EmR2125 Rule Text

The Department reviewed Wisconsin statutes, administrative rules, and changes to federal law to determine the information that employers must submit to receive charging relief, the options available to ensure that employer contribution rates are appropriately determined for 2022, and the options available to provide maximum flexibility to employers subject to reimbursement financing regarding assessment of interest. The recharging of claims under s. 108.07 (5) (bm), Stats., may not be complete until early 2022. Because the Department had to set up several new federal benefit programs, the Department was unable to complete the recharging of claims by June 30, 2021 so that employer contribution rates would have been correctly set for 2022. The Department determined that 30 days after the Department sent a notification to the employer of an initial claim for benefit years is an appropriate deadline for employers not subject to the presumption to submit the documentation in order to give employers sufficient time to request relief and to ensure that all requests for relief are received before the Department completes the recharging work.

In particular, the Department reviewed 2021 Wisconsin Act 4 to determine the treatment of employers in a claimant’s base period who are not the most recent employer of a claimant whose initial claim is related to the public health emergency. The Department interpreted the new legislation to apply the employer non-charging provisions Acts 185 and 4 to all employers in a claimant’s base period to be consistent with the administration of other charging provisions under ss. 108.02 (8), 108.02 (22), and 108.18 (4), Stats.

Analysis and supporting documents used to determine effect on small business or in preparation of an economic impact analysis

Acts 185 and 4 provide 100% of the unemployment insurance benefits for initial claims for benefit years beginning on or after March 15, 2020 through March 13, 2021 related to the public health emergency will be charged to the balancing account of the Trust Fund for employers subject to contribution financing. Fifty or twenty-five percent of the unemployment insurance benefits for initial claims related to the public health emergency will be charged to the interest and penalty appropriation for employers subject to reimbursement financing; the remainder will be paid by the federal government. The charging relief for employers under state law is effective for state unemployment insurance benefits paid for the period of March 15, 2020 through March 13, 2021. However, charges for the first week of unemployment and for benefits paid under work share plans will be charged to the federal government during that period.

Section 108.04 (2) (d), created by 2019 Wis. Act 185, requires claimants and employers to indicate whether a claim for regular benefits is related to the public health emergency. 2021 Wis. Act 4 extends the relief from benefit charging for employers from December 31, 2020 to March 13, 2021, and specifies that the Department must presume that all initial claims through March 13, 2021 are related to the public health emergency and are, thus, entitled to recharging relief unless the separation is due to a labor dispute, misconduct, substantial fault, and, in most cases, a voluntary termination of work. In those cases where the presumption does not apply, this rule is necessary for the Department to properly and timely apply s. 108.07 (5) (bm), Stats., which, as described above, provides for the charging of certain benefits to the balancing account or interest and penalty appropriation. Further, under s. 108.07 (5) (bm) 2. b., Stats., employers will not receive relief from benefit charges unless they timely and adequately provide the information necessary for the Department to determine how to charge the claim.

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, June 30 of each year. Ultimately, however, the employer’s reserve fund balance takes into account all charges and credits on a rolling basis so that the employer’s unemployment experience determines the contribution rate.

Because the Department had to implement a variety of new federal benefit programs, it was unable to complete the charging changes required by Acts 185 and 4 by June 30, 2021. Without an emergency rule, most employers’ contribution rates for 2022 would have been based on benefit charges that should have been charged to the balancing account instead of the employers’ accounts. This would have resulted, for most employers subject to contribution financing, in contribution rates for 2022 that were higher than they should be.

This rule, in effect, directs the Department to assume that all benefit charges and benefit adjustments for the period of March 15, 2020 through March 13, 2021 relate to the public health emergency. This will have the effect of aligning employer contribution rates for 2022 with the policy goals of Acts 185 and 4.

Finally, reimbursable employer businesses that do not receive full charging relief under state and federal law (because, for example, the claims were for weeks of unemployment after the state law relief period ended) may find it difficult to pay their reimbursements timely during the COVID-19 pandemic due to a reduction in business income. Under this rule, businesses subject to reimbursement financing will not be assessed interest for tardy reimbursements and would therefore be given extra time to pay their bills.

Fiscal Estimate and Economic Impact Analysis

The Fiscal Estimate and Economic Impact Analysis is attached.

Effect on small business

This emergency rule is expected to have a positive economic impact on employers subject to the Wisconsin unemployment insurance law, which may include small businesses, if those employers are required to submit information to the Department to request charging relief, do so by the deadline set by this emergency rule, and receive charging relief as a result. The emergency rule is expected to have a positive economic impact on employers subject to unemployment insurance contribution financing by providing those employers with contribution rates that align with the policy goals of Acts 185 and 4. Businesses subject to unemployment insurance reimbursement financing would receive the benefit of a waiver of interest and potentially additional time to pay their reimbursements under this emergency rule.

Summary of comments on the statement of scope and

description of how the comments were taken into account in drafting the rule

A preliminary public hearing on the statement of scope was held on September 8, 2021; comments were received at the hearing and by email. Commenters generally supported promulgating a rule creating policies like those established by the Department in prior unemployment insurance emergency rules related to COVID-19. One commenter indicated support for the charging relief and emergency rules the Department had promulgated in the past and indicated that the Department should continue to not require employers to submit a form to request charging relief for claims related to laid off workers. Another commenter supported the waiver of interest for reimbursable employers and asked to have the interest waived until after Department has relieved all employers of benefit charges related to the public health emergency as well as for some time afterward so that employers may review the revised bill and set up a payment plan.

Agency Response: The Department considered all relevant comments received. The Department agrees that the intent of the new rule will be to continue to not require employers to submit a form to request charging relief for claims related to laid off workers but that there would continue to be some circumstances that require the form to be submitted to request benefit charging relief, such as for quits that would otherwise remain charged to employers. The Department has drafted the emergency rule to provide for an interest waiver for each month during which the rule is in effect for any part of the month. This is expected to provide an interest waiver for reimbursable employers after the Department completes the charging relief for reimbursable employer accounts, assuming that the emergency rule is in effect for at least 150 days.

Agency contact person

Questions related to this rule may be directed to:

Janell Knutson, Director, Bureau of Legal Affairs

Division of Unemployment Insurance

Department of Workforce Development

P.O. Box 8942

Madison, WI 53708

Telephone: [phone]

E-Mail: [e-mail]

Place where comments are to be submitted and deadline for submission

Mark Kunkel, Rules and Records Coordinator

Department of Workforce Development

P.O. Box 7946

Madison, WI 53707

E-Mail: [e-mail]

Comments will be accepted until a date to be determined.

  Section 1. DWD 102.01 is amended to read:

  DWD 102.01 Purpose. This chapter specifies the initial contribution rates for certain categories of employers. This chapter also provides the treatment of benefit claims and adjustments for determining employer contribution rates for 2022.

  Section 2. DWD 102.04 is created to read:

  DWD 102.04 2022 Employer Contribution Rates. When calculating 2022 employer contribution rates, all benefit charges for weeks of unemployment for the period of March 15, 2020 through March 13, 2021 and all benefit adjustments processed during the period of March 15, 2020 through March 13, 2021 shall be disregarded.

  Section 3. DWD 113.027 is created to read:

  DWD 113.027 Waiver of Interest for Employers Subject to Reimbursement Financing. The department shall waive interest for amounts owed by reimbursable employers, as defined in s. 108.155 (1) (b), Stats., to ensure correct employer billing and to provide reimbursable employers the opportunity to pay their reimbursements over time. This waiver shall apply to each month during which this rule is in effect for any part of the month.

  Section 4. DWD 123.01 is amended to read:

  DWD 123.01 Purpose. Pursuant to ss. 108.04 (13), 108.09 (1), and 108.14 (2), Stats., in order to determine benefit claims, the department requires employers to provide information about claimants’ employment separations, dates of work, wages and other payments, and other issues that may be disqualifying. This chapter specifies the benefit reports that must be filed by employers and the filing requirements for those reports. This chapter also determines the information that employers must submit under ss. 108.04 (2) (d) and 108.07 (5) (bm), Stats., if any, to request relief of unemployment benefit charges for initial claims filed for benefit years beginning on or after March 15, 2020 through March 13, 2021, the deadline by which employers must submit the information, if any, to the department, and the treatment of payors of base period wages.

  Section 5. DWD 123.04 is created to read:

  DWD 123.04 Requests for Charging Relief. (1) Under s. 108.07 (5) (bm) 1m., Stats., for separations from employment that are not due to a labor dispute, voluntary termination of work, discharge for misconduct, or discharge for substantial fault, an employer does not need to submit information to the department to receive relief of benefit charges under s. 108.07 (5) (bm), Stats.

  (2) An employer that paid base period wages to a claimant whose most recent separation from employment is due to a voluntary termination of work for which s. 108.04 (7) (h), Stats., does not apply and whose initial claim is for benefit years beginning on or after March 15, 2020 through March 13, 2021 may receive relief of benefit charges under s. 108.07 (5) (bm), Stats., by submitting a request for relief under this section.

  (3) An employer may be relieved of unemployment benefit charges under s. 108.07 (5) (bm), Stats., for benefits for initial claims described in sub. (2) if it provides the information specified by the department in the form required by the department.

  Note: The required department form for requesting charging relief is UCB-18823-E, available online at https://dwd.wisconsin.gov/uitax/relief-of-charging.htm.

  (4) An employer described in sub. (2) may receive benefit charging relief if it certifies that any of the following circumstances apply to the initial claim:

  (a) The employer’s business/operations reduced, suspended, or ceased after experiencing a significant reduction of income due to a Safer at Home order or a government-issued health order that restricts business operations.

  (b) The employer’s business/operations reduced, suspended, or ceased due to other businesses (including suppliers) having reduced, suspended, or ceased operations.

  (c) The federal Paycheck Protection Program loan amount was used to pay employees, but the business did not yet reopen.

  (d) The employer provides other information showing that the initial claim relates to the public health emergency declared on March 12, 2020 by Executive Order 72.

  (5) An employer that must submit a request for relief under this section to receive relief under s. 108.07 (5) (bm), Stats., must submit the request to the department by the thirtieth day after the department sent a notification to the employer of an initial claim for benefit years beginning on or after March 15, 2020 through March 13, 2021.

  (6) If an initial claim relates to the public health emergency declared on March 12, 2020, by Executive Order 72 and s. 108.07 (5) (bm) 1., Stats., applies to the claim, the provisions of s. 108.07 (5) (bm) 3., Stats., apply to all the employers that paid base period wages for the claim.

  (7) The department shall apply s. 108.07 (5) (bm), Stats., to additional initial claims filed on or after March 15, 2020 through March 13, 2021 for any benefit years that began before March 15, 2020.

  Section 6. Effective dates. This rule shall take effect on October 3, 2021, or upon publication in the official state newspaper, as provided in s. 227.24 (1) (c), Stats., whichever is later, except that Sections 1 and 2 of this rule shall take effect on November 26, 2021.

  Dated this 20th day of September, 2021.

  WISCONSIN DEPARTMENT OF WORKFORCE DEVELOPMENT

By:   __________________________________________________________

  Amy Pechacek, Secretary-designee