SB327: Bill Text

LRB-4050/1

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1997 - 1998 LEGISLATURE

1997 Senate BILL 327

October 22, 1997 - Introduced by Senators Plache and Zien, cosponsored by Representatives Vrakas and Vander Loop. Referred to Committee on Labor, Transportation and Financial Institutions.

SB327,2,22 An Act to repeal 106.21 (9) (d), 106.215 (10) (d), 108.02 (15) (gm) and 108.05 (1) (f) and (g); to renumber 108.05 (3) (b) 2.; to renumber and amend 108.09 (2) (c) and 108.09 (4) (f) 2.; to amend 6.10 (9), 15.227 (3), 16.48 (1) (a) (intro.), 16.48 (1) (a) 1., 2. and 6. and (b), 16.48 (2) and (3), 19.85 (1) (ee), 20.445 (1) (gd), 20.445 (1) (gd), 20.445 (1) (gd), 20.445 (1) (gf), 20.445 (1) (n), 40.02 (22) (b) 3., 40.65 (5) (b) 2., 45.71 (9) (a), 46.27 (5) (i), 47.035 (1), 49.19 (4) (dm) 4., 59.40 (2) (e), 59.57 (2) (b), 66.30 (6) (c) 1., 66.30 (6) (h), 66.521 (1) (a), 71.05 (6) (a) 12., 71.52 (6), 71.67 (7) (title), 71.67 (7) (a), 71.67 (7) (b) 2., 71.80 (16) (a), 71.80 (16) (a), 71.80 (16) (b), 101.654 (2) (c), 102.28 (7) (b), 106.11 (2) (a) 1. b., chapter 108 (title), 108.01 (1), 108.02 (4m) (a), 108.02 (12) (b) (intro.), 108.02 (12) (c) (intro.), 108.02 (15) (c) 1., 108.02 (15) (dm) 1., 108.02 (15) (e), 108.02 (15) (i) 2., 108.02 (15) (k) 5., 108.02 (15) (k) 9., 108.02 (15) (k) 10., 108.02 (15) (k) 14., 108.02 (15) (k) 19. b., 108.02 (21) (a) 2., 108.02 (21) (b), 108.04 (4) (a), 108.04 (4) (c), 108.04 (5), 108.04 (7) (a), 108.04 (7) (e), 108.04 (7) (L) (intro.), 108.04 (7) (p), 108.04 (8) (a), 108.04 (8) (c), 108.04 (8) (d), 108.04 (12) (c), 108.04 (12) (d), 108.05 (1) (h) (intro.), 108.05 (2) (c), 108.05 (3) (a), 108.05 (3) (b) 1. a. and b., 108.06 (2) (d), 108.06 (5) (a), 108.065 (1), 108.07 (3m), 108.07 (5m), 108.09 (4) (f) 3., 108.09 (6) (c), 108.13 (2), 108.13 (4) (a) 4., 108.13 (4) (b), 108.13 (4) (c) (intro.), 108.13 (4) (e), 108.13 (4) (f), 108.135 (1) (intro.), 108.135 (1) (a), 108.14 (5) (a), 108.14 (5) (ag), 108.14 (5) (ar), 108.14 (6), 108.14 (7) (a), 108.14 (8) (a), 108.14 (8m) (a), 108.14 (8n) (a), 108.14 (8n) (b), 108.14 (8s) (a), 108.14 (8s) (b), 108.14 (8t), 108.14 (9), 108.14 (13), 108.14 (14), 108.141 (1) (b) 3., 108.141 (1) (h), 108.141 (3g) (a) 1., 108.141 (3g) (a) 2., 108.141 (3g) (a) 3. a., 108.141 (3g) (a) 3. b., 108.141 (3g) (a) 3. d., 108.141 (3g) (c), 108.141 (3g) (d), 108.141 (3g) (e), 108.142 (1) (h) 3., 108.142 (1) (i), 108.16 (5) (b), 108.16 (7m), 108.161 (3), 108.162 (1), 108.162 (3), 108.18 (3m) (b), 108.18 (3m) (c), 108.18 (7) (a) 1. and (h), 108.18 (9) (intro.), 108.19 (3), 108.19 (4), 108.20 (2m), 108.20 (2m), 108.205 (1), 108.21 (1), 108.22 (9), 109.01 (3), 116.03 (4), 175.46 (5) (a), 230.26 (4), 303.08 (3), 303.08 (4), 303.08 (5) (intro.), 560.71 (1) (e) 4. c., 560.797 (2) (a) 4. c., 779.14 (1m) (a), 779.15 (1), 815.18 (13) (j), 859.02 (2) (a) and 949.06 (3) (b); and to create 20.445 (1) (gg), 20.445 (1) (gh), 20.445 (1) (nb), 108.02 (4m) (g), 108.02 (18m), 108.02 (25e), 108.05 (1) (i) and (j), 108.05 (3) (b) 1. c., 108.05 (3) (b) 2., 108.09 (2) (c) 1. and 2., 108.09 (2) (cm), 108.09 (4) (f) 2. b., 108.14 (18), 108.18 (3m) (d), 108.18 (4) (figure) Schedule D, 108.18 (9) (figure) Schedule D, 108.18 (9c) and 108.19 (1e) of the statutes; relating to: various changes in the unemployment compensation law and related provisions, granting rule-making authority and making appropriations.

Analysis by the Legislative Reference Bureau

This bill makes various changes in the unemployment compensation law and related provisions. Significant provisions include:

Benefit rate changes

Currently, weekly unemployment compensation benefit rates for total unemployment range from $53 for an employe who earns wages (or certain other amounts treated as wages) of at least $1,325 during at least one quarter of the employe's base period (period preceding a claim during which benefit rights accrue) to $282 for an employe who earns wages (or certain other amounts treated as wages) of at least $7,050 during any such quarter. This bill adjusts weekly benefit rates for weeks of unemployment beginning on or after January 4, 1998, and before January 3, 1999, to rates ranging from $43 for an employe who earns wages (or certain other amounts treated as wages) of at least $1,075 during at least one quarter of the employe's base period to $290 for an employe who earns wages (or certain other amounts treated as wages) of at least $7,250 during any such quarter; and beginning on or after January 3, 1999, to rates ranging from $44 for an employe who earns wages (or certain other amounts treated as wages) of at least $1,100 during at least one quarter of the employe's base period to $297 for an employe who earns wages (or certain other amounts treated as wages) of at least $7,425 during any such quarter.

Other benefit changes

Qualifying wages

Currently, an employe is not eligible to begin receiving benefits unless he or she earns wages (or certain other amounts treated as wages) during the employe's base period equal to at least 30 times the employe's weekly benefit rate, including wages (or other amounts treated as wages) of at least 7 times the employe's weekly benefit rate during the quarters other than the one in the employe's base period in which the employe earns his or her highest wages (or other amounts treated as wages). This bill requires instead that an employe earn wages (or other amounts treated as wages) of at least 30 times the employe's weekly benefit rate, including wages (or other amounts treated as wages) of at least 4 times the employe's weekly benefit rate during a quarter other than the one in the employe's base period in which the employe earns his or her highest wages (or other amounts treated as wages).

Treatment of certain cafeteria plan payments for benefit purposes

Currently, the eligibility for benefits and amount of benefits payable to an employe depend in part upon the amount of wages or certain other amounts paid or treated as having been paid to the employe during his or her base period. This bill treats as wages for those purposes any salary reduction amounts that are not wages and that would have been paid to an employe by an employer as salary during the employe's base period but for a salary reduction agreement under a cafeteria plan, as defined in the federal Internal Revenue Code (plan under which certain payments, such as medical or child care expenses, are paid from the pretax income of an employe). The change potentially increases the number of employes who qualify for benefits and the amounts of benefits that some employes receive. Similarly, the bill treats salary reduction amounts deducted by an employer from the wages earned by a claimant in a given week pursuant to a cafeteria plan as wages received by the claimant for purposes of determining the eligibility of and amount of benefits payable to the claimant for partial unemployment in that week. The change potentially decreases the number of employes who qualify to receive benefits for partial unemployment and the amounts of benefits for partial unemployment that some employes receive. In connection with these changes, the bill also requires employers to keep records of cafeteria plan payments and permits the department of workforce development (DWD) to require employers to report this information to it.

Eligibility to begin new benefit years

Under current law, an employe is not eligible to begin a new benefit year (period during which benefits are potentially payable) unless, after the beginning of the employe's most recent benefit year in which the employe was paid benefits, the employe earns wages equal to at least 8 times the benefit rate that was payable to the employe for that most recent benefit year in work covered by the unemployment compensation law of any state or the federal government. This bill requires an employe to perform services and earn wages for those services equal to at least 8 times that benefit rate in such work before the employe may begin a new benefit year.

Set aside of benefit years

Currently, a claimant may, in writing, request DWD to set aside a benefit year. DWD must grant the request if certain conditions are satisfied. This bill instead requires that such a request be made verbally, electronically or in writing in the manner that the department prescribes by rule.

Requalification for extended benefits

Currently, if an individual fails to either apply for suitable work when notified by a public employment office or to accept suitable work when offered, the individual is ineligible to receive extended benefits (benefits partially funded by the federal government which are provided during periods of high unemployment) for the week in which the failure occurs and thereafter until the individual has again worked for at least 4 weeks and earned wages equal to at least 4 times his or her extended benefit rate. A similar requalification requirement applies when a claimant fails to search for work or voluntarily terminates or is suspended from his or her employment under certain conditions. This bill requires that a claimant work for at least 4 weeks in work covered by the unemployment insurance law of any state or the federal government and earn wages for that work equal to at least 4 times his or her extended benefit rate in order to qualify or requalify to receive extended benefits.

Employe status

Currently, in order to be eligible to claim benefits, an individual must, in addition to other requirements, be an "employe" as defined in the unemployment compensation law. Generally, an "employe" is an individual who performs services for an employer in employment covered under the unemployment compensation law, whether or not the individual is directly paid by the employer. However, an individual is not an "employe" if the individual performs services as a contract operator with a carrier or as a skidding operator or piece cutter with a forest products manufacturer or logging contractor and the individual has been and will continue to be free from the employer's control or direction over the performance of his or her services both under his or her contract and in fact, and the individual's services are performed in an independently established trade, business or profession in which the individual is customarily engaged. Any other individual is not an "employe" if the individual holds or has applied for an employer identification number with the federal internal revenue service or has filed business or self-employment income tax returns with the federal internal revenue service in the previous year, and meets at least 6 of 8 other conditions concerning the individual's relationship to or direction or control over his or her business or the services that he or she performs. This bill applies the former exclusion, rather than the latter exclusion, to all employes of governmental units and nonprofit organizations.

Tax changes

Contribution rate schedules

Currently, all employers that engage employes in work which is covered under the unemployment compensation law, other than governmental and nonprofit employers which elect to pay directly for the cost of benefits, must pay contributions (taxes) to finance unemployment compensation benefits. The total contributions of an employer are the sum of the employer's contribution rate and the employer's solvency rate, each of which vary with the employment stability of the employer and the solvency of the unemployment reserve fund, from which benefits are paid. An employer's contributions payable as a result of its contribution rate are credited to the employer's account, while an employer's contributions payable as a result of its solvency rate are credited to the fund's balancing account, which is used to fund benefits not payable from any employer's account. Currently, there are 3 schedules of contribution and solvency rates. The schedule that applies for any year depends upon the solvency of the fund on June 30 of the preceding year. The schedule that results in the lowest contribution rates for most employers is currently in effect for any year when the fund has a cash balance of at least $1,000,000,000 on June 30 of the preceding year. This bill creates an additional schedule which is in effect for any year after 1997 when the fund has a cash balance of at least $1,200,000,000 on June 30 of the preceding year. The schedule provides for lower contribution rates than are provided under current schedules for most employers for any year in which their accounts have positive balances on June 30 of the preceding year.

Special assessments and offset of solvency rates

In addition to regular contributions currently payable by employers, this bill levies an assessment on each employer that is currently subject to a contribution requirement in the amount of 0.01% of an employer's taxable payroll for each year prior to the year 2000 (unless the employer currently pays a solvency rate less than 0.01% in which case the assessment is equal to the employer's current solvency rate as applied to the employer's taxable payroll). The bill permits DWD to reduce or eliminate the levy for any year. The bill also directs DWD to reduce the solvency rate of each employer that pays an assessment for any year in which an assessment is levied by the assessment rate applicable to that employer for that year.

Under the bill, revenue received from the assessment may only be used for the purpose of design or development of unemployment insurance information technology systems. The bill also appropriates $1,450,000 from existing federal revenues and existing revenues received by DWD as interest on late payments and penalties for late payments and certain other violations of the unemployment compensation law to be used for the same purpose. The bill directs DWD to submit quarterly reports to the council on unemployment insurance describing the use of any moneys expended by DWD for this purpose and the status of any project for which moneys were expended.

Personal liability for certain business obligations

Currently, if an individual is an officer, employe, member or manager holding at least 20% of the ownership interest of a corporation or limited liability company, if the individual has control of or responsibility for filing unemployment compensation contribution reports or making unemployment compensation payments and the individual wilfully fails to file such reports or to make such payments, the individual may be found personally liable for any payments due, including interest, tardy payment or filing fees, costs and other fees if the corporation or limited liability company is unable to make these payments. This bill provides that ownership interest of a corporation or limited liability company for these purposes includes ownership or control, directly or indirectly, by the individual, by the individual's spouse or child, by the individual's parent if the individual is under age 18, or by a combination of 2 or more of them, as well as such ownership of an interest in a parent corporation or limited liability company of which the corporation or limited liability company is a wholly owned subsidiary.

Other changes

Law name change

The bill changes the name of the unemployment compensation law to the "unemployment insurance" law and makes terminology changes throughout the statutes to effect the name change.

Performance of services for customers of employe service companies

Currently, an employe service company is considered to be the employer of an individual for unemployment compensation purposes if the individual performs services for a client or customer of the employe service company and the employe service company is taxed under the Federal Unemployment Tax Act on the basis of that employment. This bill substitutes a rule that an employe service company is considered to be the employer of an individual who the company engages in employment to perform services for a client or customer of the company.

Set aside, amendment, reopening, reversal or modification of certain determinations and decisions

Currently, DWD may set aside or amend an initial determination concerning the eligibility of a claimant to receive unemployment compensation benefits within one year of the determination to correct a mistake, unless a party has filed a timely request for a hearing as to the determination. Unless a party has filed a timely petition for review of a decision, an appeal tribunal (hearing examiner) may similarly reopen any decision concerning benefit eligibility or the status of an employer within one year of the decision if the tribunal determines that false testimony was given or false evidence was offered. The labor and industry review commission (LIRC) may set aside any final determination of DWD or any decision of an appeal tribunal or LIRC within one year of the determination or decision upon the grounds of mistake or newly discovered evidence. Currently, DWD is not authorized to set aside any decision of an appeal tribunal and is not authorized to reverse, modify or set aside any decision of LIRC. This bill extends from one year to 2 years the period during which determinations and decisions may be set aside, amended or reopened under the circumstances currently provided. The bill also permits DWD to set aside or amend an initial determination at any time if DWD determines that the benefits paid or payable to a claimant have been affected by wages earned by the claimant which have not been paid, and DWD is provided with notice from the appropriate state or federal court or agency that a wage claim for those wages will not be paid in whole or in part, unless a party has filed a timely request for a hearing concerning that determination. Similarly, the bill permits an appeal tribunal to set aside a decision of the appeal tribunal at any time (unless a party has filed a timely petition for review of the decision with LIRC), and permits LIRC to set aside a final determination of DWD or a decision of an appeal tribunal or LIRC at any time (regardless of whether an appeal or petition for review has been filed) under similar circumstances if the appeal tribunal or LIRC is provided with similar notice of an unpaid wage claim. In addition, the bill permits DWD to set aside or amend any decision of an appeal tribunal adverse to a claimant that has been issued within the 4-year period preceding the day the bill becomes law, and permits DWD to reverse, modify or set aside any decision of LIRC adverse to a claimant that has been issued within that period, if DWD finds that the benefits paid or payable to the claimant have been affected by wages earned by the claimant which have not been paid, and DWD is provided with notice from the appropriate state or federal court or agency that a wage claim for those wages will not be paid in whole or in part, unless a timely petition for review by LIRC has been filed or a timely action for judicial review has been commenced.

Coverage of Wisconsin service corps and Wisconsin conservation corps employes

Under current state laws governing the Wisconsin service corps (WSC) and the Wisconsin conservation corps (WCC), no corps enrollee in the WSC and no corps member or assistant crew leader in the WCC is eligible for unemployment compensation benefits by virtue of his or her employment in the corps. Conflicting provisions of the same laws provide that to the extent permitted by federal law, the WSC and WCC programs shall be considered work-relief and work-training programs for the purpose of determining eligibility for unemployment compensation benefits.

Under current state law governing the unemployment compensation program, no corps member or assistant crew leader in the WCC is eligible for unemployment compensation benefits by virtue of his or her employment in the WCC. In addition, an individual serving in a position receiving work relief or work training as a part of a work-training or work-relief program assisted or funded by a state agency is not eligible for unemployment compensation benefits based on such service except as the agency otherwise elects with the approval of DWD. This provision is based on federal law, which generally requires states participating in the federal-state unemployment compensation program to provide benefits for employes of state agencies except, if a state elects, for individuals performing service as a part of an unemployment work-relief or work-training program assisted or funded by a state agency if the individuals receive work relief or work training under the program [26 USC 3309 (b) (5)]. "Work relief" and "work training" are interpreted by DWD in accordance with standards imposed by the U.S. department of labor.

This bill deletes the provisions of current state laws governing the WSC and WCC programs. In addition, the bill deletes the provision of current state law governing the unemployment compensation program specifying that a corps member or assistant crew leader in the WCC is ineligible to receive unemployment compensation benefits by virtue of his or her employment in the WCC, but retains the disqualification for individuals receiving state-assisted work relief or work training.

Other

For further information see the state and local fiscal estimate, which will be printed as an appendix to this bill.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

SB327, s. 1 Section 1. 6.10 (9) of the statutes is amended to read:

SB327,8,4 6.10 (9) No person loses the right to vote at the person's place of residence while receiving public assistance or unemployment compensation insurance even if the legal settlement for assistance is elsewhere.

SB327, s. 2 Section 2. 15.227 (3) of the statutes, as affected by 1997 Wisconsin Act 3, is amended to read:

SB327,9,9 15.227 (3) (title) Council on unemployment compensation insurance. There is created in the department of workforce development a council on unemployment compensation insurance appointed by the secretary of workforce development to consist of 5 representatives of employers and 5 representatives of employes appointed to serve for 6-year terms and a permanent classified employe of the department of workforce development who shall serve as nonvoting chairperson. In making appointments to the council, the secretary shall give due consideration to achieving balanced representation of the industrial, commercial, construction, nonprofit and public sectors of the state's economy. One of the employer representatives shall be an owner of a small business or a representative of an association primarily composed of small businesses. In this subsection, "small business" means an independently owned and operated business which is not dominant in its field and which has had less than $2,000,000 in gross annual sales for each of the previous 2 calendar years or has 25 or fewer employes. A member vacates his or her office if the member loses the status upon which his or her appointment is based.