AB553: Bill Text

LRB-3682/1

JTK&DAK:kmg:pg

2001 - 2002 LEGISLATURE

2001 Assembly BILL 553

October 10, 2001 - Introduced by Representatives Hundertmark and Turner, cosponsored by Senators Hansen and A. Lasee. Referred to Committee on Labor and Workforce Development.

AB553,2,5 An Act to renumber 108.02 (12m) (c) and (d); to renumber and amend 108.02 (12m) (intro.), 108.02 (12m) (a) and (b), 108.02 (12m) (e) and 108.09 (3) (a); to amend 20.445 (1) (gh) (title), 20.445 (1) (nb) (title), 49.45 (10), 108.02 (10m), 108.02 (13) (a), 108.02 (15) (f) (intro.), 108.02 (15) (g) (intro.), 108.02 (15) (j) 4. and 5., 108.02 (15) (k) 18. c., 108.02 (15) (k) 19. b., 108.02 (15) (n), 108.02 (22m), 108.04 (2) (a) 3., 108.04 (7) (h), 108.04 (8) (c), 108.04 (13) (d) 4. (intro.), 108.04 (16) (b), 108.04 (17) (b), 108.04 (17) (e), 108.04 (17) (h), 108.05 (1) (L) (intro.), 108.05 (7) (a) 1., 108.05 (7) (f) 1., 108.065 (1), 108.16 (6) (g), 108.16 (6m) (a), 108.16 (8) (b) (intro.), 108.16 (8) (b) 2., 108.16 (8) (b) 3., 108.16 (8) (c) 3., 108.16 (8) (e) 3., 108.16 (8) (f), 108.17 (2), 108.19 (1e) (a) and (d), 108.19 (1m), 108.20 (3), 108.22 (1) (am), 108.22 (1) (b), 108.22 (1) (e), 108.22 (1m), 108.225 (1) (a) to (c) and 108.225 (16) (intro.); and to create 108.02 (15) (gm), 108.02 (15) (j) 6., 108.02 (15) (k) 20., 108.02 (17m), 108.02 (20g), 108.02 (21c), 108.02 (21e), 108.02 (23g), 108.02 (29), 108.05 (1) (m) and (n), 108.065 (1m), 108.067, 108.09 (3) (a) 2., 108.14 (2e), 108.14 (19), 108.141 (7) (c), 108.152, 108.16 (8) (c) 4., 108.16 (8) (e) 4., 108.16 (8) (L), 108.17 (2c), 108.17 (2g), 108.22 (1) (ad) and 230.12 (1) (g) of the statutes; relating to: various changes in the unemployment insurance law, appointment of temporary reserve appeal tribunals, requiring the exercise of rule-making authority, and making an appropriation.

Analysis by the Legislative Reference Bureau

This bill makes various changes in the unemployment insurance law. Significant provisions include:

Benefit rate changes

Currently, weekly unemployment insurance benefit rates for total unemployment range from $46 for an employee who earns wages (or certain other amounts treated as wages) of at least $1,150 during at least one quarter of the employee's base period (period preceding a claim during which benefit rights accrue) to $313 for an employee who earns wages (or certain other amounts treated as wages) of at least $7,825 during any such quarter. This bill adjusts weekly benefit rates for weeks of unemployment beginning on or after December 30, 2001, and before December 29, 2002, to rates ranging from $48 for an employee who earns wages (or certain other amounts treated as wages) of at least $1,200 during at least one quarter of the employee's base period to $324 for an employee who earns wages (or certain other amounts treated as wages) of at least $8,100 during any such quarter; and beginning on or after December 29, 2002, to rates ranging from $49 for an employee who earns wages (or certain other amounts treated as wages) of at least $1,225 during at least one quarter of the employee's base period to $329 for an employee who earns wages (or certain other amounts treated as wages) of at least $8,225 during any such quarter.

Other Benefit changes

Offset of social security benefits

Currently, with certain exceptions, if benefits are payable to a claimant for any week for which the claimant receives a pension payment from a governmental or other retirement system (including the social security system) maintained or contributed to by an employer for which the claimant worked during his or her base period (recent work period during which benefit rights accrue), the benefits received by the claimant for each week are reduced by the amount of the pension payment received for that week, except that if the payment is received under the Social Security Act the benefits received by the claimant for each week are reduced by 50% of the gross amount of the social security payment received for that week. This bill provides that, beginning with the first full week of 2003, all payments received by a claimant under the Social Security Act are not included in determining the amount of any required unemployment insurance benefit reduction.

The bill also provides that for all weeks beginning in 2002 the benefits received by a claimant for each week in which the claimant receives a payment under the Social Security Act are reduced by only 25% of the gross amount of the social security payment received by the claimant for that week.

Search for work

Currently, during the 104-week period that began on January 2, 2000, in order to receive benefits for a week in which a claimant earns no wages, the claimant must conduct a reasonable search for suitable work during that week, unless otherwise permitted by the department of workforce development (DWD) by rule. The search must include at least two actions each week that constitute a reasonable search as prescribed by DWD by rule. After this period, a claimant must simply seek suitable work in order to remain eligible for benefits, but there are no specific statutory requirements concerning what constitutes a reasonable search. This bill extends this period during which the specific statutory requirements apply to 156 weeks, and also directs DWD, by rule, to require claimants to conduct a reasonable search for work after this 156-week period, and to prescribe, by rule, standards for the search to be considered reasonable.

Requalification for employees receiving certain training

Currently, with certain exceptions, if an employee is unable to work or unavailable for work, has not registered for work, or is not seeking suitable work, the employee's benefits are reduced or the employee is ineligible to receive benefits. Also currently with certain exceptions, if an employee fails, without good cause, to accept suitable work when offered or to return to work when recalled by his or her employer, the employee is ineligible to receive benefits for the next 4 full weeks and until the employee requalifies by earning a specified amount of wages in certain employment. One exception permits an employee to receive benefits without requalifying if the employee enrolls in or leaves work to participate in training approved under the federal Trade Readjustment Act. This bill also permits an employee to receive benefits without requalifying if the employee enrolls in or leaves work to participate in training under a state plan approved under the federal Workforce Investment Act. The cost of benefits paid to an employee under the current exception is generally charged to the employer or employers that employed the employee during his or her base period. Under this bill, the cost of benefits resulting from the current exception and the proposed exception is charged to the balancing account of the unemployment reserve fund, which is financed from contributions (taxes) of all employers that are subject to a requirement to pay contributions, unless the employee's employer or employers do not pay contributions, in which case the cost of benefits is generally chargeable to the employee's employer or employers.

Charging of certain benefits paid after recall

Currently, if an employee fails, without good cause, to return to work with a former employer that recalls the employee within 52 weeks after the employee last worked for the employer, the employee is ineligible to receive benefits for the next 4 full weeks and until the employee requalifies by earning a specified amount of wages in certain employment. Currently, the cost of benefits paid to an employee who fails, without good cause, to return to work with an employer after the employee requalifies is generally charged to the employer or employers that employed the employee during his or her base period. Under this bill, the cost of benefits that would otherwise be chargeable to the recalling employer is charged to the balancing account of the unemployment reserve fund, unless the employee's employer or employers do not pay contributions, in which case the cost of benefits is generally chargeable to the employee's employer or employers.

Rule making

The bill directs DWD to submit proposed rule changes to the legislative council staff no later than the first day of the 11th month beginning after the day the bill becomes law to:

1. Decrease the number of hours per week that a claimant must remain available for work in order to receive benefits from 35 to 32.

2. Establish a specified level of repeated absenteeism or repeated tardiness that will permit an employer to terminate an employee without being required to pay the cost of any benefits for which the employee may qualify resulting from the base period applicable to the date of termination, and that will preclude the employee from receiving benefits without requalifying by working for a specified period and receiving a specified amount. (Currently, the degree of absenteeism or tardiness that permits such action varies depending upon the facts of each case.)

3. Specify, in accordance with applicable administrative and judicial interpretations, what constitutes an "establishment" for purposes of a current disqualification from receipt of benefits because of a labor dispute in the establishment in which an employee is or was employed.

The bill also directs DWD to promulgate an emergency rule no later than the 90th day after the bill becomes law to extend the current deadline for filing an initial claim for benefits from the end of the initial week for which benefits are payable to the end of the following week. Currently, emergency rules are generally effective for no more than 150 days. Under the bill, this emergency rule is effective until the first day of the 11th month after the day on which the bill becomes law or the day on which a permanent rule relating to this subject matter becomes effective, whichever is sooner, and no finding of emergency is required to promulgate the emergency rule.

Tax changes

Claimant eligibility reviews

This bill directs DWD to conduct reviews of claimants for unemployment insurance benefits in the 2001-03 fiscal biennium to verify adherence to work search requirements and other conditions of eligibility.

Deferral of first quarter contribution liability

Currently, if an employer is liable for the payment of contributions (taxes), the employer must make regular payments for the periods specified by DWD. This bill codifies the existing requirement that these payments be made on a quarterly basis. The bill also permits an employer that has a first quarter contribution liability of at least $5,000 and that is not delinquent in making its contribution payments or in paying any interest, penalties or fees assessed against the employer for unemployment insurance purposes to defer payment of up to 60% of the contribution liability of the employer for the first quarter of the year in which the liability accrues (normally payable by April 30) without payment of interest, if the employer pays at least 30% of that liability by the following July 31, an additional 20% of that liability by the following October 31 and any remaining liability by the following January 31. Under the bill, if an employer fails to make a deferred payment of contribution liability when due, the employer must pay interest on all contribution liability for the calendar year in which the liability accrues retroactive to April 30 of that year.

Special assessments for information technology systems

Currently, each employer that is subject to a contribution requirement must pay an annual special assessment for each year prior to 2002 in an amount that may not exceed the lesser of 0.01% of the employer's annual taxable payroll for unemployment insurance purposes or the employer's solvency contribution for that year for the purpose of financing the renovation and modernization of the unemployment insurance tax and accounting system. DWD must reduce the solvency rate that an employer must pay in each year prior to 2002 by the special assessment rate applicable to that employer for that year. (The solvency rate is the portion of an employer's contribution rate that is used to maintain the solvency of the unemployment reserve fund.) This bill makes the special assessment requirement and solvency rate offset applicable to calendar years 2002 and 2003. The bill also permits DWD to use the revenue generated by the assessments for the design, or development of, unemployment insurance information technology systems generally, including the tax and accounting system.

Other changes

Coverage of and financing of benefits by Indian tribes and tribal units

Currently, the unemployment insurance law of this state applies to Indian tribes so that the tribes or units are generally subject to the requirement to pay contributions (taxes) to this state on services performed for them and employees of the tribes are potentially eligible to claim benefits. However, under federal law, tribes that are recognized by the federal government are not generally subject to the jurisdiction of this state except as federal law permits or requires. On December 20, 2000, the federal government required this state to make Indian tribes subject to the unemployment insurance law of this state and to pay benefits to employees of the tribes to the same extent as other employers and employees generally.

This bill specifically applies the unemployment insurance law of this state to Indian tribes and their employees. However, in accordance with federal requirements, the bill accords Indian tribes, tribal units, or combinations of tribal units the privilege of financing the payment of benefits to their employees on a reimbursement basis after benefits are claimed in lieu of payment of regular contributions as is generally required of most other employers. The bill also prescribes procedures for and restrictions on the election of reimbursement financing by Indian tribes, tribal units, and combinations of tribal units.

Coverage of certain services provided to medical assistance recipients

Currently, under the medical assistance (MA) program administered by the department of health and family services (DHFS), this state provides assistance to finance certain health care costs of needy individuals. Private-duty nursing service or part-time intermittent care provided to an MA recipient by an individual who is certified by DHFS as a nurse in independent practice or an independent nurse practitioner and respiratory care service provided to an MA recipient by an individual who is certified by DHFS as a provider of respiratory care services in independent practice are generally subject to contribution requirements (taxation) under the state unemployment insurance law and the individuals who perform these services are potentially eligible to claim benefits. This bill eliminates coverage of these services under the state unemployment insurance law if they are provided by an individual who is not an employee of a home health agency (an organization licensed by DHFS that provides skilled nursing and other therapeutic services). Under the bill, the recipients of these services are no longer subject to contribution requirements and claimants are no longer eligible to claim benefits based on the performance of these services.

Coverage of certain nonresident aliens

Currently, the services of nonresident aliens who are lawfully admitted to the United States for certain purposes, as well as the services of their spouses and minor children who are admitted for the same purposes, are subject to contribution requirements (taxes) under the state unemployment insurance law, but the employees who perform these services are generally not eligible to claim benefits. This bill eliminates coverage of services performed by certain kinds of nonresident aliens who are lawfully admitted to the United States under certain specified visas, thereby eliminating contribution requirements for services performed by these individuals. The change does not affect coverage of services performed by spouses or minor children of these aliens if the spouses or children are not admitted to the United States for the same purposes as their spouses or parents. The change applies retroactively to January 1, 1999.

Contribution report format

Currently, each employer that is subject to the unemployment insurance law must file with DWD periodic reports of contributions (taxes). This bill provides that, if an employer retains an agent to file contribution reports and the agent files contribution reports on behalf of 25 or more employers, the agent must file the contribution reports electronically. Under the bill, employer agents that are subject to this requirement and that fail to file their reports electronically may be assessed a penalty of $25 for each employer whose report is not filed electronically.

Temporary reserve appeal tribunals

Currently, DWD employs individuals to serve as "appeal tribunals," who hear and decide appeals of initial determinations made by employees of DWD with respect to unemployment insurance matters. With limited exceptions, these individuals must be permanent employees of DWD. This bill permits DWD to employ an individual who formerly served as an appeal tribunal, and who retired from state service as a permanent employee, to serve as a temporary reserve appeal tribunal. The individual must be an attorney who is licensed to practice in this state. Currently, the rates of pay for limited term state employees are fixed under the state compensation plan. This bill provides that the compensation plan must include a provision specifying that, if an individual receives a limited term appointment as a temporary reserve appeal tribunal, DWD may compensate the individual at a rate not more than the base pay rate that the individual was paid at the time of his or her separation from DWD, plus any intervening adjustment made since that separation.

Treatment of employee leasing arrangements

Currently, an employer is generally liable for contributions (taxes) or benefit reimbursements based on an individual's employment if the individual is subject to the employer's control or direction over the performance of the individual's services. However, if an individual performs services for a client or customer of an employee service company under contract, the employee service company is liable for the contributions (taxes) or benefit reimbursements based on those services under certain specified conditions. This bill discontinues the existing category of "employee service company" and replaces it with two new categories called "professional employer organization" and "temporary help company." Under the bill, a professional employer organization or a temporary help company is treated as the employer of individuals who perform services for the entities with whom the organizations or companies contract under certain specified conditions. Professional employer organizations generally engage individuals on an ongoing basis to perform services for the entities with whom they contract, whereas temporary help companies engage individuals on a temporary basis to support or supplement the workforce of the entities with whom they contract.

Electronic submissions

Under current state law, unless otherwise provided, any document that may be submitted in writing to a state agency and that requires a signature may, with the consent of the agency, be submitted in electronic format. Federal law may also require or permit state agencies to accept certain documents electronically. This bill specifically permits DWD to provide a secure means of electronic interchange between itself and employing units, claimants, and other persons which, upon request to and with prior approval by DWD, may be used for departmental transmission or receipt of any document that is related the administration of the unemployment insurance law in lieu of any other means of submission or receipt currently provided. The bill also provides that, if a due date is established by statute for the receipt of any document that is submitted electronically to DWD, then that submission is timely only if the document is submitted by midnight of that due date.

Liens for unpaid reimbursements and certain forfeitures