SB426: Bill Text

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.

Admission of employment data system reports

Currently, the contents of a verified or certified report by a qualified expert presented by a party or DWD at an administrative hearing in a benefit claim case is prima facie evidence of the matter contained in the report if the report is otherwise competent and relevant, subject to rules as DWD prescribes. If a report is accepted as prima facie evidence of the matter contained in the report, it is not necessary to present testimony of the expert who created the report in order to admit the report into evidence.

This bill provides that if DWD maintains a database system consisting of occupational information and employment conditions data and an employee of DWD creates a report from the system, the report also constitutes prima facie evidence as to the matters contained in the report in an administrative hearing on a benefit claim if DWD first provides to the parties an explanation of the system, the parties have an opportunity to review and object to the report, and the report sets forth all information used in creating the report.

Charging of certain benefits for claimants enrolled in approved training

Under current law, if a claimant who is enrolled in employment-related training approved by DWD is paid benefits for which the claimant would otherwise be ineligible because the claimant has terminated his or her work or failed to accept suitable work or recall to work and is unable to work or unavailable for work or has failed to meet work search requirements, the costs of the benefits is 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 the claimant's employer or employers. This bill specifically applies this noncharging procedure only with respect to an employer from which the claimant terminated his or her work or refused to accept a recall to work.

Study of unemployment reserve fund

This bill directs DWD to study the long-term fiscal stability of the unemployment reserve fund. The bill directs DWD to report the results of its study to the Council on Unemployment Insurance no later than July 1, 2007.

Because this bill creates a new crime or revises a penalty for an existing crime, the Joint Review Committee on Criminal Penalties may be requested to prepare a report concerning the proposed penalty and the costs or savings that are likely to result if the bill is enacted.

For further information see the state 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:

SB426, s. 1 Section 1. 20.005 (3) (schedule) of the statutes: at the appropriate place, insert the following amounts for the purposes indicated: - See PDF for table

SB426, s. 2 Section 2. 20.445 (1) (gd) of the statutes is amended to read:

SB426,11,12 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 (gi), 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.

SB426, s. 3 Section 3. 20.445 (1) (gi) of the statutes is created to read:

SB426,11,17 20.445 (1) (gi) Unemployment insurance law enforcement. 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 of assisting the department of justice in the enforcement of ch. 108.

SB426, s. 4 Section 4. 20.445 (1) (nb) of the statutes is amended to read:

SB426,12,5 20.445 (1) (nb) Unemployment administration; information technology systems; federal moneys. From the moneys received from the federal government under section 903 (d) of the federal Social Security Act, as amended, 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) (d). 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) (d).

SB426, s. 5 Section 5. 20.445 (1) (nc) of the statutes is amended to read:

SB426,12,13 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, for federal fiscal years 2000 and 2001 and the first $2,289,107 $3,289,107 of the moneys received from the federal government under that act for federal fiscal year 2002, as authorized by the governor under s. 16.54, to be used for administration of unemployment insurance. No moneys may be encumbered or expended from this appropriation after September 30, 2007.

SB426, s. 6 Section 6. 20.445 (1) (nd) of the statutes is amended to read:

SB426,13,2 20.445 (1) (nd) Unemployment insurance administration; apprenticeship. From the moneys received from the federal government under section 903 (d) of the federal Social Security Act, as amended, the amounts in the schedule, as authorized by the governor under s. 16.54, to be used for administration by the department of apprenticeship programs under subch. I of ch. 106. 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 this paragraph.

SB426, s. 7 Section 7. 20.445 (1) (ne) of the statutes is amended to read:

SB426,13,14 20.445 (1) (ne) Unemployment administration; bank service costs. From the moneys received by this state under section 903 (d) of the federal Social Security Act, as amended, all moneys transferred from the appropriation account under par. (n) to be used for the payment of the cost of banking services incurred by the unemployment reserve fund. Notwithstanding s. 20.001 (3) (c), 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 this paragraph.

SB426, s. 8 Section 8. 108.02 (12) (a) of the statutes is amended to read:

SB426,13,19 108.02 (12) (a) "Employee" means any individual who is or has been performing services for pay for an employing unit, in an employment, whether or not the individual is paid directly by such the employing unit;, except as provided in par. (b), (bm), (c), (d), (dm) or (dn).

SB426, s. 9 Section 9. 108.02 (12) (dm) of the statutes is amended to read:

SB426,13,23 108.02 (12) (dm) Paragraph (a) does not apply to an individual who owns a business that operates as a sole proprietorship with respect to services the individual performs for that business.

SB426, s. 10 Section 10. 108.02 (12) (dn) of the statutes is amended to read:

SB426,14,3 108.02 (12) (dn) Paragraph (a) does not apply to a partner in a business that operates as a partnership with respect to services the partner performs for that business.

SB426, s. 11 Section 11. 108.02 (15) (j) 5. and 6. of the statutes are amended to read:

SB426,14,9 108.02 (15) (j) 5. In any quarter in the employ of any organization exempt from federal income tax under section 501 (a) of the internal revenue code, other than an organization described in section 401 (a) or 501 (c) (3) of such code, or under section 521 of the internal revenue code, if the remuneration for such service is less than $50; or

SB426,14,16 6. By a nonresident alien for the period that he or she is temporarily present in the United States as a nonimmigrant under 8 USC 1101 (a) (15) (F), (J), (M), or (Q), if the service is performed to carry out the purpose for which the alien is admitted to the United States, as provided in 8 USC 1101 (a) (15) (F), (J), (M), or (Q), or by the spouse or minor child of such an alien if the spouse or child was also admitted to the United States under 8 USC 1101 (a) (15) (F), (J), (M), or (Q) for the same purpose.; or

SB426, s. 12 Section 12. 108.02 (15) (j) 7. of the statutes is created to read:

SB426,14,22 108.02 (15) (j) 7. By an individual who is a participant in the AmeriCorps program in a program that is funded under 42 USC 12581 (a) or (d) (1) or (2), except service performed pursuant to a professional corps program as described in 42 USC 12572 (a) (8) or service performed pursuant to an innovative education award only program under 42 USC 12653 (b).

SB426, s. 13 Section 13. 108.02 (15) (k) 14. of the statutes is repealed.

SB426, s. 14 Section 14. 108.02 (21) (b) of the statutes is amended to read:

SB426,15,5 108.02 (21) (b) Notwithstanding par. (a), except as provided in s. 108.151 (7)_ (a), an employer's payroll includes only the first $10,500 of wages paid by an employer to an individual during a calendar year, including any wages paid for any work covered by the unemployment insurance law of any other state, except as authorized in s. 108.17 (5).

SB426, s. 15 Section 15. 108.02 (21e) (intro.) and (b) of the statutes are amended to read:

SB426,15,12 108.02 (21e) Professional employer organization. (intro.) "Professional employer organization" means any person who contracts to provide the nontemporary, ongoing employee workforce of a client more than one client under a written leasing contract, the majority of whose clients are not under the same ownership, management, or control as the person other than through the terms of the contract, and who under contract and in fact:

SB426,15,14 (b) Sets the rate of pay of the employees, whether or not through negotiations and whether or not the responsibility to set the rate of pay is shared with the client;

SB426, s. 16 Section 16. 108.04 (1) (b) 1. of the statutes is amended to read:

SB426,15,20 108.04 (1) (b) 1. While the employee is unable to work, or unavailable for work, if his or her employment with an employer was suspended by the employee or by the employer or was terminated by the employer because the employee was unable to do, or unavailable for, suitable work otherwise available with the employer , except as provided in par. (c);

SB426, s. 17 Section 17. 108.04 (1) (b) 3. (intro.) of the statutes is amended to read:

SB426,15,24 108.04 (1) (b) 3. While the employee is on family or medical leave under the federal family and medical leave act of 1993 (P.L. 103-3) or s. 103.10, and except as provided in par. (c), until whichever of the following occurs first:

SB426, s. 18 Section 18. 108.04 (1) (c) of the statutes is amended to read:

SB426,16,14 108.04 (1) (c) If a leave of absence under par. (b) 2. or a family or medical leave under par. (b) 3. is granted to an employee for a portion of a week, if an employee is absent for only a portion of the available work in a week due to a suspension under par. (b) 1., or if an employee is absent for only a portion of the available work in a week in which a termination under par. (b) 1. occurs, the employee's eligibility for benefits for that partial week shall be reduced by the amount of wages that the employee could have earned in his or her work had the leave not been granted or had the suspension or termination not occurred. For purposes of this paragraph, the department shall treat the amount the employee would have earned as wages in that work for that week as wages earned by the employee and shall apply the method specified in s. 108.05 (3) (a) to compute the benefits payable to the employee. The department shall estimate the wages that an employee would have earned for a partial week if it is not possible to compute the exact amount of wages that the employee would have earned for that partial week.

SB426, s. 19 Section 19. 108.04 (1) (e) of the statutes is repealed.

SB426, s. 20 Section 20. 108.04 (5) of the statutes is amended to read:

SB426,17,11 108.04 (5) Discharge for misconduct. An Unless sub. (5g) applies, an employee whose work is terminated by an employing unit for misconduct connected with the employee's work is ineligible to receive benefits until 7 weeks have elapsed since the end of the week in which the discharge occurs and the employee earns wages after the week in which the discharge occurs equal to at least 14 times the employee's weekly benefit rate under s. 108.05 (1) in employment or other work covered by the unemployment insurance law of any state or the federal government. For purposes of requalification, the employee's weekly benefit rate shall be that rate which would have been paid had the discharge not occurred. The wages paid to an employee by an employer which terminates employment of the employee for misconduct connected with the employee's employment shall be excluded from the employee's base period wages under s. 108.06 (1) for purposes of benefit entitlement. This subsection does not preclude an employee who has employment with an employer other than the employer which terminated the employee for misconduct from establishing a benefit year using the base period wages excluded under this subsection if the employee qualifies to establish a benefit year under s. 108.06 (2) (a). The department shall charge to the fund's balancing account any benefits otherwise chargeable to the account of an employer that is subject to the contribution requirements under ss. 108.17 and 108.18 from which base period wages are excluded under this subsection.

SB426, s. 21 Section 21. 108.04 (5g) of the statutes is created to read:

SB426,17,23 108.04 (5g) Discharge for failure to notify employer of absenteeism or tardiness. (a) If an employee is discharged for failing to notify his or her employer of absenteeism or tardiness that becomes excessive, and the employer has complied with the requirements of par. (d) with respect to that employee, the employee is ineligible to receive benefits until 6 weeks have elapsed since the end of the week in which the discharge occurs and the employee earns wages after the week in which the discharge occurs equal to at least 6 times the employee's weekly benefit rate under s. 108.05 (1) in employment or other work covered by the unemployment insurance law of any state or the federal government. For purposes of requalification, the employee's weekly benefit rate shall be the rate that would have been paid had the discharge not occurred.

SB426,18,3 (b) For purposes of this subsection, tardiness becomes excessive if an employee is late for 6 or more scheduled workdays in the 12-month period preceding the date of the discharge without providing adequate notice to his or her employer.

SB426,18,7 (c) For purposes of this subsection, absenteeism becomes excessive if an employee is absent for 5 or more scheduled workdays in the 12-month period preceding the date of the discharge without providing adequate notice to his or her employer.

SB426,18,9 (d) 1. The requalifying requirements under par. (a) apply only if the employer has a written policy on notification of tardiness or absences that: