Employer UI taxes declining because more UI claims being denied

Wisconsin employers are having their unemployment tax rates slashed in 2017 because the fund from which unemployment benefits is reaching ever higher solvency metrics. The Walker administration is heralding this news here and here.

Understandably, there are two possible explanations for what is going on with the state’s unemployment fund. The state’s unemployment funds are positive because either job growth is booming or because fewer folks are claiming benefits despite NOT having jobs.

Is job growth booming in Wisconsin?

The July state jobs report reveals that job growth in Wisconsin continues to be anemic. This report indicates that, initially, in July 2016 5,000 private-sector jobs were added to Wisconsin payrolls. But, June 2016 numbers for private-sector job growth were revised downward, from 10,900 to 5,600. This loss of 5,300 jobs from the June report means that the initial number for July does not even get the state back to what was first reported for June 2016.

Neither does the quarterly data offer any better news. From March 2015 to March 2016, the quarterly data indicates that the state added 37,432 jobs during that time frame. But, this number is a few thousand less than what was reported for the March 2015 to March 2015 time frame in the July 2015 jobs report: 39,652 private-sector jobs.

So, without adding new jobs to the state’s economy, the decline in unemployment claims must be coming from fewer folks claiming unemployment benefits. In two bullet points, the July 2016 jobs report actually acknowledges this development.

• Year 2016 initial UI claims are running at their lowest level since 1989.
• Continuing unemployment claims in Wisconsin are running the lowest in at least the past 30 years.

But, the question remains: if jobs are not being created, why are claims now so low?

Why are unemployment claims so low?

Actual claims data is available from ETA 207, Non-monetary Determinations Activities Report. See DOLETA data downloads generally for UI data. The 207 data series has all determinations issued by a state compiled on a quarterly basis going back several decades until the most recently completed quarter, June 2016.

Here are some charts from that data for Wisconsin starting in the first quarter of 2007 through the second quarter of 2016.

This chart shows that most initial determinations issued by the Department lead to the denial of unemployment benefits. But, starting in the first quarter of 2014, the denial rate for initial determination jumped markedly. Prior to 2014, 59.90% of all initial determinations denied benefits to claimants. Since the start of 2014, 77.45% of all initial determinations issued by the Department have been to deny unemployment benefits. In other words, currently only one of four initial determinations being issued by the Department allows unemployment benefits, and three out of four initial determinations deny unemployment benefits in some way.

Keep in mind that these numbers are based on the initial determinations issued by the Department in regards to a new unemployment claim. In most states, these determinations would consist almost entirely of separation determinations — whether claimants are disqualified because their discharge was their fault in some way or they lacked good cause for quitting their jobs. In Wisconsin, these separation decisions are only a part of what the Department decides. And, increasingly separation decisions are becoming a smaller and smaller part of what the Department does in disqualifying claimants.

Here, initial determination concerning separation issues (i.e., quits and discharges) were around 60% of all initial determinations until 2009, when they declined and hovered around 50% of all initial determinations until the first quarter of 2014. At that point, the percentage of separation initial determinations being issued by the Department plummeted to 40% of all initial determinations. In the last two quarters of 2015, the number of separation initial determinations fell again to under 30% of all initial determinations. So at present, less than 30% of the initial determinations being issued by the Department concern separation issues related to a discharge or a quit. And, since most of these other determinations (and probably all of them given the analysis below) are denying unemployment benefits, many of these probably include some kind of concealment allegation, given the Department’s push to allege concealment against claimants.

In regards to denying claimants unemployment benefits, the Department consistently denied about 26% of all claimants who were discharged from their jobs until the first quarter of 2014.

From the first quarter of 2014 until the latest, however, the number of discharge cases being denied jumped to 38.47% of all discharge determinations. This increase nearly doubled the number of denials from before 2014 — a stunning and remarkable jump in the number of claims being denied.

The magnitude of this jump is seen when it is compared the number of quit denials over this same time frame.

Here, a slight increase in denials occurs in the first quarter of 2014. But, this increase is part of a general increase in denial rates that appears to have started in the second half of 2010. So, while denial rates for those quitting their jobs are high and gradually increasing, there is no sudden or striking shift in denial rates in quit cases at any one point in time.

Now, consider that in the last two years only about 30% of all initial determinations concern separation issues and that only 1 out of 4 initial determinations is allowing unemployment benefits at all. In this light, it appears that the only initial determinations right now allowing benefits are the discharge and quit separation determinations that are NOT denying benefits. Everything else the Department is doing is to deny unemployment benefits to claimants.

What these numbers reveal is that most folks applying for unemployment benefits are being denied those benefits, that essentially the only folks qualifying for unemployment benefits are those laid off from their jobs by their employers, and that numerous denials of unemployment benefits have nothing to do with separation issues. These non-separation initial determinations most likely are part of the Department’s program integrity efforts and most likely lead to charges of unemployment concealment, especially under the Department’s new strict liability standard for concealment.

So, unemployment claims and benefits are at record lows in the state because the state is making it difficult to impossible for claimants to receive benefits and charging the few that collect unemployment benefits with unemployment concealment. Essentially, employers are paying unemployment taxes for a benefit almost no one is using. Pretty soon, folks will start calling for eliminating the unemployment system entirely, as who wants to pay a tax that does nothing.

UPDATE (14 Sept. 2016): Fixed links so that a click on a chart brings up a full-sized version.

UI Presentations: Don’t file for UI

Over the last several months, I have made two presentations about unemployment law. On 16 May 2016, I explained to the South Central Federation of Labor about “Misconduct, substantial fault, and concealment: presuming employee fault.” For the 4 August 2016 meeting of the Wisconsin Association of Worker’s Compensation Attorneys, I offered a more detailed presentation about “Misconduct and substantial fault: presuming employee fault.”

The concealment changes that went into effect in April of 2016 cannot be emphasized too much. Here is what changed via 2015 Wis. Act 334:

Section 18. 108.04 (11) (g) of the statutes is renumbered 108.04 (11) (g) 1. and amended to read:

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

Section 19. 108.04 (11) (g) 2. and 3. of the statutes are created to read:

108.04 (11) (g) 2. 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. The department shall consider the following factors in determining whether a claimant intended to mislead the department as described in subd. 1.:

a. Whether the claimant failed to read or follow instructions or other communications of the department related to a claim for benefits.

b. Whether the claimant relied 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. Whether the claimant has a limitation or disability and, if so, whether the claimant provided evidence to the department of that limitation or disability.

d. The claimant’s unemployment insurance claims filing experience.

e. Any instructions or previous determinations of concealment issued or provided to the claimant.

f. Any other factor that may provide evidence of the claimant’s intent.

3. 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.

At the same time this new law took effect in April 2016, the Department also instituted its new on-line claim-filing process that turned 11 or so questions into a 40+ question marathon.

These two changes go hand in hand. First, this new definition of concealment makes claimants liable for unemployment fraud for their unintentional mistakes on their claims. Second, the new on-line process is so complicated and cumbersome that a mistake is now incredibly easy to make (e.g., by reporting income in the wrong category or failing to check a definition relating to a question that you don’t think applies to your situation — $10 from a parent for taking care of the laundry or cutting the grass counts as babysitting income that should be reported).

Accordingly, given the ease of making a mistake and the consequences for concealment related to that mistake, no one should be filing for unemployment benefits anymore.

If you absolutely must file for unemployment benefits, do NOT file via the on-line process but make all your weekly claims by phone. And, try to get a DWD specialist on the phone when filing your weekly claim certifications and take detailed notes of any advice your receive from that DWD representative. That advice is probably your only avenue for escaping a concealment charge from DWD when you make a mistake.

Letter to Governor Walker

In light of the Senate passage of AB819 on Tuesday of this week, I am sending a letter to Governor Walker urging him to line-item veto four provisions in the bill.

Dear Governor Walker:

I represent in my legal practice numerous employees and employers in unemployment law matters, and I urge you to line-item veto various provisions in AB819.

The provisions at issue consist of proposals by the Department of Workforce Development (“DWD” or “Department”) that create marked, unpredictable, and undesirable changes in unemployment law for the employees and employers of Wisconsin.

Changes to the definition of unemployment concealment

Sections 18 and 19 of the bill essentially make claimants strictly liable for their claim-filing mistakes. The proposed changes state that concealment is intentional but then disclaim that the Department does not have to prove that a claimant has such an intent. Furthermore, the proposed changes specify ways for a claimant to show no concealment that are so limited or specific that they essentially mean that concealment will be presumed.

This strict liability standard creates due process issues in unemployment law as well as significant problems for any criminal sanctions against claimants for actual concealment. The implications in criminal cases are especially problematic. While the intent requirement for concealment is being removed, criminal prosecutions for unemployment concealment still need mens rea to be shown. Because the mens rea is being administratively presumed rather then proven, claimants who commit actual concealment could likely avoid criminal prosecution for their fraudulent acts in light of this missing mens rea.

Creating a slush fund for Department expenditures

Sections 83-87 of the bill creates a fund for perpetually funding the Department’s program integrity efforts. This funding mechanism, however, lacks any criteria regarding this spending or legislative oversight and so allows for Department hiring and expenditures that are arbitrary. Accordingly, this program is the antithesis of small government .

Re-doing the prohibition on receiving unemployment benefits when receiving Social Security Disability Income (“SSDI”) benefits

Sections 20-25 of the bill re-write the prohibition on receiving unemployment benefits when already receiving SSDI benefits. An earlier and similar prohibition was enacted as part of 2013 Wis. Act 36. The Labor and Industry Review Commission (“LIRC” or “Commission”) initially held that the original prohibition only applied for the week when the claimant received his or her SSDI benefit check. Four circuit courts, however, reversed the Commission’s reasoning. As a result, there is now no legal need for re-writing this prohibition.

Furthermore, this new prohibition will, pursuant to section 103 of the bill, be retroactive to January 2014, the same time when the original prohibition became effective. Because of this retroactive application, this new prohibition creates a constitutional problem that will lead to a new round of litigation for the three to five claimants who received a few hundred dollars of unemployment benefits before the Commission decisions regarding the first prohibition were over-turned. The Department will end up spending thousands of dollars in litigation expenses and staff hours over a few hundred dollars in unemployment benefits. Since the first prohibition is now being enforced, there is simply no legal or economic need for this second retroactive prohibition.

Changing the procedures for obtaining review of a LIRC decision in circuit court

Sections 54 and 55 of the bill substantially alter the process, venue, and parties involved in appeals of Commission decisions. Among these proposed changes, the Department will have the right to file unemployment appeals in any county it chooses regardless of where employees or employers reside. Furthermore, because these changes presume that any party in an unemployment case risks default judgment when not answering a complaint, employers will need to file answers in claimant appeals of Commission decisions. Since Wisconsin requires any company to have an attorney representing it in court, employers will have to spend several hundred dollars for an attorney to file an answer on their behalf. Right now, employers can rely on the Commission to defend these cases and have no need for separate representation and the filing of answers.

The Commission tried to discuss these changes with the Department and the Advisory Council but was ignored. Without a voice in the process, the Commission formally opposed these changes at public hearings for this bill.

There are notable improvements in unemployment law in this bill. For instance, the provisions for protecting reimbursable employers from identity theft in section 73 of the bill are useful and well-done.

But, the four provisions mentioned here create confusion and legal complications about what unemployment law means and how to apply it. Please line-item veto these provisions.

Update on UI legislation

Advisory Council Bill AB819
Yesterday, the state senate passed the bill and messaged it to Governor Walker for his signature. This law consists of the following 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. Why? This second SSDI prohibition is back-dated to January 2014, the effective date of the original SSDI prohibition.
• 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.
• 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).
• 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.
• Proposed changes to the definition of claimant concealment in D15-08 are described in this previous post and described in a Department memo (discussed in this post), Additional criminal penalties for concealment in AB533 passed the Assembly but has yet to be passed by the Senate. 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. You can see and hear testimony against these concealment changes via this previous post.
• Technical changes in D15-09 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.
• Major changes to the process for getting unemployment decisions reviewed in circuit court are set forth in D15-11. These changes were previously described here and here. The Labor and Industry Review Commission opposed these changes, which essentially reverses the 2016 Appeals Court decision in DWD v. LIRC.
• 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.
• 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.

Labor and Management Proposals
The Advisory Council bill also includes management and labor proposals.

On the management side, there will be 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 employees in painting and sheetrock work $1,000 per incident (capped at $10,000 per calendar year) when coerced 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, was enacted as 2015 Wisconsin Act 194.

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.

Other unemployment-related legislation
A bill to address an NLRB decision about frachisors and franchisees was signed into law as 2015 Wisconsin Act 203. I previously noted that:

unemployment is not mentioned once in the [Browning-Ferris Industries decision this law is intended to undo], so the applicability and purpose — let alone its effectiveness — of the state law changes in this proposed legislation are muddled at best. And, as DWD notes in its memo, the changes could be extremely problematic for some Wisconsin employers.

A re-writing of real estate agent law in Wisconsin has been enacted via 2015 Wisconsin Act 258. The original bill, AB456, was intended, in part, to remove real estate agents completely from unemployment coverage. Even though real estate services are not considered covered employment for unemployment purposes, agents who qualify for unemployment benefits through other work they do outside of real estate sales found themselves and their brokerages being brought into unemployment hearings whenever there was a change in their relationship. In short, even though there is no covered employment or even an employer, the real estate agent is still treated as an employee who must either quit with good cause or be discharged without misconduct or substantial fault from a brokerage firm in order to keep receiving unemployment benefits connected to non-real estate work. The legislation as-passed leaves this process in place. Real estate agents, however, will be excluded as employees from workers compensation coverage, workplace discrimination law, and other workplace laws. See Section 174 of the new Act.

Previously enacted legislation
2015 Wisconsin Act 86 contained the following three Department proposals:

• 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.
• D15-03 applies the Treasury offset program to employers, as described previously in this post.
• A renewed work-share program, D15-07.

The Wisconsin jobs picture in 2016

Back in January 2016, CogDis presented Rep. Gordon Hintz’s (D-Oshkosh) run down of Wisconsin’s job numbers. While the post takes on its typical anti-Walker bent, it does present the numbers as they are, which are not all that great.

Wisconsin’s new substantial fault standard

I just filed a brief with the Labor and Industry Review Commission about the new substantial fault standard. Here are the relevant portions:

As amended by 2013 Wis Act 20, Wis. Stat. § 108.04(5g)(a) defines substantial fault as:

those acts or omissions of an employee over which the employee exercised reasonable control and which violate reasonable requirements of the job but shall not include:

1. Minor infractions of rules unless such infractions are repeated after a warning was received by the employee,
2. inadvertent mistakes made by the employee, nor
3. Failures to perform work because of insufficient skill, ability, or equipment.

As noted previously, these three caveats mirror to a great extent the clarifications from Boynton Cab. As discussed in greater detail below, treating these caveats as exceptions or clarifications significantly affects how this new standard will be applied.

When substantial fault was initially proposed, the Department of Workforce Development (“DWD” or “Department”) explained “that the current misconduct standard within Wisconsin law was too generous in providing benefits to employees who should not qualify for benefits” and that the new substantial fault standard:

creates a lower standard for disqualifying a claimant but then places some restrictions on the applicability of the lower standard. The proposal also provides further clarification regarding what constitutes misconduct. It is hoped that this strikes the right balance over the concerns of the employer community and claimants who seek benefits.

Department Proposal D12-01 at 5 (available at http://dwd-uireform.vforberger.fastmail.fm/D12-01.pdf); see also Department’s Examples and/or Explanation for Each Proposal at 2 (examples of discharges considered to be substantial fault include an employee discourteous to a customer after warnings, an employee sleeping on the job after warning and aware of policy prohibiting sleeping when on-duty, and an employee who fails to do his or her job duties and tells the employer otherwise (available at http://dwd-uireform.vforberger.fastmail.fm/Examples%20and%20or%20Explanations%20for%20each%20Proposal.pdf). But cf. Victor Forberger, “Memorandum RE: 27 November 2012 DWD legislative proposals to Advisory Council” (13 January 2013) at 6-10 (examples and provisions examined for when substantial fault would apply are for the most part already considered under case law as disqualifications for misconduct) (available at http://dwd-uireform.vforberger.fastmail.fm/DWD-Proposals-Response.pdf), posted at “Memo on DWD proposed UI changes” (available at https://wisconsinui.wordpress.com/2013/01/14/memo-on-dwd-proposed-ui-changes/) .

The Advisory Council rejected this proposed change and instead worked out new misconduct language to clarify that longstanding disqualification. See blog posting “Advisory Council Meeting — 1 April 2013” (available at https://wisconsinui.wordpress.com/2013/04/01/advisory-council-meeting-1-april-2013/) (council declined to adopt proposed substantial fault standard but recommended adding various examples of misconduct). The Department never acted on the Advisory Council’s recommendations, however. And, on 29 May 2013 the Joint Finance Committee added the rejected substantial fault and misconduct standards to the budget bill that eventually became 2013 Wis Act 20. See blog posting “Advisory Council — 2 May 2013 meeting — and legislative actions today” (available at https://wisconsinui.wordpress.com/2013/05/29/advisory-council-2-may-2013-meeting-and-legislative-actions-today/) and blog posting “JFC UI amendments” (available at https://wisconsinui.wordpress.com/2013/05/29/jfc-ui-amendments/) (JFC motion to amend budget bill included various unemployment financing provisions and rejected substantial fault, misconduct, and quit provisions; DWD drafted bills that eventually became 2013 Wis Act 36 never included the Advisory Council’s agreed-upon misconduct and quit proposals). Accordingly, these changes to unemployment law went against the express recommendations of the Advisory Council.¹

As the Commission can only act when presented with relevant cases, it has had limited opportunities to clarify how this new substantial fault standard will be applied. From the cases decided so far, it appears that the Commission has focused on the three caveats as exceptions. See, e.g., the Commission’s on-line outline of decisions that includes a general category for substantial fault decisions and then three additional categories for each of the three caveats, labeled as exceptions (available at http://dwd.wisconsin.gov/lirc/ucdg_mc_.htm#Substantial%20Fault). This categorization of substantial fault cases is a mistake as it necessarily shifts the burden of proof in these discharge cases prematurely to claimants who have to demonstrate whether the exceptions apply to them rather than first requiring employers to satisfy their burden of proof that their expectations are reasonable and that the action or inaction in question is something over which employees exercise reasonable control. Kansas City Star Co., Flambeau Paper Co. Div. v. Dep’t of Industry, Labor & Human Relations, 60 Wis.2d 591, 602, 211 N.W.2d 488 (1973) (an employee is presumed eligible for unemployment benefits, and the party resisting payment must prove disqualification), see alsoBoynton Cab, 237 Wis. at 243, 296 N.W. at __ (a challenging employer has the burden to show disqualifying misconduct). Accordingly, the Commission should instead read the caveats as clarifications of what (1) the reasonable employer expectations entail and (2) the scope the conduct over what the employee exercises reasonable control. Indeed, this reading of the statute comports with how the Commission handles misconduct cases under Boynton Cab: the clarifications to the misconduct standard in Boynton Cab are not considered as exceptions but rather as indicia of circumstances where an employer has failed to satisfy its burden of proof. Herr v. McEssy Investment Co., UI Hearing No. 10602407MW (27 August 2010) (reviewing case law to explain that finding of misconduct is more than just violation of employer policy but also requires examination of whether the employee’s actions in the circumstances at hand rise to the level of being intentional and unreasonable interference with the employer’s interests).

This shift in focus from exceptions back to clarifications can be seen in Campo v. Park Towne Management Corp., UI Hearing No. 14000528MD (27 June 2014), where the Commission found that a claimant was not disqualified for her mistakes in doing her job. For the Commission, those mistakes were not rule violations per se but either “inadvertent errors” over actions for which she had not been previously warned or performance mistakes since the claimant herself never demonstrated a level of competence to do the work in the first place. It is questionable whether many claimants will be happy with such a result, as they are essentially having to show their inability to perform a job in order to win unemployment benefits. On the other hand, if the Commission had initially determined whether the employer had first demonstrated whether its expectations were reasonable or not and whether the employee exercised reasonable control over the job duties in question, the decision would have led to the same result without having to label the claimant as lacking competence to perform her job. In Campo, the claimant’s problems existed since she was hired, so (1) there was no showing by the employer that the claimant had been presented with a clear, understandable guidelines about her job duties, and (2) the employer had failed to demonstrate that the job duties in question could be met prior to the discharge. As a result, the employer failed to meet its burden of proof either that its expectations were reasonable or that the employee had the skills, ability, and equipment to carry out those ambiguous job duties.

So, the decision to disqualify a claimant for unemployment benefits because of substantial fault turns initially on two issues: (1) whether the employer’s expectations are reasonable and (2) whether the employee has the skills, abilities, and equipment to exercise reasonable control to accomplish those job duties.

An employer’s reasonable expectations of its employees necessarily requires that those expectations not only be objectively reasonable but also known to the employee and uniformly enforced.² An employer can satisfy this knowing requirement by either a warning to the employer or a written or oral policy presented to the employee. In Frederick v. Vista Int’l Packaging LLC, UI Hearing No. 14601230MW (30 May 2014), an employer orally informed employee three times about employer expectations that employee control his behavior and follow directions without argument, so prior warning to not argue were unnecessary for substantial fault to be found. The employer established that the employee knew and understood specifically what the employer expected of him. Id., cf. Robinson v. Scan-Pac Mfg Inc., UI Hearing No. 14601571MW (27 June 2014) (no violation of a reasonable expectation occurred when employee discharged for absenteeism because employee had previously completed forms for requesting time off and had no prior attendance warnings). Once that burden is met by the employer, only then should the burden of proof shift to the employee to show that an actual warning of some kind was still needed for substantial fault to be found (for example, an employee could indicate that a supervisor informed the employee that the employer expectation at issue would no longer apply to or count against the employee after three months and those three months had since lapsed).

The employer should also be required under its burden of proof in discharge cases to demonstrate that the employee exercises reasonable control over the action or inaction at issue. Hence, the employer must first present evidence that the employee has the skills, knowledge, ability, and equipment to exercise that reasonable control. See Rolkosky v. Marinette Marine Corp., UI Hearing No. 14401261EC (30 May 2014) (employee guilty of substantial fault after employer told employee to not sit idle and employee, when trapped in room, had the ability to yell for help or use a telephone but instead chose to wait until the door was opened by someone).³ An employee, for example, should not have the burden of proving that she was late to work because of a blizzard in order for one of the exceptions to apply. Rather, the employer should first have the burden of showing that the employee could still have arrived on-time to work because she had the ability and equipment to drive in extreme weather. If the employer then presents evidence to show that all of its other workers managed to navigate through the snow in order to arrive at work on-time or that the claimant had previously driven through similar blizzards, only then should the claimant have to demonstrate that this particular blizzard presented circumstances relating to her abilities (a broken arm prevented use of the manual transmission in her four-wheel vehicle driven during previous blizzards) or the equipment available to her (the four-wheel vehicle was at the repair shop) or that inadvertent mistakes (a slide-out onto the side of the road necessitated help from a tow truck) led to her late arrival at work.

1Counsel for Ms. CLAIMANT lacks long-term knowledge of Wisconsin’s unemployment law to know whether the legislature has ever before enacted changes to unemployment law that the Advisory Council had previously rejected (as opposed to just modifying those recommendations).

2This uniformity requirement is not currently being examined by the Department, appeal tribunals, or the Commission. Rather, employer’s policy are accepted as presented as prevalent, communicated to all, and completely understood and applied in the same way by all persons. As a result, the reasonableness of a policy is presumed without any evidence to support such a presumption. This failure to ask basic questions of employers about how their expectation has been applied in the past to other employees has led to hearing records, as demonstrated in this case, where basic information about the requirement is missing. Here, for instance, basic questions about how the wheelchair tip policy was applied by the employer generally, what training was made available, what role attendants and volunteers had relative to drivers in effectuating the policy, how the safety of other passengers mattered and was handled, and how the policy changed over time were not broached (the employer witness testified as to the importance of the wheelchair tip policy and how it was put in place two years ago, synopsis at 3, but there is no explanation of how the policy actually changed from what existed before and what the employer does to implement the policy currently). By simply having employers meet their statutory burden of proof by showing how a policy in question has been developed and applied, the Commission would gain key evidence about the mechanics and application of the policy.

3Following the shifting burden of proof being described here, Rolkosky could have over-turned a finding of substantial fault by showing that his voice was hoarse because of illness, the door was too thick for sound to travel through, or that the telephone was inoperative.

Looming end to EUC benefits will have big impact in Wisconsin

Extended Unemployment Compensation (EUC) benefits are scheduled to expire at the end of this month. The abrupt end of this program will leave a large hole in household budgets.

Nationally, around 1.3 million workers currently receiving federal EUC benefits who will be abruptly cut off in the week between Christmas and New Year’s, and an additional 850,000 workers will run out of state unemployment insurance in the first three months of 2014. The National Employment Law Project has a report with the relevant details.

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

In comparison, only 8,500 residents in Minnesota are slated to lose their EUC benefits, nearly three times less than in Wisconsin. Both Illinois and Michigan will experience a similar impact to what will happen in Wisconsin in regards to the lose of EUC benefits. Relative to their populations, the ratio of individuals affected by the end of EUC benefits is one out of every 200 in Illinois and one out of every 226 in Michigan. Indiana presents better numbers, as one out of every 340 of its residents will lose EUC benefits at the end of December if the program is not renewd by Congress.

In other words, a great many residents in Wisconsin (and Illinois and Michigan) still need EUC benefits.