AB668: Bill Text

Exemption of wages from levies

Currently, DWD may administratively levy against property held by a third party who holds the property of a person who is indebted to DWD for the purpose of enforcing collection of the debt. If the levy is to collect a benefit overpayment or a forfeiture (civil penalty) imposed upon an employer, an individual debtor is entitled to an exemption of the greater of: 1) 75 percent of the debtor's earnings (excluding amounts withheld by law, insurance premiums, union dues, child support payments, and prior garnishments) then due and owing; or 2) an amount equal to 30 times the federal minimum wage per week or a proportionate amount for any partial week of earnings received.

This bill applies the current exemption only to forfeitures imposed upon an employer. The bill also provides that if the levy is to collect a benefit overpayment, an individual debtor is entitled to an exemption of 80% of the debtor's disposable earnings, except that: 1) a debtor's disposable earnings are totally exempt from levy if the debtor's wages are below the federal poverty line for a household of the debtor's size or the levy would cause that result; 2) DWD may allow a greater exemption upon a showing of hardship; and 3) DWD may decrease or eliminate the exemption under certain conditions if there is an outstanding adjudication that the debtor made a false statement or representation in order to obtain benefits.

Recovery of benefit overpayments

Currently, DWD may offset any benefits that are overpaid to a claimant against benefits that the claimant would otherwise be eligible to receive. This bill provides for DWD to recoup any overpayment instead of offsetting it. The change facilitates collection of overpayments during bankruptcy proceedings.

Tax changes

Special assessments for information technology systems

Currently, each employer that is subject to a contribution requirement must pay an annual special assessment for each year prior to 2004 in an amount that may not exceed the lesser of 0.01% of the employer's annual taxable payroll for unemployment insurance purposes or the employer's solvency contribution for that year for the purpose of financing the renovation and modernization of the unemployment insurance tax and accounting system. DWD must reduce the solvency rate that an employer must pay in each year prior to 2004 by the special assessment rate applicable to that employer for that year. (The solvency rate is the portion of an employer's contribution rate that is used to maintain the solvency of the unemployment reserve fund.) This bill makes the special assessment requirement and solvency rate offset applicable to calendar years 2004 through 2007. The bill also permits DWD to use the revenue generated by the assessments to upgrade unemployment insurance information technology systems.

Duration of levies

Currently, an administrative levy does not apply for more than one year after the date of service. This bill removes that limitation. Under the bill, a levy is effective until the debt is satisfied or until DWD releases the levy, whichever occurs first.

Enforcement of assessments against imposters

Currently, if any person makes a false statement or representation in order to obtain benefits in the name of another person, DWD may, by administrative action or by decision in an administrative proceeding, require the person to repay the benefits and may also penalize the person by levying an assessment against him or her in an amount not greater than 50 percent of the benefits wrongfully obtained. The assessment may be enforced by obtaining a judgment against the person in court and then by levying against the nonexempt property of the person to enforce the judgment. This bill provides, in addition, that DWD may recoup the amount due from other benefits that the person would otherwise be eligible to receive or may issue an administrative levy against the property of the person without a court proceeding.

Other changes

Treatment of limited liability companies

Currently, limited liability companies are generally covered under the unemployment insurance system. Current law does not expressly treat the issue of whether members of a limited liability company are considered to be employees of the company and therefore whether they are eligible to receive benefits. Currently, a corporation may, under certain conditions, elect to exclude its principal officers from unemployment insurance coverage, with the result that the corporation pays no contributions based on their services and the officers are not eligible to receive benefits. Currently, if a business has one owner or if a business is organized as a partnership, the owner or partners pay no contributions based on their services and they are not eligible to receive benefits.

This bill provides that a limited liability company shall be treated as a corporation for unemployment insurance purposes, including payment of contributions and eligibility of its members for benefits if it is so treated for federal tax purposes, beginning on the date it becomes so treated by the federal Internal Revenue Service, if the company files proof of such treatment with DWD, except that for benefit purposes the treatment does not apply earlier than proof of such treatment is filed with DWD. If a limited liability company is not treated as a corporation for federal tax purposes, the company is treated as a partnership if it has more than one member or as a sole proprietorship (business owned by one individual) if it has only one member, except that, under the bill, DWD may in the interests of justice or to prevent fraud upon the unemployment insurance program determine a member of a limited liability company to be an employee of the company. In this case, the services performed by the member are subject to contributions and the member potentially qualifies to receive benefits.

Treatment of stepchildren

Currently, stepchildren are not treated as children for purposes of the unemployment insurance law. This bill treats stepchildren as children for that purpose. Among other effects, the change means that: a) unless an employer otherwise elects, with the approval of DWD, the wages of the stepchildren of a nonresident alien who has nonimmigrant status are not subject to contribution requirements and these stepchildren may not claim benefits based on their employment; b) ownership of a business by the stepchild of a claimant may result in a limitation of benefit availability based on employment with that business; c) the need to obtain child care for a stepchild or domestic abuse involving a stepchild may serve to permit a claimant to obtain benefits after voluntarily terminating work without requalifying by engaging in new work, under certain conditions; and d) ownership of a business by a stepchild of another owner may result in treatment of the business as the successor of the previous business rather than treatment of the business as a new business, under certain conditions.

Partial successorship

Currently, if a business is transferred from one employer to another employer, the transferee may, under certain conditions, request that DWD treat it as a successor to the transferor for purposes of unemployment insurance experience, including contribution and benefit liability, if 100 percent of the transferor's business is transferred to a single transferee. In addition, DWD must treat a transferee as a successor, under certain conditions, if 100 percent of the transferor's business is transferred to the transferee or if the transferor's unemployment insurance account is overdrawn on the date of the transfer. This bill deletes the restriction that precludes a transferee from requesting that it be treated as a successor unless 100 percent of the transferor's business is transferred to a single transferee and the requirement that DWD must treat a transferee as a successor under the conditions specified above.

Rule making

2001 Wisconsin Act 35 directed DWD to submit proposed rule changes to the legislative council staff no later than December 1, 2002, to:

1. Establish a specified level of repeated absenteeism or repeated tardiness that will permit an employer to terminate an employee without being required to pay the cost of any benefits for which the employee may qualify resulting from the base period applicable to the date of termination, and that will preclude the employee from receiving benefits without requalifying by working for a specified period and receiving a specified amount. (Currently, the degree of absenteeism or tardiness that permits such action varies depending upon the facts of each case.)

2. Specify, in accordance with applicable administrative and judicial interpretations, what constitutes an "establishment" for purposes of a current disqualification from receipt of benefits because of a labor dispute in the establishment in which an employee is or was employed.

This bill repeals both rule-making requirements.

Late appeals

Currently, if a party in an unemployment insurance determination files an appeal that is not timely, DWD may schedule a hearing concerning whether the party's failure to file the appeal on a timely basis was for a reason that was beyond the party's control. This bill provides that if a party files an appeal that is not timely, an appeal tribunal (attorney employed by DWD) must review the reasons given by the party for not filing a timely appeal and if those reasons, taken as true and construed most favorably to the party, do not constitute a reason that was beyond the party's control, the tribunal may dismiss the appeal without a hearing and issue a decision finding that the appeal was not filed on a timely basis. If the tribunal finds that the appeal may have been filed late for a reason that was beyond the party's control, the department may schedule a hearing on that issue.

Method of payment of certain court filing fees

Currently, DWD has a lien on the property of each employer for payment of contributions, together with any interest, fees, and forfeitures owed by the employer. DWD may issue a warrant and record the warrant with the clerk of circuit court to secure payment of the amounts due. DWD need not pay the filing fee with each warrant that is recorded, but instead pays semiannually or at another interval that is agreed to by the clerk of circuit court. This bill provides that DWD need not pay the filing fee for any satisfaction of a warrant or release or withdrawal of a warrant at the time it is recorded, but instead may pay the clerk of circuit court periodically in the same manner that fees for recording of warrants are paid currently.

Payment of banking service costs

Currently, the cost of banking services incurred by the unemployment reserve fund is paid by maintaining compensating balances in the bank accounts that are used to make daily transactions. This bill provides for the treasurer of the fund to make estimates, prior to the beginning of each calendar quarter, of the earnings that the fund could anticipate in that quarter if compensating balances are maintained to cover service costs and, alternatively, if the moneys that would otherwise be maintained in bank accounts to cover service costs were instead retained in the federal unemployment trust account and the banking service costs were paid from that account. The treasurer is directed to pay banking service costs using the method that the treasurer determines will permit the fund to realize the greatest net earnings in that quarter.

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:

AB668, s. 1 Section 1. 20.445 (1) (gg) of the statutes is amended to read:

AB668,7,6 20.445 (1) (gg) Unemployment tax and accounting system information technology systems; interest and penalties. From the moneys received as interest and penalties collected under ss. 108.04 (11) (c) and (cm) and (13) (c) and 108.22, as a continuing appropriation, the amounts in the schedule for the purpose specified in s. 108.19 (1e) (d).

AB668, s. 2 Section 2. 20.445 (1) (gh) of the statutes is amended to read:

AB668,8,5 20.445 (1) (gh) Unemployment information technology systems; assessments. All moneys received from assessments levied under s. 108.19 (1e) (a) and 1997 Wisconsin Act 39, section 164 (2), for the purpose specified in s. 108.19 (1e) (d). The treasurer of the unemployment reserve fund may transfer moneys from this appropriation account to the appropriation account under par. (gd).

AB668, s. 3 Section 3. 20.445 (1) (n) of the statutes, as affected by 2003 Wisconsin Act 33, is amended to read:

AB668,9,2 20.445 (1) (n) Employment assistance and unemployment insurance administration; federal moneys. All federal moneys received, as authorized by the governor under s. 16.54, for the administration of employment assistance and unemployment insurance programs of the department, for the performance of the department's other functions under subch. I of ch. 106 and ch. 108, except moneys appropriated under par. (nc), and to pay the compensation and expenses of appeal tribunals and of employment councils appointed under s. 108.14, to be used for such purposes, except as provided in s. 108.161 (3e), and, from the moneys received by this state under section 903 (d) of the federal Social Security Act, as amended, to transfer to the appropriation account under par. (nb) an amount determined by the treasurer of the unemployment reserve fund not exceeding the lesser of the amount specified in s. 108.161 (4) (d) or the amounts in the schedule under par. (nb), and to transfer to the appropriation account under par. (nd) an amount determined by the treasurer of the unemployment reserve fund not exceeding the lesser of the amount specified in s. 108.161 (4) (d) or the amounts in the schedule under par. (nd) , and to transfer to the appropriation account under par. (ne) an amount determined by the treasurer of the unemployment reserve fund not exceeding the lesser of the amount specified in s. 108.161 (4) (d) or the amount required to pay for the cost of banking services incurred by the unemployment reserve fund.

AB668, s. 4 Section 4. 20.445 (1) (nb) of the statutes is amended to read:

AB668,9,15 20.445 (1) (nb) Unemployment information technology systems; federal moneys. As From the moneys received from the federal government under section 903 (d) of the federal Social Security Act, as amended, as a continuing appropriation, the amounts in the schedule, as authorized by the governor under s. 16.54, for the purpose specified in s. 108.19 (1e) (d). All moneys transferred from par. (n) for this purpose shall be credited to this appropriation account. Notwithstanding s. 20.001 (3) (a), the treasurer of the unemployment reserve fund shall transfer any unencumbered balance in this appropriation account that is not needed or available to carry out the purpose of this appropriation to the appropriation account under par. (n). No moneys may be expended from this appropriation unless the treasurer of the unemployment reserve fund determines that such expenditure is currently needed for the purpose specified in s. 108.19 (1e) (d).

AB668, s. 5 Section 5. 20.445 (1) (nd) of the statutes, as created by 2003 Wisconsin Act 33, is amended to read:

AB668,9,25 20.445 (1) (nd) Unemployment insurance administration; apprenticeship. From the moneys received from the federal government under section 903 (d) of the federal Social Security Act, as amended, the amounts in the schedule, as authorized by the governor under s. 16.54, to be used for administration by the department of apprenticeship programs under subch. I of ch. 106. All moneys transferred from par. (n) for this purpose shall be credited to this appropriation account. Notwithstanding s. 20.001 (3) (a), the treasurer of the unemployment reserve fund shall transfer any unencumbered balance in this appropriation account that is not needed or available to carry out the purpose of this appropriation to the appropriation account under par. (n). No moneys may be expended from this appropriation unless the treasurer of the unemployment reserve fund determines that such expenditure is currently needed for the purpose specified in this paragraph.

AB668, s. 6 Section 6. 20.445 (1) (ne) of the statutes is created to read:

AB668,10,16 20.445 (1) (ne) Unemployment administration; bank service costs. From the moneys received by this state under section 903 (d) of the federal Social Security Act, as amended, all moneys transferred from the appropriation account under par. (n) to be used for the payment of the cost of banking services incurred by the unemployment reserve fund. Notwithstanding s. 20.001 (3) (c), the treasurer of the unemployment reserve fund shall transfer any unencumbered balance in this appropriation account that is not needed or available to carry out the purpose of this appropriation to the appropriation account under par. (n). No moneys may be expended from this appropriation unless the treasurer of the unemployment reserve fund determines that such expenditure is currently needed for the purpose specified in this paragraph.

AB668, s. 7 Section 7. 108.02 (6m) of the statutes is created to read:

AB668,10,18 108.02 (6m) Child. "Child" means a natural child, adopted child, or stepchild.

AB668, s. 8 Section 8. 108.02 (12) (a) of the statutes is amended to read:

AB668,10,23 108.02 (12) (a) "Employee" 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), (bm), (c) or, (d), (dm) or (dn).

AB668, s. 9 Section 9. 108.02 (12) (b) (intro.) of the statutes is amended to read:

AB668,11,8 108.02 (12) (b) (intro.) During the period beginning on January 1, 1996, and ending on December 31, 1999, and during the period beginning on January 1, 2004, with respect to contribution requirements, and during the period beginning on January 1, 1996, and ending on April 1, 2000, and during the period beginning on April 4, 2004, with respect to benefit eligibility, par. (a) does not apply to an individual performing services for an employing unit other than a government unit or nonprofit organization in a capacity other than as a logger or trucker, if the employing unit satisfies the department that:

AB668, s. 10 Section 10. 108.02 (12) (bm) (intro.) of the statutes is amended to read:

AB668,11,16 108.02 (12) (bm) (intro.) During the 4-year period beginning on January 1, 2000, with respect to contribution requirements, and during the period beginning on April 2, 2000, and ending on April 3, 2004, with respect to benefit eligibility, par. (a) does not apply to an individual performing services for an employing unit other than a government unit or nonprofit organization in a capacity other than as a logger or trucker, if the employing unit satisfies the department that the individual meets 7 or more of the following conditions by contract and in fact:

AB668, s. 11 Section 11. 108.02 (12) (dm) and (dn) of the statutes are created to read:

AB668,11,19 108.02 (12) (dm) Paragraph (a) does not apply to an individual who owns a business that operates as a sole proprietorship.

AB668,11,21 (dn) Paragraph (a) does not apply to a partner in a business that operates as a partnership.

AB668, s. 12 Section 12. 108.02 (15) (L) of the statutes is amended to read:

AB668,12,2 108.02 (15) (L) "Employment" includes an individual's service for an employer organized as a corporation or a limited liability company that is treated as a corporation under this chapter in which the individual is a principal officer and has a direct or indirect ownership interest, except as provided in s. 108.025.

AB668, s. 13 Section 13. 108.02 (15m) (a) and (b) of the statutes are amended to read:

AB668,12,9 108.02 (15m) (a) A corporation or a limited liability company that is treated as a corporation under this chapter in which 50% or more of the ownership interest, however designated or evidenced, is or during a claimant's employment was owned or controlled, directly or indirectly, by the claimant or by the claimant's spouse or child, or by the claimant's parent if the claimant is under the age of 18, or by a combination of 2 or more of them; or

AB668,12,13 (b) Except where par. (a) applies, a corporation or a limited liability company that is treated as a corporation under this chapter in which 25% or more of ownership interest, however designated or evidenced, is or during a claimant's employment was owned or controlled, directly or indirectly, by the claimant.

AB668, s. 14 Section 14. 108.02 (20r) of the statutes is created to read:

AB668,12,15 108.02 (20r) Partnership. "Partnership" has the meaning given in s. 178.03.

AB668, s. 15 Section 15. 108.02 (25s) of the statutes is created to read:

AB668,12,18 108.02 (25s) Vocational training. "Vocational training" includes technical, skill-based, or job readiness training intended to pursue a career.

AB668, s. 16 Section 16. 108.025 (title) and (1) of the statutes are amended to read:

AB668,12,21 108.025 (title) Coverage of certain corporate officers and limited liability company members.

AB668,12,22 (1) In this section, "principal officer" means an:

AB668,12,25 (a) An individual named as a principal officer in the a corporation's most recent annual report or, if that information is not current, an individual holding an office described in the corporation's most recent annual report as a principal officer.; or

AB668, s. 17 Section 17. 108.025 (1) (b) of the statutes is created to read:

AB668,13,4 108.025 (1) (b) An individual named as a member of a limited liability company that is treated as a corporation under this chapter in the records of the company required to be kept under s. 183.0405 as of the date of an election under this section.

AB668, s. 18 Section 18. 108.025 (2) and (6) of the statutes are amended to read:

AB668,13,14 108.025 (2) If an employer having is organized as a corporation or limited liability company that is treated as a corporation under this chapter, the employer has no annual payroll for the calendar year preceding an election or an employer having has an annual payroll of less than the amount specified in s. 108.18 (9) which establishes separate solvency contribution rates for the calendar year preceding an election, and the employer files a notice of election, in the manner prescribed by the department, to exclude the service of all of its principal officers who have a direct or indirect substantial ownership interest in the corporation or limited liability company, employment does not include the service of those officers.

AB668,13,19 (6) A principal officer has a direct or indirect substantial ownership interest in a corporation or limited liability company that is treated as a corporation under this section if 25% or more of the ownership interest, however designated or evidenced, in the corporation or limited liability company is owned or controlled, directly or indirectly, by the officer.

AB668, s. 19 Section 19. 108.04 (1) (g) 1. of the statutes is amended to read:

AB668,14,2 108.04 (1) (g) 1. Employment by a partnership or limited liability company that is treated as a partnership under this chapter, if a one-half or greater ownership interest in the partnership or limited liability company is or during such employment was owned or controlled, directly or indirectly, by the individual's spouse or child, or by the individual's parent if the individual is under age 18, or by a combination of 2 or more of them.

AB668, s. 20 Section 20. 108.04 (1) (g) 1L. of the statutes is repealed.

AB668, s. 21 Section 21. 108.04 (1) (g) 2. and 3. of the statutes are amended to read:

AB668,14,11 108.04 (1) (g) 2. Employment by a corporation or limited liability company that is treated as a corporation under this chapter, if one-half or more of the ownership interest, however designated or evidenced, in the corporation or limited liability company is or during such employment was owned or controlled, directly or indirectly, by the individual or by the individual's spouse or child, or by the individual's parent if the individual is under age 18, or by a combination of 2 or more of them.

AB668,14,16 3. Except where subd. 2. applies, employment by a corporation or limited liability company that is treated as a corporation under this chapter, if one-fourth or more of the ownership interest, however designated or evidenced, in the corporation or limited liability company is or during such employment was owned or controlled, directly or indirectly, by the individual.

AB668, s. 22 Section 22. 108.04 (1) (gm) 1., 2., 3. and 4. (intro.) of the statutes are amended to read:

AB668,14,21 108.04 (1) (gm) 1. Dissolution of the family corporation, due to economic inviability, under ch. 180 or the analogous applicable laws of the jurisdiction in which the corporation is incorporated or organized;

AB668,14,22 2. Filing for corporate of a petition in bankruptcy by the family corporation;

AB668,14,24 3. Filing for personal of a petition in bankruptcy by all owners who are personally liable for any of the debts of the family corporation; or

AB668,15,2 4. (intro.) Disposition of a total of 75% or more of the assets of the family corporation using one or more of the following methods:

AB668, s. 23 Section 23. 108.04 (2) (a) 3. of the statutes is renumbered 108.04 (2) (a) 3. (intro.) and amended to read:

AB668,15,19 108.04 (2) (a) 3. (intro.) The individual is seeking suitable work during that week or, during the 156-week period beginning on January 2, 2000, the individual conducts a reasonable search for suitable work during that week. The reasonable search required during the period specified in this subdivision for suitable work must include 2 actions that constitute a reasonable search as prescribed by rule of the department. The department shall, by rule, require claimants to conduct a reasonable search for suitable work during the period beginning after the 156-week period specified in this subdivision and shall, by rule, prescribe standards for the search to be considered reasonable. This subdivision does not apply to an individual if the department determines that the individual is currently laid off from employment with an employer but there is a reasonable expectation of reemployment of the individual by that employer. In determining whether the individual has a reasonable expectation of reemployment by an employer, the department shall request the employer to verify the individual's employment status and shall also consider other factors, including: