Concealment redefinition approved: Watch out claimants

There have been previous discussions here in this blog about the Department of Workforce Development’s concealment efforts on 27 January 2014, 28 May 2014, 14 April 2015, 15 April 2015, 26 May 2015, 23 April 2015, and numerous other posts.

On 19 May 2015, the Advisory Council approved of a redefinition of concealment that did not make logical sense — reinserting the word “intentionally” in various places of the new redefinition but stating that concealment does not require “an intent or design to receive benefits,” and shifting the burden of proof on claimants to disprove their concealment. In this redefinition of concealment, concealment was both intentional and not intentional.

At the 18 June 2015 council meeting, new concealment language was made available in Department-sponsored legislation (see pp.6-7). In this draft legislation, Wis. Stat. § 108.04(11)(g) is re-numbered (g)(1) and amended to read:

For purposes of 1. In this subsection, “conceal” means to intentionally mislead or defraud the department by withholding or hiding information or making a false statement or misrepresentation.

And, Wis. Stat. §§ 108.04(11)(g)(2) and (3) are created to read:

2. As a condition of eligibility for benefits under this chapter, a claimant has a duty of care to provide an accurate and complete response to each inquiry made by the department in connection with his or her receipt of benefits. If a claimant, in response to such an inquiry, makes a false statement or representation regarding a material fact relating to his her eligibility for benefits or regarding his or her wages earned or paid or payable or hours worked in a given week, there is rebuttable presumption that the claimant has violated par.(a) or (b), whichever is applicable. A claimant may rebut that presumption with competent evidence that the claimant did not intentionally mislead the department, but competent evidence does not include evidence that a claimant provided false or misleading answers due to any of the following:

a. The claimant’s failure to read or follow instructions or other communications of the department related to a claim for benefits.

b. The claimant’s reliance on the statements or representations of persons other than an employee of the department who is authorized to provide advice regarding the claimant’s claim for benefits.

c. The claimant’s limitation or disability, where the claimant has not brought such limitation or disability to the attention of a department employee authorized to provide service to claimants before issuance of the initial determination and has not provided competent evidence of the disability or limitation.

3. It is not a prerequisite to a finding that a claimant concealed a material fact relating to his or her eligibility for benefits as provided in par.(a) or concealed wages or hours as provided in par.(b) that the claimant has an intent or design to receive benefits to which the claimant knows he or she was not entitled.

This draft legislation is as illogical as the initially approved proposal. Concealment is still intentional, but under sub-section (3) a finding of concealment does not require any actual intent to conceal. Furthermore, the burden of proof will still be on claimants to disprove their concealment. And, folks cannot claim in their defense: (a) confusion or lack of understanding of departmental materials, (b) reliance on advice from others unless they can demonstrate that the advice was from someone in the Department “authorized to provide advice regarding the claimant’s claim,” or (c) a learning disability of some kind unless the learning-disabled claimant has the foresight to notify the Department beforehand of his or her learning disability and provide “competent evidence” establishing that disability (so, simply claiming a disability will not suffice). In other words (and as noted previously), claimants will be strictly liable for this mistakes.

A May letter to the Advisory Council illustrates these issues:

May 25, 2015

Janell Knutson, Chair Unemployment Insurance Advisory Council 201 E. Washington Avenue PD. Box 8942 Madison, Wisconsin 53708

Dear Ms. Knutson,

I have recently read the proposed law changes to Statute 108.04(11)(g) regarding the definition of “conceal” which will eliminate the word “intentionally” mislead or defraud. As a claimant who has had to pay overpayments that were not done intentionally, this concerns me.

Recently, I incurred an over-payment because my reported wages were “under reported.” I work highway construction. My pay scale is all over the place due to varied projects. For example, I worked on a county road project. As a conscientious person, I called the payroll division to clarify the wages and reported accordingly. What the payroll division didn’t tell me is that we were also paid benefitt pay. County jobs typically don’t include benefits; state highway projects do. Though this was a county road, the job was state funded. As soon as I received my pay check I called and gave correct information. If the “intent” element is removed, a claimant in my position may not realize he or she has received benefits to which he or she is not entitled, thus might be accused of concealment. Because these errors may not be discovered for a length of time, this could lead to hefty consequences for an honest mistake.

I have another personal scenario involving a friend. She had just signed up for benefits and wanted my help to access the dwd online web services. When she got onto her account, I noticed that she had reported wages of only $10. She works ten hours a week as a crossing guard and had actually earned $100. She reported these wages because she misunderstood the question. She thought that she was to report what she earned per hour and then how many hours she had worked. To my knowledge, she has never filed before. This also was an honest, understandable mistake. She also called and corrected this immediately. Had she not, it’s possible that this could have gone undetected for some time. Repayment of the monies, imposing the new penalty of 40%, and not allowing benefits until 2x her overpayment would be an excessive penalty for a misunderstanding.

I realize that fraud and concealment are major issues, but I am concerned that the passing of this proposal may deny a person their right to due process. I hope you will take my insights into consideration. Thank you for your time.

NOTE: At the June 18th council meeting, Ms. Knutson advised council members that there had been e-mail correspondence with the individual who authored the letter and that no discussion or response from the council to the letter was needed. Ms. Knutson did NOT say what her response to the letter was.

Both “mistakes” here were caught early through foresight and extreme carefulness. But, if not caught early, both situations would easily qualify as concealment, and there would be little the claimants could do to counter that accusation. A claimant who never corrected the “benefit pay” she received would be guilty of a concealment mistake even though she did NOT know at the time she filed her weekly claim that she would be receiving such wages. If she did not correct the mistake on her own, concealment would be charged because the burden is now on the claimant to prove his or her mistake was not actually a mistake she had any control over. Since she eventually knew about the benefit pay via a pay stub, the Department would likely allege that she was responsible for correcting the mistake even though she did not know about the mistake at all when she first filed her weekly claim certification.

The claimant who mis-understood her weekly claim reporting obligations by reporting her hourly wage rather than the total weekly wages she received is completely out of luck. Her mis-understanding will, by law, be excluded as any kind of explanation for her mistake. In short, the only chance a claimant will have to win such a concealment case will be to dispute the mistake ever occurred. Claiming that the mistake took place for reasons for which the claimant had no knowledge or awareness is not possible here since the claimant cannot allege that she does not know how many hours she worked or the total earnings she received for that work.

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.

Substantial fault equals negligence

In just two weeks time (a record turnaround), the Labor and Industry Review Commission issued a decision in the substantial fault case I just posted about a few days ago.

The decision deserves careful reading. There is no surprise here that the Commission found no misconduct. In failing to secure a wheelchair passenger, the Commission explained, the “employee did not willfully disregard this responsibility; it was an act of negligence” and that this “negligence was not of a severity to willful disregard of the employer’s interests.”

But, the Commission did find that this negligence constituted substantial fault. The Commission maintained in this decision: (1) that the reasonableness of the employer’s requirements is established as articulated (that is, on its face) and (2) that the employee has to demonstrate that the action at issue was beyond his or her reasonable control. For the Commission, the employee failed to satisfy this requirement. “The evidence does not show that the employee’s failure was a minor infraction, that the error was merely an inadvertence, of that she lacked sufficient skill, ability or equipment to perform her responsibility.”

There are two problems here with the Commission’s reasoning. First, the Commission is placing the burden of proof on claimants to demonstrate they satisfy one of the three caveats to avoid a finding of substantial fault rather than having employers first show that the action at issue truly is something the employee should be expected to have reasonable control over. Second, and more troubling, the Commission is holding here that a negligent act disqualifies someone from unemployment benefits. As a result, this decision could possibly threaten the tax credits employers currently qualify for.

There are a few but very important federal requirements that state unemployment systems must satisfy in order for the employers in those states to qualify for tax credits. See 6 U.S.C. § 3302 (federal tax credits for employer’s contributions to state unemployment funds). One of these requirements is that:

(10) compensation shall not be denied to any individual by reason of cancellation of wage credits or total reduction of his benefit rights for any cause other than discharge for misconduct connected with his work, . . .

6 U.S.C. § 3304(a).

If the Secretary of Labor finds that a state is not meeting this requirement, then that lack of compliance means the tax credit goes away. So, the Commission, by holding that substantial fault is in actuality substantially less stringent than the misconduct standard, may have effectively ended a vital tax savings for employers. For a measure originally intended to reduce the unemployment benefits being paid out, the new substantial fault standard may now cost employers much more through higher taxes.

Registration with Job Center of Wisconsin mandatory on Oct. 13th

Wisconsin DWD is beginning to institute a host of job search and registration requirements as part of the new budget law, Act 20, and the new unemployment law, Act 36.

The first of these requirements is that unemployment claimants who file initial claims on or after October 13, 2013, and who do not have their job search waived must also create and have active accounts on the Job Center of Wisconsin website.

DWD has created a FAQ about this registration requirement. You can also download a PDF of the FAQ as well.

Lack of computer access does not appear to excuse this requirement. And, this requirement remains regardless of other job search sites you might be using.

So, anyone who begins an unemployment claim or who must start searching for work on or after October 13th will need to register with the state’s official job search web site.  Failing to register will mean no unemployment benefits will be paid until the registration is complete.

Short descriptions of the new UI changes in Wisconsin

Here is a table listing all of the UI changes at issue by bill and the effective date of the proposed change. In addition, here is a two-page description of the relevant changes in unemployment law.

Because the quit exceptions will matter for all determinations after January 5, 2014, and because many of those quit exceptions cover quits with secondary employers, I believe claimants should now presume these changes have already taken effect before quitting a job in the next few months.

For example, suppose a claimant quits a part-time job right now, loses his or her full-time job in February 2014, and subsequently files a claim for unemployment benefits. Because exception (7)(k), quit a part-time job, will no longer exist in February 2014, he or she will be disqualified from benefits unless he or she can show that the quit from the part-time job was for a good cause.

In other words, people who think that current law still applies are wrong. Instead, they need to act right now as if the proposed law is in effect. Only if they know they will not file an unemployment claim in
the next year and a quarter can they safely quit a second job today and not worry about the impact of that quit on unemployment benefits from their primary job.