November 13, 2003 - Introduced by
Committee on Labor. Referred to Committee
on Labor.
AB668,2,6
1An Act to repeal 108.04 (1) (g) 1L., 108.16 (8) (c) 4. and 108.16 (8) (e) 4.;
to
2renumber 108.225 (16) (b);
to renumber and amend 108.04 (2) (a) 3., 108.225
3(16) (intro.), 108.225 (16) (a) and 108.225 (16) (c);
to amend 20.445 (1) (gg),
420.445 (1) (gh), 20.445 (1) (n), 20.445 (1) (nb), 20.445 (1) (nd), 108.02 (12) (a),
5108.02 (12) (b) (intro.), 108.02 (12) (bm) (intro.), 108.02 (15) (L), 108.02 (15m)
6(a) and (b), 108.025 (title) and (1), 108.025 (2) and (6), 108.04 (1) (g) 1., 108.04
7(1) (g) 2. and 3., 108.04 (1) (gm) 1., 2., 3. and 4. (intro.), 108.04 (7) (h), 108.04 (7)
8(r), 108.04 (11) (cm), 108.04 (16) (a) (intro.), 108.04 (17) (a) 1. and 2., (b) 1. and
92., (c) 1. and 2., (d), (e), (f), (g), (h), (i) and (k) (intro.), 108.05 (7) (a) 1., 108.05
10(7) (b), 108.05 (7) (c), 108.05 (7) (d) 1. (intro.), 108.05 (7) (f) (intro.), 108.09 (4)
11(c), 108.14 (8s) (a) and (b), 108.16 (3) (a), 108.16 (6m) (a), 108.16 (6m) (e), 108.16
12(8) (b) (intro.), 108.16 (8) (b) 2., 108.16 (8) (f), 108.161 (4) (c), 108.161 (8), 108.162
13(3), 108.19 (1e) (a) and (d), 108.22 (2) (b), 108.22 (8) (b), 108.225 (1) (b) and
14108.225 (15);
to repeal and recreate 108.04 (16) (a) 1. to 4. and 108.04 (16) (b)
1and (c);
to create 20.445 (1) (ne), 108.02 (6m), 108.02 (12) (dm) and (dn), 108.02
2(20r), 108.02 (25s), 108.025 (1) (b), 108.04 (2) (a) 3. a. to c., 108.04 (16) (a) 5.,
3108.04 (16) (d) and (e), 108.05 (7) (cm), 108.068, 108.16 (12) and 108.225 (16)
4(am) of the statutes; and
to affect 2001 Wisconsin Act 35, section
72 (2) (a) 2.
5and 3.;
relating to: various changes in the unemployment insurance law,
6granting rule-making authority, and making appropriations.
Analysis by the Legislative Reference Bureau
This bill makes various changes in the unemployment insurance law.
Significant provisions include:
Benefit changes
Employee status
Currently, in order to be eligible to claim unemployment insurance benefits, an
individual must, in addition to other requirements, be an "employee" as defined in
the unemployment insurance law. Generally, an "employee" 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 "employee" if the individual performs services as
an independent contractor.
Prior to the year 2000, in order to qualify as an independent contractor, an
individual, other than a logger or trucker performing services for an employer other
than a governmental or nonprofit employer, was required to meet at least one of two
conditions (having a federal employer identification number or having filed federal
business or self-employment tax returns based on services performed as an
independent contractor), plus at least six of eight other conditions relating to the
individual's relationship to or control over his or her business or the services that he
or she performs. During the four-year period beginning in the year 2000 (the specific
date varies in different situations), an individual, other than a logger or trucker
performing services for an employer other than a governmental or nonprofit
employer, must meet at least seven of these ten conditions in order to qualify as an
independent contractor.
This bill eliminates the expiration date for the test that is in effect prior to 2004
to determine "employee" status of individuals other than loggers and truckers
performing services for an employer other than a governmental or nonprofit
employer, thus making that test permanent.
Approved training
Currently, benefits may not be denied to an otherwise eligible claimant because
the claimant is enrolled in a vocational training course or a basic education course
that is a prerequisite to such training ("approved training") under certain conditions.
Current law also provides that a claimant is not subject to certain requirements to
requalify for benefits by obtaining new work after voluntarily terminating work or
failing, without good cause, to accept suitable work or recall to work for a former
employer if the failure occurs as a result of participation in a federal training
program or the claimant leaves work to enter or continue in such a program.
This bill expands the types of approved training programs for which a
participating claimant retains benefit eligibility to include certain programs
administered by the Department of Workforce Development (DWD) and job
readiness training. The bill expands the types of disqualifications from and
suspensions of benefits that do not apply as a result of a claimant's participation in
approved training and also specifies certain disqualifications from and suspensions
of benefits that do not apply to a claimant who is enrolled in an approved training
course even if the course does not directly preclude the claimant from adhering to
benefit qualification and requalification requirements. The bill provides that the
current exemptions do not apply to a claimant who fails to provide to DWD a social
security number or who provides a false social security number. The bill also expands
a current benefit disqualification exemption that permits workers obtaining training
under the federal Trade Adjustment Assistance Act to receive benefits during such
training so that the exemption applies, in addition, to dislocated workers.
Currently, if a claimant is paid benefits for which the claimant would otherwise
be ineligible because the claimant terminates his or her work or fails accept suitable
work or recall to work for a former employer as a result of enrollment in approved
training, the costs of benefits that could otherwise be chargeable to the claimant's
employer or employers are charged to the balancing account of the unemployment
reserve fund (which is financed from contributions of all employers that are subject
to a requirement to pay contributions) instead of to the account or accounts of each
of the claimant's employers. This bill provides, in addition, that if a claimant is paid
benefits for which the claimant would otherwise be ineligible as a result of certain
other benefit disqualification exemptions created by the bill because the claimant is
enrolled in certain types of approved training, the costs of those benefits are also
charged to the balancing account.
Search for work
Currently, in order to remain eligible to receive benefits for a week in which a
claimant earns no wages, a claimant is required, among other things, to seek suitable
work within that week.
This bill provides, in addition, that in order to remain eligible to receive benefits
for a week in which a claimant earns no wages, the claimant must conduct a
reasonable search for suitable work within that week, which must include two
actions that constitute a reasonable search as prescribed by rule of DWD. The bill
also provides that the requirement does not apply to an individual if DWD
determines that the individual is currently laid off from work with an employer but
there is a reasonable expectation of reemployment of the individual by that employer.
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
1Section
1. 20.445 (1) (gg) of the statutes is amended to read:
AB668,7,62
20.445
(1) (gg)
Unemployment tax and accounting system information
3technology systems; interest and penalties. From the moneys received as interest and
4penalties collected under ss. 108.04 (11) (c) and (cm) and (13) (c) and 108.22, as a
5continuing appropriation, the amounts in the schedule for the purpose specified in
6s. 108.19 (1e)
(d).
AB668, s. 2
7Section
2. 20.445 (1) (gh) of the statutes is amended to read:
AB668,8,5
120.445
(1) (gh)
Unemployment information technology systems; assessments. 2All moneys received from assessments levied under s. 108.19 (1e)
(a) and
1997
3Wisconsin Act 39, section
164 (2), for the purpose specified in s. 108.19 (1e)
(d). The
4treasurer of the unemployment reserve fund may transfer moneys from this
5appropriation account to the appropriation account under par. (gd).
AB668,9,28
20.445
(1) (n)
Employment assistance and unemployment insurance
9administration; federal moneys. All federal moneys received, as authorized by the
10governor under s. 16.54, for the administration of employment assistance and
11unemployment insurance programs of the department, for the performance of the
12department's other functions under subch. I of ch. 106 and ch. 108, except moneys
13appropriated under par. (nc), and to pay the compensation and expenses of appeal
14tribunals and of employment councils appointed under s. 108.14, to be used for such
15purposes, except as provided in s. 108.161 (3e),
and, from the moneys received by this
16state under section 903 (d) of the federal Social Security Act, as amended, to transfer
17to the appropriation account under par. (nb) an amount determined by the treasurer
18of the unemployment reserve fund not exceeding the lesser of the amount specified
19in s. 108.161 (4) (d) or the amounts in the schedule under par. (nb),
and to transfer
20to the appropriation account under par. (nd) an amount determined by the treasurer
21of the unemployment reserve fund not exceeding the lesser of the amount specified
22in s. 108.161 (4) (d) or the amounts in the schedule under par. (nd)
, and to transfer
23to the appropriation account under par. (ne) an amount determined by the treasurer
24of the unemployment reserve fund not exceeding the lesser of the amount specified
1in s. 108.161 (4) (d) or the amount required to pay for the cost of banking services
2incurred by the unemployment reserve fund.
AB668, s. 4
3Section
4. 20.445 (1) (nb) of the statutes is amended to read:
AB668,9,154
20.445
(1) (nb)
Unemployment information technology systems; federal moneys. 5 As From the moneys received from the federal government under section 903 (d) of
6the federal Social Security Act, as amended, as a continuing appropriation, the
7amounts in the schedule, as authorized by the governor under s. 16.54, for the
8purpose specified in s. 108.19 (1e)
(d). All moneys transferred from par. (n) for this
9purpose shall be credited to this appropriation account. Notwithstanding s. 20.001
10(3) (a), the treasurer of the unemployment reserve fund shall transfer any
11unencumbered balance in this appropriation account that is not needed or available
12to carry out the purpose of this appropriation to the appropriation account under par.
13(n). No moneys may be expended from this appropriation unless the treasurer of the
14unemployment reserve fund determines that such expenditure is currently needed
15for the purpose specified in s. 108.19 (1e)
(d).
AB668,9,2518
20.445
(1) (nd)
Unemployment insurance administration; apprenticeship. 19From the moneys received from the federal government under section 903
(d) of the
20federal Social Security Act, as amended, the amounts in the schedule, as authorized
21by the governor under s. 16.54, to be used for administration by the department of
22apprenticeship programs under subch. I of ch. 106. All moneys transferred from par.
23(n) for this purpose shall be credited to this appropriation account. Notwithstanding
24s. 20.001 (3) (a), the treasurer of the unemployment reserve fund shall transfer any
25unencumbered balance in this appropriation account that is not needed or available
1to carry out the purpose of this appropriation to the appropriation account under par.
2(n). No moneys may be expended from this appropriation unless the treasurer of the
3unemployment reserve fund determines that such expenditure is currently needed
4for the purpose specified in this paragraph.
AB668, s. 6
5Section
6. 20.445 (1) (ne) of the statutes is created to read:
AB668,10,166
20.445
(1) (ne)
Unemployment administration; bank service costs. From the
7moneys received by this state under section 903 (d) of the federal Social Security Act,
8as amended, all moneys transferred from the appropriation account under par. (n)
9to be used for the payment of the cost of banking services incurred by the
10unemployment reserve fund. Notwithstanding s. 20.001 (3) (c), the treasurer of the
11unemployment reserve fund shall transfer any unencumbered balance in this
12appropriation account that is not needed or available to carry out the purpose of this
13appropriation to the appropriation account under par. (n). No moneys may be
14expended from this appropriation unless the treasurer of the unemployment reserve
15fund determines that such expenditure is currently needed for the purpose specified
16in this paragraph.
AB668, s. 7
17Section
7. 108.02 (6m) of the statutes is created to read:
AB668,10,1818
108.02
(6m) Child. "Child" means a natural child, adopted child, or stepchild.
AB668, s. 8
19Section
8. 108.02 (12) (a) of the statutes is amended to read:
AB668,10,2320
108.02
(12) (a) "Employee" means any individual who is or has been performing
21services for an employing unit, in an employment, whether or not the individual is
22paid directly by such employing unit; except as provided in par. (b), (bm), (c)
or, (d)
,
23(dm) or (dn).
AB668, s. 9
24Section
9. 108.02 (12) (b) (intro.) of the statutes is amended to read:
AB668,11,8
1108.02
(12) (b) (intro.) During the period beginning on January 1, 1996, and
2ending on December 31, 1999,
and during the period beginning on January 1, 2004, 3with respect to contribution requirements, and during the period beginning on
4January 1, 1996, and ending on April 1, 2000,
and during the period beginning on
5April 4, 2004, with respect to benefit eligibility, par. (a) does not apply to an individual
6performing services for an employing unit other than a government unit or nonprofit
7organization in a capacity other than as a logger or trucker, if the employing unit
8satisfies the department that:
AB668, s. 10
9Section
10. 108.02 (12) (bm) (intro.) of the statutes is amended to read:
AB668,11,1610
108.02
(12) (bm) (intro.) During the
4-year period beginning on
11January 1, 2000, with respect to contribution requirements, and during the period
12beginning on April 2, 2000,
and ending on April 3, 2004, with respect to benefit
13eligibility, par. (a) does not apply to an individual performing services for an
14employing unit other than a government unit or nonprofit organization in a capacity
15other than as a logger or trucker, if the employing unit satisfies the department that
16the individual meets 7 or more of the following conditions by contract and in fact:
AB668, s. 11
17Section
11. 108.02 (12) (dm) and (dn) of the statutes are created to read:
AB668,11,1918
108.02
(12) (dm) Paragraph (a) does not apply to an individual who owns a
19business that operates as a sole proprietorship.
AB668,11,2120
(dn) Paragraph (a) does not apply to a partner in a business that operates as
21a partnership.
AB668, s. 12
22Section
12. 108.02 (15) (L) of the statutes is amended to read:
AB668,12,223
108.02
(15) (L) "Employment" includes an individual's service for an employer
24organized as a corporation
or a limited liability company that is treated as a
1corporation under this chapter in which the individual is a principal officer and has
2a direct or indirect ownership interest, except as provided in s. 108.025.
AB668, s. 13
3Section
13. 108.02 (15m) (a) and (b) of the statutes are amended to read:
AB668,12,94
108.02
(15m) (a) A corporation
or a limited liability company that is treated
5as a corporation under this chapter in which 50% or more of the ownership interest,
6however designated or evidenced, is or during a claimant's employment was owned
7or controlled, directly or indirectly, by the claimant or by the claimant's spouse or
8child, or by the claimant's parent if the claimant is under the age of 18, or by a
9combination of 2 or more of them; or
AB668,12,1310
(b) Except where par. (a) applies, a corporation
or a limited liability company
11that is treated as a corporation under this chapter in which 25% or more of ownership
12interest, however designated or evidenced, is or during a claimant's employment was
13owned or controlled, directly or indirectly, by the claimant.
AB668, s. 14
14Section
14. 108.02 (20r) of the statutes is created to read:
AB668,12,1515
108.02
(20r) Partnership. "Partnership" has the meaning given in s. 178.03.
AB668, s. 15
16Section
15. 108.02 (25s) of the statutes is created to read:
AB668,12,1817
108.02
(25s) Vocational training. "Vocational training" includes technical,
18skill-based, or job readiness training intended to pursue a career.
AB668, s. 16
19Section
16. 108.025 (title) and (1) of the statutes are amended to read:
AB668,12,21
20108.025 (title)
Coverage of certain corporate officers and limited
21liability company members.
AB668,12,22
22(1) In this section, "principal officer" means
an: