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 states 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). Wisconsins 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
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 claimants 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 claimants 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: (608) 266-1639
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
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.
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