On June 30, 2013, Wisconsin Governor Scott Walker signed into law Act 20 which amends Wisconsin’s Unemployment Insurance law. The changes go into effect on January 5, 2014 and will make it more difficult for workers to receive benefits after a termination, maintain eligibility for benefits, or receive benefits following a “voluntary” quit.
Undoubtedly, the most important change under Act 20 is the expansion of grounds for denying unemployment benefits to workers who are terminated. Historically, benefits could be denied due to “misconduct” on the part of the employee, but this has required evidence showing deliberate rule violations in willful disregard of an employer’s interest. This stringent standard was adopted to preserve broad eligibility for benefits, consistent with the purpose of an insurance program designed to cushion employees from the effect of unemployment.
That purpose is threatened by the adoption of new standards. Beginning in January 2014, even if a worker is not terminated for misconduct, he/she may still be ineligible for Wisconsin unemployment compensation following termination if he/she is terminated “for substantial fault by the employee connected with the employee’s work.” “Substantial fault” is very broadly defined as “those acts or omissions of an employee over which the employee exercised reasonable control and which violate reasonable requirements of the employee’s employer.” “Substantial Fault” does not include minor infractions unless repeated after warnings from the employer, inadvertent errors, or failure to perform work due to insufficient ability.
In addition to the “substantial fault” standard, Act 20 creates sections 108.04(5)(a) to (g), which expand the definition of “misconduct” to include:
• Violation of an employer’s alcohol or drug policy, as long as the employee knew about the policy and admitted to using alcohol or drugs OR refused to take a test or tested positive for drugs or alcohol;
• Theft of an employer’s property or currency, felonious conduct connected with employment, or conduct that causes substantial damage to the employer’s property;
• Conviction of a crime that makes it impossible for the employee to perform their duties for the employer;
• Threats or acts of harassment, assault, or physical violence at the workplace;
• Absenteeism on more than two occasions within 120 days before the termination or excessive tardiness if the employee does not provide to his or her employer both notice and one or more valid reasons for the absenteeism or tardiness;
• Falsifying a business record or the employer;
• Willful violation of government standards that would cause the employer to be sanctioned or have its license revoked.
Workers who are found ineligible under either the “substantial fault” or the “misconduct” standard may not receive benefits until 7 weeks have passed after the termination AND the worker has earned at least 14 times their weekly benefit rate.
Some other notable changes to Chapter 108:
Increased Work Search Requirements to Maintain Eligibility for Wisconsin Unemployment Compensation
Workers receiving benefits are currently required to show they have taken two actions per week that constitute a reasonable search for work. Act 20 will require “at least 4” actions per week, and “the department may, by rule, require an individual to take more than 4 reasonable work search actions in any week.” This portion goes on to say the department will require uniform work search requirements “for similar types of claimants.” What constitutes a “similar type of claimant” remains to be seen.
Voluntary Quits – Amendment of Requalification Requirements
Wisconsin workers who voluntarily quit their employment are currently ineligible for Wisconsin unemployment compensation benefits until four weeks have passed and they have earned at least four times their benefit rate. Act 20 eliminates the four week requirement, but changes the required earnings from four times the benefit rate to six times the benefit rate, effectively extending the period the employee will be without benefits.
Voluntary Quits – Elimination of Exceptions
Chapter 108 currently contains a long list of exceptions to the voluntary quit rule, nine of which are eliminated by Act 20. The nine exceptions to be eliminated are:
• Where an employee quits to accept work from a former employer within 52 weeks after having worked for such employer;
• Where an employee maintains a temporary residence near the worksite, maintains a permanent residence in another locality, and quits work and returns to his/her permanent residence because work available is reduced to less than 20 hours in at least two consecutive weeks;
• Where the employee leaves work because of reaching the compulsory retirement age used by the employer;
• Where an employee quits part-time work because of the loss of full-time work and the loss of full-time work makes it economically unfeasible for the employee to continue the part-time work;
• Where an employee quits work with a labor organization if the termination causes the employee to lose seniority rights granted under a collective bargaining agreement and results in loss of employment with the employer that is a party to that collective bargaining agreement;
• Where an employee quits work as a part-time elected or appointed member of a governmental body or representative of employees, works for an employer other than the one in which they were elected/appointed, and was paid wages in the terminated work constituting not more than 5% of their overall wages;
• Where an employee quits work in one of two or more concurrently held positions, at least one of which was full-time, if the employee terminates work before receiving notice of termination from a full-time position;
• Where an employee, while claiming benefits for partial unemployment, quits work to accept employment, if that work offered an average weekly wage greater than the average weekly wage earned in the work terminated;
• Where an employee owns or controls an ownership interest in a family corporation and the employee’s employment was terminated by the employer because of an involuntary cessation of the business.
How Act 20 Will Affect Wisconsin Workers
The changes are presented by the Legislature as a way to increase the fiscal health of the Wisconsin unemployment compensation program. Unfortunately, the alleged savings are achieved at the expense of much needed economic security for some of the most vulnerable working people in our state. In addition to the simple reality that recently unemployed workers need continued income, these changes will fall disproportionately on low income workers. For example, an employee who quits a part-time job because he/she lost his/her full-time job is eliminated from eligibility. In other words, the change negatively affects those workers who must work two jobs to survive; these are the very workers who most need the safety net these benefits are intended to provide.
In addition to its direct impact on unemployed workers, Act 20 will encourage employers to enact stricter attendance policies and institute drug and alcohol testing procedures. It will also encourage employers to challenge benefits due to the vague and malleable definition of the new “substantial fault” standard.
If you have been denied Wisconsin unemployment compensation benefits or your employer has taken steps to challenge your eligibility, Hawks Quindel attorneys may be able to assist you. Please call us or email our Wisconsin employment attorneys via our Contact Page.