LRB-4497/1
MED&AJM:all
2015 - 2016 LEGISLATURE
February 1, 2016 - Introduced by Senator Nass, cosponsored by Representative
Knodl, by request of Department of Workforce Development. Referred to
Committee on Labor and Government Reform.
SB684,2,11
1An Act to repeal 102.07 (8) (d), 108.02 (24g), 108.04 (8) (e), 108.05 (1) (q), 108.05
2(1) (r) (figure), 108.05 (2), 108.05 (2m), 108.09 (2) (cm), 108.14 (27) and 111.327;
3to renumber and amend 108.04 (8) (d), 108.04 (11) (g), 108.04 (12) (f) 1.,
4108.04 (12) (f) 2., 108.09 (7) (d), 108.151 (3) (b) and 108.19 (1s) (a);
to amend
5108.02 (13) (k), 108.02 (21) (b), 108.04 (1) (bm), 108.04 (2) (h), 108.04 (7) (c),
6108.04 (7) (e), 108.04 (7) (h), 108.04 (8) (c), 108.04 (12) (e), 108.04 (13) (d) 3.
7(intro.) and a., 108.04 (13) (d) 4. (intro.) and a., 108.04 (16) (b), 108.05 (1) (r),
8108.09 (2) (a), 108.09 (2) (d), 108.09 (2r), 108.09 (4) (c), 108.09 (4) (d) 1. and 2.,
9108.09 (4) (e), 108.09 (4) (f) 1., 108.09 (4) (f) 2. (intro.), 108.09 (4) (f) 3., 108.09
10(4o), 108.09 (5) (b), 108.09 (5) (d), 108.09 (6) (a), 108.09 (6) (b), 108.09 (6) (c),
11108.09 (6) (d), 108.09 (7) (a) and (b), 108.095 (2), 108.095 (3), 108.095 (7), 108.10
12(1), 108.10 (2), 108.10 (4), 108.10 (6), 108.14 (8n) (e), 108.141 (3g) (a) 3. (intro.),
13108.141 (4), 108.141 (7) (a), 108.151 (4) (b), 108.152 (6) (a) (intro.), 108.16 (6) (g),
14108.16 (7m), 108.16 (10), 108.18 (7) (a) 1., 108.18 (7) (h), 108.18 (9c), 108.19
1(1m), 108.22 (1) (b), 108.22 (1) (c), 108.22 (1m), 108.22 (9), 108.225 (1) (a) and
2108.24 (2m);
to repeal and recreate 108.04 (1) (b), 108.09 (4) (d) 3., 108.09 (5)
3(c) and 108.19 (title);
to create 108.04 (7) (cg), 108.04 (8) (d) 2., 108.04 (8) (dm),
4108.04 (8) (em), 108.04 (11) (g) 2. and 3., 108.04 (12) (f) 1m., 108.04 (12) (f) 2m.,
5108.04 (12) (f) 3. b. to d., 108.04 (13) (d) 4. c., 108.09 (7) (c) to (h), 108.151 (3) (b)
62., 108.155, 108.16 (6m) (i), 108.19 (1f), 108.19 (1s) (a) 2., 108.19 (1s) (a) 3.,
7108.19 (1s) (a) 4. and 108.221 of the statutes; and
to affect 2011 Wisconsin Act
8198, section
4m,
2011 Wisconsin Act 198, section
6m,
2011 Wisconsin Act 198,
9section
37m,
2011 Wisconsin Act 198, section
47m (1) and
2013 Wisconsin Act
1036, section
236m;
relating to: various changes to the unemployment insurance
11law.
Analysis by the Legislative Reference Bureau
This bill makes various changes in the unemployment insurance law, which is
administered by the Department of Workforce Development. Significant changes
include:
Employers, contributions, and finance
Misclassification; assessments and penalties
Under current law, an employer engaged in construction projects or in the
painting or drywall finishing of buildings or other structures who willfully provides
false information to DWD for the purpose of misclassifying or attempting to
misclassify an individual who is an employee of the employer as a nonemployee
under the UI law is subject to a criminal fine of $25,000 for each violation. Similar
penalties apply to such employers who so act with the intent to evade any
requirement of the worker's compensation law or the fair employment law. DWD is
required to promulgate rules defining what constitutes a willful misclassification of
an employee as a nonemployee for purposes of each of these provisions.
This bill does the following with respect to these provisions:
1. Repeals the prohibitions that apply with respect to the worker's
compensation law and the fair employment law, as well as the requirement that
DWD promulgate rules defining what constitutes a willful misclassification of an
employee as a nonemployee for purposes of these provisions.
2. Requires DWD to assess an administrative penalty against such an
employer who knowingly and intentionally provides false information to DWD for
the purpose of misclassifying or attempting to misclassify an individual who is an
employee of the employer as a nonemployee under the UI law. The bill provides for
a penalty of $500 for each employee who is misclassified, not to exceed $7,500 per
incident, and requires DWD to consider certain factors in determining whether an
employer committed a violation.
3. Revises the current prohibition regarding such employers who provide false
information to misclassify an individual under the UI law so that the bill 1) changes
the standard from "willfully" providing such false information to "knowingly and
intentionally" doing so; 2) requires, as an element of the crime, that the employer was
previously assessed a penalty by DWD for providing such false information; and 3)
revises the penalty to be $1,000 for each employee who is misclassified, subject to a
maximum fine of $25,000 for each violation.
In addition, the bill requires DWD to assess an administrative penalty against
such an employer who, through coercion, requires an individual to adopt the status
of a nonemployee in the amount of $1,000 for each individual so coerced, but not to
exceed $10,000 per calendar year.
Program integrity assessment
Currently, all employers that engage employees in work that is covered under
UI, other than governmental, nonprofit, and Indian tribal employers that elect to pay
directly for the cost of benefits, must pay taxes to finance UI benefits. An employer's
contributions are assessed based on the employer's contribution rate and the
employer's solvency rate, each of which varies with the employment stability of the
employer and the solvency of the state's unemployment reserve fund. An employer's
contributions payable as a result of the employer's contribution rate are credited to
the employer's account in the fund, while an employer's contributions payable as a
result of the employer's solvency rate are credited to the fund's balancing account,
which is used to fund benefits not payable from any employer's account.
In addition to these contributions, this bill levies an annual assessment on each
employer that is currently subject to a contribution requirement in the amount of
0.01 percent (or a lower rate if prescribed by DWD) of an employer's taxable payroll
for each year, unless the employer is not required to pay a solvency contribution. An
assessed employer's solvency rate is then reduced by the amount of the assessment
rate. The levy is not effective for any year unless DWD, no later than the November
30 preceding that year, publishes a class 1 notice giving notice that the levy is in effect
for the ensuing year. DWD must consider the balance of the state's unemployment
reserve fund before prescribing the levy, and the secretary of workforce development
must consult with the Council on Unemployment Insurance before DWD prescribes
a levy. Under the bill, assessments are deposited in the unemployment program
integrity fund and must therefore, as provided under current law, be used for
payment of costs associated with program integrity activities.
Transfer of moneys from the unemployment interest payment fund
Under current law, an employer must pay an assessment to the state
unemployment interest payment fund at a rate established by DWD that is sufficient
to pay interest due on advances from the federal government from the federal
unemployment account in the federal unemployment trust fund. Such advances are
made when the state's unemployment reserve fund is depleted. If the assessments
collected are in excess of the amounts needed to pay interest due, DWD must use any
excess to pay interest owed in subsequent years on advances from the federal
unemployment account. However, if DWD determines that additional interest
obligations are unlikely, DWD must transfer the excess to the unemployment reserve
fund's balancing account.
This bill instead provides that DWD must transfer the excess in the state
unemployment interest payment fund to the balancing account, the unemployment
program integrity fund, or both in amounts determined by DWD.
Charging of benefits financed by reimbursable employers in cases of identity
theft
Under current law, UI benefits are financed by employers in one of two ways:
1. Through contribution financing, under which an account in the state's
unemployment reserve fund is maintained for an employer; the employer pays
contributions, which are deposited into that account in the fund; and benefits for
employees of the employer who file claims for UI benefits are generally financed by
that employer's account in the fund. Such employers must additionally pay solvency
contributions, which are credited to the fund's balancing account.
2. Through reimbursement financing, under which an employer reimburses
the fund directly for benefits for employees of the employer who file claims for UI
benefits. Reimbursable financing is available only to public employers, nonprofit
organizations, and Indian tribes. In the case of reimbursement financing, DWD
maintains a reimbursement "employer account" for each employer as a "subaccount"
of the fund's balancing account.
Current law provides that if benefits charged to the account of an employer
subject to contribution financing have been erroneously paid to an employee without
fault by the employer, DWD must, to correct the payment if not otherwise adjusted,
restore the proper amount to the employer's account in the fund and charge that
amount to the fund's balancing account. With respect to employers subject to
reimbursement financing, however, current law does provide for restoring the proper
amount to the employer's account and charging that amount to the fund's balancing
account. These provisions in current law do not distinguish between instances in
which benefit payments are erroneously paid to an employee who received the
payments and instances in which the erroneous payment resulted from a false
statement or representation about an individual's identity (i.e., cases of identity theft
in which a third party, and not the employee, receives the benefit payments).
This bill provides that, with respect to UI benefits financed by an employer
subject to reimbursement financing, if an erroneous payment of UI benefits results
from a false statement or representation about an individual's identity and the
employer was not at fault for the erroneous payment, DWD must restore the proper
amount to the employer's account in the balancing account.
In addition, the bill requires DWD to do all of the following:
1. Set aside $2,000,000 in the fund's balancing account for accounting purposes
and, on an ongoing basis, tally the amounts restored to reimbursable employers'
accounts as provided under the bill and deduct those amounts from the amount set
aside plus any interest calculated thereon.
2. Annually determine the amount remaining of the amount set aside plus
interest and the amount restored to reimbursable employers' accounts as provided
under the bill in the preceding calendar year.
3. Once there is less than $100,000 remaining of the amount set aside plus
interest, begin proportionally assessing reimbursable employers for the total
amount restored to reimbursable employers' accounts as provided under the bill in
the preceding calendar year, subject to certain exceptions as specified in the bill.
DWD may pursue recovery of unpaid assessments as with other amounts.
The bill requires DWD to annually report to the Council on Unemployment
Insurance the amount remaining of the amount set aside and the amount restored
to reimbursable employers' accounts as provided under the bill in the preceding
calendar year.
Personal liability of partners in LLCs and others for UI contributions
Current law allows DWD, in certain circumstances, to hold an individual who
is an officer, employee, member, or manager holding at least 20 percent of the
ownership interest of a corporation or of a limited liability company personally liable
for UI contributions and certain other amounts. This bill adds partners and other
responsible persons to the list of persons who may be held personally liable, and
allows such a person to be held liable if the person has a 20 percent ownership
interest in other forms of business associations, as well as corporations and LLCs.
Repeal of program integrity fund sunset
2013 Wisconsin Act 36 provided for the sunset (repeal) of the establishment of
the program integrity fund and related provisions, effective January 1, 2034.
This bill repeals the sunset of the program integrity fund and related provisions
so that the program integrity fund and related provisions will continue to exist
beyond January 1, 2034.
Fiscal agent for child not an employer
Under current law, a person receiving certain long-term support services
through a county department or aging unit may be provided the services of a fiscal
agent, either from the county department or aging unit or through a fiscal
intermediary with which the county department or aging unit contracts. The fiscal
agent is responsible for complying with the person's duties as an employer under the
UI law. However, current law specifies that, for the purposes of the UI law, a county
department or aging unit that serves as a fiscal agent or contracts with a fiscal
intermediary is not considered an employer as to an individual performing services
for the person receiving those long-term support services.
2015 Wisconsin Act 55 also provides for such fiscal agent services for a child or a child's parent if the child
receives community support services through a county department under the
children's community options program. This bill also excludes from the definition of
employer under the UI law such a county department that serves as a fiscal agent
or that contracts with a fiscal intermediary under the children's community options
program.
Benefits and benefit claims
Failure to accept suitable work when offered; good cause for such failure
Under current law, if a claimant for UI benefits fails, without good cause, to
accept suitable work when offered, the claimant is ineligible to receive benefits until
he or she earns wages after the week in which the failure occurs equal to at least six
times the claimant's weekly UI benefit rate in covered employment. Current law
specifies, for purposes of this provision, that a claimant has good cause for such a
failure to accept suitable work if DWD determines that the failure involved work at
a lower grade of skill or a significantly lower rate of pay than applied to the claimant
on one or more recent jobs, and that the claimant had not yet had a reasonable
opportunity, in view of labor market conditions and the claimant's degree of skill, to
seek a new job substantially in line with the claimant's prior job skill and rate of pay.
This provision specifying what constitutes good cause, however, applies only with
respect to six weeks after the claimant became unemployed. In addition current law
requires DWD to define by rule what constitutes suitable work for claimants, with
the rule specifying different levels of suitable work based upon the number of weeks
that a claimant has received benefits in a given benefit year.
The bill deletes the language in current law specifying what constitutes good
cause and the provision requiring DWD to define by rule what constitutes suitable
work for claimants and instead provides all of the following with respect to failures
to accept suitable work when offered:
1. That with respect to the first six weeks after the claimant became
unemployed, "suitable work" means work that 1) is not at a lower grade of skill than
that which applied to the claimant on one or more of his or her most recent jobs; and
2) would have had an hourly wage that was 75 percent or more of what the claimant
earned on the highest paying of his or her most recent jobs.
2. That with respect to the seventh week after the claimant became
unemployed and any week thereafter, "suitable work" means any work that the
claimant is capable of performing, regardless of whether the claimant has any
relevant experience or training, that pays wages that are above the lowest quartile
of wages for similar work in the labor market area in which the work is located, as
determined by DWD.
3. That a claimant has good cause for failing to accept suitable work if DWD
determines that the failure related to the claimant's personal safety, the claimant's
sincerely held religious beliefs, or an unreasonable commuting distance, or if the
claimant had another compelling reason that would have made accepting the offer
unreasonable.
Concealment by claimants
Under current law, if a claimant for UI benefits conceals any material fact
relating to his or her eligibility for UI benefits or conceals any of his or her wages or
hours worked, the claimant is ineligible for benefits in an amount ranging from to
two to eight times the claimant's weekly benefit rate, depending on the number of
acts of concealment committed, for each single act of concealment, and is also liable
for an additional administrative penalty. For purposes of these provisions, current
law defines "conceal" to mean intentionally misleading or defrauding DWD by
withholding or hiding information or making a false statement or
misrepresentation. This bill does the following with respect to acts of concealment
by claimants for UI benefits:
1. Deletes the reference to defrauding DWD from the definition of "conceal," so
that "conceal" is defined as intentionally misleading DWD by withholding or hiding
information or making a false statement or misrepresentation.
2. Provides that a claimant has a duty of care to provide an accurate and
complete response to each inquiry made by DWD in connection with his or her receipt
of UI benefits. In addition, the bill requires DWD, in determining whether a
claimant intended to mislead DWD, to consider various factors specified in the bill
as well as any other factor that may provide evidence of the claimant's intent.
3. Specifically provides that, when making a finding of concealment, DWD is
not required to determine or prove that a claimant had an intent or design to receive
UI benefits to which the claimant knows he or she was not entitled.
Concurrent receipt of UI and SSDI
Current law provides that any individual who actually receives social security
disability insurance (SSDI) benefits in a given week is ineligible for UI benefits paid
or payable in that same week.
This bill modifies current law with respect to the concurrent receipt of UI and
SSDI benefits. Specifically, the bill provides that an individual is ineligible for UI
benefits for each week in a month in which an SSDI payment is issued to the
individual, but subject to the following: 1) in the first month an SSDI payment is first
issued to an individual, the individual is ineligible for UI benefits for each week
beginning with the week the SSDI payment is issued to the individual and for all
subsequent weeks in that month; 2) following a cessation of SSDI payments to an
individual and upon the individual again being issued an SSDI payment, the
individual is ineligible for UI benefits for each week beginning with the week the
SSDI payment is issued to the individual and all subsequent weeks in that month;
and 3) following cessation of SSDI payments, the individual may be eligible for UI
benefits, if otherwise qualified, beginning with the week following the last Saturday
of the month in which the individual is issued his or her final SSDI payment.
The bill provides that the modifications take effect retroactively to January 5,
2014.
Eligibility for UI when receiving worker's compensation payments
Under current law, an individual who receives a temporary total disability
worker's compensation payment for a whole week is ineligible for UI benefits for that
same week, unless otherwise provided by federal law. The bill similarly provides that
an individual who receives a permanent total disability worker's compensation
payment for a whole week is ineligible for UI benefits for that same week, unless
otherwise provided by federal law.
Also under current law, a temporary total disability or temporary partial
disability worker's compensation payment for part of a week is treated as wages for
purposes of eligibility for partial UI benefits. The bill similarly provides that a
permanent total disability worker's compensation payment for part of a week is
treated as wages for purposes of eligibility for partial UI benefits.
Administration, administrative review, and other changes
Administrative and judicial review of UI decisions
Under current law, initial determinations regarding UI matters are made by
DWD. Those determinations may be appealed to appeal tribunals (ALJs), and a
tribunal's decision may be appealed to the Labor and Industry Review Commission.
A decision of LIRC may then be appealed to circuit court. Under current law, judicial
review of UI decisions is largely governed by the judicial review provisions in the
worker's compensation law. This bill makes a number of changes to the processes
under current law for issuing and appealing decisions, determinations, and orders
under the UI law, including the following:
1. If a party fails to appear at a hearing on the merits of a UI determination,
current law provides for a hearing on the issue of whether a party had good cause for
failing to appear at the hearing. The bill allows an ALJ to issue, without a hearing,
a decision on the issue of whether a party to a determination had good cause for
failing to appear at such a hearing. The bill allows the ALJ to make the decision
based upon the party's explanation for failing to appear, as well as any response
submitted to that explanation by the opposing party. The bill allows the opposing
party seven days to submit such a response to the party's explanation for failing to
appear.
2. The bill allows for the electronic delivery of UI determinations and decisions,
in addition to or instead of mailing.
3. Under current law, all testimony at UI hearings before ALJs must be taken
down by a stenographer, or recorded by a recording machine. The bill instead
provides that all such testimony must be recorded by electronic means and allows
LIRC to use the electronic recording in a review of an ALJ's decision. As under
current law, the bill allows a party, for a fee, to request a transcript of the hearing.
4. The bill establishes distinct provisions for the judicial review of UI decisions,
which are similar to the provisions under the worker's compensation law that
currently apply but also include 1) that DWD or any party may commence an action
for the judicial review of a LIRC UI decision, but that DWD is not required to exhaust
its available remedies in order to commence an action; 2) expressly providing that
DWD must be a party in all actions for judicial review of UI decisions, including
benefit cases; 3) that, unless the parties agree otherwise, proceedings for the judicial
review of a LIRC UI decision must be brought in the circuit court for the county where
the plaintiff resides, except that if the plaintiff is DWD, the proceedings must be
brought in the circuit court for the county where a defendant that is not LIRC resides;
and 4) requiring LIRC to transmit the record of proceedings to the circuit court
within 60 days after making an appearance.
Revisions to provisions concerning ability to work and availability for work
As a general qualifying requirement to receive UI benefits, current law
provides that, subject to certain exceptions, a claimant is eligible for UI benefits as
to any given week only if the claimant is able to work and available for work during
that week. The bill eliminates other, duplicative language in the UI law that
similarly provides that a claimant is ineligible for UI benefits while unable to work
or unavailable for work.
Also under current law, unless an exemption applies, if a claimant voluntarily
terminates his or her work with an employer, the claimant is generally ineligible to
receive benefits until certain requalification requirements are satisfied. One such
exemption applies if the claimant terminated his or her work but had no reasonable
alternative because he or she was unable to do his or her work, or if the claimant
terminated his or her work because of the verified illness or disability of an
immediate family member that reasonably necessitates the care of the family
member for a period of time that is longer than the employer is willing to grant leave.
The exemption further provides that if the claimant is unable to work or unavailable
for work, he or she is ineligible to receive benefits while such inability or
unavailability continues. The bill 1) eliminates the duplicative language providing
that the claimant is ineligible for UI benefits while unable to work or unavailable for
work; and 2) divides the exemption into two separate exemptions, one of which
applies if the claimant terminated his or her work but had no reasonable alternative
because of the verified illness or disability of the employee, and another which
applies if the claimant terminated his or her work because of the verified illness or
disability of an immediate family member and the verified illness or disability
reasonably necessitates the care of the family member for a period of time that is
longer than the employer is willing to grant leave.
Elimination of statutory benefit rate tables and adjustment language
Under current law, UI weekly benefit rate schedules are published in the
statutes. The schedules illustrate the results of the formula for calculating weekly
benefit amounts and establish minimum and maximum weekly benefit rates.
Current law requires DWD to adjust the minimum and maximum weekly benefit
rates, but a separate provision indefinitely suspends this adjustment requirement.
This bill repeals the UI benefit rate schedules contained in the statutes showing
the results of the formula for calculating weekly benefit amounts and instead
requires DWD to publish and maintain such schedules on its Internet site. The bill
maintains the minimum and maximum weekly benefit rate amounts as currently
established in the schedules. The bill repeals the provisions requiring adjustment
of benefit amounts and the provision suspending those provisions.
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:
SB684,1
1Section
1. 102.07 (8) (d) of the statutes is repealed.
SB684,2
2Section
2. 108.02 (13) (k) of the statutes is amended to read: