus, while states may offer claimants a variety of methods to receive information, the content of a written determination, whether it is a letter mailed to the claimant or provided in an electronic medium, must comply with the requirements in the Standard for Claim Determination specified [in Employment Security Manual, Part V, Section 6013.C.1.c.].

UIPL 02-16 (1 October 2015) at 3-4.

Electronic-only communication requirements may well run afoul of these non-discrimination requirements.

The nondiscrimination laws that apply to state UI agencies prohibit discrimination based on both disparate treatment — intentionally treating members of protected groups differently based on their protected status — and disparate impact — the use of policies or practices that are neutral on their face, but have a disproportionate impact on members of some protected groups. In addition, as detailed below, regulations implementing these laws prohibit states from establishing policies or procedures that, while not directly barring access to benefits or services for individuals who have disabilities and/or are [Limited English Proficient], indirectly prevent or limit access. The use of a website and web-based technology as the sole or primary way for individuals to obtain information about UI benefits or to file UI claims may have the effect of denying or limiting access to members of protected groups in violation of Federal nondiscrimination law.

* * *

States may offer individuals the option of receiving the information, services, etc., discussed in this guidance via electronic methods, but may not require that individuals communicate only through electronic means. Such policies unduly restrict program access, as not all individuals have the ability or capacity to communicate electronically.

Id. at 4-5. This advisory then goes into detail about what these non-discrimination requirements mean and describes the numerous steps that state agencies need to take. Of particular note are the following requirements and objectives:

Use of free, web-based translation services (also known as machine translation software) is not sufficient to ensure that the translation is appropriate and conveys the same meaning as the English version. Information about effective translation resources may be found at: [Lost in Translation.]

* * *

State UI agencies should also ensure that web-based claims filing systems also maintain a system for receiving and addressing complaints from limited English proficient persons and persons with a disability. This includes, but is not limited to, providing in-language notice regarding how to file an online complaint about delayed or denied service resulting from language barriers.

* * *

States may promote on-line filing as a primary method of filing UI claims, but they may not have policies and operational practices that make on-line filing the exclusive method of filing and certifying UI claims. As with persons with disabilities or those with [Limited English Proficiency], or older individuals, states must offer an alternative option for accessing information and benefits, such as by telephone and/or in person, in a manner that ensures equal access for persons unable to access or use a web-based system in order to avoid disparate impact on other protected groups. Further, states must broadly and conspicuously disseminate information about alternative access options in ways that ensure that people who may need to use such options are aware of the options. State UI agencies must ensure that use of new technologies and systems for administering UI programs and providing services do not create barriers (e.g., procedural, technological, or informational) that may prevent individuals from accessing UI benefits, such as by denying them a reasonable opportunity to establish their eligibility.

* * *

State UI agencies must also take reasonable steps to ensure that, if technology or other issues discussed in this UIPL interfere with claimants’ access, they have established alternative methods of access, such as telephonic and/or in-person options. The alternative access points must be communicated clearly in a manner that reaches the population that may need to use them. The processes the state UI agency uses to offer alternative methods of access must be documented in the agency’s policy documents and operating procedures. In addition, a state must train UI and American Job Center staff on the alternative methods of access to ensure that claimants and others who experience challenges are properly directed to alternative access options so that they may be served in a timely manner. Excessive delays experienced by potential claimants as they are referred to alternative access methods can result in a denial of access to services, in conflict with Federal UI law and nondiscrimination law requirements.

* * *

Action Required. State Administrators must:

  1. Ensure that processes exist or are implemented to provide all claimants access to UI benefits as discussed in this UIPL;
  2. Disseminate this guidance to appropriate state agency staff, including the state’s [Equal Opportunity] Officer;
  3. Ensure that state [Equal Opportunity] Officers are involved early in all appropriate information technology modernization and business process reengineering plans to promote the full integration of equal opportunity requirements into agency technology plans; and
  4. Work with state [Equal Opportunity] Officers to evaluate the avenues available to the public to participate in the UI process to help ensure access to everyone including individuals with disabilities and [Limited English Proficient] individuals.

Id. at 9, 10, 12, 13, and 14.

The recent developments in Florida and the push in Wisconsin for similar obstacles to filing unemployment claims have been going on for some time now. See, e.g., the posts about job searches changes and waivers. These advisories, however, demonstrate for the first time that federal authorities are pushing back. Stay tuned to see what happens next. The National Employment Law Project has declared: “By staking out a strong enforcement position in support of fairness and accessibility, we believe that the Department [of Labor] has taken a critical first step toward ensuring that unemployment insurance will be there when America’s workers need it, no matter who you are or where you live.”

Findings of the unemployment audit

Yesterday, December 16th, the Legislative Audit Bureau released its report on unemployment claims handling in Wisconsin.

The report is divided into three parts: telephone claims handling, processing of appeal decisions, and benefit over-payments. The most notable finding concerns telephone claims handling.

Telephone problems

The report shows that from late-November 2013 through mid-January 2014 that more than 70% and 80% of all calls to the Department’s initial claims phone line were blocked (see p.18 of the report). Furthermore, 50% to almost 90% of all calls to the inquiry phone line were blocked from July 2013 through mid-January 2014 (see p.19 of the report). That is a staggering collapse of the Department’s phone system.

At the January 2014 meeting of the Advisory Council, the Department explained this phone problem as a seasonal blip that was slightly more than expected because folks preferred the telephone to the on-line system:

Ms. Knutson asked the Council if there was any other business the Council would like to address. Mr. Gustafson referenced a recent story that aired in the Green Bay area related to the Unemployment Insurance claim telephone line experiencing back-ups. He asked how the department is handling this issue. Division Administrator Robert Rodriguez stated that currently the department is experiencing its typical peak season but due to a multitude of things this season has been more difficult. Mr. Rodriguez stated that the department received 220,000 calls last week. Mr. Rodriguez explained that the department cannot dictate how claimants use the system although online is recommended. It is, of course, the claimant’s choice but the department would like everyone who is able to use the online filing portal to use it, but understands that some people have limitations.

Mr. Gustafson stated there was not any real issue causing the increase in telephone calls such as something similar to the most recent recession, and he was worried that the story was misleading and painted the department in a bad light and it implied a much larger problem. Mr. Rodriguez stated that the department is scaled well for 46 or 47 weeks to meet demand but we have responded to the most recent influx by adding staff, which the department typically does during the seasonal peak, and has authorized additional overtime. Mr. Gustafson stated that the story did not ask the question how the department was reacting to the issue. Mr. Rodriguez stated that an individual having to call the department 20-40 times is not acceptable but reiterated that current numbers show that the issue is going away. Ms. Feistel asked if there were issues with the online claim filing system. Ms. Knutson recognized and asked Mr. Lutfi Shahrani, the department’s Benefits Director, to address the Council on this issue.

Mr. Shahrani stated that this is not a new issue. Wisconsin typically takes 8,000 calls in early November and that number increases towards the end of November and for the month of December but then begins to taper off in January. Mr. Shahrani stated that the difficulty is not on the side of those filing for benefits, but for those who are placing inquiry calls. A multitude of factors, such as the expiration of the federal EUC program, the reduction in capacity due to how the holidays fell this year, and the additional individuals who were unable to work due to the deep freeze all are contributing to the increase in inquiry calls. Mr. Shahrani brought up the 220,000 figure stating that we do not have 220,000 claimants currently receiving benefits. He explained how callers who repeatedly hit redial clog the system. He reiterated the department has reacted to the issue by hiring additional staff, extending work hours by allowing more overtime, by not allowing vacation during the holidays and by rededicating staff during the peak time. Mr. Shahrani also stated that just yesterday the IVR system which handles incoming calls was only at 60 to 70% capacity. Mr. Gustafson again reiterated that he felt the department was unfairly characterized within the news story.

As the audit report indicates, news reports at the time actually understated how extensive the phone meltdown was, and the Department’s explanation to the council about this problem was inadequate (for instance, the number of calls being blocked was hardly typical from prior years).

The report offers no explanation for why there was a sudden increase in phone calls. At the council meeting, the Department offered the explanation that the increase in calls arose because of the expiration of Extended Unemployment Compensation (“EUC”) benefits, a reduction in capacity because of the holidays (while the audit report claims that 20 LTE staff were added in October 2013 there is no explanation about the tasks to which those LTE staff were assigned), and historically bad weather that led to an increase in temporary layoffs. In his letter attached to the report, Secretary Newson points to the following cause for the meltdown: “During the winter of 2013-2014, uncertainty about the federal Emergency Unemployment Compensation program triggered a further spike in call volume.”

That explanation makes the most sense. As the audit report shows, unemployment has been steadily declining the past three years. The number of claims filed in the 2013-14 fiscal year was 520,100 — 272,200 less than the number of claims filed in the previous fiscal year. If there was a sudden spike in claims during last winter, the data is available on a weekly basis to show whether such a spike actually occurred. Since there is no data in the report about a winter increase in claims, the available conclusion is that a sudden spike in claims was not the reason for the sudden spike in phone calls.

So, the explanation for the increase in calls turns on folks wanting to know about EUC benefits that were slated to expire in December 2014 if Congress did nothing about the issue. As noted previously in this blog, the expiration of EUC benefits was a bigger issue in Wisconsin then in other states:

In Wisconsin, 23,700 individuals are slated to lose their EUC benefits at the end of December according to this House report. That’s about one out of every 242 residents having their income slashed just before the New Year.

Further, because EUC benefits affected everyone in the unemployment program, the number of folks in Wisconsin wanting to know what would happen to those benefits was obviously more than 24,000. Unfortunately, until December 13th (when the Department finally posted information on EUC benefits on its website), the only way for folks to find any information relating to EUC benefits was to call the Department. Even after information was posted to its website, the terse language in that post (if folks could even find this post) probably left many questions about EUC benefits unanswered, such as should they still file weekly claims in case the program was renewed and how would EUC benefits start up again if Congress acted?

Certainly, there might not be easy answers to these kinds of questions. But, folks facing the loss of all income will have these kinds of questions and more. As a result, the Department’s web response did little to quell the phone calls coming in. Not until it was clear that Congress would do nothing about EUC benefits in mid-January 2014 did the number of calls begin to decline.

And, this web response does not portend well when unemployment questions arise in the future. The audit report touts as one solution in the future an October 2014 upgrade to Department computer systems that provides claimants with basic information about their claims. There are three problems with those proposed solution. First, it is only available to those who can use the Department’s on-line system.  Second, there is no evidence that the Department is doing anything to encourage and educate folks about on-line access.  The Department does not use LinkedIn, FaceBook, or Twitter to provide unemployment information or on-line access at any level. Third, the current on-line information does not include an easy way to add new information and issues that might be relevant next year or the year after that by incorporating information from sources outside of the Department or providing easy access to the Department’s specific claimant records. In other words, this improved on-line experience is hardly a solution at all.

Appeals processing

The audit report shows that the handling of appeals has improved even though the staff (aka administrative law judges) handling those appeals has declined (from 33 in 2011 to just over 25 in July 2014). Decisions are now generally being issued within the time lines established by federal authorities. Comparisons in the report with other states, see pp.26-7, however, are misleading because those states may have different notice requirements than in Wisconsin. Wisconsin, for example, only requires six days hearing notice. Other states typically require more than six days hearing notice. Cf. 430 CMR § 4.11 (ten days hearing notice in Massachusetts), “Preparing For Your Appeal Hearing” at 3 (ten days hearing notice in Illinois), “A Guide To Unemployment Insurance Appeals Hearing” at 7-8 (in Michigan, ten days notice for unemployment hearings, 20 days notice for cases involving fraud allegations), and Minn. R. 3310.2905(2) (ten calendar days hearing notice in Minnesota).

What is most interesting is the breakdown of appeal issues presented in the audit report. Of 68,900 appeals filed in the past three fiscal years:

  • 19,400 concerned discharges
  • 8,900 concerned quits
  • 4,400 concerned able and available issues, and
  • 36,200 (more than half) concerned 32 other reasons

See pp.23-4 of the report. In Massachusetts, where I was an administrative law judge for unemployment cases in early 2000s, 80-90% of all cases being appealed concerned quit or discharge issues. Even with the complications created by EUC benefits, I suspect that this percentage of cases concerning quit or discharge issues still hovers around 70% and that this percentage similarly applies to other states. In Wisconsin, however, quit and discharge cases make up only 41% of the cases being appealed. That shift in caseload is remarkable and deserves further examination.

Over-payments

The audit report notes that over-payments occur generally because of unintentional mistakes but that most of the over-payment amount at issue is from what the Department has characterized as intentional fault. This last finding has caught the attention of a few politicians.

The report does not indicate, however, that the Department is often finding intentional concealment on facts that only show a mistake. For the past year, the Labor and Industry Review Commission (“LIRC” or “Commission”) has been publishing on its website on a monthly basis it seems decisions overturning concealment determinations. See, e.g., the discussions here, here, here, and here. Given that the Commission only receives about 12% of all appeal tribunal decisions, which in turn are less than half of all determinations issued, there are most likely many, many concealment determination that should be overturned but never are because no appeal is filed in time in those cases.

The report also does not indicate that there are steps the Department could take to reduce the over-payment amounts at issue. Most over-payments occur because claimants and employer report differing amounts of wages earned in a given week (most claimants are not in the habit or tracking their hours in the same manner and detail that employers do and so often their reports do not match their employers). At present, the Department does not get wage reports from employers until quarterly unemployment tax reports are filed. Other states, however, use information from employers’ bi-weekly or weekly payroll and tax withholding reporting to verify wage reports on weekly claim certifications. In January 2013, I sent the following e-mail message to Department staffers:

Dear Scott and Lutfi,

Here is the info on the Massachusetts effort wage matching effort:

Unemployment Insurance Fraud
Protecting the integrity of the unemployment insurance program is a responsibility that we take seriously.

Through our Program Integrity Department, the Massachusetts Department of Unemployment Assistance focuses on the prevention, detection, investigation and prosecution of those who defraud or attempt to defraud the unemployment insurance program.

DUA works with other agencies
Numerous actions are taken to prevent and detect the fraudulent collecting of benefits. For instance, our Program Integrity Department regularly compares wage records from the Massachusetts Department of Revenue with records of current UI claims to ensure that claimants who work part-time while collecting UI benefits report those earnings to DUA.

The Department of Revenue also provides our Program Integrity Department with a weekly report of workers added to employers’ payrolls. This “new hire” report is also matched against UI records to check that claimants who return to work do not continue to collect benefits. It is important for both workers and employers to be aware that eligibility for UI benefits ends on the day an individual starts full-time work.

To prevent fraud, our Program Integrity Department matches records with those of other state and federal agencies including the Social Security Administration, the state Department of Corrections, and others.

Once DUA establishes that a claimant has collected unemployment insurance benefits to which he or she was not entitled, the Program Integrity Department’s Recovery Unit aggressively works to recover the overpaid benefits. A variety of collection tools are utilized including criminal and civil prosecutions, the interception of Massachusetts state income tax refunds, mail dunning, and the offset of any future unemployment benefits. Additionally, DUA levies a 12 percent annual interest charge against any outstanding overpayment balance if the claimant was determined to be “at fault”.

You can help
We welcome information from concerned citizens who know of workers who continue to collect UI benefits while they are employed.

You can report individuals who are collecting benefits while working full-time and employers who are paying workers and not reporting wages via any one of these methods:

1. Completing the DUA Fraud Hotline Complaint Form
2. Calling the Fraud Hotline – 1-800-354-9927
3. Emailing uifraud@detma.org
4. Writing to the U.I. Program Integrity Department, P.O. Box 8610, Boston, MA 02114. Or Fax to 617-723-5312

Employers can also download an AntiFraud Poster pdf format of poster_antifraud_508.pdf in English and Spanish.

From http://www.mass.gov/lwd/workers-and-unions/general-resources/report-fraud/ui-fraud.html

From what I understand, Wisconsin does everything above except for the weekly new-hire reporting/matching. From what I recollect, Wisconsin does new-hire matching every quarter.

* * *

Also, it appears that New Mexico has adopted something similar to Massachusetts along with a new web portal for both claimants and employers:

New unemployment insurance tax & claims system launched
For the Headlight Posted: 01/10/2013 02:54:21 PM MST

ALBUQUERQUE – The New Mexico Department of Workforce Solutions (NMDWS) this week successfully launched a new Unemployment Insurance (UI) system, marking the first time any state has simultaneously launched an integrated UI tax and claims system.

In just two days, the new system has already paid out $4 million in UI claims, certified over 17,000 people for their weekly benefits, helped over 22,000 customers open self-service online accounts, and enabled nearly 1,000 employers to electronically file wage reports, some for the first time.

Governor Susana Martinez said New Mexico’s new UI system is significantly improving the timeliness and accuracy of UI payments, enhancing the level of service provided to unemployed workers and businesses, and strengthening the state’s ability to prevent, detect, and recover improper UI payments.

“In just 36 months, we have replaced a 30-year-old tax system with a modern UI system that is more convenient for customers, more efficient for state workers, and more secure for the businesses that fund this program,” said Governor Martinez.

Since Monday, January 7, the NMDWS UI Operations Center has fielded some 182,000 phone calls from 17,500 unique callers. “While this extraordinarily high call volume impacted our ability to respond to all callers in a timely fashion, we successfully converted data from the old system to the new one,” said Secretary of NMDWS Celina Bussey. “The new UI system has been stable since it was launched and the majority of regular UI claims have been paid promptly.”

NMDWS has more than doubled the staff in their UI Operations Center and taken a number of additional steps to ensure that the agency is meeting the needs of its customers.

“We have immediately addressed any issues that have arisen and we are constantly monitoring our operations to ensure that we are providing the highest level of service to our customers,” Bussey said.

She noted that thousands of people have been able to go online to certify and receive their UI benefits and hundreds of employers and third-party administrators have already taken steps to directly manage their own UI accounts without NMDWS staff assistance.

“With anything new there is a learning curve,” Bussey said. “Our customer service agents are doing everything they possibly can to help our customers adjust to our new program integrity measures and understand the many options and benefits of the new system.”

Bussey said that a banking error unrelated to the new system was quickly resolved on Tuesday and everyone who has certified for benefits has received their UI payments. She also said that Wells Fargo has agreed to refund debit card holders any fees they may have incurred as a result of the delay in benefits being deposited in their accounts.

Since the new UI system launched on Monday, claimants have been applying for benefits, requesting payments, maintaining account information, and responding to requests for information. These new self-service options are helping to expedite UI payments to unemployed workers and more quickly resolving issues between employers and claimants.

The new UI system is also providing New Mexico employers with a single repository of all UI business functions. This self-service functionality is speeding up the processing of new registrations and appeals, and allowing employers to electronically file wage reports and respond to notices of claim filings. In the past, paper filing has cost NMDWS significant resources and delayed important wage data from being entered into the UI system.

The new system is also automatically calculating taxable wages and amounts due and accepting electronic payments from employers. In the past, all payments were processed with paper checks. On Tuesday, the first batch of employer electronic payments was successfully processed directly to the bank – without staff intervention.

The vast majority of calls to NMDWS’ toll-free number – some 7,000 – have dealt with the new federal law that extended unemployment benefits.

Bussey said NMDWS is working through each individual Emergency Unemployment Compensation (EUC) claim to help eligible claimants register for benefits. Due to recent rule changes and the complexity of multiple extended UI benefits, each claim is taking more time than usual to set up.

Of the 7,000 New Mexico EUC claimants potentially eligible for continued extended benefits, NMDWS has successfully paid about 1,000 this week. Many others claimants who no longer have money available in their UI account are calling NMDWS to inquire about their eligibility. NMDWS is working to determine if these people are eligible and, if so, to set them up with payments.

To strengthen the integrity of New Mexico’s UI program the new system includes what is known as “intelligent data collection and data validation” to reduce errors and increase the accuracy of UI payments. The system recognizes applicants after they have logged into their accounts and then directs them to the appropriate task. It also includes new tools to prevent overpayments and automated cross-matches with state and federal databases, such as the National Directory of New Hires.

Additional information about the new Unemployment Insurance Tax & Claims System and the New Mexico Department of Workforce Solutions is available at http://www.dws.state.nm.us. For the latest announcements and updates, follow NMDWS on Twitter (twitter.com/NMDWS) and the official YouTube channel (youtube.com/user/nmdws).

from
http://www.demingheadlight.com/deming-community/ci_22349104/new-unemployment-insurance-tax-claims-system-launched

If the Department here in Wisconsin took advantage of employer’s payroll filing rather than the quarterly unemployment tax filing, then discrepancies in wage reporting would be addressed within a few weeks rather than months later (indeed, many investigations I have seen about wage reporting discrepancies usually occur nine months to a year later). It is perplexing to say the least for why the Department has not begun exploring the option of using payroll reporting to verify claim information. In short, over-payment issues are not just a claimant problem. The Department could easily be more efficient and thorough in its own work in order to catch these kinds of problems earlier.