Drug testing is making a comeback

Brand new proposed regulations are now available. Here is the initial reaction from NELP:

Washington, D.C. — Following is a statement from Christine Owens, Executive Director, National Employment Law Project:

“Today, the Trump Department of Labor (DOL) released a proposed rule giving states fairly broad authority to conduct mandatory drug testing of unemployment benefit claimants and recipients. The proposal not only suffers from a number of fatal legal flaws, but more to the point, drug testing of UI applicants–when there is no basis for suspicion–is a gross insult to unemployed Americans everywhere, and a costly solution in search of a non-existent problem. Clearly, this proposal is designed to stigmatize use of an important layer of our social safety net.

“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 conduct drug testing of unemployment insurance claimants under two exceedingly 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 the statutory language, but upset with the bargain it struck, Congress then used the Congressional Review Act to repeal this regulation, arguing that in spite of the very narrow language in the MCTRA, states should be allowed to drug test in broader circumstances.

“State-mandated drug testing may well violate the Fourth Amendment’s prohibition of unreasonable searches and seizures. The mere act of applying for a government program 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.

“In addition, when Congress passed the MCTRA, it not only articulated very narrow circumstances under which drug testing could be conducted, but it delegated to DOL the authority to define which occupations were covered under the law. The Trump DOL has instead essentially granted states broad authority to determine which occupations regularly conduct drug testing beyond that which is required by law, a delegation of authority not authorized by the MCTRA.

“As the proposed regulation acknowledges, the expense of such drug testing is considerable, while states’ funding to run their UI programs is at a historic low. Expanding drug testing would drain critical resources from programs that are already strapped for funds. In 2015, for example, states spent more than $850,000 on testing TANF applicants, and 321 people tested positive–a cost of approximately $2,650 per positive test. Indeed, all testing regimes yield positive results at rates substantially below the Centers for Disease Control’s estimate of 8.5 percent drug-use rate in the general population.

“Finally, this misguided proposal represents a not-so-subtle attack on the character of unemployed Americans. This intrusion into the privacy of Americans who just happen to be unlucky enough to lose their job seems rooted in a blanket assumption that unemployed workers are to blame. 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. And NELP will lead the fight to stop this expensive, illegal, ill-conceived effort to erode this safety net.”

As noted in this newly proposed rule, Wisconsin, Texas, and Mississippi are the only states that have passed drug-testing laws for unemployment claimants that seek to implement drug-testing of some kind. The proposed rule also “claims” that drug testing will have minimal costs. Really?

If this new proposal survives court challenges, expect Wisconsin to expand drug-testing for any job sector for which the state thinks drug-testing is important in some way. I fully expect Gov. Walker to expand testing to include school employees whenever they apply for unemployment benefits. Indeed, I would not be surprised if Gov. Walker determined that every unemployment claimant should be drug-tested. After all, such tests would simply be one more obstacle claimants would have to jump through as part of the initial claim-filing process.

Federal drug testing is trying for a comeback

The current administration is trying to bring back drug testing. As of Oct. 24th, the Office of Management and Budget has approved new, proposed regulations:

As indicated here, these proposed regulations are strangely NOT economically significant, do NOT affect small entities, and have NO federalism impacts (i.e., state sovereignty remains intact). The whole point of drug testing the unemployed was to reduce the “terrible” effects of drug use on workplace productivity and safety, that this federal drug testing requirement would empower small businesses to take up this testing and thereby get a drug-free workforce at much lower costs, and that the regulation would allow states the “freedom” to implement specific drug-testing requirements. Essentially, this conclusion of NO effect on these issues is proclaiming that drug-testing the unemployed is of no importance, financially or otherwise.

The new, proposed regulations should appear in the Federal Register in the next few weeks. Only then will we know what the substance of these new requirements are.

As I noted previously here and here, there are serious problems with any new drug testing regulations given how Congress nixed the prior regulations via the Congressional Review Act. Under that law, new regulations are verboten if they are in “substantially the same form” as the disapproved regulations unless they are specifically authorized by a subsequent federal law.

In other words, these new, proposed regulations MUST be substantially different from the prior drug-testing regulations, as Congress has passed no law authorizing new regulations.

Bad drug testing advice from DWD

The Department of Workforce Development has another newsletter for employers (here is a link to a PDF version). Understandable, the Department lets employers know about the deep decline in unemployment taxes for employers the last few years, pushes its new on-line portal for employers, publicizes the upcoming public hearing, and other employer-centric issues.

Surprisingly, the Department also states:

Pre-Employment Drug Testing Program Helps Strengthen Wisconsin’s Workforce

With a record low unemployment rate, the prevalence of substance abuse is a growing problem for employers who are already struggling to find qualified workers. As part of DWD’s commitment to ensuring no talent is left on the sidelines, the Department’s Pre-Employment Drug Testing Program is a way employers can help grow Wisconsin’s pool of work-ready job seekers while fostering a drug free workplace within their business.

Provisions included in the UIAC agreed-upon bill, effective April 1, 2018 provide that an employer that submits the results of a positive test or notifies DWD of an individual’s refusal to take a pre-employment drug test is immune from state civil liability for its acts or omissions with respect to the submission of the reported information (Wis. Stat. § 108.133(4)(c)). Go to https://dwd.wisconsin.gov/ui/pre_employment_drug_testing to find additional information, forms, and resources on how to participate in the program.

This advice is plain silly and borderline malpractice. Immunity from civil liability in state law is basically meaningless in the area of medical privacy law. Almost any and every law suit a person might file will be based on federal laws that protect an individual’s medical privacy. Obviously, federal law against disability discrimination may apply in these situations. While HIPAA does not cover employers, it does cover health care providers and all of the entities that contract with those providers, including drug-testing labs. Moreover, a self-insured employer who has an ERISA plan (which pretty much covers all large employers in the state) will mean that employer liability can probably ONLY occur through an action based on federal law. Finally, an employer who fails to follow federal drug-testing requirements will most-likely open themselves up to liability and even bars against future contracts for federal work.

In other words, state law has limited relevance here, and so an immunization from civil liability in state law simply does not mean all that much. Any employer that thinks otherwise is being misled. In actuality, no matter what might be said in state law, an employer essentially has NO immunity from a law suit alleging an invasion of medical privacy at the federal level.

NOTE: drug tests of employees or potential hires are usually NOT an invasion of medical privacy because of federal laws that allow such testing or waivers that the employees sign as part of their employment contract. The problem with reporting failed drug tests of applicants, however, is that neither probably applies. After all, an applicant is not yet an employee and has received nothing of consequence accept a contingent offer of employment.

No more drug testing this year for claimants

As indicated in an earlier post, the repeal of federal drug testing regulations put in jeopardy any further drug testing of unemployment claimants until new congressional legislation is enacted.

A Bloomberg article by Josh Eidelson confirms that observation:

The effort backfired. Because the 2012 law let states test people suited for jobs specified by federal regulations, now that those regulations have been scrapped, there are no jobs for which states are able to test for drugs. Before Congress revoked Obama’s rules, states could have tested aspiring pipeline operators and commercial drivers; now they can’t.

* * *

Jeffrey Lubbers, a law professor at American University and special counsel for the Administrative Conference of the United States, says if he were the Labor Department’s lawyer, he would warn against attempting any new drug testing regulation without Congress passing a law first. “They’d be doing it under a cloud of uncertainty,” Lubbers says. “The irony of it is, now that they’ve disapproved this law, they’re in a worse position than they were before.”

As noted in the previous post, voluntary testing of job applicants by employers can still occur, as that testing is being done by employers of job applicants (and so is not Department testing of unemployment claimants). But, employers have no reason to bring the Department into the loop of applicant drug testing and to make themselves a party to litigation which does not really involve them.

Department unemployment proposals in 2017

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

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

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

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

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

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

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

D17-02 Joint and several liability for fiscal agents

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

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

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

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

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

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

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

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

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

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

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

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

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

D17-03 Employer assessment for failing to provide records

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

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

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

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

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

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

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

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

D17-05

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

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

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

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

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

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

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

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

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

D17-07 Revisions to collections statutes, revised

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

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

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

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

D17-08 Many miscellaneous changes, revised, revised again

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

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

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

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

D17-09 Miscellaneous rule changes

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

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

D17-10 Drug testing changes, revised

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

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

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

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

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

Unemployment drug testing in 2017

Where other states are debating legalization of marijuana, in Wisconsin drug-testing has been the hot topic.

NOTE: Drug-testing is by-far the topic that attracts the most public attention. On this blog, traffic jumps 4X on average whenever I post something about drugs. For whatever reason, drugs are perpetually generating interest and concern.

The 2015 budget included various drug-testing efforts. As I originally described them, this testing can be divided into three parts:

1. Allowing employers who conduct pre-employment drug screenings of job applicants to report failed tests to the Department.
2. Requiring drug tests for claimants “for whom suitable work is only available in certain occupations that are federally approved for benefits eligibility testing.”
3. Requiring drug testing for claimants “for whom suitable work is only available in an occupation that regularly conducts drug testing, as determined by the Department.”

The drug testing will be described below for item 1 and then items 2 and 3 in separate sections.

Item 1: Employers’ voluntary reporting

The Department enacted emergency regulations and additional emergency regulations and then permanent regulations for the testing in Item 1. As of 28 April 2017, the Department even has a website page describing this voluntary reporting with links for the reporting forms.

These rules create DWD 131 for governing this voluntary reporting by employers. In general, these regulations create two kinds of potential disqualification for job applicants: when they test positive or when they refuse a drug test. These potential disqualifications, however, only apply when:

• the job applicant is receiving unemployment benefits at the time,
• the employer voluntarily submits the required information to the Department,
• the employer participates in an unemployment hearing should the job applicant challenge the potential disqualification,
• and, if the job applicant loses the hearing, he or she declines to participate in government-funded drug treatment/counseling.

As I explained in May 2015:

during the debate over this drug testing the Democratic members of the Joint Finance Committee were the ones pointing out the wasteful, big government spending at issue with this drug testing. The estimates were low-balled, these Democrats exclaimed, the testing and treatment will accomplish nothing, and government bureaucracy will only make finding work that much harder. WisPolitics budget blog smartly featured the Republicans’ response to these criticisms. Rep. Dale Kooyenga, R-Brookfield, explained: “There’s a tremendous opportunity through good public policy to make a community better.” In 1975, Ted Kennedy could not have said it better, and that is what makes this drug testing one of the strangest pieces of legislation I have ever seen.

Despite the Department’s push for this voluntary drug-testing by employers, the Department has yet to report any employer actually submitting a failed drug test or an employee refusing a drug test. It appears that this new reporting option is still a big zero, or much ado over nothing.

Items 2 and 3: Required drug-testing for federally-approved occupations and state-determined occupations

Rather than voluntary reports by employers, the drug testing for items 2 and 3 would be done by the Department as part of certain claimants’ initial claim for unemployment benefits. The questions were which claimant occupations would be subject to such drug testing, how would a claimant’s occupation be determined, and what kind of drug testing protocols would be required.

Recall that federal law is what made this drug testing possible. So, federal regulations were first needed before a state could go forward with its own testing efforts, and final regulations did not emerge from the US Dep’t of Labor until 1 August 2016. These final rules limited the occupations for drug testing to those occupations required under state or federal law for drug testing (e.g., airline pilots and inter-state truck drivers) and indicated that state law about a claimant’s occupation and suitable work would govern for determining whether that claimant was in an occupation for which testing would be required. Hence, this rule limited drug testing to occupations required under state or federal law for such testing and did not allow state agencies on their own initiative to designate occupations for drug testing.

That limitation was not to the liking of Republicans in Congress, and so they passed a joint resolution overturning these new rules, which the current President then signed into law. So, there are now no rules at present, and drug testing by the Department itself is back to square one. Indeed, drug testing for unemployment claimants when they file their initial claims is now not likely at all this year.

When new federal rules do emerge, expect the reach of drug testing to be expansive and discretionary. But, for now the only drug-testing at issue in unemployment matters are employers’ tests of job applicants that are voluntarily turned over to the Department.

NOTE: New federal rules, moreover, may not be forthcoming at all. The mechanism used to repeal the August 2016 rules — the Congressional Review Act — provides that a new rule may not be issued in “substantially the same form” as the disapproved rule unless it is specifically authorized by a subsequent federal law. See The Congressional Review Act: Frequently Asked Questions for all the details. So, without a new law by Congress, new rules for expansive drug testing are unlikely.

Drug testing for Temporary Assistance for Needy Families (TANF) recipients

UPDATE (9 Nov. 2015): The new drug testing regulations actually only apply to Temporary Assistance for Needy Families (TANF) programs. Food stamp recipients may be covered at some later date if Wisconsin wins a law suit against the federal government to allow drug testing in food stamp programs.

Emergency regulations that were only recently proposed on October 19th have this week been quickly approved by the governor (the comment period closed this week on Monday, November 2nd) and will take effect this upcoming Monday, November 9th.

While this drug testing has nothing to do with unemployment benefits (unemployment testing cannot even be considered for implementation until federal authorities issue final regulations and then state regulations for the testing pass federal review), this testing of food stamp Temporary Assistance for Needy Families (TANF) recipients includes some wrinkles — or rather a lack of specificity — that everyone should take note of.

In particular, the criteria and the nature of the drug testing that will be used is essentially “to be determined.”

NATURE OF TESTING REQUIRED. Testing shall consist of laboratory analysis of a specimen collected from an individual. The department shall provide to each administering agency a list of all controlled substances or metabolites of controlled substances that must be included in the test and cutoff levels for the test and any confirmation test that may be used. The department may add or delete controlled substances or metabolites that must be included in the laboratory test to reflect changes in pre-employment drug testing practices of Wisconsin employers. Any positive test shall be confirmed through a confirmation test from the original specimen collected from the individual. Methods of analysis for the confirmation test may include quantification by gas chromatograph-mass spectrometer, liquid chromatography-mass spectrometry, tandem mass-spectrometry, or another analytical method approved by a medical review officer for the drug testing vendor.

ADM DCF 105.05(2) [pp.8-9 of the emergency regulation].

What information about the drug testing standards at issue here indicate that open-ended criteria will be used to determine both what kinds of tests will be used as well as the criteria at issue in those tests. Rather than the urine testing that is standard in most workplace drug testing, the Department of Children and Families could well order up saliva, sweat, blood, or even hair testing (see, for instance Brandt v. Scot Forge Co., UI Hearing No. 09006150MD (18 July 2013) for a discussion of some of the problems with hair testing). At present, the federal agency responsible for drug testing has still only approved of urine or blood tests as legitimate tests for use of illegal drugs. In addition, this new regulation allows the Department of Children and Families to set cutoff levels for revealing drug use that may differ or even conflict with federal requirements for establishing a positive test result. It is the “drug testing practices of Wisconsin employers” rather than established scientific standards that will govern what cutoff levels will be used for a positive test result.

Finally, these regulations are completely silent about inspection and certification requirements for the drug testing laboratories themselves. The federal standards for drug testing and certification are thorough and fair. Other standards for drug testing laboratories, however, can leave out quite a bit. And so, any lab that is not federally certified might not have much validity at all to its tests. But, without a thorough understanding of the science and laboratory techniques at issue with that test and the lab conducting the test, a challenge about a fake-positive will be difficult if not impossible to mount.

This Narcotics Anonymous group brought to you by DWD

Yesterday, the Joint Finance Committee approved of drug testing the unemployed in the proposed budget.

The final testing requirements are similar to AB192 minus the requirement to survey employers about their drug testing. Accordingly, the estimate by the Legislative Finance Bureau to a great extent applies to this similar testing requirement. I went through AB192 costs here. In short, initial costs for setting up the drug testing will be just over $1.6 million, and the annual costs for the drug testing will, it is estimated, be $1.06 million.

The drug testing in the budget bill was previously described here. For the Joint Finance Committee, the Fiscal Bureau added additional analysis for the drug testing that is now in the budget bill. This memo revises the annual cost estimates from AB192 — now only $973,200 — and notes numerous “issues” with this testing. For instance, other drug testing programs have only found extremely low numbers of positive test results, this testing could easily be more expensive than estimated, the testing requirement could — if the full scope of the requirement is allowed by federal authorities and applied by DWD — cover up to 85% of all claimants in Wisconsin, almost 5% of Wisconsin’s workers would most likely be immediately covered by this drug testing requirement, and estimated treatment costs of $2,700 per claimant are really nothing more than guesswork and that actual costs for treatment are unknown.

The ability of employers to volunteer test results of job applicants raises a host of additional problems as well, from whether employers will need to change their testing procedures to DWD-approved testing, potential violations of employee privacy, and creating a host of complications regarding departmental record-keeping requirements. Indeed, the Finance Bureau specifically notes that the Advisory Council previously asked the legislature to repeal a similar testing provision that was passed by the legislature in 2011. And, the legislature did so. None of the issues with that legislation have been addressed in this current drug testing requirement.

So, there are many reasons to think this drug testing requirement is not ready for prime time. But, all of these problems are not what is most remarkable about this legislation. What is most strange here is who is advocating for this testing and what supporters and critics are saying.

As the title for this post indicates, this testing requirement is essentially making the Department of Workforce Development into a sponsor and supporter of drug treatment programs for hundreds of Wisconsin workers. Prior to my arrival in Wisconsin, for some time I lived in Massachusetts, the home state of that lion of the senate, that bastion of liberalism, Ted Kennedy. Senator Kennedy certainly changed his positions on issues over time, but the Kennedy of the 1970s was the symbol of big government programs intended to cure societal ills. In 2015 — forty years later — you would think that the Republicans of today would be as far apart from 1970s big government liberalism as possible, especially when many push President Reagan’s rebuke of that liberalism as a little bit of political heaven on earth.

Yet, during the debate over this drug testing the Democratic members of the Joint Finance Committee were the ones pointing out the wasteful, big government spending at issue with this drug testing. The estimates were low-balled, these Democrats exclaimed, the testing and treatment will accomplish nothing, and government bureaucracy will only make finding work that much harder. WisPolitics budget blog smartly featured the Republicans’ response to these criticisms. Rep. Dale Kooyenga, R-Brookfield, explained: “There’s a tremendous opportunity through good public policy to make a community better.” In 1975, Ted Kennedy could not have said it better, and that is what makes this drug testing one of the strangest pieces of legislation I have ever seen.

Costs of Drug Testing

The drug testing provisions in the proposed budget have also been put into separate legislation — AB192 — and the Legislative Finance Bureau has prepared estimates for how much this testing would cost. While the Finance Bureau cautions that these numbers are not applicable to the proposed drug testing in the budget bill (see this post for details about that drug testing), everything I have heard and read indicates that the drug testing proposed in AB192 is very similar to what is proposed in the budget bill.

To start, here are the numbers for setting up this drug testing:

• Programming costs of just over $1.2 million.
• Training, program management, testing, communications, and database development costs of around $360,000.
• Vendor costs of $18,000.
• Policy and rule promulgation costs of $38,000.

So, the total costs to set up this drug testing are just over $1.6 million.

[AB192 also includes a requirement to survey employers about their drug testing requirements. The costs for setting up this survey would be more than $1.2 million. Subsequent surveys every ten years will cost $865,000.]

Obviously, there are also annual costs for this drug testing.

• DWD estimates that 85% of claimants will have to be screened to determine if drug testing is appropriate for them. That screening will cost $2 per claimant or $321,000 annually.
• DWD estimates that 2.5% — about 4,000 claimants — will end up being required to undergo drug testing. DWD believes around 300 will refuse these tests, and that tests for the rest — at $40 per test — will cost around $149,000 each year.
• DWD believes 318 of those tested will test positive — around 8.5% of those tested (a high positive test rate that is unlikely to occur when compared to prior testing). DWD also posits that only half of those testing positive will opt for treatment (an extremely low estimate, especially when treatment will be the only way for unemployment benefits to continue and these benefits are usually vital to paying rent and getting groceries). Treatment costs of $2700 per claimant, then, will only amount to just under $430,000 annually.
• Staffing costs of .75 FTE or nearly $69,000 annually will be needed for managing all of this testing, and printing and mailing associated with this testing will cost $5,000.
• Not yet known will be the costs for litigating disputes over test results or how much will be spent on test results that employers voluntarily submit to DWD.

With these numbers taken as is, drug testing will cost each year around $1.06 million.

Understandably, there are savings from this drug testing because claimants who test positive and do not seek treatment will not collect any unemployment benefits. Here, the Department of Workforce Development’s over-estimating the number of positive test results and under-estimating the number of folks who will seek treatment leads to significant savings. Nearly 460 claimants each year are expected to lose their eligibility for unemployment benefits, according to the Department’s estimates (NOTE: this number consists of of the 300 who refuse drug tests plus the 159 who test positive this number of claimants testing positive and refusing treatment is wrong, since only 318 are believed to test positive and only half of this number will presumably refuse treatment, leaving only 159 — not 459 as reported). Assuming an average benefit amount of $3,950, just over $1.8 million will then NOT be paid out to 459 claimants.

The Finance Bureau does not simply accept this number as the total savings, however. Employers’ unemployment taxes will be reduced somewhat for two reasons: (1) claimants who test positive and refuse treatment will not be paid any benefits that can be charged to employers’ accounts, and (2) claimants who test positive but seek out treatment will have their benefits paid out of the general balancing account rather than charged against their employers. In both cases, employers will be paying less in unemployment taxes (and even though benefits continue to be paid in the second scenario). Because the charges to employers’ accounts are being reduced, there will be a general reduction in employer’s unemployment taxes. So, according to the Finance Bureau, employers will see a general $194,000 reduction in their unemployment taxes. In addition, approximately $600,000 of benefits will be charged to the balancing account for those claimants seeking out treatment. As a result, the annual savings are down from $1.8 million to just over $1.02 million each year of this program.

In short, even with the Department’s generous estimates about how many will test positive and how few will actually seek treatment, this drug testing will still cost Wisconsin taxpayers around $30,000 each year. Keep in mind as well that, even though employers’ unemployment taxes are being reduced by $194,000 for the 300 refusing tests and the 159 testing positive, around $600,000 in benefits being paid each year to those testing positive and seeking treatment will be paid out of the balancing account.  As a result, the balancing account — which all employer pay a portion of their taxes into — is likely to have a negative balance that much sooner. Take out the generous estimates about how many will test positive and how many will refuse treatment, then the costs escalate further.

UPDATED 13 May 2015 (struck out reference to wrong number and added explanation for how that number is calculated; updated discussion at end of posts about costs of drug testing).

Gov. Walker’s proposed drug testing plan: Meh

On January 22nd, Governor Walker announced his workforce readiness plan, which includes a proposal to drug test folks who receive food stamps or unemployment benefits.

Food stamps is operationally and legally distinct from unemployment, and so the purpose and mechanism for drug testing in each will have to be very different. Recent commentary on this drug testing issue is available from CogDis and the Wisconsin State Journal. And, here is what Governor Walker stated about this proposed drug testing:

Helping People Move from Government Dependence to Independence:

Some employers in high-demand fields, including manufacturing, require their employees be drug-free for safety and other reasons. To assist those looking to secure these positions, the budget includes a plan to require drug testing of those who are applying for or receiving benefits from programs, which may include unemployment insurance, FoodShare, Transform Milwaukee, transitional jobs, and others.

Those who fail the drug test will be offered the opportunity to participate in a drug treatment program, free of charge, as well as job training.

Huh?  This quotation is all that Governor Walker has actually said about this drug testing proposal. Based on this language, it is hard to know anything about this proposal other than that drug testing may be a possibility. Will drug testing be limited to former employees of an employer who does drug testing? Or, will the drug testing apply to any and all?  How will the drug testing be paid for and how will the tests be handled?  Without the actual mechanics and substance for this proposal (perhaps when the specific budget bill is revealed in early February), about all that can be said about who is actually affected . . .  meh.