Wages are flat because unemployment IS so low

The New York Times had a feature on February 2nd on why wages continue to lag despite the extremely low unemployment rates at the moment.

There is a basic presumption in this article that is no longer valid, however: namely that the unemployment rate today is the same kind of unemployment rate from 10 or 20 or even 30 years ago.

In Wisconsin, the news for some time has been how the state’s unemployment rate and benefit payments to claimants are at record lows. For instance, a January 2018 press release from the Department includes the following observations:

Other indicators of the state of Wisconsin’s economy include:

  • Initial UI claims ended 2017 at their lowest level in the last 30 years.
  • Continuing unemployment claims ended 2017 at their lowest level since 1973.

See also this October 2017 press release. What is notable here is that this decline is well known and part of an apparent plan.

As previously noted here, this decline is occurring because of Department efforts at making it harder for the unemployed to qualify for unemployment benefits and then disqualifying them for not jumping through some state requirement fast enough or alleging unemployment fraud for nothing more than simple claim-filing mistakes.

But, the data in Wisconsin does not explain what is happening nationally. The National Employment Law Project has already noted how unemployment has changed significantly across the nation the last few years. But, thanks to the efforts of some smart folks in Pennsylvania, national unemployment data is now available in a highly convenient format and which produces eye-catching charts.

NOTE: I cannot say enough good things about this unemployment data explorer. Pretty much any unemployment data currently being collected is now available for quick analysis in a chart. Moreover, you can easily see and download the data being used to create the charts. Excellent work.

This data provides some charts that can compare what is happening from state to state. For instance, separation data (how claims are denied because of a quit or a discharge for which misconduct/substantial fault is found) presents the following set of charts:

50-state denial rates from 2005 to 2017

The red line in these charts is the national rate. As obvious, this chart shows that there is a great deal of variation from state to state. And, because there have been big changes in the number of claims being filed, this data is somewhat incomplete. SeeEmployer UI taxes declining because more UI claims being denied” (24 August 2016) for an examination of how changes in the number of claims being filed affect Wisconsin’s claim-filing numbers.

But, the variation among the states also reveals some obvious increases in denial rates in Kansas, Maryland, New Mexico, South Carolina, and Wisconsin. On the other hand, Alabama, Colorado, Florida (a surprise), Mississippi, New Hampshire, New Jersey, and New York show significant drops in denial rates.

This 50-state data gets even more interesting when “other” reasons for denying unemployment benefits are examined:

50-state denial rates for other reasons from 2005 to 2017

NOTE: “Other” reasons include, for instance, a claimant not being able and available, not completing the required job search actions for that state, not attending call-in or meeting requirements a state has mandated, or not registering for various state-mandated services. Wisconsin specific data on these issues “other” denial reasons is available here from this prior post on the financial impact of Wisconsin’s substantial fault disqualification. Outside of able and available status, these “other” reasons generally encompass requirements an individual state creates as part of its claim-management bureaucracy for supervising the unemployed.

Again, the red line in this chart is a national average of cases being decided for “other” reasons. As evident here, there has been an increase (and even an explosion in some states) in “other” denial reasons the last few years in Florida, Louisiana, Massachusetts, Michigan, Mississippi, Montana, New Mexico, New York, Ohio, Oklahoma, Pennsylvania, South Carolina, and Tennessee. Indeed, the national trend of these “other” cases increasing over time would probably be much more significant if the extremely large populations of Texas and California were removed from the analysis (Texas has been flat, and California has actually declined significantly). As such, national data is masking significant changes in the availability of unemployment benefits in numerous states.

Of course, this table is simply showing the number of cases being decided for “other” reasons. If all of these cases did NOT lead to a denial of an unemployment claim, then there is essentially no harm, no foul in these cases. But, the actual denial rates for “other” reasons reveal a not-so innocent story.

50-state denial proportion for other reasons from 2005 to 2017

Where California declined and Texas increased slightly and then plateaued, Delaware, Florida, Iowa, Illinois, Indiana, Louisiana, Massachusetts, Maryland, Michigan, Mississippi, Montana, North Carolina, North Dakota, New Mexico, New York, Ohio, Oklahoma, Pennsylvania, South Carolina (showing shocking jumps from year to year), Tennessee, Utah, Wisconsin, and Wyoming have seen obvious increases in denial rates since 2005.

These other reasons for the most part did not exist until very recently and almost none go back a decade in significant numbers in any one state. The Wisconsin data on this issue, for instance, is telling: cases involving profiling registration requirements were in single or low double-digits until 2015 when they sky-rocketed to hundreds and then thousands. What this last chart reveals is that numerous states have essentially created numerous mechanisms for disqualifying claimants even when those claimants are initially eligible for unemployment benefits.

Given that we are all human and can only take so much abuse before moving on, it is extremely likely that most folks have simply stopped filing unemployment claims because of the obstacles states have placed on their eligibility and not because they have found the jobs they have wanted all along.

So, if states are making it much, much harder to receive unemployment benefits when filing a claim, then the low unemployment rates of today are NOT comparable to the low unemployment rates of yesteryear or even to unemployment rates of a decade or so ago. Instead of creating a question about how low wages and low unemployment rates can co-exist, the low unemployment rates of today may actually be placing a brake on wage growth: the state unemployment policies at issue here increase the supply of individuals looking for any work in place of their missing unemployment benefits. That increase in the labor supply, as a result, creates downward pressure on wages. At least, that is what I learned in labor economics 101.

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Tips for filing for unemployment benefits in Wisconsin

As noted here and here (and too many others to list), filing for unemployment benefits in Wisconsin is dangerous. Any mistake you make on a claim can lead to a concealment/fraud charge by the Department of Workforce Development against you.

So, if you must file for unemployment benefits, here are some key things to do when filing.

Read the Worker’s Guide

Download and read A Worker’s Guide to Unemployment Law. Most of the information presented here is from that guide.

Be self-reliant

Do not rely on the Department’s on-line system to explain or inform you about what is going on with your claim. The on-line system is intended to provide the Department with information about you and your claim and does not provide much, if any, information about why the Department is taking some action or how it will do so. To get actual information about what the Department is doing, you need to call or review decision documents that are mailed to you.

NOTE: At some point, the Department should make decision documents available to you via its on-line system. Until then, the on-line system is limited in providing actual information about your unemployment claim. And, keep in mind that when on-line notices arrive, there will also be significant consequences to you. The story in Michigan about on-line only claims notice indicates dire problems with missed appeal deadlines for claimants in Wisconsin when that kind of notice arrives here.

Obviously, you also need to be your own record-keeper. For every conversation you have with a Department staffer, take detailed notes of what you say and what is told to you. If you have trouble with taking notes, record those conversations.

The unemployment system right now is geared to punish you for any mistakes you make. The Department, on the other hand, has limited its liability for those mistakes and will certainly deny any responsibility for its own mistakes. The best way you can hold the Department accountable is if you have your own records to back up your claims about mistaken advice you may have received.

Register at https://jobcenterofwisconsin.com/

Create a user-id and password and upload a resume to this website as soon as you file an unemployment claim. As Laura Hoffman, UI Hearing No.17002961MW (16 Nov. 2017) indicates, benefits will not be paid until this step is completed. The quality of the resume is unimportant, so do not delay in order to get the resume done right. You can always revise the resume later.

Be able and available for work

To receive benefits, you must be available for full-time work, and usually you must be available during daytime or first-shift hours or the hours in which your type of work is typically performed. For example, a bartender might be disqualified for restricting availability to first-shift work rather than nights and weekends, while a bank teller might be disqualified for restricting availability to nights and weekends.

There are some factors to watch out for when filing an unemployment claim:

  • Education: Students almost never qualify for benefits if their classes are during daytime hours or occurring during the hours in which their type of work is usually performed. Even if the student promises to drop out if he or she gets a job, he or she will likely be found to be unavailable. Only if the student is taking classes that will not lead to a degree and is not a full-time student can a person still be considered able and available for work.
  • Disabilities: Disabilities that restrict your hours of work or the kind of work you do are NOT disqualifying. See Eaton v. R & D Drywall, Inc., UI Hearing No. 08004119MD (27 July 2009), Wright v. Independence First Inc., UI Hearing No. 09607759MW (8 March 2010), and Dugenske v. New Haven of Oshkosh, UI Hearing No. 12403278AP (12 Feb. 2013) (claimant with a physical and/or psychological restriction is only required to be able to work on a part-time basis and does not need to work full-time in order to qualify for unemployment benefits). But, if you receive SSDI benefits because of that disability you are completely barred from receiving unemployment benefits, even if laid off from full-time jobs.
  • Transportation: You cannot overly restrict the geographic areas in which you are willing to work. Depending on your labor market and the type of work involved, most people are expected to travel anywhere from 15 to 25 miles each way. Certain jobs, such as construction work, may require up to a 50-mile commute. So, expect that daily driving by car or use of public transportation as part of being able and available for work. If your car breaks down, there is no public transportation, and you do not have access to other cars, the Department will consider you to NOT be able and available for work.

Do four job searches a week and expect an audit

You need to do four job searches each week and report those searches on every weekly claim certification. Use the UCB-12 form for tracking each week’s job searches. And, keep copies of these forms for 52 weeks (because the Department will audit you at some point).

Per Bodo Viliunas, UI Hearing No. 15607525MW (4 March 2016), the following actions count as one of those four job searches:

  • Applying for work with employers who have available openings (a second application to the same employer within four weeks is not allowed, unless the application is to a new, different job, the employer’s customary practices allow for multiple applications to the same job opening, or the employer is a temporary help employer).
  • Taking examinations for suitable work, such as civil service or a similar kind of test, such as a WorkKeys exam.
  • Registering for suitable work with a public or private placement facility, including a union.
  • Mandatory Job Center of Wisconsin registration.
  • Posting a resume on an employment website (only one posting per website is normally allowed).
  • Following the recommendations of a public employment office or similar re-employment services, including participation in reemployment services.
  • Attending non-mandatory re-employment services operated by DWD.
  • Registering with placement facility or head hunter.
  • Meeting with a career counselor.
  • Participating in a job interview.
  • Participating in weekly professional networking group connected to your profession.

Again, expect that your job search efforts will be audited. Insiders at the Department inform me that, besides dedicated audit teams, all claims workers at the Department need to review a specific number of claims each week as part of their regular job duties. In other words, the Department has made finding claimant “mistakes” a priority for everyone working there.

When audited, you (not the employer) will need to supply some kind of confirmation from the employer about your job application. That confirmation is best handled by keeping the e-mail message you receive from the employer or website and submitting that e-mail message to the Department as proof of your job application.

Of course, the Department will probably not allow you to forward that e-mail message to the Department staffer auditing your job search records. Rather, you will likely need to print the e-mail confirmation and fax or mail that message to the Department staffer. As one insider explained this auditing procedure to me: It is annoying for everyone, and there is no reason for this no e-mail policy other than claimant inconvenience.

Take advantage of your canvassing period

You may have up to six weeks from when you became unemployed in which you can turn down work which is a lower grade of skill or at a significantly lower rate of pay than you had on one or more recent jobs without losing your eligibility for benefits. During your canvassing period you will be able to turn down jobs that do not pay as well as your old job (less than 80% of your old wage) or require less skill but you may be found ineligible if you turn down a job offer for a position similar to your old job.

After the canvassing period ends, however, you need to accept reasonable job offers. Benninger v. Spherion Atlantic Resources LLC, UI Hearing No. 04004083MD (17 December 2004) (“a sliding scale approach has been applied to determine whether an employee had good cause to refuse an offer of work after the six-week canvassing period”). What is reasonable is in the eye of the beholder, however, so generally plan on accepting any job offers you receive after your canvassing period is over.

Temp agency assignments trigger numerous disqualification opportunities

Not only do you need to contact your temp agency for a new assignment whenever your current assignment ends, but you also need to contact your temp agency each week you claim unemployment benefits if that temporary job agency is your last employer. That is, once employed at a temp agency, you have an on-going requirement on each week of your unemployment claim to continue to contact that temp agency for new assignments. See this post for the details.

If you fail to contact that temp agency about available assignments each subsequent week you claim unemployment benefits, the temp agency can inform DWD of your lack of contact. You will then have to prove that: (a) either you actually did contact the temp agency by having phone logs or copies of e-mail messages and letters showing that contact, or (b) the temp agency failed to inform you of this requirement when you last worked for it.

Speak with a DWD staffer always

The claimants’ handbook in Wisconsin is a confusing document to read — full of legalese and jargon — about a claim-filing process that should be simple and easy but is hardly that. Cf. the Wisconsin claimants’ guide to Iowa, Minnesota, or Massachusetts, for example.

So, the only way to make sure you are not making a mistake on your weekly claims certification is to ask a Department staffer about all the questions you are answering each week (the weekly claim certification now involves 20-40 questions and should usually take at least half an hour to complete). As noted below, the information needed to file an unemployment claim can be incredibly complex. For those who are not lawyers or accountants, you probably do not have the same understanding of what you need to report as the Department does. And so, you need to ask questions or simply talk to someone about your claim-filing, simply because you may not have any idea that you are doing anything wrong.

The Department, however, presumes that you know everything to file a proper unemployment claim. Do not play this game with the Department and demand to speak with someone about what information you need to file and how you should be filing that information.

Track and report (a) any and all work you do and and (b) any and all income you receive in a week

The formula for determining a person’s unemployment benefit encourages folks to work on a part-time basis when collecting unemployment benefits. Part-time work, however, opens up opportunities for weekly claim-filing mistakes that the Department will pounce on and allege fraud.

Each weekly certification requires you to report your part-time work and income as earned in a given week even though you may not be paid until a following week or even several months later. So, you need to track your hours of work and your earnings independent of your employer, because you need to report this information to the Department before your employer actually pays you.

NOTE: For unemployment purposes, part-time work and wages are when you work less than 32 hours in a week or earn less than $500 that week. As an independent contractor (difficult to qualify for under Wisconsin unemployment law), you must report your independent contractor status and are ineligible for all unemployment benefits when doing more than 15 hours of independent contractor work in a given week. Independent contractor earnings, however, do not count at all against your unemployment benefits.

But, Wisconsin makes the claim-filing process even more complicated because the state requires you to report your part-time income and hours of work according to various kinds of categories of which you may have no knowledge or even lack any awareness.

The Department does not track paid-time off or PTO pay, for instance. But, the Department does want you to report that PTO pay and hours. And, you need to report sick time and pay, vacation time and pay, holiday time and pay, performance bonuses, disability and insurance benefit payments and the work-time included in such payments, and termination or dismissal pay of any kind. So, you need to make legal determinations just like an attorney about how something like PTO pay in your case translates to what the Department wants reported. And, you need to report this hourly information even if you are paid on a part-time salary basis or a part-time commission of some kind.

NOTE: You also need to report any missed hours of work, see Kunze v. City of Stevens Point Transportation, UI Hearing No. 13003015MD, 13003016MD, 13003017MD, and 13003018MD (29 November 2013) (any missed shift for which due notice by the employer was provided constitutes work and wages that need to be reported on each weekly claim certification), which could include missed hours or pay because of illness, missed holiday hours and pay, and even missed vacation hours and pay as well as other kinds of possible pay and work hours. Missing a shift to take a child to a doctor’s appointment constitutes missed work that needs to be reported as if you did not miss that shift.

In other words, there are many, many ways for you to make a mistake on your weekly claim certification. And, as noted ad nauseam here, the Department will consider any mistake you make as equivalent to unemployment fraud and charge you for that alleged fraud. The only way to get any protection from that mistake is get some advice from a Department staffer about how to file a correct claim. Even if that advice is wrong (which it probably will be), you can point out how your mistake was based on that bad advice and so avoid a charge of fraud down the road.

NOTE: In its push to go on-line, the Department has scaled back phone help by limiting access to staffers to only a few days a week and eliminating use of a toll-free number (except when reporting claimant fraud) in lieu of 414-435-7069. Indeed, the Department is making the phone system so difficult to use that you now have to call just to learn when you can call on your designated day.

Of course, the Department will deny ever giving out bad advice. So, having a record of that bad advice will be essential to your defense against the fraud charge that the Department will lodge against you for your claim-filing mistakes.

On-line only claim filing

As of 1 September 2017, the Department mandated that all unemployment claims and all weekly claim certifications be filed on-line only.

As noted when the Department mandated in May 2017 that initial unemployment claims had to be filed on-line, federal guidelines indicate that on-line only requirements are problematic.

This new, more expansive mandate from the Department seems to ignore these cautions from federal authorities about maintaining effective options for those with limited on-line access or limited English proficiency. For instance, the Department seems only to be providing assistance for on-line filing, not any actual alternatives to on-line filing.

At the very bottom of this page, a person having trouble with on-line claims finds this advice:

For help using online services or if you are truly unable to go online call 414-438-7713 during business hours.

The general page about unemployment services also indicates that on-line filing is required. For those who want help with their clams, this advice is offered:

For help using online services call 414-438-7713 during business hours:

Monday — Friday 7:45 AM – 4:30 PM

Callers may be asked to call back on a specific day of the week.

Additionally, this same general page also explains just under the notice about reporting fraud that:

DWD is an equal opportunity employer and service provider. If you have a disability and need assistance with this information, please dial 7-1-1 for Wisconsin Relay Service. Please contact the Unemployment Insurance Division at 414-438-7713 to request information in an alternate format, including translated to another language.

In the claimants’ handbook, the advice for those who might have trouble with the on-line system is tucked away under the Filing a Weekly Claim Certification:

Important Points to Remember When Filing a Weekly Claim:

All questions apply to the specific calendar week for which you are claiming. For example, when asked if you quit a job, you are being asked if you quit during the week you are claiming. If you did not quit during that week, answer “NO.”

If you are truly unable to use online services to file your weekly claim, contact a Claims Specialist at 414-438-5395 during business hours. Claims Specialists are available to assist you.

In a FAQ about benefit filing, the Department explains:

The Unemployment Insurance Division is retiring the automated telephone filing system. Workers must now file online. Apply online at https://my.unemployment.wisconsin.gov. For help using online services call 414-438-7713 during business hours.

So, the Department is having claimants call for assistance to make their on-line claim work and not offering any alternatives to the on-line claim process. Moreover, these phone calls are NOT toll-free and can only occur during limited hours.

For those calling with limited English proficiency, my sources indicate that phone-service interpreters will be added to the call to help explain the on-line filing requirements to claimants. Those with limited access to the Internet — which is most of Wisconsin, as high-speed broadband is still not available to most homes in rural Wisconsin — are being told to file at their local libraries. Indeed, the Department has indicated on numerous occasions to ask librarians for assistance when filing their unemployment claims.

Finally, there are some doubts about the adequacy of the Spanish version of the on-line filing system for Spanish-speaking claimants.

NOTE: There is still no on-line option for Hmong-speaking claimants.

The terms of use for the on-line system declares:

DISCLAIMER FOR TRANSLATION

The Googleâ„¢ translation feature is provided for informational purposes only. Please be advised that the Department of Workforce Development is unable to guarantee the accuracy of this translation service and is therefore not liable for any inaccurate information resulting from the translation application tool. Please consult with your own translator for accuracy if you are relying on the translation or are using this site for official business.

The US Dep’t of Labor has specifically held in UIPL 02-16 at 9 that machine translation — what google does when it translates — is NOT adequate and that these kinds of disclaimers are just silly. As explained on digitalgov.gov:

Some view disclaimers as the solution to justify an imperfect translation. Ask yourself and your managers: What are we trying to achieve? If an agency provides imperfect information but includes a disclaimer, the agency is essentially saying that it cannot guarantee the accuracy of the information they have provided. If so, how is this:

  • fulfilling a need?
  • fulfilling our mission?
  • serving the public?

Consider how you would react if you were reading information that had a disclaimer that said, very politely, that the agency can’t guarantee the integrity of the translation and, therefore, can’t guarantee the accuracy of the information it is giving you. A disclaimer on translated content works for the agency, but it does not work for the person trying to accomplish a task.

As already noted, this on-line mandate seems little more than an elaborate trap for charging claimants with fraud when they get confused and make a mistake on their claims. The initial screen claimants see with the on-line system — even before they create a user-id and password — makes this goal front and center:

Initial warning screen

Unemployment is going away

The March 2nd edition of the Isthmus has an excellent cover story about unemployment changes the past few years. Make sure to read it.

The Department’s press release that same day provides some additional insight into what is going on with unemployment in this state.

Two issues arising from these news items deserve additional comment.

First, the response from the Department in the Isthmus story indicates that this expansion of concealment to include mistakes is intended.

Now, honest mistakes can lead to fines and criminal charges, Forberger says.

Tyler Tichenor, a DWD spokesperson, counters that the change was made “to make the definition clearer for claimants so they could better understand what they need to do to file a claim accurately.”

John Dipko, another department spokesperson, says the state is making a concerted effort to crack down on fraud and that referrals for prosecution began increasing even before the definition change.

“The number of referrals have gone up,” Dipko says. “We’ve been much more aggressive in referring the most egregious cases of fraud for consideration for possible prosecution.”

The change Mr. Tichenor is referring to is the 2015 change in the statutory definition of concealment. He is NOT referring to providing simpler explanations of unemployment issues for claimants or making the filing process easier to follow. No claimant (or employer for that matter) should be expected to review a legal statute simply to make sure he or she is doing what the Department wants him or her to do. Such a policy is akin to the IRS making everyone read the Internal Revenue Code when filing their taxes. Yes, the statutes govern. But, the agency responsible for carrying out those statutes has a duty to explain those statutory requirements as simply as possible and in a way that is not intended to confuse and trip folks up.

But, confusion and mistakes are the whole point of unemployment concealment now. For instance, the on-line filing process is now more complex, not less, with numerous requirements for which any single mistake can now lead to a charge of unemployment concealment.

And, this concealment push cannot be under-stated. When filing on-line, the first thing a claimant sees, even before he or she creates a user-id and a password, is this screen:

UI claim initial screen

Notice the specific language being used here — “If you make a mistake or forget to report a material fact related to your claim . . . ” The Department is officially declaring here that a simple mistake or even forgetfulness can be the basis for a concealment charge.

Second, the Department’s press release about record-low unemployment claims and a sudden rise in employees’ wages indicate how significant the Department’s changes in unemployment have been.

Four issues in the Department press release on March 2nd highlight the changes being wrought by the Department. First, the Department reveals that September 2015 to September 2016 job growth in Wisconsin was 29,486 total jobs and 25,608 private-sector jobs. When compared to prior job growth numbers, this trend indicates that job growth is actually slowing in Wisconsin — 37,432 jobs from March 2015 to March 2016 and 39,652 jobs from March 2015 to March 2015.

In light of the Department’s push for charging claimants with concealment for their honest mistakes and the loss of work search waivers during the winter months for seasonal employees, three other points from the press release suggest what is actually going on.

  • Quarterly wages by covered private-sector employers grew by 7 percent year over year. Total wages grew by 7.5 percent over the year.

  • Initial UI claims ended 2016 at their lowest level since 1988. Continuing unemployment claims ended 2016 at their lowest level since 1973.
  • More people were employed last year in Wisconsin (November 2016) than at any point in our state’s history.

As indicated here, the number of people working in Wisconsin is at a record high level. (NOTE: this statistic could also be — and likely is as noted below — because the number of people in the state remains relatively flat.) This increase in working folk should indicate that Wisconsin has a “hot” job market. Employees would then have increased bargaining power and be willing to switch jobs when employers are less than fair or better opportunities appear to be available with other employers. Such a “hot” job market would suggest that unemployment claims would rise somewhat because of individuals trying out new jobs that do not work out or which prove to be less than hospitable. But, initial unemployment claims are at record lows. So, folks either are NOT leaving jobs at all or are NOT filing claims for unemployment benefits when job separations do happen (because of the Department’s concealment push). Finally, the fact that wages have jumped over 7% in one year without a “hot” labor market indicates that employers are voluntarily raising wages for the employees they already have even though labor turnover (signified by the record low number of claims being filed) is markedly down.

As indicated in the Isthmus cover story, employers this past winter were faced with employees who no longer had seasonal job search waivers when claiming unemployment benefits and so had to do four job searches a week along with all the other job search requirements the Department has enacted the past two years. Those employees are essentially making themselves available to be poached by other employers, and so the Department has created a competition for employees among employers where none existed before.

If employees were little more than replaceable cogs, this increased competition would still not lead to higher wages. But, for skilled work where employees are not interchangeable, employers need to keep their skilled labor because of the high replacement costs that arise when those skilled employees leave.

To avoid this whole government-created poaching regime, employers’ only real option is to keep their employees off of unemployment by “hiring” and paying them during winter months despite the lack of actual work available for these employees. In other words, some employers have found themselves handing out winter make-do work to keep their employees off of unemployment. With full wages (or even partial wages), these employees are doing financially much better than when they just received unemployment benefits that max out at $370 a week.

NOTE: as this COWS report indicates, the wage growth at issue here is a very recent development. In January 2017, the story in Wisconsin was the flat wage growth in this state.

Finally, this lack of unemployment benefits is affecting everyone — employers and employees — when the record low in continuing claims is considered. This statistic indicates that even when employees file a claim for unemployment benefits, that claim is stopped shortly thereafter because they are either denied benefits because of substantial fault or misconduct or because they fail to meet some new job registration requirement that Department has enacted. With no unemployment benefits available, the unemployed are out searching for jobs or they are leaving this state for greener pastures where jobs and unemployment benefits are available. The state’s relatively flat population growth the last few years — a 0.6% growth rate in 2010 is 0.2% in 2016 — bears this point out. Because of the Department’s drastic changes to unemployment, the state is certainly not becoming business friendly for most employers.

DWD/Advisory Council bill going forward

The official Advisory Council/DWD bill has just been introduced, AB819. So, here is a rundown of what has been happening with unemployment law over the last several months, organized by proposal.

Department Proposals

  • A second SSDI prohibition, D15-01, to replace the current prohibition was approved in April 2015 and back-dated in May 2015. But, after the Department started winning the court cases challenging the old SSDI prohibition (see this post for the details), this proposal disappeared from the Department’s legislative draft at the council’s September 2015 meeting. But, after the Labor and Industry Review Commission ruled in November 2015 that departmental error had occurred when appeal tribunals (but not the Commission) had originally ruled in favor of claimants regarding dual receipt of SSDI and UI benefits (and so no repayment of UI benefits previously received was proper), this proposal re-emerged at the November 2015 council meeting in the Department’s legislative drafts and is now part of AB819. Why? This second SSDI prohibition is back-dated to January 2014, the effective date of the original SSDI prohibition.
  • D15-02 is a house-keeping change that allows the Department to issue determinations against out-of-state employers in combined wage claims for being at fault for an erroneous benefit payment to a claimant. This proposal is part of AB416 and has been enacted in 2015 Wisconsin Act 86.
  • D15-03 applies the Treasury offset program to employers, as described previously in this post. This proposal is part of AB416 and has been enacted in 2015 Wisconsin Act 86. Because of this quick enactment, employers will be subject to treasury offsets for their 2015 tax returns for any unemployment taxes for which they have been found individually liable.
  • D15-04 sets 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. This proposal is part of AB819.
  • D15-05 corrects a hole in the statutes that accidentally left LLPs out of the definition of employer (see also this DWD memo on this issue). This proposal is part of AB819.
  • The Advisory Council approved the Department’s appeals modernization proposal, D15-06, at the 7 January 2016 meeting. LRB draft language was prepped soon thereafter. 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. This proposal is now part of AB819.
  • A renewed work-share program, D15-07, is part of AB416 and has been enacted as 2015 Wisconsin Act 86.
  • Proposed changes to the definition of claimant concealment in D15-08 (described in this previous post and described in a Department memo (discussed in this post) are part of AB819. Additional criminal penalties for concealment in AB533 continue to advance in the legislature. To see what all the fuss is about, take a look at this January 21st Assembly Committee on Public Benefit Reform hearing regarding AB533 and other UI bills or read this LIRC memo on the proposed concealment changes.
  • Technical changes in D15-09 and included in AB819 will allow the Department to distinguish able and available determinations from separation determinations.
  • D15-10 eliminates the publication of the claimant benefit tables within the statutes and is included in AB819.
  • Major changes to the process for getting unemployment decisions reviewed in circuit court, set forth in D15-11, are part of AB819. These changes were previously described here and here.
  • D15-12 allows the same protocols for unemployment taxes in regards to fiscal agents in adult care to apply to fiscal agents in child care situations. This proposal is part of AB819.
  • D15-13 ends 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. See the next two proposals for why.
  • The Department’s proposals for a program integrity slush fund, D15-14 and D15-15, are part of AB819.

Labor and Management Proposals
At the Advisory Council’s 19 January 2016 meeting, the council took action on various management and labor proposals and the agreed-to changes have been incorporated in AB819.

The management proposals that the council agreed to include significant changes to what will be considered suitable work:

  • During the first six weeks of a job search, suitable work that a claimant MUST accept will be those jobs that (1) do not have a lower grade of skill than one or more of his or her most recent jobs and (2) have had an hourly wage that is 75 percent or more of what the claimant previously earned in his or her most recent, highest paying job.
  • After the first six weeks, suitable work means any work the claimant is capable of performing regardless of prior experience, skills, or training, as long as the wages for that job are above the lowest quartile wage-level in the claimant’s relevant labor market.

Once a job offer is considered suitable work for a claimant, then the claimant only has good cause for declining the job offer if the claimant’s personal safety is at risk, the claimant’s sincerely held religious beliefs conflict with the work, the work entails an unreasonable commuting distance, or some other compelling reason makes accepting the offer unreasonable. These changes to what will be considered suitable work will also apply to those who tentatively accept a job and then quit within the first thirty days.

In addition, this accepted management proposal will either eliminate unemployment eligibility entirely for anyone receiving temporary or partial workers’ compensation benefits or mandate offsets against UI benefits for those receiving these kind of workers’ compensation benefits (the specific type of workers’ compensation benefit being received leads to the different kinds of treatment). In other words, the SSDI prohibition is being expanded to workers’ compensation benefits. Also, anyone making a mistake in how they report their specific workers’ compensation benefits will, under the new on-line filing system, likely face a concealment charge for his or her mistake in reporting the kind of workers’ compensation benefits he or she is receiving.

These management-sponsored changes will take effect four weeks after enactment.

The labor proposals that the council agreed to include:

  • repealing the mis-classification prohibitions in workers’ compensation and fair employment law,
  • creating an administrative penalty for mis-classification for unemployment purposes of $500 per employee (capped at $7,500) when construction employers (and only construction employers) knowingly and intentionally provide false information to the Department (NOTE: compare this definition with the proposed changes to claimant concealment) for the purpose of misclassifying or attempting to mis-classify an employee,
  • fining employers in painting and sheetrock work $1,000 per incident (capped at $10,000 per calendar year) when coercing employees into accepting non-employee status for unemployment purposes, and
  • fining construction employers $1,000 per employee (with a maximum of $25,000) for subsequent violations as well as possible referral for criminal prosecution.

These mis-classification changes will take effect six months after passage.

Budget Bill Fixes
The LIRC funding fix bill, discussed here, is also right now being considered by the legislature.

The call in the budget bill for the Department to create suitable work rules for claimants has been eliminated by the management-sponsored changes to suitable work described above.

UI FAQ by DWD

The Department of Workforce Development has produced a FAQ on unemployment eligibility issues. This information is somewhat more user-friendly than the claimants’ handbook.

There is also a limited FAQ about how the new work search waivers are being applied.

Finally, there is a FAQ on UI concealment. The concealment examples are not really examples but very basic descriptions dating from 2011. Strangely, there are two questions in this FAQ on employers “aiding and abetting” claimant fraud. There is only one Wisconsin case on employer aiding and abetting that I am aware of, however. That case was easily dismissed. But, employers should note that as claimant concealment expands, employers will be dragged into these concealment cases via this “aiding and abetting” provision.

Final concealment language approved and drafted

Today at the November 19th Advisory Council meeting, the Department presented the final concealment language that the Advisory Council previously approved at its October 29th meeting.

In this final proposal (cf. to the original proposal), claimants have “a duty of care to provide accurate and complete” responses to Department inquiries and that the following six factors will be used for determining whether a claimant intended to mislead the Department:

  1. Whether the claimant failed to read or follow instructions or other Department communications,
  2. Whether the claimant relied on statements or representations of non-Departmental employees,
  3. Whether the claimant has a limitation or a disability and the claimant provided evidence of that limitation or disability to the Department,
  4. The claimant’s claims filing experience,
  5. Prior instructions or concealment determinations issued or provided to the claimant, and
  6. Any other relevant factor providing evidence of the claimant’s intent.

While concealment still “means to intentionally mislead” the Department, a third sub-section declares that: “Nothing in this subsection requires the department, when making a finding of concealment, to determine or prove that a claimant had an intent or design to receive benefits to which the claimant knows he or she was not entitled.”

So, concealment is still an intentional act, but the Department does not need to demonstrate an intent to conceal. These two provisions contradict each other, and the only way to make sense of them is to ignore the contradiction and conclude that: (1) concealment is intentional in name only and (2) can be demonstrated by any claimant mistake that led to an over-payment of unemployment benefits. The only apparent way a claimant can avoid a concealment charge is if she can show that her mistake was not intended (i.e., she did not intend to answer “no” instead of “yes” in response to a question and somehow did not have the chance to review and correct that mistaken answer). Under such a framework, concealment is pretty much a guarantee for almost all claimant mistakes.

NOTE: The number of LIRC decisions overturning concealment charges showcase how claimants are already being charged with concealment for nothing more than accidental claim-filing mistakes. Under this new definition of concealment, however, the statutory basis for requiring an actual intent to deceive for a finding of concealment will no longer exist. As a result, the Commission will not have a statutory basis for overturning these concealment charges.

The Labor and Industry Review Commission previously presented to the Advisory Council a memorandum about the Department’s proposed changes to the definition of concealment (see the discussion in this post for a discussion of the Department in 2014 changed how it handled concealment cases and now seeks to cement that new practice in the statutes). This proposal essentially adopts the Department’s current practices in charging concealment against claimants. As I noted already, “Unemployment claims . . . have . . . become a vehicle for alleging concealment against claimants,” and the unemployed should now generally NOT file claims for unemployment benefits.

NOTE: Because benefit payments have plunged to record lows, it appears that many of the unemployed have already adopted this position and avoided filing claims altogether.

To compound matters, the effort to criminalize concealment has been renewed in AB533 [UPDATE 4 December 2015: companion bill SB401 has also been taken up with hearings] with the re-introduction of the criminal penalties that were removed from Governor Walker’s budget bill. The Department’s original Budget Act memo on these felony penalties for concealment details the consequences to claimants charged with concealment. So, if AB533 [or SB401] passes, prison terms will be applied to claimants who are being held strictly liable for their claim-filing mistakes. YIKES!

UI Darth Maul