Currently, an employer’s contribution rate on the employer’s payroll for a given calendar year is based on the reserve percentage of the employer’s account as of the applicable computation date, which is June 30 of each year. Ultimately, however, the employer’s reserve fund balance considers all charges and credits on a rolling basis so that the employer’s unemployment experience determines the contribution rate.
The new policy to be included in this rule will ensure that employers’ contribution rates are calculated as of June 30, 2021 and meet the policy goals of Acts 185 and 4. Contribution rates for 2023 will be calculated after all recharging is complete.
Similarly, on June 27, 2020, the Department promulgated EmR2018 to ensure 2021 contribution rates would not be higher than they should have been under Act 185 because the Department was unable to complete recharging by June 30, 2020. At the time, the Department anticipated that it would have recharging complete by June 30, 2021, to set the 2022 rates. However, since then, additional state and federal law changes have altered the requirements for recharging and have created new and modified benefit programs that caused a delay in the IT programming necessary to implement recharging. To correctly set contribution rates, recharging work must consider applicability of federal programs that reduce the benefit charges to employers in addition to the recharging relief provided by Acts 185 and 4. Federal law changes provide federal funding (in whole or in part) that affects recharging in the following programs: waiver of waiting week; work share; and regular unemployment for reimbursable employers.
Moreover, under state law, Act 4 extended the period of charging relief for contribution employers from December 31, 2020 to March 14, 2021, and created a presumption of relief for employment separations unless certain exemptions apply.
These federal and state law changes must be taken into account to correctly perform the recharging to ensure the correct tax rate for employers. It is not possible to simply "recharge" the regular unemployment benefits covered by Acts 185 and 4 and accurately determine the tax rate for employers. This emergency rule will ensure when recharging is completed for all employers, their tax rates will be accurate.
Moreover, the new federal benefits programs under the Coronavirus Aid, Relief, and Economic Security Act, Continued Assistance Act, and the America Rescue Plan Act created new and modified benefit programs that placed demands on the Department's computer programming and staff resources. The Department prioritized programming of those benefit programs over the recharging efforts given this rule can ensure that employers are not subject to a higher contribution rate than they should receive, while ensuring workers receive timely benefits.
The policy alternative is to do nothing, which would negatively impact most employers subject to contribution financing because their contribution rates will be higher for 2022 than they should be. For most employers subject to contribution financing, this would result in higher contribution rates for 2022, which would not be in accordance with the legislative intent of Acts 185 and 4.
Statutory authority for the rule, including the statutory citation and language:
The Department has statutory authority for the proposed rule.
“The department may adopt and enforce all rules which it finds necessary or suitable to carry out this chapter.” Section 108.14(2), Stats. Estimate of the amount of time that state employees will spend developing the rule and other resources necessary to develop the rule:
The estimated time is 80 hours.
Description of all entities that may be affected by the proposed rule:
Employers subject to contribution financing for unemployment insurance.
Summary and preliminary comparison with any existing or proposed federal regulation that is intended to address the activities to be regulated by the proposed rule:
State law must conform to and substantially comply with federal regulations. See 20 C.F.R. § 601.5.
Anticipated economic impact of implementing the rule (note if the rule is likely to have an economic impact on small businesses):
The proposed rule is expected to have an economic impact on employers subject to contribution financing, which may include small businesses, to provide those employers with contribution rates that align with the policy goals of Acts 185 and 4.
Approval of the agency head or authorized individual:
