July 3, 2013 – Gov. Scott Walker recently signed the 2013-2015 biennial budget bill (Assembly Bill 40), enacted as 2013 Wisconsin Act 20, which makes substantial changes and amendments to Wisconsin’s unemployment insurance law.

These changes, which will apply to unemployment insurance benefit determinations that are issued or appealed on or after Jan. 5, 2014, will affect the adjudication of UI claims by current and former employees against Wisconsin employers.

Wisconsin lawyers, including labor, employment and corporate lawyers – as well as those attorneys that own and/or manage their own firms or other businesses – should be aware of these changes and how they will modify existing Wisconsin law.

Below is a summary of the changes that are part of the budget, which modifies Chapter 108 of the Wisconsin Statutes.

Act 20 Modifies or Eliminates Several Key Eligibility and Misconduct Provisions and Eliminates a Number of “Voluntary Quit” Exceptions 

Act 20 modifies several key provisions which regulate Chapter 108 provisions governing employee eligibility for UI benefits, disqualification from eligibility for UI benefits as a result of misconduct or substantial fault by an employee and eliminates the number of available exceptions which permit an employee to voluntarily quit work and collect UI benefits. In doing so, Act 20 is expected to reduce the amount of benefits paid out by Wisconsin employers and strengthen the overall fiscal health of the UI system.

Eligibility 

• Act 20 requires a unemployment insurance claimant, in order to maintain eligibility each week, to conduct at least four actions that constitute a reasonable search for suitable work instead of only two actions required under current law. Additionally, the department may increase an individual’s minimum number beyond four actions in any week – so long as it is a uniform change for similar types of claimants.

• Act 20 also requires an unemployment insurance claimant claiming benefits against a temporary help agency to contact the temporary help agency weekly about available assignments to maintain eligibility. The contact will constitute one reasonable search for suitable work action for the overall four action minimum.

Misconduct And The Creation of a New Disqualification Provision  

Act 20 revises the commonly-cited definition of “misconduct by codifying the prior Labor and Industry Review Commission cases to now specifically include the the following situations where an employee is found to have engaged in the following conduct:

• Violation of an employer’s reasonable substance abuse policy concerning the use of alcohol beverages, use of a controlled substance or use of a controlled substance analog if the employee: 1) had knowledge of the alcohol beverage or controlled substance policy; and 2) admitted to the use of alcohol beverages, a controlled substance, or controlled substance analog, refused to take a test or tested positive for the use of such substances in a test used by the employer in accordance with a DWD-approved testing methodology;

• Theft of an employer’s property, services, money (of any value), felonious conduct connected with an employee’s employment with his or her employer, or intentional or negligent conduct by an employee that causes substantial damage to the employer’s property;

• Conviction of a crime or other offense, while on or off duty, involving a civil forfeiture that precludes the employee from working for the employer;

• One or more threats or acts of harassment, assault, or other physical violence instigated by an employee at the employer’s workplace;

• Absenteeism on more than two (2) occasions within the 120 days before the date of termination, unless permitted by the employer’s employment manual of which the employee acknowledged receipt, 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 (note: this provision replaces the existing absenteeism/tardiness misconduct provision at Wis. Stat. § 108.04(5g));

• Falsifying the employer’s business records, unless directed by the employer; and,

• 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, which standard has been communicated by the employer to the employee and which violation would cause the employer to be sanctioned or to have its license or certification suspended by the agency, again, unless directed by the employer.

Act 20 creates a secondary misconduct-type disqualification provision, referred to as “substantial fault,” which is defined to include those acts or omissions of an employee over which the employee exercised reasonable control and which violate reasonable requirements of the employer but does not include the following:

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

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

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

“Voluntary Quit” Exceptions 

Act 20 reduces the number of “voluntary quit” exceptions from eighteen to eight. The exceptions codified under Wis. Stat. sections 108.04(7)(d), (g), (j), (k), (m), (n), (o), (p) and (r), respectively below, are repealed and, accordingly, an employee that quits employment for the following reasons would not be entitled to unemployment benefits:

• If the Department of Workforce Development (DWD) determines that the employee quit to accept a recall to work for a former employer within 52 weeks after having last worked for such employer;

• If the employee: 1) maintained a temporary residence near the work; 2) maintained a permanent residence in another locality; and 3) quit work and returned to his or her permanent residence because the work available to the employee had been reduced to less than 20 hours per week in at least two consecutive weeks;

• If DWD determines that the employee quit or lost his or her work because of reaching the compulsory retirement age used by the employer;

• If the employee quit part-time work if the employee is otherwise eligible to receive benefits because of the loss of the employee’s full-time employment and the loss of the full-time employment makes it economically unfeasible for the employee to continue the part-time work;

• If the employee quit work with a labor organization if the termination causes the employee to lose seniority rights granted under a collective bargaining agreement and if the termination results in the loss of the employee’s employment with the employer which is a party to that collective bargaining agreement;

• If the employee, serving as a part-time elected or appointed member of a governmental body or representative of employees, quits work while being engaged in work for a different employer and was paid wages in the quit work constituting not more than 5% of the employee’s base period wages for purposes of benefit entitlement;

• If an employee quits one of two or more concurrently held positions, at least one of which is full-time work, if the employee terminates his or her work before receiving notice of termination from a position which is full-time work;

• If DWD determines that an employee, while claiming benefits for partial unemployment, quit work to accept employment or other work covered by UI law of any state or the federal government, if that work offered an average weekly wage greater than the average weekly wage earned in the terminated work; and,

• If DWD determines that the employee owns or controls, directly or indirectly, an ownership interest, however designated or evidenced, in a family corporation, and the employee’s employment was terminated by the employer because of an involuntary cessation of the business of the corporation under certain circumstances.

While the “voluntary quit” exceptions currently codified at sections 108.04(7)(am), (b), (c), (cm), and (q), remain in effect, the following provisions, sections 108.04(7)(e), (L) and (t), respectively, remain in effect but are amended as follows:

• An employee that accepts work which the employee could have failed to accept with “good cause” under Wis. Stat. §108.04(7)(b) and terminated such work with the same good cause may only terminate such work within 30 days after starting the work in order to be entitled to UI benefits, instead of the ten (10) weeks period formerly provided for in this section;

• An employee who quits work to accept certain types of employment or other work covered by UI laws of any state or the federal government will no longer be required to have earned wages in the subsequent work, repealing the former 4-week earning requirement;

• An employee who quits work because his or her spouse changes their place of employment such that a commute is impractical and the employee quit to follow the spouse would only be permitted to collect UI benefits where the employee’s spouse is a member of the U.S. armed forces on active duty, the employee’s spouse was required by the U.S. armed forces to relocate to a place to which it is impractical for the employee to commute, and the employee terminated his or her work to accompany the spouse to that place.

Vetoed Provision 

Gov. Walker did use the line item veto authority to veto 57 provisions of AB 40, only one of which would have affected Wis. Stat. ch.108.¹

The provision, which modified employee eligibility for partial unemployment benefits during holiday weeks, was vetoed to ensure further consideration of the provision’s compliance with existing state and federal regulations and in order to ensure that the provision does not jeopardize federal grant funds.

Conclusion 

The budget’s changes contain fairly substantial changes to ch. 108. These changes will impact not only the adjudication of unemployment insurance claims but also will impact decision-making by Wisconsin employers and employees involved in unemployment insurance benefits claim disputes.

Accordingly, Wisconsin lawyers should to be aware of these changes in order to advise their respective business and individual clients appropriately.

Endnotes

¹ See Governor Walker’s veto message, at p. 2 (last visited, July 1, 2013).