ORDER OF THE WISCONSIN DEPARTMENT OF WORKFORCE DEVELOPMENT
EMERGENCY RULE
The Wisconsin Department of Workforce Development (the Department) adopts the following emergency rule to amend DWD 102.01 and 123.01 and to create DWD 102.04, 113.027, and 123.04, relating to protecting Wisconsin employers from the adverse financial effects of COVID-19.
The Governor approved the scope statement for this rule, SS 075-21, on August 26, 2021. The scope statement was published in register No. 788B, on August 30, 2021. The notice of preliminary hearing and comment period on the scope statement was published on August 30, 2021, in register No. 788B. The preliminary hearing on the scope statement was held on September 8, 2021. The Department approved the scope statement on September 9, 2021. This rule was approved by the Governor on September 17, 2021.
Analysis Prepared by the Department of Workforce Development
Finding of Emergency
On March 12, 2020, by Executive Order 72, the Governor declared a public health emergency to protect the health and well-being of the state’s residents and directed state agencies to assist as appropriate in the State’s ongoing response to the public health emergency. On March 13, 2020, the President declared a national emergency concerning the COVID-19 pandemic. On April 4, 2020, the President declared a major disaster under the federal Stafford Act in Wisconsin due to 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 and 2021 Wisconsin Act 4 (Acts 185 and 4), the Department of Workforce Development must charge unemployment benefits for initial claims that relate to the public health emergency first declared on March 12, 2020, by Executive Order 72 (the “public health emergency) to the balancing account of the Trust Fund for contribution employers. For reimbursable employers, the Department must charge such benefits to the interest and penalty appropriation unless federal funding is available to relieve employers of benefit charges. This treatment of claims charging applies to weeks of benefits payable for the period of March 15, 2020 through March 13, 2021.
2019 Wisconsin Act 185 also created s. 108.04 (2) (d), Stats., which requires employees and employers to “indicate whether a claim for regular benefits is related to the public health emergency declared on March 12, 2020, by executive order 72” when the Department requests. The statute does not provide a deadline for employees or employers to submit the information. That paragraph further provides that the Department “may specify the information required to be provided.” 2021 Wisconsin Act 4 provides that only some employers must provide this information to the Department.
The federal Coronavirus Aid, Relief, and Economic Security (“CARES”) Act and Continued Assistance for Unemployed Workers Act provide for 50% federal payment of unemployment insurance benefits chargeable to reimbursable employers for weeks of unemployment for March 15, 2020 through April 3, 2021. The federal American Rescue Plan Act provides for 75% federal payment of unemployment benefits chargeable to reimbursable employers for weeks of unemployment for April 4 through September 4, 2021. Federal law also provides for 100% federal funding for the first week of unemployment and for work share benefits for certain periods.
The Department’s antiquated computer systems are ill-equipped to automatically transfer the charges from the employers’ accounts to the balancing account, interest and penalty appropriation, or the federal funding sources. Each weekly claim to be recharged under section 108.08 (5) (bm), Stats., which was created and amended by Acts 185 and 4, requires the Department to change the benefit charges from the employer’s account, after any federal funds have been appropriately applied, to the balancing account or interest and penalty appropriation. While the Department is working to automate as much of this process as possible, some manual processing of claims by Department personnel will be necessary due to the complexity of the claims charging system. Due to the high volume of claims filed during the pandemic, the Department anticipates that this project may not be completed until early 2022.
Under ss. 108.02 (8), 108.02 (22), and 108.18 (4), Stats., “an employer’s contribution rate on the employer’s payroll for a given calendar year shall be based on the reserve percentage of the employer’s account as of the applicable computation date,” s. 108.18(4), Stats., which is June 30 of each year. Section 108.02 (22), Stats., requires the Department to determine the status of an employer’s account when setting the reserve percentage for contribution purposes as of the computation date.
The Department set up several new federal benefit programs during the pandemic, which delayed the programming for relieving employers of benefit charges. Because the Department was unable to complete the benefit charging changes required by Acts 185 and 4 by June 30, 2021, and Emergency Rule 2118 will expire before some employers’ contribution rates for 2022 are assigned, some employers’ rates will be based on benefit charges that should have been charged to the balancing account instead of the employers’ accounts. This would result, for some employers subject to contribution financing, in contribution rates for 2022 that are higher than they should be unless the Department promulgates this emergency rule.
If the recharging of benefits from employer accounts to the balancing account is not completed by June 30, 2022 for contribution employers, those employers’ contribution rates for 2023 could be set higher than they should be under the charging relief enacted by Acts 185 and 4. Contribution rates that are incorrect could adversely affect employers’ abilities to recover financially from the economic downturn caused by the pandemic.
If the recharging of benefits from reimbursable employer accounts to the interest and penalty appropriation is not completed before the expiration of a blanket interest waiver for those employers, they will receive incorrect monthly bills for reimbursements with assessed interest charges that they should not be required to pay under Acts 185 and 4.
Because of the pandemic-related economic devastation, employers subject to reimbursement financing may be unable to pay their reimbursements for unemployment claims in full. The requirement to immediately pay their reimbursements could further jeopardize the viability of employers subject to reimbursement financing. Relieving reimbursable employers of interest charges is therefore necessary.
Statutes Interpreted
Statutory Authority
Sections 108.14 (2) and 108.22 (1) (cm), 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.
Interest is assessed monthly on delinquent employer contributions and reimbursements in lieu of contributions. Section 108.22 (1) (a), Stats. The Department may promulgate rules to, in limited circumstances, “waive or decrease the interest charged.” Section 108.22 (1) (cm), Stats.
Related Statutes or Rules
To implement the charging relief required under Acts 185 and 4, the Department promulgated EmR2044, which expired, and EmR2112, which expires October 2, 2021.
Current s. DWD 113.025 permits the Department to waive or decrease interest in limited circumstances. Emergency rule EmR2011, which expired, and EmR2108, which expires September 26, 2021, waive interest for reimbursable employers in certain circumstances due to the COVID-19 pandemic.
The Department previously promulgated emergency rule EmR2018, relating to employer contribution rates for 2021, which expired, and emergency rule EmR2118, which expires November 25, 2021, relating to employer contribution rates for 2022.
Plain Language Analysis
The emergency rule determines the information that employers must submit, if any, to request charging relief for initial claims that relate to the public health emergency between March 15, 2020 and March 13, 2021, to comply with s. 108.07 (5) (bm), Stats.
If a claimants most recent employment separation is not due to a labor dispute, voluntary termination of work, discharge for misconduct, or discharge for substantial fault, and the claimants initial claim is for a benefit year beginning on or after March 15, 2020 through March 13, 2021, the Department will presume that the claim relates to the public health emergency. All employers who paid base period wages to the claimant will be relieved of the benefit charges for that claim and employers will not be required to request the relief.
An employer that paid base period wages may request charging relief if the most recent employment separation is due to a voluntary termination of work that would otherwise be charged to the employer and the claimants initial claim is for a benefit year beginning on or after March 15, 2020 through March 13, 2021 and if the employer certifies that certain circumstances apply to the initial claim. If the most recent separation is due to a labor dispute, misconduct, substantial fault, or a voluntary termination of work, the unemployment benefits are already not charged to the employer under pre-pandemic law. An employer may meet the requirement by certifying that any of the following conditions exist:
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