Gov. Walker's 2017-19 proposed budget (see pp.662-74 in the PDF for the unemployment changes, for example) replaces the Labor and Industry Review Commission's (LIRC or Commission) review of workers' compensation, equal rights, and unemployment cases with review by a division administrator.
The Department of Workforce Development (Department) has supported the Commission's elimination in this proposed budget because of a disagreement with the Commission about what conduct and intent constitutes unemployment fraud/concealment and how the Department can prove that concealment. (See my Wisconsin Unemployment blog post, LIRC's Elimination for a description of the unemployment cases at issue as well as a description of available information about administrator review in place of the Commission, and the article “MORE changes to Work Comp: Elimination of Court Reporters & Appeals Commission?” for information specific to workers' compensation).
Currently, the Commission serves as the administrative equivalent of an appellate court. When decisions are appealed to the Commission, it conducts an independent review of the hearing record to assess whether statutory due process and procedural provisions are followed as well as whether the substantive workers' compensation, equal rights, or unemployment law requirements are followed. In conducting that review, the Commission has established standards and extensive case law for how administrative law judges conduct their hearings and the substance of unemployment, equal rights, and workers' compensation law.
The Proposed Administrator Review
The proposed administrator review contains almost no guidelines or procedures about how it will be conducted or what will be required. Testimony from Department Secretary Ray Allen to the Joint Finance Committee indicates that for unemployment cases, six staff attorneys (out of the six to eight currently employed) will assume additional review responsibilities to enforce the consistent application of unemployment law as determined by the Department's unemployment division.
So, it appears that the proposed review process will serve as a new mechanism by which the Department can determine the meaning and scope of unemployment law and provide a check against administrative law judges that might disagree with the Department. Not only will Department attorneys be prosecuting unemployment cases and assessing administrative law judges in the performance of their job duties, they will also be conducting the administrator review of the unemployment cases being appealed to the administrator. In short, Department attorneys will be judge, jury, and prosecutor all rolled into one. This combination certainly is more efficient.
The Commission: Created as an Independent Agency
Recall that the Commission was created in the late 1970s as an independent agency. Previously, the Commission managed the entire Department of Industry, Labor, and Human Services (the previous incarnation of the Department) and also handled appellate review of discrimination, workers' compensation, and unemployment cases.
At the time, there were concerns raised about staff attorneys and administrative law judges who were involved in cases having a hand in the appellate review of those cases by the Commission, even though at that time there was a separate division dedicated to appellate review. To address those concerns, in part, the Commission and the staff section dedicated to appellate review were separated and made into a distinct agency – what is now called LIRC. In this way, the Commission was insulated from political concerns and improper communications among attorneys who were connected to the parties in a case.
Effects of the Proposal: Political Factors will Prevail
This proposed administrator review ignores these concerns that led to the formation of the current Commission. Furthermore, if Secretary Allen's testimony to the Joint Finance Committee is accurate, this proposed review turns the procedural and substantive requirements of judicial review into nothing more than a checklist for conformity with Department policies.
For unemployment cases, this proposal directly makes the Department's concerns about how a case should be resolved of primary importance. Because cases have to be decided in a timely manner, the unemployment staff attorneys conducting the review on behalf of the division administrator will focus their attention pretty much on the Department's own substantive goals rather than on the concerns of the parties for a fair and impartial hearing free of any thumbs on the scales. Indeed, given that the Department presently accrues to itself substantial funds for the unemployment fraud it alleges against claimants and employers, this proposed review creates a situation ripe for abuse and self-dealing that are averse to any sense of neutral review and the fair application of the law.
In equal rights and workers' compensation cases, the effect of administrator review will have a slightly different impact. There are at present no attorneys in those divisions who can tackle the extensive review of hearing record and arguments currently undertaken by the Commission in these kinds of cases. Accordingly, the administrator in these matters will likely rubber stamp decisions unless there is an inquiry from the governor about a case (the equal rights administrator, after all, is a political appointee who serves at the pleasure of the governor; more on this point below).
In place of the consistency available via Commission review, then, political factors will prevail in short order. Parties will subsequently need to take more of their cases to court and to the Court of Appeals to obtain any kind of substantive consistency in discrimination or workers' compensation law, or to have basic procedural concerns in the conduct of the hearing addressed.
A Chilling Effect on Judicial Independence
Finally, it cannot be ignored that the division administrators who will nominally be responsible for this proposed review are political appointees of the overnor who serve at his or her pleasure. The political concerns that warrant such appointees – responsiveness to the elected officials who appoint them, prioritizing the political concerns of elected officials, applying a party mandate efficiently, and maintaining party discipline in the executive ranks of a state agency – are anathema to the kind of legal review that is needed and expected when any party appeals a decision of an administrative review judge.
Division administrators should certainly expect a phone call from a higher up when considering any politically touchy case, and will almost certainly be given "political" guidance at some point about which kind of factors or parties should be winning these kinds of cases.
Indeed, the reason for the Commission's elimination here – the Department's disagreement over how unemployment concealment cases are proven – establishes an obvious chilling effect on judicial independence of any kind. The message is clear and direct, that disagreement with the Department puts a person's job in jeopardy. When the Department can eliminate an independent agency, administrative law judges certainly will understand that they must do what the Department wants or face similar elimination, regardless of the actual requirements for independent and impartial reviews.