By: Daniel Finerty

The 2013 – 2015 Biennial Budget bill currently in front of the Joint Financial Committee now includes Motion #506, which was passed yesterday by a vote of 12 – 4. Motion #506 contains a number of substantial amendments to the provisions of Wisconsin’s unemployment insurance (“UI”) law that are commonly cited by business owners, human resource professionals and others as among the most frustrating.

In short, these pro-employer changes will dramatically affect an employer’s decision regarding how, and which, UI claims to challenge and whether to appeal UI claims that have been granted to an Appeal Tribunal hearing in order to take advantages of the UI changes provided by this legislation to successfully defend the employer’s UI reserve account and, in doing so, ensure that the employer does not experience a tax increase when the account is evaluated the following July 1st.

Here is a quick summary of the changes that are part of Motion #506, which, if ultimately included in the budget signed by the Governor, would first apply to UI claims filed during the week of January 5, 2014:

 Misconduct is specifically defined by, to some extent, codifying the prior Labor and Industry Review Commission (“LIRC”) cases that have held misconduct can be found where an employee violates an employer rule and/or if found to have committed any of the following offenses:

o Violation of an employer’s reasonable substance abuse policy;

o Theft;

o Conviction of a crime or other offense involving a civil forfeiture that precludes the employee from working for the employer (e.g., a truck driver’s drunk driving citation);

o One or more threats or acts of harassment, assault, or other physical violence instigated by an employee in the workplace;

o Absenteeism on more than two (2) occasions within the 120

days before the date of termination, unless permitted by the employer’s employment manual, or excessive tardiness in violation of the employer’s policy, if the employee does not provide notice and one or more valid reasons for the absenteeism or tardiness;

o Falsifying business records, unless directed by the employer; and,

o A willful and deliberate violation of a written and uniformly applied standard or regulation of the federal, state, or tribal government, an agency of which licenses the employer, provided the violation could cause the employer to be sanctioned or to have its license or certification suspended by the agency.

 A secondary misconduct provision of lesser proof called “substantial fault,” which includes those acts or omissions of an employee over which the employee exercised reasonable control and which violated reasonable requirements of the employer but would not include the following:

o One or more minor infractions of rules unless an infraction is repeated after the employer warns the employee about the infraction;

o One or more inadvertent errors made by the employee; or,

o Any failure by the employee to perform work because of insufficient skill, ability or equipment.

•   Require a UI claimant claiming benefits against a temporary help agency, in order to maintain eligibility each week, to conduct two (2) actions that constitute a reasonable search for suitable work (NOTE: another provision of the budget bill requires a UI claimant to conduct at least four (4) actions that constitute a reasonable search for suitable work but is not specifically limited to temporary help agencies);
•   Modify the rules surrounding an employer’s complete holiday shutdown by reducing the number of hours that the employee could have worked or been paid by eight (8) hours, from the

current 32 hour level, during the holiday week if the employer provides the require advance notice to DWD of the designated federal or state holidays, which can be no more than seven (7) days total.

The Department of Workforce Development estimates that the foregoing provisions would reduce UI benefit payments by Wisconsin employers by an estimated $14.1 million between July 1, 2013 and June 30, 2014 and by $23.1 million between July 1, 2014 and June 30, 2015.

While Motion #506 does also increase the UI tax rates upon Wisconsin employers, and makes other changes to the financial structure of the program, it is likely that the anticipated reductions in the payment of UI benefits by employers may offset any tax increase that employers experience. However, if the UI changes are included in the budget bill and signed by the Governor, the UI tax increase can only be offset by lower benefit payments for Wisconsin employers that utilize these beneficial changes detailed above to appropriately defend their UI accounts.

By contrast, Wisconsin employers that do not utilize the UI changes to their advantage will likely feel the greater effect of the UI tax rate increase.

We will provide additional information regarding whether or not the UI changes are included in the final budget bill that is ultimately presented to the legislature for passage and the Governor for signature.

If you have questions about the proposed UI changes, Appeal Tribunal hearings or other appeals, or other issues, please contact Daniel Finerty at 414-226-4807, or any other Lindner & Marsack attorney at 414-273-3910.