MacIver News Service | May 29, 2020
The Wisconsin Department of Workforce Development (DWD) isn’t just failing to pay out hundreds of thousands of unemployment claims to people thrown out of work by Gov. Tony Evers’ lockdown. The agency is screwing up the checks it is sending out, according to state lawmakers.
Legislative leaders informed Gov. Evers that DWD is illegally charging employers for COVID-19 related unemployment benefits when they’re supposed to be coming out of the state’s funds.
“The outrageous decision to break the law is made worse by the fact that in so doing, the department is making it even harder for the employers impacted by the health crisis to get their businesses open and bring their employees back to work,” Senate Majority Leader Scott Fitzgerald and Assembly Speaker Robin Vos wrote in a letter hand delivered to Gov. Evers on Thursday.
Whenever someone gets an unemployment check, their former employer is usually the one that paid for it. In Wisconsin, most employers are required to pay a special tax that goes into a designated account at DWD. That account funds unemployment benefits for their employees. The more former workers an employer has collecting unemployment, the more that employer is taxed to keep their account replenished.
The Wisconsin legislature wanted to protect employers from getting overwhelmed by all the claims caused by Gov. Evers’ lockdown. The COVID-19 Relief Bill, signed into law on Apr. 15 as Act 185, prohibits DWD from taking funds from employers’ accounts to pay for COVID-19 related unemployment claims.
The law requires DWD to identify what claims are related to COVID-19 and then ensure they are paid from the UI trust fund or other DWD accounts. By doing that, employers would be shielded from tax hikes at a critical time. They would be shielded, that is, if DWD was actually following the law.
“It is our understanding that the Department of Workforce Development (DWD) has chosen not to follow these provisions of Act 185,” Fitzgerald and Vos asserted.
In order to comply with the law, DWD needs to write an administrative rule that spells out what processes it will use to fulfill the new requirements. Fitzgerald and Vos know DWD has not done this, because the legislature is in charge of approving new administrative rules and the agency has not yet submitted anything. In the meantime, DWD continues to withdraw funds from the employers’ unemployment accounts to pay COVID-19 related claims. There’s not much time to fix this problem.
On June 30th, the state will calculate new tax rates for employers based on what’s left in their unemployment compensation accounts. If DWD has not begun following state law by then, most employers will get hit with a massive tax hike at a time their businesses are struggling to survive.
“Your administration, DWD specifically, is charged with administering the UI program and following state statutes,” Fitzgerald and Vos wrote. “It is incomprehensible that the department charged with workforce and employment would mindfully act to make it harder for unemployed workers to get back into the workforce. Time is short. We urge you to immediately correct this situation and assure that this law is being followed and that the tax rates will be reflective of legislative intent, codified by your signature.”
It is possible for DWD to correct this problem in the nick of time. The legislature has an expedited process for emergency rules. It can take as little as two weeks. However, even after a new rule is approved, DWD still needs to execute it – correcting all the account transactions made since Apr. 15th. At a time when it is still falling further and further behind just paying out weekly claims, that will be a challenge.