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
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 claimant’s 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 claimant’s 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 claimant’s 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:
- The employer’s business/operations reduced, suspended, or ceased after experiencing a significant reduction in business due to a Safer at Home order or a government-issued health order that restricts business operations.
- The employer’s business/operations reduced, suspended, or ceased due to other businesses (including suppliers) having reduced, suspended, or ceased operations.
- The federal Paycheck Protection Program loan amount was used to pay employees, but the business did not yet reopen.
- The employer provides other information showing that the initial claim relates to the public health emergency.
For those employers who do not meet the presumption that the claim is related to the public health emergency, this emergency rule sets a deadline by which employers must submit the information required by section 108.04 (2) (d), Stats. The deadline is the thirtieth day after the Department sends a notification to the employer of an initial claim for benefit years beginning on or after March 15, 2020 through March 13, 2021. The deadline is necessary to ensure that all information regarding the initial claims is submitted in time for processing the recharging of benefits by the time the Department completes the work to relieve employers of charges. This rule also determines 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 will apply the employer charging provisions of Acts 185 and 4 to all base period employers for the claim.
This rule requires the Department to interpret the provisions of s. 108.07 (5) (bm), Stats., by applying the provisions of s. 108.07(5) (bm), Stats., to additional initial claims filed on or after March 15, 2020 for a benefit year that began before March 15, 2020 so that the legislative intent of 2021 Wis. Act 4 is properly applied. This rule also provides that the Department, in calculating an employer’s net reserve as of the June 30, 2021 computation date, shall disregard all benefit charges and benefit adjustments for the period of March 15, 2020 through March 13, 2021.
The Department will, in effect, assume that all benefit charges and adjustments were related to the public health emergency. This assumption applies only for the purposes of setting the contribution rates for 2022. This rule will ensure that employers’ contribution rates for 2022 are calculated based on reserve fund balances as of June 30, 2021 without taking charges related to the public health emergency into account so that the policy goals of Acts 185 and 4 are met. This rule will only affect calculation of contribution rates for 2022. Contribution rates for 2023 will be calculated in 2022 after all charging relief is complete.
Finally, this rule provides a waiver of interest for employers subject to unemployment reimbursement financing for each month during which this rule is in effect. Under this rule, interest is waived starting October 1, 2021 for reimbursable employers. This will give reimbursable employers an opportunity to pay their reimbursements over time if any amounts are still due after the Department completes the work to relieve employer accounts of benefit charges.
Summary of, and comparison with, existing or proposed federal statutes and regulations
Federal law requires that state unemployment compensation laws conform to and comply with federal requirements. 20 C.F.R. § 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 U.S.C. § 1103 (h) (3) (B). Wisconsin’s share of the $500 million is about $9.457 million.
The federal CARES Act provides that states have “flexibility to reimbursing employers as it relates to timely payment and assessment of penalties and interest….” CARES Act s. 2103(a). US-DOL encourages states to “interpret or amend their state unemployment compensation laws in a manner that provides maximum flexibility to reimbursing employers as it relates to timely payments in lieu of contributions and assessment of penalties and interest.” UIPL 18-20, p. 2. 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 charged benefits to the unemployment insurance non-chargeable account, unless the employer was determined to have misclassified workers.
Iowa did not charge unemployment benefits related to COVID-19 to employer accounts until June 12, 2021.
By Emergency Executive Order 20-05, Minnesota will “not use unemployment benefits paid as
a result of the COVID-19 pandemic in computing the future unemployment tax rate of a taxpaying employer.”
Michigan, Illinois, and Iowa do not appear to waive interest for employers subject to reimbursement financing. Minnesota law permits the compromise of reimbursements due by employers under Minnesota Statutes 2019, s. 268.067(b). Summary of factual data and analytical methodologies
