JTK&MES:kmg:ch
1995 - 1996 LEGISLATURE
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
1An Act to repeal 108.04 (1) (gm) 1. and 2., 108.04 (8) (g), 108.05 (1) (d) and (e),
2108.09 (4) (f) and 108.09 (4) (i);
to renumber 108.02 (12) (b) 1. and 2., 108.02
3(12) (c), 108.02 (12) (e), 108.04 (1) (gm) 3. to 5. and 108.09 (4) (h);
to renumber
4and amend 108.02 (12) (b) (intro.), 108.04 (1) (gm) 6., 108.09 (4) (g) and 108.09
5(4) (hm);
to amend 108.02 (12) (a), 108.02 (12) (f), 108.02 (15m) (intro.), 108.02
6(26) (c) 5., 108.04 (2) (a) 2., 108.04 (2) (e), 108.04 (7) (r), 108.04 (11) (b) 1., 108.04
7(17) (c) (intro.), (f) and (i), 108.05 (1) (f) (intro.), 108.05 (7) (f) 2., 108.05 (9),
8108.06 (2) (a) (intro.), 108.07 (3), 108.07 (3m), 108.07 (5) (c), 108.13 (title) and
9(1) to (3), 108.14 (8n) (e), 108.141 (1) (d) and (7) (a), 108.15 (3) (a) and (e) and
10(9) (a) and (c), 108.151 (1), (2) (b) and (6) (a), 108.16 (6m) (a), 108.18 (2) (a), (b)
11(intro.), (c) and (d), 108.18 (2) (d) and 185.981 (5);
to repeal and recreate
12108.09 (4) (c) to (e); and
to create 71.67 (7), 108.02 (12) (b), 108.04 (1) (gm) 4.,
13108.05 (1) (g) and (h), 108.05 (10), 108.07 (3r), 108.07 (8), 108.09 (2) (bm), 108.09
14(4) (a) (title), 108.09 (4) (b) (title), 108.09 (4) (f) (title), 108.09 (4s), 108.13 (5) and
15108.135 of the statutes;
relating to: various changes in the unemployment
16compensation law, unemployment compensation coverage for employes of
17cooperative sickness care associations and withholding of certain amounts from
1unemployment compensation for payment of income taxes and providing a
2penalty.
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.
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:
SB390, s. 1
1Section
1. 71.67 (7) of the statutes is created to read:
SB390,9,7
171.67
(7) Withholding from unemployment compensation. (a) The
2department of industry, labor and human relations may, in accordance with s.
3108.135, deduct and withhold from any unemployment compensation payment, on
4a form prepared by the department of industry, labor and human relations, a portion
5of the payment as Wisconsin income tax. The department of industry, labor and
6human relations shall deposit the amounts withheld, on a monthly basis, as provided
7in s. 108.135 (6).
SB390,9,118
(b) The department of industry, labor and human relations shall furnish to each
9claimant who receives benefits during any year, on or before January 31 of the
10succeeding year, at least one legible copy of a written statement showing all of the
11following:
SB390,9,1212
1. The name of the claimant and that claimant's social security number.
SB390,9,1413
2. The gross amount of unemployment compensation that is subject to
14withholding under par. (a).
SB390,9,1515
3. The total amount deducted and withheld under par. (a).
SB390,9,1816
(c) 1. If the department of revenue so requires, the claimant shall furnish the
17department of revenue with one copy of the written statement that he or she receives
18under par. (b), along with his or her income tax return for the year.
SB390,9,2119
2. The department of industry, labor and human relations shall furnish the
20department of revenue with a copy of any statement that is furnished to the claimant
21under par. (b).
SB390, s. 2
22Section
2. 108.02 (12) (a) of the statutes is amended to read:
SB390,9,2523
108.02
(12) (a) "Employe" means any individual who is or has been performing
24services for an employing unit, in an employment, whether or not the individual is
25paid directly by such employing unit; except as provided in par. (b)
or (e), (c) or (d).
SB390, s. 3
1Section
3. 108.02 (12) (b) of the statutes is created to read:
SB390,10,52
108.02
(12) (b) Paragraph (a) does not apply to an individual performing
3services in a capacity other than as a contract operator with a carrier or as a skidding
4operator or piece cutter with a forest products manufacturer or a logging contractor,
5if the employing unit satisfies the department that:
SB390,10,66
1. The individual:
SB390,10,87
a. Holds or has applied for an employer identification number with the federal
8internal revenue service; or
SB390,10,109
b. Has filed business or self-employment income tax returns with the federal
10internal revenue service based on such services in the previous year; and
SB390,10,1111
2. The individual meets 6 or more of the following conditions:
SB390,10,1312
a. The individual maintains a separate business with his or her own office,
13equipment, materials and other facilities.
SB390,10,1614
b. The individual operates under contracts to perform specific services for
15specific amounts of money and under which the individual controls the means and
16method of performing the services.
SB390,10,1817
c. The individual incurs the main expenses related to the services that he or
18she performs under contract.
SB390,10,2119
d. The individual is responsible for the satisfactory completion of the services
20that he or she contracts to perform and is liable for a failure to satisfactorily complete
21the services.
SB390,10,2422
e. The individual receives compensation for services performed under a
23contract on a commission or per-job or competitive-bid basis and not on any other
24basis.
SB390,11,2
1f. The individual may realize a profit or suffer a loss under contracts to perform
2services.
SB390,11,33
g. The individual has recurring business liabilities or obligations.
SB390,11,54
h. The success or failure of the individual's business depends on the
5relationship of business receipts to expenditures.