SB255: Bill Text

Analysis by the Legislative Reference Bureau

This bill makes various changes in the unemployment insurance law. Significant provisions include:

Benefit rate changes

Currently, weekly unemployment compensation benefit rates for total unemployment range from $44 for an employe who earns wages (or certain other amounts treated as wages) of at least $1,100 during at least one quarter of the employe's base period (period preceding a claim during which benefit rights accrue) to $297 for an employe who earns wages (or certain other amounts treated as wages) of at least $7,425 during any such quarter. This bill adjusts weekly benefit rates for weeks of unemployment beginning on or after April 2, 2000, and before October 1, 2000, to rates ranging from $45 for an employe who earns wages (or certain other amounts treated as wages) of at least $1,125 during at least one quarter of the employe's base period to $305 for an employe who earns wages (or certain other amounts treated as wages) of at least $7,625 during any such quarter; and beginning on or after October 1, 2000, to rates ranging from $46 for an employe who earns wages (or certain other amounts treated as wages) of at least $1,150 during at least one quarter of the employe's base period to $313 for an employe who earns wages (or certain other amounts treated as wages) of at least $7,825 during any such quarter.

Other benefit changes

Partial unemployment

Currently, if a claimant earns wages in a given week, the first $30 of the wages are disregarded and the claimant's weekly benefit payment is reduced by 67% of the remaining amount of wages earned, but no claimant is eligible to receive benefits for any week if the benefits would be less than $5 and any wages that the claimant would have earned in any week for work performed for his or her employer had the claimant accepted available work from that employer are treated as wages earned for that week. Any amount that a claimant earns for services performed as a volunteer fire fighter or volunteer emergency medical technician in any week does not reduce the claimant's weekly benefit payment for that week. With certain exceptions, if a claimant works at least 35 hours in any given week for the employer that provided at least 80% of the wages or certain other payments that the claimant received during his or her base period (qualifying work period during which benefit rights accrue), the claimant is ineligible to receive any benefits for that week.

This bill provides, in addition, that a claimant is ineligible to receive any benefits for a week in which the claimant works a total of 40 or more hours for any employer or employers.

Search for work

Currently, in order to receive benefits for a week in which a claimant earns no wages, a claimant must seek suitable work during that week, unless otherwise permitted by the department of workforce development (DWD) by rule. This bill provides that, during the 104-week period beginning on the day the law resulting from the bill takes effect, in order to receive benefits for a week in which a claimant earns no wages, the claimant must conduct a reasonable search for suitable work during that week, unless otherwise permitted by DWD by rule. Under the bill, the search must include two actions each week that constitute a reasonable search as prescribed by DWD by rule.

Benefits payable during voluntary leaves of absence

Currently, an employe is ineligible to receive benefits while the employe is on a voluntary leave of absence granted for a definite period, until the period ends or until the employe returns to work, whichever occurs first. This bill provides that if an employe is granted a leave of absence for any portion of a week, the employe's eligibility for benefits for that portion of a week shall be reduced by the amount of wages that the employe could have earned had the leave not been granted, by treating the wages that the employe would have earned for work the employe would have performed during the leave as wages actually earned and applying the same method for computing benefits that is used to determine the benefits payable to employes who are partially unemployed. The bill provides that DWD shall estimate the wages that an employe would have earned for any partial week if it is not possible to compute the exact amount of wages that the employe would have earned for that partial week.

Possession or use of controlled substances

Currently, if an employe is discharged for misconduct connected with his or her work (interpreted by the courts to include only misconduct that evinces wilful or wanton disregard of the employer's interests or carelessness or negligence in the performance of duties to such degree or recurrence as to manifest culpability or wrongful intent or exhibit such behavior as to endanger the physical safety of persons on the work site), the employe is ineligible to receive benefits until seven weeks have elapsed since the end of the week in which the discharge occurs and the employe earns wages after the week in which the discharge occurs equal to at least 14 times the employe's weekly benefit rate in employment covered by the unemployment compensation law of any state or the federal government. In addition, all wages earned with the employer that discharges the employe are excluded in determining the amount of any future benefits to which the employe is entitled. If an employe is suspended for good cause connected with his or her work, the employe is ineligible to receive benefits until three weeks have elapsed since the end of the week in which the suspension occurs or until the suspension is terminated, whichever occurs first. Under current law, DWD must prescribe, by rule, conditions under which an employe's possession, use or impairment due to use of a controlled substance (dangerous drug) or an employe's violation of a work rule relating to controlled substances testing constitutes misconduct or good cause for suspension for purposes of these provisions.

This bill deletes the requirement for DWD to promulgate this rule, thereby leaving determination of misconduct or good cause for suspension under these circumstances to be determined on a case-by-case basis.

Voluntary termination of work

Currently, if an employe voluntarily terminates his or her work with an employer, the employe is generally ineligible to receive benefits until four weeks have elapsed since the end of the week in which the termination occurs and the employe earns wages after the week in which the termination occurs equal to at least four times the employe's weekly benefit rate in employment covered by the unemployment insurance law of any state or the federal government. However, an employe may terminate his or her work and receive benefits without requalifying under this provision if the employe terminates his or her work with good cause attributable to his or her employer. In addition, an employe may voluntarily terminate his or her work and receive benefits without requalifying under this provision if the employe terminates his or her work because the employe's employer made employment, compensation, promotion or job assignments contingent upon the employe's consent to sexual contact or sexual intercourse.

This bill eliminates the second exception relating to sexual contact or sexual intercourse, but specifically provides that "good cause" under the first exception includes sexual harassment by an employer, an employer's agent or a co-worker of which the employer knew or should have known but failed to take timely and appropriate corrective action.

The bill also creates a new exception which provides that an employe may voluntarily terminate his or her work and receive benefits without requalifying if the employe terminates his or her work due to domestic abuse, concerns about his or her personal safety or harassment or concerns about the personal safety or harassment of members of the employe's household, the employe obtains a temporary or permanent order from a court in this state or another jurisdiction relating to domestic abuse, child abuse, harassment or contact with a child or vulnerable adult prior to terminating his or her work and the employe demonstrates that the order has been or is reasonably likely to be violated.

In addition, the bill creates another new exception which provides that an employe may voluntarily terminate his or her work and receive benefits without requalifying if the employe is hired to work a particular shift and the employe terminates his or her work as the result of a requirement by his or her employer to transfer his or her working hours to a shift occurring at a time that would result in a lack of child care to his or her minor children, provided that the employe is able to work and available to perform work during the same shift that the employe worked in the employe's most recent work for that employer.

Under the bill, the cost of benefits paid to an employe under the sexual harassment and child care exceptions is generally charged to the employer or employers that employed the employe during his or her base period (recent work period during which benefit rights accrue). The cost of benefits paid to an employe under the abuse, contact and harassment exception is charged to the balancing account of the unemployment reserve fund, which is financed from the contributions (taxes) of all employers that are subject to a requirement to pay contributions, unless the employe's employer or employers do not pay contributions, in which case the cost of benefits is generally chargeable to the employe's employer or employers.

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 insurance law. Generally, an "employe" is an individual who performs services for an employer in employment covered under the unemployment insurance 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. Except in the case of a logger or trucker performing services for an employer other than a governmental or nonprofit employer, to be considered an independent contractor, an individual 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 six of eight 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. This bill provides instead, that during the four-year period beginning in the year 2000 (the specific date varies in different situations), an independent contractor (other than a logger or trucker as currently provided) must meet at least seven of ten conditions concerning the individual's relationship to or control over his or her business or the services that he or she performs. Two of the conditions that an individual may use to qualify as an independent contractor require the individual to have a federal employer identification number or to have filed business or self-employment income tax returns with the federal internal revenue service based on the services performed as an independent contractor. The other eight conditions are the same eight conditions that an individual may use to qualify as an independent contractor under current law.

Definition of base period

Currently, an employe's eligibility for and amount of benefits are determined with reference to the employe's "base period", which is the work period consisting of the first four of the five most recently completed quarters at the time that an employe begins a "benefit year" (period during which benefits are payable). This bill provides that, if an employe does not qualify to receive any benefits using the current definition of "base period", the employe's base period shall be the four most recently completed quarters at the time that an employe begins a benefit year. Under the bill, an employe whose benefits are computed using the alternate base period may not reuse any wages for a subsequent benefit claim based on the current definition of "base period", except for payment of Wisconsin supplemental or federal extended benefits (these benefits are paid during periods of high unemployment).

Tax changes

Solvency rate adjustment

Currently, all employers that engage employes in work that is covered under the unemployment insurance law, other than governmental and nonprofit employers that elect to pay directly for the cost of benefits, must pay contributions (taxes) to finance unemployment insurance benefits. The total contribution rate of an employer is equal to the sum of the employer's contribution rate and the employer's solvency rate, each of which vary with the employment stability of the employer and the solvency of the unemployment reserve fund, from which benefits are paid. An employer's contributions payable as a result of its contribution rate are credited to the employer's account, while an employer's contributions payable as a result of its solvency rate are credited to the fund's balancing account, which is used to fund benefits not payable from any employer's account. This bill decreases the solvency rate payable by employers having a taxable annual payroll for unemployment insurance purposes of less than $500,000 when the unemployment insurance fund has a balance of at least $900,000,000 from 0.02% of an employer's payroll to 0.00% of an employer's payroll.

Special assessments payable by certain new employers

Currently, if a new employer is required to pay contributions (taxes) to the unemployment reserve fund and the employer's account is overdrawn as of January 31 or June 30 following any of the first three calendar years that the employer is subject to a contribution requirement because the total benefits charged to the account exceed the total contributions credited to the account as of one of those dates, the employer must pay a special assessment to the unemployment reserve fund in the amount of 1.3% of the employer's annual taxable payroll for unemployment insurance purposes for the calendar year preceding the year in which the account is overdrawn. This bill repeals the requirement to pay this assessment.

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 2000 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 design or development of unemployment insurance information technology systems. The department of workforce development (DWD) must reduce the solvency rate that an employer must pay in each year prior to 2000 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 2000 and 2001. The bill also permits DWD to use the revenue generated by the assessments only for renovation and modernization of the unemployment insurance tax and accounting system.

Other changes

Quarterly wage report format

Currently, each employer that is subject to the unemployment insurance law must file with DWD a quarterly report of the wages paid to each of its employes and certain other information. Employers of 250 or more employes must file the report using a medium approved by DWD. If an employer is delinquent in filing a report, the employer is subject to a tardy filing fee of $15 to $115, depending on the number of its employes. This bill applies this reporting requirement to all employers of 100 or more employes. The bill also provides that once an employer becomes subject to the electronic reporting requirement, the employer must continue to report electronically, regardless of the number of its employes, unless that requirement is waived by DWD. Under the bill, an employer that becomes subject to an electronic reporting requirement is not required to file electronically until the fourth quarter after the quarter in which the requirement first applies. In addition, the bill changes the amounts of the tardy filing fees from not less than $25 to not more than $75, and permits DWD to assess a penalty against any employer that is subject to an electronic reporting requirement and that fails to report using an electronic medium approved by DWD in the amount of $10 for each employe whose information is not reported using an approved electronic medium.

Use of interest and penalty revenues

Currently, DWD collects interest on late payments required to be made to DWD by employers and various penalties for late payments and certain other infractions under the unemployment insurance law. The revenues from interest and penalties are used to finance administration of the unemployment insurance and other employment security programs, including employment security building construction costs and operation of public employment offices. This bill discontinues use of these interest and penalty revenues for employment security building construction and administrative purposes. Under the bill, the only authorized purpose for which these revenues may be used is unemployment insurance administration.

Fraudulent claims for benefits

Currently, if a person makes a false statement or representation in order to obtain benefits that are payable to another person, DWD may file a civil lawsuit to recover the amount of the benefits improperly paid. In addition, the person making the fraudulent statement or representation is guilty of a misdemeanor and is subject to a fine of not less than $100 nor more than $500 or imprisonment for not more than 90 days, or both, for each false statement or misrepresentation.

This bill provides, in addition, that DWD may, after an investigation, issue an administrative determination requiring the repayment of any benefits that were obtained in the name of another person and that were obtained by means of a false statement or representation and may also require the offender to pay an additional amount equal to not more than 50% of the amount of the benefits obtained. The determination may be appealed.

Grace period for reimbursements

Currently, public employers and nonprofit organizations may elect, in lieu of paying contributions to the unemployment reserve fund, to reimburse the fund for any benefit payments made by the fund that are chargeable to these employers. Any reimbursement is due not later than 20 days after DWD mails a bill to an employer for the reimbursement. This bill provides if DWD receives any such reimbursement by the last day of the month in which that 20th day occurs, the employer making the reimbursement is not liable for any interest or penalty.

Reissuance of voided benefit checks

Currently, if an unemployment insurance benefit check is not presented for payment within one year after its date of issue, the amount of the check is credited to the unemployment reserve fund and a replacement check may be issued within one year after the date on which the check becomes void.

This bill provides, instead, that, if an unemployment insurance benefit check is not presented for payment within one year after its date of issue, the amount of the check is credited to the unemployment reserve fund. The bill also provides that a replacement check may be issued if the employe to whom the original check was payable makes application therefor within six years after the date of issue of the original check. The change is retroactive to checks issued on or after January 1, 1995.

Use of federal employment security moneys

Currently, federal moneys received by this state under the federal Reed Act of 1954 may be used to pay benefits or for employment security administration, including unemployment insurance, the public employment service and related statistical operations. This bill provides, in accordance with federal law, that the moneys allocated to this state for federal fiscal years 2000, 2001 and 2002 may only be used for unemployment insurance administration.

Charging of certain improperly paid benefits

Currently, when DWD pays benefits to an employe improperly due to a departmental error, the account of the employer is not charged for the benefits. This bill removes conflicting language in current law to clarify that if the employer is subject to a requirement to pay contributions to the unemployment reserve fund, the cost of any benefits that are improperly paid to an employe of the employer and that are not recovered from that employe is charged to the balancing account of the unemployment reserve fund. The bill also clarifies that if benefits are erroneously paid to an employe due to the fault of an employer, the cost of the benefits is charged to the employer's account rather than the balancing account regardless of whether the benefits may have been paid as a result of a departmental error.

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:

SB255, s. 1 Section 1. 20.445 (1) (gd) of the statutes, as affected by 1997 Wisconsin Acts 27, 39 and 252, is amended to read:

SB255,9,13 20.445 (1) (gd) Unemployment interest and penalty payments. From the moneys received as interest and penalties collected under ss. 108.04 (11) (c) and (cm) and 108.22, assessments under s. 108.19 (1m) and forfeitures under s. 103.05 (5), all moneys not appropriated under. pars. (ge), (gf) and (gg) and all moneys transferred to this appropriation account from the appropriation account under par. (gh) for the payment of benefits specified in s. 108.07 (5) and 1987 Wisconsin Act 38, section 132 (1) (c), for the payment of interest to employers under s. 108.17 (3m), for the payment of interest due on advances from the federal unemployment account under title XII of the social security act to the unemployment reserve fund, and for payments made to the unemployment reserve fund to obtain a lower interest rate or deferral of interest payments on these advances, except as otherwise provided in s. 108.20.

SB255, s. 2 Section 2. 20.445 (1) (ge) of the statutes is amended to read:

SB255,9,18 20.445 (1) (ge) Unemployment reserve fund research. From the moneys received as interest and penalties collected under ss. 108.04 (11) (c) and (cm) and 108.22, the amounts in the schedule for research relating to the current and anticipated condition of the unemployment reserve fund under s. 108.14 (6).

SB255, s. 3 Section 3. 20.445 (1) (gf) of the statutes is amended to read:

SB255,9,25 20.445 (1) (gf) Employment security Unemployment insurance administration. From the moneys received as interest and penalties collected under ss. 108.04 (11) (c) and (cm) and (13) (c) and 108.22, the amounts in the schedule for the administration of employment service programs and unemployment insurance programs under ch. 108 and s. 106.09 and federal or state unemployment insurance programs authorized by the governor under s. 16.54; and for payments to satisfy any federal audit exception concerning a payment from the unemployment reserve fund or any federal aid disallowance involving the unemployment insurance program.

SB255, s. 4 Section 4. 20.445 (1) (gg) of the statutes is amended to read:

SB255,10,8 20.445 (1) (gg) (title) Unemployment information technology systems tax and accounting system; 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).

SB255, s. 5 Section 5. 20.445 (1) (gh) (title) of the statutes is amended to read:

SB255,10,11 20.445 (1) (gh) (title) Unemployment information technology systems tax and accounting system; assessments.

SB255, s. 6 Section 6. 20.445 (1) (n) of the statutes is amended to read:

SB255,10,22 20.445 (1) (n) Unemployment administration; federal moneys. All federal moneys received for the employment service under s. 106.09 (4) to (6), for the administration of unemployment insurance or for the performance of the department's functions under ch. 108, and for its other efforts to regularize employment, except moneys appropriated under par. (nc), to pay the compensation and expenses of appeal tribunals and of councils and to pay allowances stimulating education during unemployment, to be used for such purposes except as provided in s. 108.161 (3e), and to transfer to 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) .

SB255, s. 7 Section 7. 20.445 (1) (nb) of the statutes is amended to read:

SB255,11,11 20.445 (1) (nb) (title) Unemployment information technology systems tax and accounting system; federal moneys. 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). 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). No moneys may be encumbered from this appropriation account after the beginning of the 3rd 12-month period beginning after May 21, 1998.

SB255, s. 8 Section 8. 20.445 (1) (nc) of the statutes is created to read:

SB255,11,17 20.445 (1) (nc) Unemployment insurance administration; special federal moneys. All moneys received from the federal government under section 903 of the federal Social Security Act, as amended, as authorized by the governor under s. 16.54, for federal fiscal years 2000, 2001 and 2002, to be used for administration of unemployment insurance.

SB255, s. 9 Section 9. 108.02 (4) of the statutes is amended to read:

SB255,11,20 108.02 (4) Base period. An employe's "base "Base period" means the period that is used to compute an employe's benefit rights under s. 108.06 consisting of the:

SB255,11,23 (a) The first 4 of the 5 most recently completed quarters preceding the employe's benefit year, which is used to compute his or her benefit rights for that year under s. 108.06.; or

SB255, s. 10 Section 10. 108.02 (4) (b) of the statutes is created to read:

SB255,12,3 108.02 (4) (b) If an employe does not qualify to receive any benefits using the period described in par. (a), the period consisting of the 4 most recently completed quarters preceding the employe's benefit year.

SB255, s. 11 Section 11. 108.02 (12) (a) of the statutes is amended to read:

SB255,12,7 108.02 (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), (bm), (c) or (d).

SB255, s. 12 Section 12. 108.02 (12) (b) (intro.) of the statutes is amended to read:

SB255,12,16 108.02 (12) (b) (intro.) Paragraph 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:

SB255, s. 13 Section 13. 108.02 (12) (bm) of the statutes is created to read:

SB255,12,24 108.02 (12) (bm) 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:

SB255,13,2 1. The individual holds or has applied for an identification number with the federal internal revenue service.

SB255,13,6 2. The individual has filed business or self-employment income tax returns with the federal internal revenue service based on such services in the previous year or, in the case of a new business, in the year in which such services were first performed.

SB255,13,8 3. The individual maintains a separate business with his or her own office, equipment, materials and other facilities.

SB255,13,11 4. The individual operates under contracts to perform specific services for specific amounts of money and under which the individual controls the means and methods of performing such services.

SB255,13,13 5. The individual incurs the main expenses related to the services that he or she performs under contract.

SB255,13,16 6. 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.

SB255,13,19 7. 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.

SB255,13,21 8. The individual may realize a profit or suffer a loss under contracts to perform such services.