Dec. 4, 2013 – The 2013-15 Biennial Budget Bill, 2013 Wisconsin Act 20 made substantial changes to Wisconsin’s unemployment insurance laws.
These changes – some of which became effective on Sept. 30, 2013, and the rest on Jan. 5, 2014 – are intended to help Wisconsin employers reduce their unemployment insurance costs and obligations.
In the next few months, lawyers should assist clients in reviewing personnel policies and procedures to ensure they are consistent with new changes in the law.
The article explains the major changes that must be squared with existing policies and procedures. Additionally, by implication, the article also explains what this means for employees.
Cafeteria Plan Deductions and Payments
Effective Sept. 30, 2013, pre-tax salary deductions and payments made by employers to 26 U.S.C. section 125 cafeteria plans are no longer included as base-period wages.
Before Act 20, the term “wages” included pre-tax salary deductions and payments to section 125 cafeteria plans, even though the value of the deductions and payments toward the section 125 cafeteria plan were not taxed or otherwise treated as wages.
This expanded definition of “wages” increased the weekly benefit amount of unemployment compensation benefits available to the claimant (but not beyond the maximum weekly benefit).
However, as a result of Act 20, for purposes of claims filed on or after Sept. 30, 2013, claimants are no longer able to increase base period wages, pre-tax salary deductions and payments made by employers to section 125 cafeteria plans.
Definition of Misconduct
Under Wis. Stat. section 108.04(5), claimants are temporarily ineligible for unemployment compensation benefits following discharge from employment for “misconduct.” This long-standing provision has been modified under the new law.
The new version of section 108.04(5) applies to new claims for unemployment compensation benefits filed on or after Jan. 5, 2014.
For more than 70 years, the definition of “misconduct” was that set forth in Boynton Cab Co. v. Neubeck & Industrial Comm’n, 237 Wis. 249, 296 N.W. 636 (1941), which provided as follows:
[T]he intended meaning of the term ‘misconduct’ … is limited to conduct evincing such willful or wanton disregard of an employer’s interests as is found in deliberate violations or disregard of standards of behavior which the employer has the right to expect of his employee, or in carelessness or negligence of such degree or recurrence as to manifest equal culpability, wrongful intent or evil design, or to show an intentional and substantial disregard of the employer’s interest or of the employe[e]’s duties and obligations to his employer. On the other hand, mere inefficiency, unsatisfactory conduct, failure in good performance as the result of an inability or incapacity, inadvertencies or ordinary negligence in isolated instances, or good faith errors in judgment or discretion are not to be deemed ‘misconduct’ within the meaning of the statute.
com Slewis dkattorneys Shana R. Lewis, U.W. 1999, is a shareholder with Davis & Kuelthau S.C., Madison. Lewis practices in the areas of labor and employment, school and municipal law, representing public- and private-sector employers. Reach her by com Slewis dkattorneys email or by phone at (608) 280-6207.
More often than not, this burdensome standard allowed claimants to collect unemployment compensation benefits in a variety of situations, including when they had engaged in serious on-the-job misconduct that led to their termination.
As a result of Act 20, section 108.04(5) is amended to incorporate the Boynton Cab definition of misconduct, but expands it to include many employee actions that administrative law judges previously concluded did not meet the high standard.
In addition, Act 20 eliminated the onerous requirements related to the termination of an employee for absenteeism and tardiness, which were previously found in section 108.04(5g), and incorporated absenteeism within the new definition of “misconduct.”
By providing a nonexhaustive list of the specific actions that constitute “misconduct” for purposes of the unemployment compensation benefits, the expectation is that administrative law judges will have less discretion in awarding such benefits to employees terminated for serious misconduct, such that more claimants will be deemed ineligible for unemployment compensation benefits on this basis.
Act 20 created Wis. Stat. section 108.04(5g), which sets forth a new basis for disqualifying claimants from receiving unemployment compensation benefits called “substantial fault.” Section 108.04(5g) first applies to claims for unemployment compensation benefits filed on or after Jan. 5, 2014.
This new provision is intended to cover those acts or omissions by an employee over which he or she has exercised reasonable control and which violate reasonable requirements of the employer. However, the statutory language explains that “substantial fault” does not include:
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; and
Any failure of the employee to perform work because of insufficient skill, ability, or equipment.
Similar to situations involving “misconduct connected with employment,” situations involving “substantial fault” also cause the claimant to be ineligible for unemployment compensation benefits for a period of seven weeks and until the claimant earns at least 14 times the employee’s weekly benefit rate in replacement employment. However, the calculation of wages for recertification purposes is slightly different.
Voluntary Resignation Exceptions
Act 20 also changes the law related to voluntary resignations. These new provisions apply to voluntary resignations that occur as of Jan. 5, 2014.
Before Act 20, an employee could voluntarily resign from employment and still collect unemployment compensation benefits if the circumstances involved in the employee’s resignation satisfied one of 17 exceptions set forth in the Wisconsin Statutes.
The following exceptions are no longer valid reasons for an employee to resign and still be eligible for unemployment compensation benefits:
The employee terminated his or her work to accept a recall to work for a former employer within 52 weeks after having last worked for that employer;
The employee maintained a temporary residence near the terminated work, the employee maintained a permanent residence in another locality, and the employee terminated the 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;
The employee left or lost his or her work because the employee reached the employer’s compulsory retirement age;
The employee terminated part-time work because a loss of other, full-time employment made it economically unfeasible for the employee to continue the part-time work;
The employee terminated his or her work with a labor organization if the termination caused the employee to lose seniority rights granted under a collective bargaining agreement and resulted in the loss of the employee’s employment with the employer that is a party to that collective bargaining agreement;
The employee terminated his or her work in a position serving as a part-time elected or appointed member of a governmental body or representative of employees, the employee was engaged in work for an employer other than the employer in which the employee served as the member or representative, and the employee was paid wages in the terminated work constituting not more than five percent of the employee’s base period wages for purposes of entitlement for benefits;
The employee terminated his or her work in one of two or more concurrently held positions, at least one of which was full-time work, if the employee terminated his or her work before receiving notice of termination from a full-time work position; or
The employee owns or controls an ownership interest in a family corporation and the employee’s employment was terminated because of an involuntary cessation of the business of the corporation under certain specified conditions.
As of Jan. 5, 2014, when an employee voluntarily resigns from employment, he or she shall be eligible for unemployment compensation benefits only if the situation meets one of the following exceptions:
The suspension or termination of the claimant’s work was in lieu of a suspension or termination by the employer of another employee’s work;
The employee terminated his or her work with good cause attributable to the employing unit. In this paragraph, “good cause” includes, but is not limited to, a request, suggestion or directive by the employing unit that the employee violate federal or Wisconsin law, or sexual harassment, as defined in section 111.32 (13), by an employing unit or employing unit's agent or a co-worker, of which the employer knew or should have known but failed to take timely and appropriate corrective action;
The employee terminated his or her work but had no reasonable alternative because the employee was unable to do his or her work, or that the employee terminated his or her work because of the verified illness or disability of a member of his or her immediate family and the verified illness or disability reasonably necessitates the care of the family member for a period of time that is longer than the employer is willing to grant leave. However, if the department determines that the employee is unable to work or unavailable for work, the employee is ineligible to receive benefits while such inability or unavailability continues;
The employee is hired to work a particular shift and the employee terminated his or her work as the result of a requirement by his or her employing unit to transfer his or her working hours to a shift occurring at a time that would result in a lack of child care for his or her minor children, provided that the employee is able to work and available for full-time work during the same shift that the employee worked in the employee's most recent work with that employing unit;
The employee accepted work that the employee could have failed to accept with good cause and terminated such work with the same good cause and within the first 30 calendar days after starting the work, or that the employee accepted work which the employee could have refused and terminated such work within the first 30 calendar days after starting the work. For purposes of this paragraph, an employee has the same good cause for voluntarily terminating work if the employee could have failed to accept the work when it was offered, regardless of the reason articulated by the employee for the termination;
The employee, while serving as a member of the U.S. armed forces, was engaged concurrently in other work and terminated that work as a result of the employee's honorable discharge or discharge under honorable conditions from active duty as a member of the U.S. armed forces for a reason that would qualify the employee to receive unemployment compensation under 5 U.S.C. 8521;
The employee terminates his or her work due to domestic abuse, concerns about personal safety or harassment, the safety or harassment of his or her family members who reside with the employee, or concerns about the safety or harassment of other household members. The employee must providee to the department a protective order relating to the domestic abuse or concerns about personal safety or harassment issued by a court of competent jurisdiction, a report by a law enforcement agency documenting the domestic abuse or concerns, or evidence of the domestic abuse or concerns provided by a health care professional or an employee of a domestic violence shelter;
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.
If an employee voluntarily resigns from employment for a reason not explicitly articulated within Wis. Stat. section 108.04(7), he or she is ineligible for unemployment compensation benefits for a period of four weeks and until he or she earns at least six times the employee’s weekly benefit rate in replacement employment.
Again, these new provisions governing voluntary resignations from employment and unemployment compensation benefits first apply to determinations issued on or after Jan. 5, 2014.
With the substantial changes to Wisconsin’s unemployment insurance laws resulting from Act 20, Wisconsin employers in the private and public sectors should be able to reduce the costs associated with unemployment compensation benefits in the upcoming year. However, in order to take full advantage of these reforms, employers (and the lawyers who advise them) should take the time, now, to review personnel policies and procedures to confirm that they are consistent with the changes to the law.