SB426: Bill Text

LRB-3956/1

JTK:wlj:rs

2005 - 2006 LEGISLATURE

2005 Senate BILL 426

November 8, 2005 - Introduced by Senator Zien. Referred to Committee on Judiciary, Corrections and Privacy.

SB426,2,4 An Act to repeal 108.02 (15) (k) 14., 108.04 (1) (e), 108.04 (7) (f) and 108.05 (1) (j) to (m); to renumber 108.22 (1) (ad); to renumber and amend 108.105 and 108.22 (8) (b); to amend 20.445 (1) (gd), 20.445 (1) (nb), 20.445 (1) (nc), 20.445 (1) (nd), 20.445 (1) (ne), 108.02 (12) (a), 108.02 (12) (dm), 108.02 (12) (dn), 108.02 (15) (j) 5. and 6., 108.02 (21) (b), 108.02 (21e) (intro.) and (b), 108.04 (1) (b) 1., 108.04 (1) (b) 3. (intro.), 108.04 (1) (c), 108.04 (5), 108.04 (13) (c), 108.04 (13) (e), 108.04 (16) (b), 108.04 (16) (c) 2., 108.05 (1) (n) (intro.), 108.05 (3) (a), 108.05 (10) (b), 108.068 (2), 108.068 (8), 108.09 (2) (bm), 108.09 (4s), 108.151 (4) (b), 108.16 (6m) (a), 108.16 (8) (e) 1., 108.16 (8) (h), 108.17 (2g), 108.18 (1) (a), 108.18 (2) (d), 108.20 (2m), 108.205 (2), 108.22 (1) (ac), 108.22 (1) (b), 108.22 (1) (c), 108.22 (1m), 108.22 (2), 108.225 (1) (a), 108.225 (20), 108.24 (2) and 165.60; and to create 20.445 (1) (gi), 108.02 (15) (j) 7., 108.04 (5g), 108.04 (13) (g), 108.05 (1) (o) and (p), 108.09 (4n), 108.105 (2), 108.151 (7), 108.151 (8), 108.152 (7), 108.16 (6w) and (6x), 108.16 (8) (em), 108.16 (8) (im), 108.16 (8) (m) to (o), 108.17 (2b), 108.205 (1m), 108.22 (1) (ad) 2., 108.22 (8) (b) 2. and 165.066 of the statutes; relating to: various changes in the unemployment insurance law, authorized positions for the department of justice, making appropriations, and providing penalties.

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 insurance benefit rates for total unemployment range from $49 for an employee who earns wages (or certain other amounts treated as wages) of at least $1,225 during at least one quarter of the employee's base period (period preceding a claim during which benefit rights accrue) to $329 for an employee who earns wages (or certain other amounts treated as wages) of at least $8,225 during any such quarter. This bill adjusts weekly benefit rates for weeks of unemployment beginning on or after January 1, 2006, and before January 7, 2007, to rates ranging from $51 for an employee who earns wages (or certain other amounts treated as wages) of at least $1,275 during at least one quarter of the employee's base period to $341 for an employee who earns wages (or certain other amounts treated as wages) of at least $8,525 during any such quarter; and beginning on or after January 7, 2007, to rates ranging from $53 for an employee who earns wages (or certain other amounts treated as wages) of at least $1,325 during at least one quarter of the employee's base period to $355 for an employee who earns wages (or certain other amounts treated as wages) of at least $8,875 during any such quarter.

Other benefit changes

Failure to provide notification of absenteeism or tardiness

Currently, if an employee is discharged for misconduct connected with his or her work — interpreted by the courts to include only misconduct that evinces willful 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 employee is ineligible to receive benefits until seven weeks have elapsed since the end of the week in which the discharge occurs and the employee earns wages (or certain other amounts treated as wages) after the week in which the discharge occurs equal to at least 14 times the employee's weekly benefit rate in employment covered by the unemployment insurance law of any state or the federal government. In addition, all wages earned with the employer that discharges the employee are excluded in determining the amount of any future benefits to which the employee is entitled.

This bill provides that if an employee is discharged for failing to notify an employer of tardiness or absenteeism that becomes excessive, as defined in the bill, and the employer complies with requirements specified in the bill to provide notice to the employee, the employee is ineligible to receive benefits until six weeks have elapsed since the end of the week in which the discharge occurs, and the employee earns wages (or certain other amounts treated as wages) after the week in which the discharge occurs equal to at least six times the employee's weekly benefit rate in work covered by the unemployment insurance law of any state or the federal government. The disqualification created by the bill applies in lieu of the current law governing eligibility for benefits after discharges in the situations to which the disqualification applies. The provisions apply only to discharges occurring during the four-year period beginning on the first Sunday that follows the 90th day beginning after the day the bill becomes law.

Determination of wages for purposes of partial unemployment benefits

Under current law, with certain exceptions, if a claimant earns wages in a given week in employment covered by the unemployment insurance law, the first $30 of the wages are disregarded and the claimant's weekly benefit payment is reduced by 67 percent of the remaining amount of wages earned. However, any amount that a claimant earns for services performed as a volunteer fire fighter, volunteer emergency medical technician, or volunteer first responder in any week does not reduce the claimant's benefit payment for that week. This bill discontinues the exclusion of amounts earned for volunteer fire fighter, volunteer emergency medical technician, and volunteer first responder services from partial unemployment benefit calculation. The bill also provides that wages earned in work not covered by the unemployment insurance law are included with other wages in calculating benefit reductions for partial unemployment benefits.

Benefit reductions due to certain suspensions, terminations, and leaves

Currently, if an employee is suspended from his or her employment, an employee is terminated by his or her employer because the employee is unable to perform or unavailable for suitable work otherwise available with the employee's employer, or an employee is granted family or medical leave, and the employee is unable to perform work or unavailable for suitable work after the suspension or termination, the employee is ineligible to receive benefits beginning with the week in which the suspension or termination occurs or the leave begins and for so long as the employee remains unable to perform work or unavailable for suitable work. This bill provides instead that an employee who is suspended or terminated due to inability to perform work or unavailability for work or an employee who is granted family or medical leave is ineligible to receive benefits as of the first full week affected by a suspension, termination, or leave. In addition, for any week in which a suspension, termination, or leave occurs after the beginning of the week or any week in which a suspension or leave ends after the beginning of the week, an employee is treated as partially unemployed for purposes of benefit computation. For any week after the week in which a termination occurs, a terminated employee is eligible to receive benefits if the employee is able to perform work and available for suitable work and meets other qualifying requirements.

Self-employment disqualification

Currently, an individual who is self-employed is not eligible for benefits for any week in which the individual has worked at the self-employment unless the individual establishes to the satisfaction of the Department of Workforce Development (DWD) that he or she has made an active and bona fide search for employment. DWD must prescribe work-search requirements by rule, and may waive those requirements under certain conditions. This bill deletes the self-employment disqualification, thereby making individuals who work at their self-employment subject to work-search requirements and waivers on the same basis as other claimants.

Voluntary termination of work

Currently, if an employee voluntarily terminates his or her work with an employer, the employee is generally ineligible to receive benefits until four weeks have elapsed since the end of the week in which the termination occurs and the employee earns wages after the week in which the termination occurs equal to at least four times the employee's weekly benefit rate in employment covered by the unemployment insurance law of any state or the federal government. However, an employee may terminate his or her work and receive benefits without requalifying under this provision if the employee terminates his or her work with good cause attributable to his or her employer. In addition, an employee may voluntarily terminate his or her work and receive benefits without requalifying under this provision if the employee is transferred by his or her employer to work paying less than two-thirds of his or her immediately preceding wage rate with that employer, except that the employee is ineligible to receive benefits for the week of termination and the four next following weeks. This bill deletes the latter exception. Under the bill, if an employee's wages are substantially reduced by his or her employer, the employee may still be able to voluntarily terminate his or her employment and claim benefits without requalifying or waiting, if it is determined that the wage reduction constitutes good cause attributable to the employee's employer.

Employee status

Currently, to be eligible to claim 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 covered by the unemployment insurance law, whether or not the employer directly pays the individual. However, an individual is not an "employee" if the individual owns a business that operates as a sole proprietorship or if the individual is a partner in a business that operates as a partnership. This bill provides that these exclusions apply only with respect to services the individual performs for the sole proprietorship or partnership.

Tax changes

Uncollectible reimbursable benefits

Currently, an employer that is a nonprofit organization may, in lieu of paying regular contributions (taxes) to the unemployment reserve fund, elect to reimburse the fund for the cost of benefits charged to its account. If a nonprofit organization that has elected reimbursement financing fails to reimburse the fund for the cost of benefits charged to its account and DWD is unable to collect the amount due, together with any interest and penalties, the fund must absorb these costs. Employers that elect reimbursement financing do not contribute to the payment of these costs. This bill provides that if, as of June 30 of any year, there is a total of at least $5,000 due from nonprofit organizations for reimbursements of benefits paid on their behalf that DWD has determined to be uncollectible, DWD must assess all employers that are nonprofit organizations and that have elected reimbursement financing, except Indian tribes, for these costs, but shall not assess more than a total of $200,000 in any single year. Under the bill, assessments are applied by DWD to each employer's gross payroll at a rate determined by DWD to be sufficient to reimburse the fund for uncollectible reimbursements paid on behalf of employers that are nonprofit organizations. The bill provides that no assessments are payable based on reimbursements that DWD determined to be uncollectible prior to January 1, 2004.

Treatment of professional employer organizations

Currently, an employer is generally liable for contributions (taxes) or benefit reimbursements based on an individual's employment if the individual is subject to the employer's direction or control over the performance of the individual's services. However, if an individual performs services for a client of a professional employer organization under a contract, the organization is liable for contributions or benefit reimbursements based on those services under certain specified conditions. Currently, a "professional employer organization" is an organization that contracts to provide the nontemporary, ongoing workforce of a client. Under this bill, an organization may qualify as a "professional employer organization" only if it contracts to provide the nontemporary, ongoing workforce of more than one client, and the majority of the organization's clients are not under the same ownership, management, or control as the organization, other than through the terms of the contract.

Other changes

Electronic reporting

Currently, employers must file separate quarterly reports of contributions and wages with DWD. Employer agents that file contribution reports on behalf of 25 or more employers must file the reports using an electronic medium approved by DWD. Employers that employ 100 or more employees must also file quarterly wage reports using an electronic medium approved by DWD. This bill requires each employer of 50 or more employees that does not use an employer agent to file its contribution reports to file those contribution reports electronically using the Internet on a form prescribed by DWD. The bill requires each employer agent that prepares contribution reports on behalf of less than 25 employers to file those reports electronically using the Internet on a form prescribed by DWD. The bill requires all employer agents to file all wage reports electronically in the form prescribed by DWD. The bill also requires employers of 50 or more employees to file wage reports using an electronic medium approved by DWD. In addition, the bill makes an employer that is required to file its contribution reports electronically liable for a penalty of $25 for each report that is not filed electronically in the form prescribed by DWD.

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 (tax) and benefit liability. DWD must treat the transferee as the successor to the transferor if the transferor and transferee are owned or controlled by the same interests. When a transferee is treated as a successor to a transferor, the contribution rates of the transferor and transferee are recomputed effective on January 1 of the year following the transfer. This bill requires DWD to treat the transferee as the successor to the transferor if the transferor and transferee are owned, controlled, or managed by the same interests. The bill also requires recomputation of the transferor's and transferee's contribution rates effective as of the beginning of the first quarter following the date of the transfer. The bill permits DWD to nullify a successorship if it finds that a substantial purpose of a business transfer was to obtain a reduced contribution rate for the transferee. In addition, the bill provides for punitive increases in contribution rates for employers, and creates both civil and criminal misdemeanor penalties for other persons, who knowingly make or attempt to make a false statement or representation to DWD in connection with an investigation to determine whether an employer qualifies to be considered a successor to the transferor of a business.

Coverage of certain employees engaged in food processing

Currently, an employee who is engaged in the processing of fresh fruits or vegetables is not entitled to receive benefits based upon that employment within the active processing season for the fruit or vegetable being processed, as defined by rule of DWD, unless 1) the employee earns sufficient wages to qualify for benefits based solely on work performed for the processing employer; or 2) in the four most recently completed quarters preceding the week in which the employee begins work for the processing employer, the employee earned at least $200 for work covered by the unemployment insurance law of any state or the federal government that was performed for another employer. However, employers that provide food processing services are subject to contribution requirements (the requirement to pay taxes) based upon these services. This bill deletes this coverage exclusion. Under the bill, claimants are eligible to claim benefits based upon the performance of food processing services.

Coverage of certain AmeriCorps employees

Currently, employees performing services for the federal AmeriCorps program are generally covered under the unemployment insurance law. This bill eliminates coverage for those services when the services are funded under certain special federal grants to governmental, nonprofit, or educational entities, except for services performed as a part of a professional corps program in which a public or private nonprofit employer pays the entire salaries of the employees or services performed under an education award program established administratively by the federal government. Under the bill, employers that provide these services are no longer subject to contribution or reimbursement requirements based upon these services, and claimants are no longer eligible to claim benefits based upon the performance of these services.

Failure of employers to provide information

Currently, if benefits are erroneously paid because an employer fails to provide correct and complete information on a report to DWD, any benefits that DWD recovers do not affect charges to the employer's account for the cost of those benefits. The bill provides, in addition, that during the period beginning on January 1, 2006, and ending on June 28, 2008, if benefits are erroneously paid because an employer fails to provide correct and complete information requested by DWD during a fact-finding investigation, but the employer later provides the requested information, then charges to the employer's account for the cost of benefits paid before the end of the week in which a redetermination or a decision of an appeal tribunal (hearing examiner) is issued regarding the matter are not affected by the redetermination or decision unless an appeal tribunal, the labor and industry review commission, or a court finds that the employer had good cause for failing to provide the information.

Suspension of agents

Currently, DWD may suspend the privilege of any agent to appear before DWD at hearings under the unemployment insurance law for a specified period if DWD finds that the agent has engaged in an act of fraud or misrepresentation, has repeatedly failed to comply with rules of DWD, or has engaged in solicitation of a claimant solely for the purpose of appearing at a hearing as the claimant's representative for pay. This bill permits DWD also to suspend the privilege of an agent to act as an employer's representative under the unemployment insurance law for up to one year if, during any 12-month period, in 5 percent or more of all hearings held in which employers represented by the agent are appellants there is a final decision finding that the employer represented by the agent failed to provide correct and complete information requested by DWD during a fact-finding investigation and there is no finding that the employer had good cause for that failure.

Issuance of warrants against certain individuals

Currently, under certain conditions, an individual who holds at least 20 percent of the ownership interest in a corporation or limited liability company may be found to be personally liable for unemployment insurance liabilities of the corporation or company. Currently, if an employer has delinquent unemployment insurance liabilities, DWD may issue a warrant and file it with the clerk of circuit court for any county where real or personal property of the employer is found. The warrant constitutes a lien upon the property and is subject to execution through sale of the property. This bill provides that DWD may issue a warrant for the collection of any unemployment insurance liabilities for which an individual is found to be personally liable.

Unemployment insurance law enforcement

This bill provides funding for 0.5 FTE assistant attorney general position in the Department of Justice (DOJ), funded from revenues received by DWD as interest and penalties for violations of the unemployment insurance law, to assist in the investigation and prosecution of noncompliance with the unemployment insurance law. The bill also authorizes DOJ to prosecute violations of the unemployment insurance law. Currently, the law is enforced by DWD and the district attorneys.

Administration funding

Currently, the federal government provides regular grants to this state for the purpose of financing the cost of unemployment insurance administration. In addition, the federal government provides special grants to this state that may be used for the purpose of unemployment insurance administration, for the payment of unemployment insurance benefits, or for certain other purposes.

Currently, only the first $2,389,107 of the moneys in a special grant for federal fiscal year 2002 may be used for unemployment insurance administration. This bill permits an additional $1,000,000 of the moneys received in the special grant for federal fiscal year 2002 to be used for unemployment insurance administration. The bill further provides that none of the moneys in any special federal grant for federal fiscal years 2000, 2001, or 2002 may be encumbered or expended after September 30, 2007. The changes potentially increase the liability of employers to finance unemployment insurance benefits through contributions (taxes).

Use of special federal grants

Currently, from the special grants received by this state from the federal government for unemployment insurance purposes, special sum certain appropriations are made for information technology systems development, the apprenticeship program, and payment of bank service costs. If the treasurer of the unemployment reserve fund determines that these moneys are more than sufficient for these purposes, the treasurer must transfer any excess moneys in these appropriation accounts to the main account to which federal unemployment insurance revenues are credited. This bill eliminates the requirement for the treasurer to make these transfers.

Treatment of limited liability companies

Currently, DWD treats a limited liability company as a corporation if the company files an election with the Internal Revenue Service to be so treated for federal tax purposes and files proof with DWD that the Internal Revenue Service has agreed to so treat the company. The treatment may affect the taxation of the wages paid to principal officers of the company and their eligibility for benefits. For benefit purposes, a change is effective on the same date that the Internal Revenue Service agrees to treat the company as a corporation or the date that proof of such treatment is filed with DWD, whichever is later. Under this bill, a change applies to benefit years (periods during which benefits are potentially payable) in existence on or beginning on or after the date that the Internal Revenue Service treats the company as a corporation for federal tax purposes if the benefit year to which the treatment is to be applied has not ended on the date that DWD first receives notice of a benefit eligibility issue that relates to treatment of that limited liability company. The bill also makes a corresponding change to the treatment of a limited liability company that is treated as a corporation if the company elects, instead, to be treated as a partnership or sole proprietorship and the company files the appropriate election and proof of federal treatment.

Administrative levy fees

Currently, DWD may proceed against any third party that has in its possession property that is subject to levy for payment of delinquent contributions or penalties administratively assessed by DWD, or for repayment of benefit overpayments. The third party may deduct and retain a fee of $5 from the amount collected in payment of the fee. This bill entitles a third party to collect and retain a levy fee of $5 for each levy in which a debt is satisfied by means of a single payment and $15 for each levy in which a debt is satisfied by means of more than one payment. Under the bill, the fee is payable from the property levied against and is in addition to the amount of the levy.

Enforcement of assessments against imposters

Currently, if any person makes a false statement or representation 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. One of the ways by which DWD may collect such an assessment is to offset the amount of the assessment against any benefits that would otherwise be payable to the person. This process is called recoupment. This bill deletes the authority of DWD to collect these assessments by means of recoupment.

Wage reports by nonprofit organizations and Indian tribes

Currently, all employers except nonprofit organizations and Indian tribes are required to submit periodic reports to DWD containing certain employment and wage information. This bill applies the same requirement to nonprofit organizations and Indian tribes.