Department of Workforce Development

Management: James Buchen, Alfred Peck, Earl Gustafson, Robert Oyler, Daniel Petersen

Chair: Gregory Frigo

Department Staff Present:  Bruce Hagen, Richard Tillema, Michelle Kho, Thomas Smith, Carol Laudenbach, Mary Anderson, Len Wroblewsky, Sue Lowry, Brian Bradley, Teresa Wojick, Charles Schaefer (ALJ from Eau Claire), Frances Healy, Tim Haering

Others present: Robert Anderson of WCCF, Bill Smith of NFIB, John Metcalf of WMC, Jason Rostan of Rep. Hundertmark’s Office, Jim Pflasterer of LIRC

Frigo called the meeting to order. Hagen congratulated Oyler on being a new Harley Davidson dealership owner. Frigo distributed the minutes from the previous two council meetings to review.

Hagen gave an overview-update on the Bush-USDOL devolution proposal, yet to be introduced, said the draft proposal protected DOL turf, keeps .2% FUTA surtax but drops the .6% FUTA in favor of state-determined UI program levy.

Hagen noted 6 states do not collect enough FUTA to run UI programs, said Wisconsin loses funds on the draft plan, predicted state would need at least .5 UI tax to run current UI program with ES services, not adjusted for inflation or postage costs. He noted DWD Sec. Reinert has recommended Gov. McCallum write letter of support. Hagen recommended waiting to hear final plan.

Buchen asked for clarity. Hagen noted USDOL gets more funding under their proposal, most states lost, few governors are supporting. Frigo added that the plan retains all federal program mandates and would subject the UI program to state budget battles. Buchen noted the proposed .2% federal tax plus the .5% state tax is still less than the .8% total UI tax businesses pay now.

Lowry gave TSB-TEUC-TEUCX comparison-overview, distributed fact sheets, noted the final federal bill creating TEUC was a totally new program and not previously analyzed by the state, added that Wisconsin is one of 5 states affected by TEUCX.

Buchen asked for clarity on the benefit extension on-trigger, Lowry explained, Platz noted the inequality of the trigger mechanism.

Oyler asked about cost projections. Laudenbach distributed and summarized the cost summary sheet, noted some paid TSB benefits will be charged back to TEUC. Peck asked for clarity on eligibility, Laudenbach explained. Peck asked about any legal prompt for TSB notices to potentially eligible claimants. Laudenbach noted TSB notice were sent on department initiative, but TEUC mandates eligibility notices. Lowry also commented.

Buchen asked about TEUC ending TSB. Frigo recalled Council approving continuing TSB for those not affected by TEUC. Peck agreed with Frigo. Buchen read from Council meeting minutes, discussed with Frigo the Council consensus on the interplay of TSB and TEUC.

Hagen noted USDOL missed the extra year reach-back of TEUC. Buchen noted employers are paying for that from trust fund. Frigo noted future Reed Act distributions would be smaller due to TEUC costs. Hagen and Peck asked for more analysis of Reed Act and trust fund reductions due to TEUC. Frigo said USDOL had made a significant error. Peck asserted it was not an error.

Anderson noted an appropriation would be needed to use Reed Act funds, noted trust fund balance of $1.382 billion, dropping $4 million each business day. Frigo noted the TSB law assured no tax increases until 2004 despite a low fund balance. Hagen, Bradley discussed the balance. Buchen asked for clarity, Bradley explained. Hagen, Laudenbach discussed fund balances. Frigo promised future updates.

Buchen asked how WSB would have interplayed with TEUC. Frigo, Lowry, Hagen commented. Frigo noted WSB allowed an Executive Order to trigger-off the program.

Laudenbach continued UI benefit caseload update, distributed and summarized 3 charts. Buchen asked for clarity, Laudenbach, Tillema explained. Laudenbach noted TSB is not included on the charts. Gustafson, Petersen asked for clarity, Lyons asked about continuing claims. Laudenbach explained.

Hagen highlighted efforts to reduce appeals backlog. Lyons asked about state budget impact on UI program workload. Hagen noted DWD had 3 GPR cuts, bit none affecting UI. He noted a budget provision would end state benefits for 50% FTE positions, would raise eligibility threshold to 70%, noted some half-timers may quit rather than increase to 70% to keep benefits, added some may shift to 70% despite insufficient workload.

Frigo introduced ALJ Schaefer’s presentation on the proposed attendance-misconduct rule. Schaefer commented on his analysis of ALJ-LIRC ruling comparisons, commented on the conflict between employers’ no-fault policies and the state requirement that ALJ’s determine fault, offered insight into how ALJ’s make their fault determinations, commented on the differential effect of no-fault rules on different types of businesses, concluded on the difficulty of making one-size-fits-all no-fault rule.

Peck asked for clarity, noted small employers are disproportionately hurt by poor attendance, emphasized his desire for a consistent rule. Schaefer gave an example of disproportionate effect of no-fault rule on different industries. Peck felt Schaefer’s analysis implied employers may abuse no-fault rule to layoff and deny benefits for less productive employees. Peterson commented. Peck and Schaefer discussed the rule’s potential for abuse.

Hagen asked whether ALJ’s decide misconduct cases based personal opinion of how critical absences are, asserted ALJ’s lack sufficient info to make that sort of judgement. Schaefer defended his assertion that some industries are less effected by no-shows. Peterson commented on absences in construction industry. Frigo noted a general no-fault rule may not fit all.

Buchen said Management proposed an attendance disqualification related to misconduct. Schaefer said that would require a statute change, not a rule.

Hagen offered a hypothetical case of no-fault rule in different businesses, Schaefer commented on how an ALJ might rule. Peck asked if Schaefer was proposing less strict rule for less important employees, more strict rule for more important employees.

Oyler asked about the effect on the temporary help industry, applying differential no-fault rules to an employee with many employers. Schaefer gave an ALJ perspective, added ALJ’s lean to employer testimony on each case. Oyler, Gustafson comment.

Buchen reiterated that Management sought to take judgement out of the determination, make it strictly no-fault. Peck commented on employers adjusting to attendance problems. Lyons commented.

Schaefer offered a rule idea, noted the attendance problem is not strictly a UI issue. Peck agreed. Schaefer suggested employers create a "reasonable" attendance policy "reasonably"
applied as a basis for the no-fault rule, noted the difficulty of meshing a no-fault rule with the current misconduct statute, suggested a separate attendance statute may be needed.

Buchen reiterated that Management sought to take judgement out of the determination, to create standards where employers do not have to testify to defend discharges, suggested the rule would need to include a standard for notification (since ineligibility would be based on absences without notice). -- and a non-notification standard that requires no adjudication.

Schaefer, Laudenbach noted excessive absenteeism almost always leads to misconduct and ineligibility. Peterson emphasized rule must be free of adjudication. Schaefer noted that un-noticed absences would still require adjucator to determine whether notice was given. Peck, Lyons comment.

Peterson, Hagen, Schaefer comment on ALJ discretion in absence-misconduct cases. Platz mused on the possibility of creating by law a "reasonable" absence policy standard in a UI rule.

Frigo, Buchen discussed the difference between a law change and a rule change. Buchen noted employers’ desire to end employees abusing absence rule to get fired and collect UI. Buchen, Schaefer discussed whether Schaefer’s proposal would work for Management. Buchen said he seeks to remove subjectivity from the process, he may eventually lobby for a statute change.

Frigo, Peck discussed the desired numerical formula for the proposed rule. Schaefer, Laudenbach discussed "excused" absences. Buchen said Management will get together to form precise standards for the rule. Frigo, Buchen commented on the benefit of the hypotheticals in discussing the no-fault rule.

Platz recalled several attendance policies, noted employers do not consistently apply policies. Peck asked to see some of the absenteeism policies.

T Smith detailed progress on the emergency and permanent rules on the 7-day extension for filing initial claims, said the emergency rule could be applied by Sunday (April 14). Frigo said the Council may wish to take a position on the permanent rule, said the Council will get to review it. Peck motion for approval of the emergency rule, Platz seconded: Buchen, Peck, Gustafson, Oyler, Petersen, Bolton, Platz, and Lyons approved the emergency rule.

Frigo noted several rules yet to be drafted.

T Smith detailed the alien exclusion rule, noted USDOL will not permit retroactive refunds of taxes paid, only credits against future UI taxes. Bradley commented on employers response to the non-refundable taxes. Hagen asked for clarity, Bradley noted the credit would not affect employers’ experience ratings. Anderson, Frigo, Hagen comment on the credit application process.

Oyler noted the impact of the credit on employers’ financial statements, said some employers would be disappointed by no refund. Frigo and Bradley noted no interest was required to be paid on the tax credits.

Frigo noted Land’s End was upset over the end of partial successorships. Bradley explained the situation. Buchen, Peck, Anderson commented on the effect on the fund balance and experience ratings.

Frigo suggested scheduling future UIAC public hearings and meetings. Council members present agreed to May 23 in Milwaukee, June 28 in Green Bay, July 25 in Eau Claire (hearing only), September 26b in Madison.

Frigo asked about polling Council members by email to schedule meetings, noted Penkalski is the only member without email. Buchen suggested shifting the remainder of today’s agenda to the next meeting. Buchen moved, Platz seconded approval of the UIAC minutes for December 7, 2001 and January 10, 2002. Buchen, Peck, Gustafson, Oyler, Petersen, Bolton, Platz, and Lyons approved both minutes.

Hagen commended Council members for their lobbying effort toward getting federal TEUC bill. Meeting was adjourned.