AB651: Bill Text

Currently, an individual must, in addition to other requirements, be able to work and be available for work during a week in order to be eligible to receive benefits for that week. As interpreted by DILHR, this requirement does not disqualify an individual from receiving benefits if the individual is unable to work or unavailable for work during some portion of that week under certain circumstances. Currently, if an employe dies after the end of a week in which the employe qualifies to receive benefits, DILHR may pay the benefits to another suitable person, such as a spouse, instead of to the employe's estate. The bill permits DILHR, in the event that it considered a claimant to be able to work and available for work during a week in which the claimant died, to pay any benefits payable to the claimant for that week to another suitable person instead of to the claimant's estate.

Employment by family owned corporations

Currently, the wages accruing to an individual that are used to compute the total benefits payable to the individual may not exceed 10 times the individual's weekly benefit rate based solely on employment by a business in which the individual or a family member of the individual owns or controls a significant interest. This limitation does not apply if the individual is employed by a family owned corporation and loses his or her employment because of involuntary cessation of business by the corporation under certain circumstances. Currently, with certain exceptions, if an employe voluntarily terminates his or her work, the employe is ineligible to receive benefits until 4 weeks after the end of the week in which the termination occurred and until the employe earns wages equal to 4 times the employe's weekly benefit rate by performing work which is covered under the unemployment compensation law of any state or the federal government. An employe who has a significant ownership interest in a family corporation is not considered to have voluntarily terminated work, and is not subject to the requalification requirement, if the employe loses his or her work because of involuntary cessation of business by the corporation under those same circumstances. The circumstances include, with certain exceptions, assignment for the benefit of creditors, surrender to one or more secured creditors or lienholders, or sale, due to economic inviability, of 75% or more of the assets of the corporation. The bill permits these circumstances to include any combination of assignment, surrender or sale, due to economic inviability, of the assets of the corporation which, in the aggregate, equals 75% or more of those assets.

Currently, a family owned corporation includes only a corporation in which 25% or more of the ownership interest is or was owned or controlled by a claimant or in which 50% or more of the ownership interest is or was owned or controlled by a claimant or by a claimant's spouse or child or a claimant's parent if the claimant is under the age of 18, or by a combination of 2 or more of them. The bill changes the definition of a family owned corporation, for purposes of the exclusion from the requalification requirement only, to include, in addition, a corporation in which the employe claiming benefits owns or controls any ownership interest and a corporation in which 50% or more of the ownership interest is or was owned or controlled by one or more brothers or sisters of a claimant or by a combination of one or more brothers or sisters and one or more family members to whom the law applies currently.

Income tax withholding

Currently, DILHR does not withhold income taxes from benefit checks. The bill directs DILHR, upon request of any claimant, to withhold an amount from each benefit check specified under federal law for federal income tax and, if DILHR permits, an amount for Wisconsin state income tax determined at a rate prescribed by DILHR. DILHR is directed to pay the amounts deducted to the federal internal revenue service or to the state department of revenue. The bill further directs DILHR to round down all benefit checks from which taxes are withheld to the next lowest whole dollar, if the checks would not otherwise be payable for an even dollar amount.

Other deductions

The bill authorizes DILHR to make a deduction from a claimant's benefit payments (with or without consent of a claimant) for any purpose that is permitted by federal law, subject to the same rounding requirement that governs income tax withholding. Currently, no such authority exists.

Offset of benefit amounts resulting from pension payments

Currently, if benefits are payable to a claimant for any week for which the claimant also receives a pension payment from an employer by which the claimant was employed during his or her base period (period preceding a benefit claim during which benefit rights accrue), and the pension payment is not received under the social security or railroad retirement act, and the claimant performed work for that employer since the start of the claimant's base period which affected the claimant's eligibility for or increased the claimant's pension payment, the benefit payments are reduced for that week by 50% or by the percentage of the employer's contribution, if that percentage is more or less than 50%. Under the bill, the benefit payments are reduced by 50% of the weekly pension amount or by the percentage of the employer's contribution, if that percentage is more or less than 50%.

Tax changes

Initial contribution rate for new employers

Currently, with certain exceptions, each new employer, other than a governmental unit or nonprofit organization that elects to reimburse the unemployment reserve fund for the cost of any benefits charged to its account, must pay contributions (taxes) to the unemployment reserve fund at the rate of 2.7% of its annual payroll, excluding any portion of that payroll consisting of wages of more than $10,500 paid to any employe, for the first 2 calendar years in which contributions are credited to its account. If a new employer's account is overdrawn, it may be required to pay contributions equal to an additional 1.3% of its annual taxable payroll. With certain exceptions, a new employer having an annual taxable payroll exceeding $10,000,000 may elect to pay contributions at a rate of 1% of its annual taxable payroll for the first 2 calendar years that it is an employer, but if the employer's account is overdrawn, it must pay contributions equal to the amount of the overdraft. After the first 2 calendar years, the contribution rate of an employer depends on the ratio of the balance in its account to its annual taxable payroll.

This bill applies the initial contribution rate for new employers for a period of 3 calendar years, subject to the current exceptions.

Exemption of certain payments from contribution requirements

Currently, if an employer pays an employe's share of the federal social security tax rather than deducting the share from the employe's wages, that payment is not a part of the employer's taxable payroll on the basis of which the employer's contributions are assessed. Under the bill, these payments are excluded from wages for purposes of an employer's taxable payroll only with respect to remuneration paid to an employe for domestic service in a private home of the employer or for agricultural labor.

Charging of benefits based on employment from a previous claim

Currently, a claimant's base period is the first 4 of the 5 most recently completed calendar quarters preceding a claimant's benefit year. When a claimant qualifies for benefits, with certain exceptions, the accounts of the employer or employers that employed the claimant during his or her base period are charged for the benefits in proportion to the total amount of wages paid or treated as having been paid to the claimant by each employer during his or her base period. The bill provides that, if a claimant has been paid or is treated as having been paid wages with respect to work performed for an employer that is subject to a contribution requirement (a requirement to pay taxes) and that has been charged for benefits paid to that claimant in an immediately preceding benefit year, the benefits are charged to the fund's balancing account instead of to the account of that employer if the claimant has not had employment with that employer since the start of the immediately preceding benefit year. (All employers that are subject to a contribution requirement pay contributions to the balancing account.)

Charging of certain benefits for prisoners

Currently, with certain exceptions, if a claimant has employment with an employer in his or her base period, DILHR charges the account of that employer for the cost of benefits payable to the claimant based on that employment. The bill provides that if a claimant is a prisoner of a state prison and has employment with an employer other than the department of corrections or a private business leasing space within a state prison, and the claimant's employment ends because conditions of incarceration or supervision make it impossible to continue the employment, DILHR shall charge the cost of benefits otherwise chargeable to the account of any employer that is subject to a contribution requirement to the balancing account of the unemployment reserve fund instead of to the account of that employer.

Charging of benefits received during certain continuing employment

Currently, with certain exceptions, the cost of benefits payable to a claimant is chargeable to the employer or employers for whom the claimant worked during his or her base period. However, if a claimant earns wages for any week of his or her benefit year for work performed for an employer from whom the claimant earned wages during his or her base period equal to at least 3.8% of the wages paid by that employer to the claimant during the 2 quarters in the claimant's base period in which the highest wages were paid by that employer to the claimant, the cost of benefits otherwise chargeable to that employer for that week is charged to the balancing account of the unemployment reserve fund (or, in the case of an employer that is not subject to a contribution requirement, is paid from revenues derived from interest and penalty assessments under the unemployment compensation law). Sick pay, holiday pay, vacation pay or termination pay received by a claimant from an employer or amounts treated as wages that would have been earned had a claimant accepted work available with his or her employer are treated in the same manner as wages for purposes of determining the account to which benefits are chargeable. The bill provides for charges of such benefits to the balancing account of the unemployment reserve fund or payment from interest and penalty revenues if the claimant's wages earned, received or treated as being received from an employer for any week are equal to at least 6.4% of the wages paid by that employer to the claimant during the same quarter of the prior calendar year as the quarter which includes that week.

Other changes

Failure to file timely appeals and failure to appear at hearings

Currently, a party to a determination of DILHR concerning a disputed issue under the unemployment compensation law may request a hearing within 14 days after issuance of the determination. If a party files a request for hearing which is not timely, the appeal tribunal (hearing examiner) must dismiss the request for hearing unless the party shows probable good cause for failure to appear. If the party who requests a properly-noticed hearing fails to appear at the hearing, the tribunal may dismiss the request for hearing. If the other party fails to appear, the tribunal must proceed with the hearing and may issue a decision. However, if a party who fails to appear provides a written excuse within 21 days after a decision is issued, and if the excuse establishes probable good cause for nonappearance, the tribunal may set aside its decision and afford further opportunity for the parties to be heard. If the excuse does not establish probable good cause for nonappearance, the tribunal may reinstate or amend the decision or issue a new decision, giving the reasons for its action.

Under the bill, if a party files an appeal which is not timely, DILHR may schedule a hearing concerning whether the party's failure to timely file the appeal was for a reason behind the party's control, and may also provisionally schedule a hearing concerning any matter in the determination. If, after the hearing, the tribunal finds that the party's failure to timely file an appeal was not for a reason beyond the party's control, the tribunal must dismiss the appeal. If the tribunal finds otherwise, the same or another tribunal must, after hearing, issue a decision. Similarly, the bill provides that if an appellant who fails to appear provides a written explanation for nonappearance before a decision is issued, DILHR may schedule a hearing concerning whether there was good cause for the appellant's nonappearance, and may also provisionally schedule a hearing concerning any matter in the determination. If, after the hearing, the tribunal finds that the appellant's explanation does not establish good cause for nonappearance, the same or another tribunal must dismiss the appeal. If, after the hearing, the tribunal finds otherwise, the tribunal must, after hearing, issue a decision. If the appellant provides such an explanation within 21 days after a decision is issued, the tribunal may set aside its decision dismissing the appeal and the matter proceeds in a similar manner. The bill also provides that if a respondent who fails to appear provides a written explanation for nonappearance before a decision is issued or within 21 days thereafter, the tribunal may set aside any decision that has been issued, and DILHR and the tribunal must proceed in a similar manner as when they receive such an explanation from an appellant, except that if the tribunal finds that the explanation does not establish good cause for nonappearance, the tribunal may issue a new decision or reinstate the original decision, as appropriate, and if the tribunal finds that the explanation establishes good cause for nonappearance, the same or another tribunal must conduct a new hearing and issue a new decision based solely on the testimony and other evidence admitted at the new hearing.

Elections of reimbursement financing

Currently, local governmental and nonprofit employers may, in lieu of paying contributions to the unemployment reserve fund, elect to reimburse the fund for the cost of benefits charged to their accounts. Any such election must be for a period of at least 2 calendar years. If a local governmental or nonprofit employer terminates its election, it may not reelect reimbursement financing for a period of at least 2 calendar years after termination. The bill changes the minimum period for elections of reimbursement financing and the minimum period for reelections to 3 calendar years.

Documentation of social security numbers

Currently, each claimant must provide his or her social security number to DILHR before he or she may receive benefits for any week of unemployment. Currently, while the law does not specifically require a claimant to provide evidence of a social security number, it does provide that a social security card or other document that is accepted by DILHR may be used to provide evidence of a social security number. The bill deletes this statement of what constitutes acceptable evidence of a social security number.

Penalty for concealment

Currently, if a claimant conceals any part of his or her wages earned or payable for a week or conceals any material fact relating to his or her benefit eligibility for a week, DILHR must require the claimant to forfeit not less than 25% of, nor more than 4 times, the claimant's benefit rate for that week for any act of concealment which results in an overpayment of less than 50%. The bill applies this same penalty to an act of concealment which results in no overpayment.

Coverage of cooperative sickness care associations

Current law governing cooperative associations provides that employes of nonprofit cooperative associations established exclusively to provide sickness care are excluded from the unemployment compensation law, as provided in that law. However, under the unemployment compensation law, the wages paid to such employes are potentially subject to contribution requirements and the employes are potentially eligible for benefits. The bill provides that unemployment compensation contributions and benefits for these employes are governed exclusively by the unemployment compensation law.

Other

For further information see the state and local fiscal estimate, which will be printed as an appendix to this bill.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

AB651, s. 1 Section 1. 71.67 (7) of the statutes is created to read:

AB651,9,7 71.67 (7) Withholding from unemployment compensation. (a) The department of industry, labor and human relations may, in accordance with s. 108.135, deduct and withhold from any unemployment compensation payment, on a form prepared by the department of industry, labor and human relations, a portion of the payment as Wisconsin income tax. The department of industry, labor and human relations shall deposit the amounts withheld, on a monthly basis, as provided in s. 108.135 (6).

AB651,9,11 (b) The department of industry, labor and human relations shall furnish to each claimant who receives benefits during any year, on or before January 31 of the succeeding year, at least one legible copy of a written statement showing all of the following:

AB651,9,12 1. The name of the claimant and that claimant's social security number.

AB651,9,14 2. The gross amount of unemployment compensation that is subject to withholding under par. (a).

AB651,9,15 3. The total amount deducted and withheld under par. (a).

AB651,9,18 (c) 1. If the department of revenue so requires, the claimant shall furnish the department of revenue with one copy of the written statement that he or she receives under par. (b), along with his or her income tax return for the year.

AB651,9,21 2. The department of industry, labor and human relations shall furnish the department of revenue with a copy of any statement that is furnished to the claimant under par. (b).

AB651, s. 2 Section 2. 108.02 (12) (a) of the statutes is amended to read:

AB651,9,25 108.02 (12) (a) "Employe" means any individual who is or has been performing services for an employing unit, in an employment, whether or not the individual is paid directly by such employing unit; except as provided in par. (b) or (e), (c) or (d).

AB651, s. 3 Section 3. 108.02 (12) (b) of the statutes is created to read:

AB651,10,5 108.02 (12) (b) Paragraph (a) does not apply to an individual performing services in a capacity other than as a contract operator with a carrier or as a skidding operator or piece cutter with a forest products manufacturer or a logging contractor, if the employing unit satisfies the department that:

AB651,10,6 1. The individual:

AB651,10,8 a. Holds or has applied for an employer identification number with the federal internal revenue service; or

AB651,10,10 b. Has filed business or self-employment income tax returns with the federal internal revenue service based on such services in the previous year; and

AB651,10,11 2. The individual meets 6 or more of the following conditions:

AB651,10,13 a. The individual maintains a separate business with his or her own office, equipment, materials and other facilities.

AB651,10,16 b. The individual operates under contracts to perform specific services for specific amounts of money and under which the individual controls the means and method of performing the services.

AB651,10,18 c. The individual incurs the main expenses related to the services that he or she performs under contract.

AB651,10,21 d. The individual is responsible for the satisfactory completion of the services that he or she contracts to perform and is liable for a failure to satisfactorily complete the services.

AB651,10,24 e. The individual receives compensation for services performed under a contract on a commission or per-job or competitive-bid basis and not on any other basis.

AB651,11,2 f. The individual may realize a profit or suffer a loss under contracts to perform services.

AB651,11,3 g. The individual has recurring business liabilities or obligations.

AB651,11,5 h. The success or failure of the individual's business depends on the relationship of business receipts to expenditures.

AB651, s. 4 Section 4. 108.02 (12) (b) (intro.) of the statutes is renumbered 108.02 (12) (c) (intro.) and amended to read:

AB651,11,12 108.02 (12) (c) (intro.) Paragraph (a) shall does not apply to an individual performing services for an employing unit in a capacity as a contract operator with a carrier or as a skidding operator or piece cutter with a forest products manufacturer or a logging contractor if the employing unit satisfies the department as to both the following conditions:

AB651, s. 5 Section 5. 108.02 (12) (b) 1. and 2. of the statutes are renumbered 108.02 (12) (c) 1. and 2.

AB651, s. 6 Section 6. 108.02 (12) (c) of the statutes is renumbered 108.02 (12) (e).

AB651, s. 7 Section 7. 108.02 (12) (e) of the statutes is renumbered 108.02 (12) (d).

AB651, s. 8 Section 8. 108.02 (12) (f) of the statutes is amended to read:

AB651,11,19 108.02 (12) (f) The department shall may promulgate rules to ensure the consistent application of this subsection.

AB651, s. 9 Section 9. 108.02 (15m) (intro.) of the statutes is amended to read:

AB651,11,22 108.02 (15m) Family corporation. (intro.) "Family Except as provided in s. 108.04 (7) (r), "family corporation" means:

AB651, s. 10 Section 10. 108.02 (26) (c) 5. of the statutes is amended to read:

AB651,12,2 108.02 (26) (c) 5. The payment by an employer, without deduction from the remuneration of an employe, of the tax imposed on the employe under 26 USC 3101 with respect to remuneration paid to the employe for domestic service in a private home of the employer or for agricultural labor.

AB651, s. 11 Section 11. 108.04 (1) (gm) 1. and 2. of the statutes are repealed.

AB651, s. 12 Section 12. 108.04 (1) (gm) 3. to 5. of the statutes are renumbered 108.04 (1) (gm) 1. to 3.

AB651, s. 13 Section 13. 108.04 (1) (gm) 4. of the statutes is created to read:

AB651,12,8 108.04 (1) (gm) 4. Disposition of a total of 75 % or more of the assets of the corporation using one or more of the following methods:

AB651,12,9 a. Assignment for the benefit of creditors.

AB651,12,10 b. Surrender to one or more secured creditors or lienholders.

AB651, s. 14 Section 14. 108.04 (1) (gm) 6. of the statutes is renumbered 108.04 (1) (gm) 4. c. and amended to read:

AB651,12,19 108.04 (1) (gm) 4. c. Sale of 75% or more of the assets of the corporation, due to economic inviability, if the sale does not result in ownership or control by substantially the same interests that owned or controlled the family corporation. For purposes of this subdivision, it It is presumed unless shown to the contrary that a sale, in whole or in part, to a spouse, parent or child of an individual who owned or controlled the family corporation, or to any combination of 2 or more of them, is a sale to substantially the same interests that owned or controlled the family corporation.

AB651, s. 15 Section 15. 108.04 (2) (a) 2. of the statutes is amended to read:

AB651,12,22 108.04 (2) (a) 2. As of that week, the individual has registered for work at a public employment office.

AB651, s. 16 Section 16. 108.04 (2) (e) of the statutes is amended to read:

AB651,13,7 108.04 (2) (e) Each claimant shall furnish to the department his or her social security number. A social security card or other document on which the number is shown that is accepted by the department may be used as evidence of the social security number. If a claimant fails, without good cause, to provide a his or her social security number, the claimant is not eligible to receive benefits for the week in which the failure occurs or any subsequent week until the week in which he or she provides the social security number. If the claimant has good cause, he or she is eligible to receive benefits as of the week in which the claimant first files a claim for benefits or first requests the department to reactivate an existing benefit claim.

AB651, s. 17 Section 17. 108.04 (7) (r) of the statutes is amended to read:

AB651,13,18 108.04 (7) (r) Paragraph (a) does not apply if the department determines that the employe has owns or controls, directly or indirectly, an ownership interest specified in sub. (1) (g) 2. or 3., however designated or evidenced, in a family corporation and the employe's employment was terminated by the employer because of an involuntary cessation of the business of the corporation under one or more of the conditions specified in sub. (1) (gm). In this paragraph, "family corporation" has the meaning given in s. 108.02 (15m) and also includes a corporation in which 50% or more of the ownership interest is or was owned or controlled, directly or indirectly, by one or more brothers or sisters of a claimant, or by a combination of one or more brothers or sisters and one or more of the persons specified in s. 108.02 (15m) (a).

AB651, s. 18 Section 18. 108.04 (8) (g) of the statutes is repealed.

AB651, s. 19 Section 19. 108.04 (11) (b) 1. of the statutes is amended to read: