Unemployment Insurance Advisory Council Meeting Minutes
Thursday, June 5, 2008 – 12:00 Noon.
Brown County Library Central
515 Pine Street, Meeting Room
Green Bay, Wisconsin
Management: James Buchen (via telephone), Dan Petersen, Ed Lump, Susan Haine, Earl Gustafson
Labor: Patty Yunk (via telephone), Dennis Penkalski
Chair: Daniel LaRocque
Department staff present: Hal Bergan, Tracey Schwalbe, Dick Tillema, Lutfi Shahrani, Carla Breber.
Others present: Bob Andersen (Legal Action of Wisconsin), Tony Moen.
Mr. LaRocque calls the meeting to order at 12:46 p.m.
3. Proposed DWD 136, Wages Exempt from Unemployment Insurance Levy
Ms. Schwalbe explains that the rule is prompted by adoption of Wisconsin Statute §108.225(16)(am) in the enactment of 2003 Wis. Act 197. In 2003, the Council’s employee representatives proposed that department levies in cases of benefit overpayments conform to procedures in state garnishment law, which provide an exemption of 80% of an individual’s disposable earnings. Act 197 required the department to adopt a rule to prescribe a methodology for application of the exemption. Proposed Dwd 136 is the new rule. We are asking for approval of the Council of the proposed rule. If approved, the department intends to submit the rule to Legislative Council for review, schedule a public hearing and submit the rule to the Legislature.
The rule applies to situations in the collections process where the department has already determined that individuals have been overpaid benefits or has determined that penalties should be imposed for fraud. Ms. Schwalbe distributed copies of letters the department sends prior to proceeding with a levy. A letter to the individual who is the subject of the levy warns that individual that the department will levy his or her wages or bank accounts. Individuals are advised by the letter that the amount of the levy is dependent on the individual’s household size and that the employer will use the number of dependents reported on the individual’s W-4 as the assumed household size unless the individual notifies the employer otherwise. The department has also developed letters to employers explaining the levy and the consequences for not complying with the levy. The packets include the letter and answer forms that employers will be sent. The forms call for the employer to compute the levy amount in a manner that accounts for the exemptions. The department made a considerable effort to assure the forms properly implemented the exemptions and would be understandable to employers. The department provided the forms to Bob Andersen, John Metcalf, and Ed Lump for review in advance of this meeting. We have also had contact with employers that they did not have difficulty filling it out.
The statute provides the calculations for how the department will determine the wages exempt from levy. For penalties imposed against an individual in an employing unit for aiding and abetting fraud, that individual is entitled to an exemption from levy of the lesser of a subsistence amount of 75% of disposable earnings or an amount equal to 30 times the federal minimum hourly wage for a full week or an equivalent pay period. The statute adopted in 2003 dealt specifically with benefit overpayments. For benefit overpayments, an individual is entitled to an exemption of 80% of disposable earnings except that earnings are totally exempt if the individual’s wages are below the federal poverty guidelines or the levy would cause that result. This differs from the garnishment statute somewhat because the garnishment statute counts all household income to determine if the household wages are below the poverty guidelines. The unemployment law counts only the individual debtor’s wages. This is a greater protection for debtors. This was intended with the law change in 2003. The intent at the time also was that if the levy would cause the wages to go below poverty guidelines, the department would be able to levy the difference. This is expressly stated in the garnishment statute, but it was not stated expressly in the unemployment statute. Bob Andersen agreed that it is a reasonable interpretation of the statute to allow levying the difference as long as the levy does not cause the result of putting the wages below poverty guidelines.
In addition to the exemptions in the statute, there are also federal protections of wages against garnishment. All levies and garnishments against an individual cannot exceed 25% of the person’s disposable earnings or the difference between the individual’s disposable earnings and 30 times the federal minimum hourly wages for a week or an equivalent pay period. The rule is drafted to address three levy situations: levies against individual debtors of an employing unit for penalties for fraud, levies against claimants for penalties for fraud, and levies against claimants for benefit overpayments. For levies against claimants for penalties for fraud, the department is not limited by the 80% exemption, but it is limited by the other federal protections. The rule is the prose of the formulae required to calculate the levy amount. The department considered it important to include the federal protections in the rule to assure a proper levy amount. The forms show how the employer will calculate the levy amount. The department may provide an online calculator for levies in the future. The employers calculate each of the protections and then compare the amounts. By paying the lowest amount, the form ensures that all of the protections are in place.
Comment (Haine): It would be helpful if the form indicated what pay period you are asking for so it is clear whether it is weekly, monthly, annually, per pay period, etc. It is not a critical issue, but if there is time to add this, it would be helpful.
Ms. Schwalbe indicates that it would be for whatever pay period the employer uses, but we could add “per pay period” or “for this pay period” on line 1 to make this clear. Mr. LaRocque indicates that some of the tweaking of the forms can be ongoing. The rule does not require the department to use any particular form. This is why we had people do some preliminary vetting of the forms before we got this far.
Question (Penkalski): Does this include bonuses, too?
Ms. Schwalbe indicates that it does. The definition of gross earnings on the back of the form instructs the employer that this includes bonuses, tips, commissions, etc. We can add this to the rule to make it clear in the rule. We can make some changes yet as we will get some comments back from the Legislative Council. Though we may get some comments, this rule is in a nearly final format because we knew that we were working under the deadline to get the rule to the Legislature in even-numbered years by August 31.
Question (Yunk): Is there any value in trying to establish how the clarification can be made to make sure it is in conformity to the garnishment statute?
Ms. Schwalbe indicates that she referred to a possible law change in the next bill cycle.
Bob Andersen, Legal Action of Wisconsin, expresses his appreciation to Ms. Schwalbe and the department for their work on this rule. He met with Ms. Schwalbe and went over the rule. It is very complicated, mostly because of the federal law. They have done an excellent job. In the past, people subject to department levies were worse off than people subject to regular garnishment. This is why the law was changed. At the same time, the garnishment statute was changed. It used to be that if the garnishment would result in the individual’s wages going below the poverty guidelines, you could not garnish anything at all. That was changed to allow garnishing the difference between the wages and the poverty guidelines. The unemployment statute was not changed because that occurred simultaneously. If you want to feel more comfortable about it, you could make a technical change to the unemployment statute. It is not completely clear that a technical change is necessary. He thinks the current statute can yield the same interpretation which is that the levy can be the difference.
Comment (Lump): Restaurant owners reviewed the forms and thought they were similar to what they fill out for garnishment cases with employees.
Ms. Schwalbe indicates that the unemployment forms are not identical to the garnishment forms. We reviewed the garnishment forms, but they do not set out the calculations to ensure compliance with the federal protections. We wanted to make sure that since employers were filling these out, we were making it as simple and complete as possible for employers to comply with both the state and federal requirements. Mr. LaRocque indicates that though the rule is independent of the forms, the forms implement the rule and if you are satisfied with the forms, you are likely satisfied with the rule.
Motion (Lump), seconded (Penkalski), to approve proposed rule DWD 136. Mr. LaRocque notes that two members are in attendance by phone and polls each member’s vote individually. Minutes are approved unanimously.
2. Minutes of Meeting May 20, 2008
Motion (Penkalski), seconded (Yunk), to approve the Minutes of the May 20, 2008, meeting. Mr. LaRocque polls each member’s vote individually. Minutes are approved unanimously.
1. Brief Remarks – Hal Bergan
Mr. Bergan updates the Council on the status of General Motors in Janesville. We have been working with GM and the union regarding the shift elimination. We are not sure how the rest of the shutdown will occur because we do not know their schedule. We will continue to be a part of the rapid response team there and do our best for all of the people affected.
We are now in the fifth week of having 20% increases in initial claims over the same weeks last year. It is still too early to consider this a statistical trend. After the first quarter, we have experienced a 2 to 2.5% increase in claims volume over last year. Suddenly things have changed and we are paying close attention to that.
Question (Gustafson): Is the percentage increase over the previous week or over the same week in the previous year?
Mr. Bergan explains that the volume of initial claims for each of the most recent five weeks has increased by 20% or more over the same week in the previous year. It is a pretty dramatic increase. We are doing well handling the workload at this point. We are concerned because of how this affects the reserve fund.
The most recent news from Washington is that extended benefits are likely not to be a part of the supplemental appropriations bill. They are likely to be taken out with other domestic spending. The focus is more on veterans’ benefits. The provision for $110 million for administrative funding to deal with the shortfall that all states are experiencing is likely gone as well.
Question (Penkalski): Is there any discussion in Washington about providing Reed Act funds?
Mr. Bergan indicates that although the Reed Act funds are there, they are resisting making payments because it counts as an expenditure. If Congress pays out Reed Act funds, Congress has to figure out a way to either pay for it or reduce other expenditures.
Question (Penkalski): I understand that there was an EEOC case against the department and that there was a settlement paid out. Did the settlement payment come from the reserve fund?
Mr. Bergan indicates that the settlement funds came out of a risk sharing fund from the Department of Administration, not the reserve fund.
4. Letters to the Council (white)
Mr. LaRocque reviews an email from an attorney regarding soccer officials as employees. The other item was a board resolution of the Village of Twin Lakes that was given to us at the last public hearing. Ms. Schwalbe indicates that she heard from the Village Administrator yesterday. She has not yet had time to prepare a response. The main concerns are these: An individual serving on a police commission was paid $25 per hearing. The Village was concerned that this payment would be counted as wages and the Village would be partly responsible for benefits due on her layoff from other employment. The department has since determined the individual worked in excluded employment. The other concern they had was that anytime someone is a part-time employee and they are laid off from a different job, they do not think the part-time employer should have to be responsible for benefits because they did not cause the individual’s unemployment.
Question (Haine): How was the individual paid? Were they paid for mileage or reimbursement?
Ms. Schwalbe indicates that they were paid $25 per meeting. The village administrator indicated that recently they have stopped paying their volunteers appointed to boards. They reported this as wages, but since it was an advisory position of less than 8 hours in a week, it was determined to be excluded employment. Mr. LaRocque indicates that it might also be an expense reimbursement rather than wages.
Motion to adjourn (Yunk), seconded (Lump), passed unanimous