The Wisconsin Department of Workforce Development adopts the following emergency rule to amend DWD 102.01 and to create DWD 102.04, relating to employer contribution rates for 2021.
The Governor approved the scope statement for this rule, SS 070-20, on June 5, 2020. The scope statement was published in register No. 774A2, on June 8, 2020. The notice of public hearing and comment period on the scope statement was published on June 15, 2020 in register No. 774A3. The public hearing on the scope statement was held on June 18, 2020. The scope statement was approved by the Department on June 19, 2020. This rule was approved by the Governor on June 23, 2020.
Analysis Prepared by the Department of Workforce Development
Finding of Emergency
By Executive Order 72, the Governor declared a public health emergency to protect the health and well-being of the states residents and directed state agencies to assist as appropriate in the States ongoing response to the public health emergency. On March 13, 2020, the President declared a national emergency concerning the COVID-19 pandemic. Due to the pandemic, many businesses have temporarily or permanently closed, resulting in significant business income reduction and layoffs.
Under 2019 Wisconsin Act 185, s. 50, which created s. 108.07 (5) (bm), Stats., the Department of Workforce Development is directed to charge unemployment benefits for initial claims that are related to the public health emergency declared by Executive Order 72, to the balancing account of the Trust Fund for contribution employers. This treatment of claims charging applies to weeks of benefits payable from the week of March 15, 2020 through December 26, 2020.
The Departments antiquated computer systems are ill-equipped to handle the changes in charges from the employers accounts to the balancing account. Each weekly claim to be charged to the balancing account under new section 108.07 (5) (bm), Stats., requires Department personnel to manually change the benefit charges from the employers account to the balancing account of the Trust Fund after any federal funds have been appropriately applied. The Department estimates that this manual process will take approximately 15 minutes for each weekly claim. Given the high volume of claims being filed during the pandemic, the Department expects that the thousands of hours of manual work to complete the charging changes will not be completed by June 30, 2020 — and likely will not be completed by the end of 2020.
Under s. 108.18 (4), Stats., an employers contribution rate on the employers payroll for a given calendar year shall be based on the reserve percentage of the employers account as of the applicable computation date, which is June 30 of each year, as specified in s. 108.02 (8), Stats. Section 108.02 (22), Stats., requires the Department to determine the status of an employers account when setting the reserve percentage for contribution purposes as of the computation date.
Because the Department will not be able to complete the manual charging changes required by 2019 Wisconsin Act 185 by June 30, 2020, most employers contribution rates for 2021 will be based on benefit charges that should have been charged to the balancing account instead of the employers accounts. This would result, for most employers subject to contribution financing, in contribution rates for 2021 that are higher than they should be.
If this rule is not promulgated, the Department would be required to halt programming changes related to new federal unemployment benefit programs and reassign and train staff currently processing those claims to assist with the manual benefit recharging efforts to attempt to meet the June 30, 2020 deadline for calculating 2021 tax rates. This rule will protect claimants who need benefit payments and protect employers from unnecessarily high contribution rates. Higher contribution rates for employers and unpaid benefit claims could impede Wisconsins economic recovery from the pandemic.
Statutes Interpreted
Sections 108.02 (8), 108.02 (22), 108.07 (5) (bm), and 108.18 (4), Stats., which are discussed in the above Finding of Emergency.
Statutory Authority
Section 108.14 (2), Stats.
Explanation of Statutory Authority
The Department has specific and general authority to establish rules interpreting and clarifying provisions of ch. 108, Stats., unemployment insurance and reserves, and general authority for promulgating rules with respect to ch. 108, Stats., under s. 108.14 (2), Stats.
Related Statutes or Rules
Plain Language Analysis
This rule provides that the Department, in calculating an employer’s net reserve as of the June 30, 2020 computation date, shall disregard all benefit charges and benefit adjustments for the period of March 15, 2020 through June 30, 2020.
The Department will, in effect, assume that all benefit charges and adjustments were related to the public health emergency declared by Executive Order 72. This assumption applies only for the purposes of setting the contribution rates for 2021. This rule will ensure that employers’ contribution rates for 2021 are calculated based on reserve fund balances as of June 30, 2020 so that the policy goals of 2019 Wisconsin Act 185 are met. This rule will only affect calculation of contribution rates for 2021. Contribution rates for 2022 will be calculated in 2021 after all recharging is complete.
Summary of, and comparison with, existing or proposed federal statutes and regulations
Federal law requires that state laws conform to and comply with federal requirements. 20 CFR 601.5.
Under the federal Families First Coronavirus Response Act, Public Law 116-127, specifically Division D, the Emergency Unemployment Insurance Stabilization and Access Act of 2020 (EUISAA), a state may receive a share of $500 million of federal funding for administering the state’s unemployment insurance program if the “State has demonstrated steps it has taken or will take to non-charg[e] employers directly impacted by COVID–19 due to an illness in the workplace or direction from a public health official to isolate or quarantine workers.42 USC 1103(h)(3)(B). Wisconsin’s share of the $500 million is about $9.457 million.
Comparison with rules in adjacent states
Illinois does not charge employers for unemployment benefits for a week of unemployment that begins on or after March 15, 2020, and before December 31, 2020, and is directly or indirectly attributable to COVID-19….” 820 ILCS 405/1502.4(A).
By Executive Order 2020-76, Michigan charges benefits to the unemployment insurance non-chargeable account, unless the employer was determined to have misclassified workers.
Iowa is currently not charging unemployment benefits related to COVID-19 to employer accounts.
By Emergency Executive Order 20-05, Minnesota will “not use unemployment benefits paid as
Links to Admin. Code and Statutes in this Register are to current versions, which may not be the version that was referred to in the original published document.