UI jurisdiction changes going forward

In September of this year, the Department of Workforce Development announced in D15-11 a new, comprehensive rewrite of circuit court review of unemployment decisions. Some of the problems with these changes were previously described in this blog.

At its October 12th meeting, the Advisory Council approved of the changes in D15-11 before the Labor and Industry Review Commission could even respond. Just prior to the council’s October 29th meeting, the Commission did provide a response to D15-11 and asked the council to reconsider its approval of D15-11 in light of those comments. The council asked the Commission to make a formal presentation about the issue that was no more than ten minutes in length at the Council’s November 19th meeting.

The Commission did so and asked the Advisory Council to hold off on D15-11 so that the Department and the Commission could discuss these changes and work out a compromise. The Commission pointed out that D15-11 had been developed without consultation with the Commission and, given the Commission’s role in circuit court review of Commission decisions, there should be some consultation with the Commission in these matters. In the meantime, the Department presented a response to the Commission’s comments. Without comment or explanation regarding the Commission’s plea for some consideration in making these changes, the council approved of LRB draft legislation that had already incorporated D15-11.

The Commission’s comments point to some obvious defects in the Department’s proposed changes. And, the Department’s response highlights a fundamental defect in the Department’s rationale and reasoning for these changes. The Department maintains that a party in an unemployment case who does not file an answer is subject to default and should be subject to default.

Under the proposed change, a court may enter an order declaring that a non-appearing party is in default for failing to timely or properly answer the complaint. In the absence of a defendant’s excusable neglect for failing to answer the complaint, that declaration of default should ordinarily be the result. The defaulting party should be precluded from seeking to litigate the case later. The proposal conforms to the longstanding law and practice in court actions in Wisconsin in cases of other types.

DWD Response to LIRC Comments at 1-2. Right now, the parties who have “won” a Commission decision receive the following cover letter from the Commission when a circuit court complaint seeking review of a Commission decision is filed:

On [date], the Labor and Industry Review Commission received copies of pleadings seeking judicial review of the commission’s decision noted above. You are named as a party in these judicial review proceedings. As required by Wis. Stat. § 102.23, we are sending you a copy of these pleadings. You have the right to participate in this proceeding if you choose.

The commission will file a timely responsive pleading and will defend its position before the court. We will send you a copy of the commission’s response when we file it with the court.

We will be happy to answer any questions you may have about the case.

In other words, parties who agree with the Commission decision essentially piggy-back on the Commission’s efforts in defending its decision. Because unemployment proceedings are not intended to entail much administrative costs, this procedural mechanism for defending the parties interest during court review of a Commission decision makes a great deal of sense. Understandably, when parties feel that they have a concern or interest in a case distinct from the Commission, they have the option of filing their own answer to a complaint.

The Department’s now council-approved changes in D15-11 up end this procedure and require any party in an unemployment to file its own answer to a complaint or risk a default judgment. For employers who are NOT sole proprietors, such answers MUST be drafted by an attorney since corporations can only appear in Wisconsin courts through legal representation. For employer-side counsel, this requirement will certainly lead to more billable hours. For employers who have to hire attorneys to file these answers . . . well, attorneys usually are not cheap.

The first of the DWD-sponsored proposals have appeared in legislation

At the 12 October 2015 Advisory Council meeting, the council gave final approval to the following proposals:

• D15-10 — eliminating the publication of the claimant benefit tables within the statutes,
• D15-11 — changes to circuit review review previously described here,
• D15-12 — allowing the same protocols for unemployment taxes in regards to fiscal agents in adult care to apply to fiscal agents in child care situations, and
• D15-13 — ending the sunset date in 2034 for the program integrity fund (i.e., the fund for receiving some of the monies from concealment enforcement) since the Department now expects concealment monies to continue in perpetuity.

Previously, the council had approved the following Department proposals:

• D15-02 — adding the ability to issue determinations against out-of-state employers in combined wage claims for being at fault for an erroneous benefit payment to a claimant,
• D15-03 — applying the Treasury offset program to employers, as described previously in this post, and
• D15-07 — changes to how work share benefits are calculated so as to comply with federal requirements for work share programs.

With the legislature currently in session, these three proposals — D15-03, D15-07, and D15-02 — have appeared in bills AB416 and SB341. The legislature will most likely enact these provisions shortly.

Several Department proposals, however, remain in limbo or are still being debated. The council has extensively discussed D15-04 in regards to setting up essentially a backup insurance program for reimbursable employers who get their unemployment accounts swindled by identity fraud (and so have little to no hope of ever recovering the stolen benefits). The final recommendation from the council was for reimbursable employers to be taxed initially in order to create a fund of $1 million for covering themselves against identity fraud, essentially the second option of the three presented. Proposal D15-05 was to correct a hole in the statutes that accidentally left LLPs out of the definition of employer (see also this DWD memo on this issue). Appeals modernization, D15-06, continues to be discussed by council members. Perhaps the most significant change in this proposal — notice by Internet in place of postal mail — has NOT received any discussion of comment from council members, however. On the other hand, there has been no word on D15-09 — distinguishing able and available determinations from separation determinations — since this proposal was introduced at the 19 May 2015 council meeting. Finally, the proposed changes to the definition of concealment in D15-08 (described in this previous post) may be discussed again at subsequent council meetings.