SB390: Bill Text

LRB-4096/12

JTK&MES:kmg:ch

1995 - 1996 LEGISLATURE

1995 Senate BILL 390

November 1, 1995 - Introduced by Senators Zien and Breske, cosponsored by Representatives Vrakas and Vander Loop. Referred to Committee on Human Resources, Labor, Tourism, Veterans and Military Affairs.

SB390,2,2 An Act to repeal 108.04 (1) (gm) 1. and 2., 108.04 (8) (g), 108.05 (1) (d) and (e), 108.09 (4) (f) and 108.09 (4) (i); to renumber 108.02 (12) (b) 1. and 2., 108.02 (12) (c), 108.02 (12) (e), 108.04 (1) (gm) 3. to 5. and 108.09 (4) (h); to renumber and amend 108.02 (12) (b) (intro.), 108.04 (1) (gm) 6., 108.09 (4) (g) and 108.09 (4) (hm); to amend 108.02 (12) (a), 108.02 (12) (f), 108.02 (15m) (intro.), 108.02 (26) (c) 5., 108.04 (2) (a) 2., 108.04 (2) (e), 108.04 (7) (r), 108.04 (11) (b) 1., 108.04 (17) (c) (intro.), (f) and (i), 108.05 (1) (f) (intro.), 108.05 (7) (f) 2., 108.05 (9), 108.06 (2) (a) (intro.), 108.07 (3), 108.07 (3m), 108.07 (5) (c), 108.13 (title) and (1) to (3), 108.14 (8n) (e), 108.141 (1) (d) and (7) (a), 108.15 (3) (a) and (e) and (9) (a) and (c), 108.151 (1), (2) (b) and (6) (a), 108.16 (6m) (a), 108.18 (2) (a), (b) (intro.), (c) and (d), 108.18 (2) (d) and 185.981 (5); to repeal and recreate 108.09 (4) (c) to (e); and to create 71.67 (7), 108.02 (12) (b), 108.04 (1) (gm) 4., 108.05 (1) (g) and (h), 108.05 (10), 108.07 (3r), 108.07 (8), 108.09 (2) (bm), 108.09 (4) (a) (title), 108.09 (4) (b) (title), 108.09 (4) (f) (title), 108.09 (4s), 108.13 (5) and 108.135 of the statutes; relating to: various changes in the unemployment compensation law, unemployment compensation coverage for employes of cooperative sickness care associations and withholding of certain amounts from unemployment compensation for payment of income taxes and providing a penalty.

Analysis by the Legislative Reference Bureau

This bill makes various changes in the unemployment compensation law and related provisions. Significant provisions include:

Benefit rate changes

Currently, weekly unemployment compensation benefit rates for total unemployment range from $50 for an employe who accrues wages (or certain other amounts treated as wages) of at least $1,250 during at least one quarter of the employe's base period (period preceding a claim during which benefit rights accrue) to $266 for an employe who accrues wages (or certain other amounts treated as wages) of at least $6,650 during any such quarter. The bill increases weekly benefit rates for weeks of unemployment beginning on January 7, 1996, and before January 5, 1997, to rates ranging from $52 for an employe who accrues wages (or certain other amounts treated as wages) of at least $1,300 during at least one quarter of the employe's base period to $274 for an employe who accrues wages (or certain other amounts treated as wages) of at least $6,850 during any such quarter; and beginning on or after January 5, 1997, to rates ranging from $53 for an employe who accrues wages (or certain other amounts treated as wages) of at least $1,325 during at least one quarter of the employe's base period to $282 for an employe who accrues wages (or certain other amounts treated as wages) of at least $7,050 during any such quarter.

Other benefit changes

Employe status

Currently, in order to be eligible to claim benefits, an individual must, in addition to other requirements, be an "employe" as defined in the unemployment compensation law. Generally, an "employe" is an individual who performs services for an employer in employment covered under the unemployment compensation law, whether or not the individual is directly paid by the employer. However, an individual is not an "employe" if the individual performs services as an independent contractor. An independent contractor is an individual who has been and will continue to be free from the employer's control or direction over the performance of his or her services both under his or her contract and in fact, and whose services are performed in an independently established trade, business or profession in which the individual is customarily engaged. The bill retains this test of independent contractor status for individuals performing services 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, but establishes a new test of independent contractor status in all other cases. Under the new test, an individual performing services as an independent contractor must hold or have applied for an employer identification number with the federal internal revenue service or must have filed business or self-employment income tax returns with the federal internal revenue service in the previous year, and must meet at least 6 of 8 other conditions concerning the individual's relationship to or direction or control over his or her business or the services that he or she performs. The bill also deletes a requirement for the department of industry, labor and human relations (DILHR) to promulgate rules to ensure the consistent application of requirements for determining "employe" status.

Educational employes

Currently, an employe of an educational service agency, including a cooperative educational service agency (CESA), which provides services to or on behalf of an educational institution, who provides services under an employment contract which does not require the performance of services on a year-round basis is ineligible to receive benefits based on those services for any week which occurs between 2 successive academic years or terms, or during an established and customary vacation period or holiday recess, if the employe has reasonable assurance of continued employment by an educational service agency and, except after a vacation period or holiday recess, in a similar capacity. In addition, if an employe performed those services in a professional capacity, the employe is ineligible to receive benefits between nonsuccessive regular terms, if the employe has reasonable assurance of continued employment in a similar capacity. The bill provides that this denial is limited to an employe who provides those services in a school or other educational institution or to or on behalf of such an institution.

Procedure for establishing a benefit year

Currently, a claimant may establish a benefit year (period during which benefits are potentially payable) by written request to DILHR, filed in the manner DILHR prescribes by rule. The bill deletes the requirement for a claimant to establish a benefit year by written request, thus permitting DILHR to accept a telephone request to establish a benefit year.

Registration for work

Currently, a claimant is eligible to receive benefits for a week in which the claimant receives no wages only if, as of that week, the claimant has registered for work at a public employment office unless DILHR, by rule, waives this requirement under specified conditions. The bill deletes the requirement that registration for work be performed at a public employment office, thus permitting registration by telephone, electronic transmission or other means.

Payment of benefits on behalf of deceased claimants

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.