SB649: Bill Text

LRB-4586/1

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2009 - 2010 LEGISLATURE

2009 Senate BILL 649

March 26, 2010 - Introduced by Senator Coggs, cosponsored by Representative Sinicki, by request of Department of Workforce Development. Referred to Committee on Labor, Elections and Urban Affairs.

SB649,2,4 An Act to repeal 108.02 (12) (b), 108.04 (2) (d), 108.04 (16) (c), 108.05 (7) (d) 2. b., 108.06 (7) (b) 5., 108.152 (1) (c) and 108.152 (3); to renumber 108.02 (12) (bm) 5. and 108.02 (12) (bm) 8. and 9.; to renumber and amend 108.02 (12) (bm) 3. and 4., 108.02 (12) (bm) 6. and 7., 108.02 (12) (bm) 10., 108.05 (7) (d) 1. b., 108.22 (8) (b) 1. and 108.24 (3); to consolidate, renumber and amend 108.05 (7) (d) 1. (intro.) and a. and 108.05 (7) (d) 2. (intro.) and a.; to amend 108.02 (12) (a), 108.02 (12) (bm) (intro.), 108.02 (15) (f) 3., 108.02 (15) (f) 6., 108.02 (15) (g) 1., 108.02 (21e) (intro.), 108.04 (1) (g) (intro.), 108.04 (2) (a) (intro.), 108.04 (7) (k), 108.04 (7) (o), 108.04 (11) (be) (intro.), 108.04 (16) (b), 108.04 (16) (d), 108.04 (16) (e), 108.05 (3) (b) 1. a., b. and c., 108.06 (7) (a) 2. and (b) 4., 108.06 (7) (d), 108.06 (7) (h) and (j), 108.09 (2) (bm), 108.09 (4s), 108.10 (4), 108.152 (6) (title), 108.152 (6) (a) (intro.), 108.152 (6) (a) 2., 108.16 (10), 108.18 (7) (a), 108.18 (7) (b), 108.18 (7) (d), 108.18 (7) (h), 108.19 (1m) and 108.20 (3); to repeal and recreate 108.02 (12) (bm) 1. and 2. and 108.04 (16) (a); and to create 108.02 (15) (km), 108.02 (15s), 108.02 (20m), 108.04 (16) (am), 108.04 (16) (f), 108.05 (3) (e), 108.16 (6) (L) and (m), 108.16 (6m) (g), 108.18 (7) (i), 108.22 (8) (b) 1. c. and d. and 108.24 (3) (a) 4. of the statutes; relating to: various changes in the unemployment insurance law and providing a penalty.

Analysis by the Legislative Reference Bureau

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

Benefit changes

Approved training and extended 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 permits a claimant who has exhausted all rights to benefits and is enrolled in an approved training course that meets certain qualifications to potentially qualify to receive up to 26 weeks of additional benefits while enrolled in that training ("extended training"). This bill makes several changes to the provisions governing approved training and extended training. The bill:

1. Provides that a claimant is not subject to certain disqualifications or requalifying requirements that otherwise apply to claimants who leave or refuse certain work after leaving certain temporary work, or after leaving on-the-job training that fails to meet certain federal requirements within 30 days after beginning that training.

2. Prohibits benefit reductions or disqualifications because a claimant is enrolled in certain federally funded training.

3. Broadens the types of training that may be considered approved training (thus precluding benefit denial or reduction during enrollment) to include certain recently created programs administered by the Department of Workforce Development (DWD) and certain training under the federal Workforce Investment Act.

4. Provides that benefits for all claimants who are enrolled in approved training (rather than only certain benefits as currently provided) are not charged to the accounts of individual employers (thus potentially affecting employer contribution (tax) rates) but are instead charged to the unemployment reserve fund's balancing account (a pooled account funded by all employers who pay contributions to the fund).

5. Eliminates a distinction between claimants who are totally unemployed and claimants who are partially unemployed in applying certain general qualifying requirements, one effect of which is to require DWD to determine whether a claimant is enrolled in approved training before determining whether a claimant meets certain other requirements to receive benefits, thereby enabling more prompt payment of benefits to enrollees.

6. Eliminates a requirement that a claimant must be separated from employment in a declining occupation or involuntarily separated as a result of a permanent reduction in the operations of his or her employer in order to receive extended training benefits.

Disqualification for full-time work

Currently, if a claimant receives wages or certain other amounts treated as wages from an employer who paid at least 80 percent of the claimant's wages in his or her base period (period preceding a claim during which benefit rights accrue) for any week, the claimant is not eligible to receive benefits for that week if the claimant works for at least 35 hours for that employer in that week and receives pay at not less than the rate of pay that the claimant received during the calendar quarter in his or her base period in which the claimant received his or her highest wages, or the claimant receives certain other payments from that employer for that week that alone or in combination with any paid wages equal at least the pay the claimant would have received for 35 hours of work.

This bill provides that a claimant is subject to this disqualifier for any week if the claimant receives wages or certain other amounts treated as wages from such an employer for full-time work for that week. The bill defines "full-time work" as work performed for 32 or more hours per week.

Employee status

Currently, in order to be eligible to claim benefits, an individual must, in addition to other requirements, be an "employee" as defined in the UI law. Generally, an "employee" is an individual who performs services for an employer in employment covered by the UI law, whether or not the individual is paid directly by the employer. However, an individual is not an "employee" 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 meet at least seven of ten conditions by contract and in fact concerning the individual's relationship to or direction or control over his or her business or the services that he or she performs.

The bill changes the test for determining employee status, other than for loggers or truckers as noted above and for individuals performing services for governmental or nonprofit employers, so that, instead of meeting at least seven of ten specified conditions by contract and in fact, an excluded individual must, by contract and in fact, perform services free from control or direction and must meet at least six of nine specified conditions. Some of the conditions specified in the bill are the same as those currently provided while others are changed from those currently provided.

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: a) the work is part-time work consisting of not more than 30 hours per week and the employee is otherwise eligible to receive benefits because of the loss of the employee's full-time work and the loss of the full-time work makes it economically unfeasible to continue his or her part-time work; or b) the employee terminates his or her work in one of two or more concurrently held positions at least one of which consists of more than 30 hours per week, if the employee terminates his or her work before receiving notice of termination from a position which consists of more than 30 hours per week.

This bill changes the above exceptions so that an employee may receive benefits without requalifying if, under a), the work from which the employee terminates is part-time work; or, under b), the employee terminates work in one position and the termination occurs prior to receiving notice of termination from another position that is full-time work. The bill defines "full-time work" as work consisting of 32 or more hours per week and "part-time work" as work consisting of less than 32 hours per week.

Benefit reductions due to certain pension payments

Currently, with certain exceptions and limitations, if a claimant receives a pension, retirement, annuity, or other similar payment based on the previous work of the claimant for a given week, DWD must reduce the claimant's UI benefits otherwise payable for that week, but not below zero, by an amount equal to not more than the amount of the payment received for that week. With certain exceptions, if a payment is actually or constructively received on other than a periodic basis, DWD allocates the payment to specific weeks for purposes of the required reduction using the claimant's most recent full weekly wage rate or another reasonable basis. The actual amount of the reduction depends upon the facts of the particular situation.

This bill provides that when a claimant actually or constructively receives a pension, retirement, annuity, or similar payment based on the previous work of the claimant on other than a periodic basis, DWD must allocate the entire payment to the week in which it is received if DWD provides due notice of the proposed allocation to the claimant before the allocation is made. In most cases, the change reduces the amount of the reduction currently required.

Treatment of bonus and profit-sharing payments

Currently, with certain exceptions, if a claimant earns wages in a given week in employment covered by the UI 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. Whether a bonus or profit-sharing payment is earned in the same week in which it is paid depends upon the particular facts of a given situation.

This bill provides that for purposes of benefits to which a claimant may be entitled for partial unemployment, a bonus or profit-sharing payment is always considered to be earned in the week in which the bonus or payment is paid by the claimant's employer.

Tax changes

Voluntary contributions after catastrophic loss

Currently, with certain exceptions and limitations, an employer may make voluntary contribution (tax) payments in any year that may, in some cases, result in a lower contribution rate than would otherwise have applied to the employer in the succeeding year. However, no employer may, by means of a voluntary contribution, reduce the employer's contribution rate to a rate more than one rate lower than the rate that would have applied to the employer in the applicable statutory rate schedule had the voluntary contribution not been made. This bill provides that, notwithstanding this limitation, an employer that suffers physical damage to its business caused by a catastrophic event for which the employer was not primarily responsible, and incurs benefit charges to its UI account for layoffs due to that damage may, by means of a voluntary contribution, increase the employer's reserve percentage (net reserve of the employer's account, stated as a percentage of the employer's taxable payroll, that is used to compute the employer's contribution rate) to no greater than the reserve percentage that would have applied to the employer had the damage not caused the employer to lay off its employees.

Deadline for making voluntary contributions

Currently, an employer may pay contributions (taxes) before they become due. If an employer makes a voluntary contribution by November 30 of any year, it is credited to the employer's account as of June 30 of that year and it may therefore have the effect of lowering the employer's contribution rate for the succeeding year. Currently, a voluntary contribution is timely if it is received by DWD no later than its due date or, if mailed, is either postmarked by that date or is received by DWD no later than three days after that date.

This bill provides that to be considered timely, a voluntary contribution must be received by DWD no later than its due date.

Other changes

Coverage of personal care services performed for family members

Currently, individuals providing personal care or companionship services to ill or disabled individuals are generally covered under the UI law. This bill eliminates coverage for personal care or companionship services performed by an individual for an ill or disabled family member of the individual who directly employs the individual providing the services. Under the bill, "family member" means a spouse, parent, child, grandparent, or grandchild of an individual, by blood or adoption, or an individual's step parent, step child, or domestic partner. Under the bill, a claimant is no longer eligible to claim benefits based upon the performance of these services and an individual who employs a family member to perform these services is no longer subject to a state contribution requirement (requirement to pay state taxes) based upon the performance of these services.

Use of surplus assessment revenues

Currently, when this state obtains a loan from the federal government to maintain the solvency of the unemployment reserve fund, from which benefits are paid, most employers must pay an assessment to cover the cost of any interest payments due on the loan. If the amounts collected from the assessment are more than is needed to pay the interest due, the amounts are retained in the administrative account of the fund, and may be used for a variety of purposes, including administration of the UI program, research relating to the condition of the fund, and the payment of certain benefits.

This bill provides instead that excess revenues shall be credited to the balancing account of the fund, which is used to pay benefits that are not chargeable to any employer's account. The effect is to enhance the balance of the fund, which decreases the need for future borrowing and assessments to maintain the fund's solvency.

Assurance requirement for Indian tribes

Currently, Indian tribes and tribal units are covered employers for UI purposes and their employees are potentially eligible to receive UI benefits. If an employee of an Indian tribe or tribal unit files a valid benefit claim, the cost of the benefits is charged to the claimant's employer. In most cases, employers must pay contributions (taxes) to the unemployment insurance fund to finance the cost of benefit payments. These contributions are payable regardless of whether benefits are charged to an employer's account. However, governmental and nonprofit employers and Indian tribes are permitted to reimburse the fund for the cost of benefits charged to their accounts after a claimant claims benefits. Currently, if an Indian tribe elects to finance its benefits on a reimbursement basis, it must provide to DWD assurance of reimbursement such as a surety bond in an amount specified by law. This bill eliminates the requirement to provide assurance of reimbursement. If benefit costs for a claimant are not reimbursed, payments to the claimant are not immediately affected. The cost of benefits is charged to the fund's balancing account or an account into which UI interest and penalty revenues are credited. If a delinquency is not resolved, an Indian tribe's authorization to use reimbursement financing is terminated and DWD may terminate the tribe's coverage under the UI law.

Unlawful discrimination and retaliation

Currently, it is unlawful for any person to: a) make a deduction from the wages of an employee to finance an employer's actual or potential UI costs; b) knowingly fail to furnish to an employee any required UI information; c) attempt to induce an employee not to claim UI benefits or to waive any other right under the UI law; or d) maintain a rehiring policy that discriminates against employees who claim benefits. Violators are guilty of a misdemeanor and are subject to a fine of not less than $100 nor more than $500 or imprisoned for not more than 90 days or both for each occurrence.

This bill also makes it unlawful to: a) attempt to induce an employee not to claim benefits or waive any right under the UI law by threatening to terminate the employee; b) attempt to induce an employee from participating in a UI audit or investigation, or testifying in a UI hearing, or c) discriminate against an individual because of the individual's participation in a UI audit or investigation, or testifying in a UI hearing or exercising any other right under the UI law. The bill also increases the maximum fine for all current and proposed offenses to $1,000 for each occurrence.

Recovery of UI liabilities by offset and setoff

Currently, if benefits are erroneously paid to an individual, the issue may be adjudicated administratively, subject to appeal through the court system. DWD may then collect the amount of the overpayment set forth in an administrative decision by deducting that amount from benefits otherwise payable to the individual. DWD may also levy against the available assets of any individual or employer who is determined to be liable to DWD for UI purposes. Currently, with certain exceptions, moneys withdrawn from the unemployment reserve fund may only be used for the payment of benefits.

This bill permits DWD to utilize procedures available under state and federal revenue laws to set off adjudicated UI liabilities against refunds or other payments that may be payable to a liable individual under state law or to offset adjudicated UI liabilities for fraudulent practices against refunds that may be payable to a liable individual under federal tax laws. The bill also permits DWD to pay the administrative expenses of the federal offsets from the unemployment reserve fund. The change initially applies to satisfaction of liabilities outstanding on the day the bill becomes law.

Exclusion of certain tribal employment from coverage

Currently, federal and state law generally provide for UI coverage in employment by Indian tribes. Federal law does not mandate coverage for any of the following types of positions with an Indian tribe: a) members of a legislative body; b) major nontenured policymaking or advisory positions; c) certain part-time policymaking or advisory positions; or d) certain work relief or work training positions.

This bill excludes employment in these positions from coverage under the state UI law unless an employer elects otherwise with DWD's approval. Under the bill, a position as a member of a legislative body is excluded only if the position is elective. Noncoverage means that an employee may not claim benefits based upon this type of employment and the employee's employer is not liable to pay for those benefits.