MacIver News Service | May 29, 2013[Madison, Wisc…] The Joint Committee on Finance (JFC) approved a motion on Wednesday that will reduce Unemployment Insurance (UI) costs to small businesses, delete multiple exceptions for individuals that receive UI benefits, and provide a fairer system for businesses that pay into the Unemployment Reserve Fund (URF).
Current UI policy led to the state’s compensation fund running dry in 2009. The state then had to borrow $1.6 billion from the federal government. In addition to paying that back, Wisconsin employers receive additional bills for the interest. The current rate is at 2.58 percent and comes out to $60,000 a day.
To eliminate the extra tax that employers have been faced with, JFC set aside a $30 million General Purpose Revenue (GPR) appropriation to cover the interest payments of $19 million in September 2013 and $7 million in September 2014.
By paying these interest payments through GPR, instead of SEG funding, small businesses in Wisconsin will see a drop in the extra tax that had been levied on them to pay off the interest owed to the federal government.
Under current law, Wisconsin has 18 exceptions for employees that voluntarily terminate their employment and can still receive UI benefits. The motion passed by JFC would eliminate nine of those exceptions.
During debate, Rep. John Nygren (R-Marinette) said that Wisconsin has a great deal more exceptions than it’s neighboring states. Illinois currently has five quit exceptions.
Some of the Wisconsin exceptions that are eliminated include:
- If the Department of Workforce Development (DWD) determines that the employee terminated his or her work to accept a recall to work for a former employer within 52 weeks after having last worked for such employer.
- If DWD determines that the employee left or lost his or her work because of reaching the compulsory retirement age used by the employee’s employing unit.
- To an employee who terminates his or her work in one of two or more concurrently held positions, at least on of which is full-time work, if the employee terminates his or her work before receiving notice of termination from a position which is full-time work.
The motion will also level the playing field between businesses when it comes to unemployment compensation costs. As a business practice, many employers in the state consistently lay off workers throughout the year. Utilizing this practice leads to many of their laid-off employees claiming UI benefits. However, under current law they would pay the same contribution rate as small businesses that rarely lay off workers.
The motion will ensure that employers that use UI benefits the most will pay a slightly higher rate than those that rarely use the benefits.
Sen. Joe Leibham (R-Sheboygan) said during debate that this provision would encourage businesses to hire and keep individuals employed.
The motion also expands the definition of “misconduct.” If an employee were to be terminated by a business for breaking company policy or committing a crime while on the job, they would not be eligible for UI benefits.
Prior to voting on the measure, Nygren made it clear that Wisconsin was in better shape than other states. “None of the changes cut benefits,” said Nygren, who later said that Michigan had cut benefits by six weeks.
The motion passed 12-4 on a partisan vote. The full motion can be seen here.