Wisconsin Department of Workforce Development

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Unemployment Insurance Advisory Council Meeting Minutes

Wednesday, May 31, 2006 10:00 a.m.

Workforce Development Center
892 Main St., Room 110
Pewaukee, WI

Members Present

Management: James Buchen, Earl Gustafson, Susan Haine, Ed Lump and Daniel Petersen

Labor: Dennis Penkalski, Red Platz and Patricia Yunk

Chair: Daniel LaRocque

Department staff present: Hal Bergan, Andrea Reid, Lutfi Shahrani, Dick Tillema, Beverly Crosson, Terese Wojick, John Zwickey, Tom McHugh, Brian Bradley, Troy Sterr, Mary Moore, Carol Long, Mike Wysocki, Barb Banks and Dave Vandermale

Others present: John Metcalf, Bob Anderson and Ray Odya

MINUTES

LaRocque opens the meeting by announcing that a public hearing will follow the morning business meeting.

Bergan discusses the status of our two IT projects (SUITES and EnABLES) and an update on his latest meeting of the National Association of State Workforce Agencies (NASWA) in Washington, DC. DOL has cut our administrative funding once again; we may receive $1 million less for 2007. Attendees at that session discussed strategies to get more funding for all UI programs.

Another item discussed was the move toward collecting separation information from claimants and employers electronically on a daily basis. Questions of governance, security, identity of the keeper of this data, among others, need to be answered as we move toward this national, central repository type of system.

Third item of importance at the NASWA meeting was a shared “core” system for UI benefits and tax since all states are revamping their systems like we are. This would help us all with costs.

SUITES (tax project) is scheduled to have its most important release rolled out in September or October of 2007. This is an extension of the schedule but with good reason. We are no longer working with Accenture as we believe we can do this ‘in-house’ with our own state employees and can better control costs in this manner. We have hired a state employee as the project manager.

EnABLES (Benefit/Legal system) uses software designed by CURAM, a company based in Ireland, with our customization. The next release is scheduled for October/November of this year. It will be an entire revamp of our Appeals process. Progress on this system is on track.

Getting a handle on the final cost of the project is problematic. The initial estimate of $24 million was based on high level requirements. As we progress to more and more detailed requirements, more time and costs come into play. The project will cost substantially more than $24 million but how much more is uncertain.

In the meantime, CURAM is developing its own UI specific module and is looking for customers. We will look at this new module next month. If we can use this module and become an early adopter of it, we may get it at a steep discount. We won’t know until we see its functionality and capabilities. CURAM estimates that we could use 60% of its core module and we would customize the remaining 40%. Even at that, we may realize a substantial savings.

A quorum is present. Minutes from the May 8, 2006 meeting were approved unanimously by the members present.

Breber expands the discussion begun at the May 8 meeting of the Family Corporation benefit reduction and exclusion and the issue of ‘corporate quit’ by the employee-owner. The family members (spouse, parent and children under 18) specified in the law for benefit reduction or exclusion was based on a federal exclusion for family member employees of sole proprietors, the rationale being that those individuals were providing help with the family business with little or no reliance on such employment for livelihood. The distinction between a parent of the employer, whose services are treated as employment, and the adult child of the employer, whose services are not treated as employment, is based on the presumption that the employment of the parent is not a means of providing his or her livelihood.

Family corporation accounts having paid benefits are overdrawn at a rate of 48% of such accounts versus 14% for other employers). The concern raised in the last meeting was the parent in this situation. Council asked us to resolve the inequity between the parent and the adult child in the same situation, benefits should not be based on need.

Council members requested staff develop and report various data to show the scope or extent of the issue.

UI Benefits staff is working on statutory language to remedy the anomalous effect that the ‘corporate quit’ rule has on employee-owners of corporations whose interests happen to fall below the 25% threshold contained in the “family corporations” provisions. Staff will develop language to correct the situation and bring it to the Council.

LaRocque updates the Council on the comments made at the May 1 public hearing regarding administrative rule DWD 133, Temporary Help Employers. There were several supportive comments, such as those of Ray Odya, Wisconsin Association of Staffing Services, among others for the industry.

One set of comments, from William Sample, opposed the rule. Sample believes there should be a ‘good cause’ exception to quitting when an assignment is refused, a personal good cause type of exception. The major thrust of his comments concerned whether or not an offer of a new assignment should be considered an offer of new work, and thereby be subject to labor standards protections under 108.04(9)(b). This is an old issue.

Sample recounts the history of this issue since 1993 when the Wisconsin Court of Appeals in the Cornwell vs. Linde case stated that offers of new assignments by the temporary help employer are not offers of ‘new ‘ work if they fall within the original contract of hire. Sample brings up the issue of federal conformity and argues that we should not do anything with our rules that doesn’t correct the problem with the Linde case.

In 1994, the DOL told Wisconsin to ignore the Linde case. In 1998, the DOL issued an Unemployment Insurance Program letter (UIPL) saying that a refusal of an assignment from a temporary help agency is subject to the protection of labor standards and that no contract may bar new assignments from review for these purposes. In 2000, the DOL issued a technical change. In 2001, the DOL issued a letter to Wisconsin saying their position was unchanged and that the failure to alter the status quo under the Linde case could result in Wisconsin being found out of conformity with FUTA. In May of 2001, the DOL again wrote to reiterate its stand and warn us that Wisconsin would be subject to conformity proceedings.

Sample ends his comments here saying that we should not pass this rule since it does not address or remedy the Linde situation and does not treat new assignments from the temporary help employer as ‘new’ work. On July 6, 2001, the Council wrote to then Governor McCallum requesting that he write a letter to DOL Secretary Chao to convince her to stop further legal action. He did that the same month and also requested that the DOL set aside its UIPL on this matter.

In an email to the DOL about a year and half ago, we outlined this rule, the scope of the rule and asked if it would create any conformity problem given DOL’s prior stance and correspondence to us on this issue. On January 5, 2005, the DOL responded, acknowledging all the 2001 correspondence and indicated that the matter of conformity and the Linde case is under review. Since that review has not been completed and since the rule appears to be a refinement of the Linde decision, the DOL would not raise any issue until such time as its review of the Linde case has been completed.

Council is aware of the controversy surrounding the Linde case; the Department feels we should go forward with adopting this rule. LaRocque ends his discussion on the comments from the May 1 public hearing.

LaRocque gives a brief update on administrative rule, DWD 128, Ability to Work and Availability for Work. A workgroup within the Department has been convened to rework this rule and is nearly ready to propose the rule changes to the Council.

We are proposing to eliminate the 15% and 50% requirements in the rule and look at a claimant’s availability or ability based on his/her skills, training, experience, job history, restrictions, ability to train for new employment, etc. The requisite percentages currently in the rule are arbitrary and rigid and Wisconsin is very different from all other states when dealing with able/availability issues.

Senate Bill 99, recently enacted, reduces from 45 days to 20 days the time in which a person has to answer a complaint filed in circuit court. It applies across the board, with certain exceptions. It includes our litigation and our enforcement of UI levies in circuit court.

Mr. Buchen states that he wrote to the Governor stating an objection to the process of introduction, passage and enactment of SB 99 without having consulted with the UIAC or the Workers Compensation Advisory Council. Workers Compensation and Unemployment Insurance are directly and expressly affected by the bill’s provisions.

Eric Grosso, an economist with DWD, presented a very informative overview of Wisconsin’s economy and labor market, including trends and projections of labor market conditions.

Meeting is adjourned.

Updated August 24, 2009
Unemployment Insurance Division, Bureau of Legal Affairs (BOLA)
Content Contact: Legal Affairs Staff