UNEMPLOYMENT INSURANCE AGENCY

Transcription

1 DEPARTMENT OF LICENSING & REGULATORY AFFAIRS UNEMPLOYMENT INSURANCE AGENCY Presentation to Michigan Manufacturers Association UI Reform: What It Means to You Lansing March 27, 2012 AMENDMENTS SOLVE SEVERAL EMPLOYER COMPLAINTS: Noncharging an employer when a worker quits Before: An employer would have to ask the UIA to cancel the benefit charges if a worker voluntarily quit a job and thereafter requalified for benefits and was paid. After: The quit will be presumed to be disqualifying, and an employer (in the base period of the claim) will automatically not be charged for benefits. Noncharging an employer when a part-time worker qualifies for benefits Before: When a worker (1) worked for a part-time employer and another employer concurrently, (2) lost the concurrent job, (3) filed a claim based on both the part-time and concurrent jobs, but (4) continued to work at the same part-time job, the part-time employer would have to request to be noncharged each week there was a charge to its account. After: The part-time employer only needs to request once to be noncharged. Benefits payable to the worker for the remainder of that claim will not be charged to the part-time employer s account. Beginning in 2014, the claimant will be able to link his/her weekly report of current wages to a specific chargeable employer and the employer s account will be automatically noncharged.

2 Page 2 Noncharging an employer when a worker leaves within 60 days Before: When a worker who was claiming benefits found a job and stopped drawing benefits, but the Agency concluded that job was unsuitable and the worker left within 60 days, he/she would not be disqualified for the leaving but the employer s account would be charged. After: The worker still is not disqualified, but the employer s account will automatically not be charged. Noncharging an Employer for a Combined Wage Claim Before: When a worker qualified for benefits in another state by combining wages from Michigan and the other state, the Michigan employer s account would be charged using the other state s law. After: If a worker would not have qualified for benefits under the Michigan law, the Michigan employer s account will not be charged. Denial of Benefits During Regularly Recurring Periods Between Seasons Before: For an employer to receive designation as a seasonal employer, both the employer and the employer s industry had to be seasonal. Benefits paid to the workers between seasons would not be chargeable to the employer if the workers had reasonable assurance of returning. After: The seasonality of the employer s industry is no longer considered. The employer s operations must merely be limited to 26 weeks within any 52-week period in order for the employer to receive designation as seasonal. Both before and after the amendment, employers in the construction industry cannot receive designation as seasonal.

3 Page 3 Amnesty Program Regarding Possible Misclassification of Wages Before: If the UIA discovered, either when a claim was filed or through a random audit of an employer, that the employer had misclassified an employee as an independent contractor, back taxes, interest and possibly penalties would be assessed. After: During 2013 only, if an employer requests the UIA to review whether workers classified as 1099 Independent Contractors should be classified as employees and the review shows they should be classified as employees, no penalties or interest will be assessed. Beginning in 2013, the current Economic Reality Test for determining independent contractor versus employee will be replaced by the more familiar 20-factor IRS test. AMENDMENTS SOLVE TRUST FUND SOLVENCY Taxable Wage Base Temporarily Increased Before: The Taxable Wage Base (the maximum amount of an employee s yearly wages against which the employer s tax rate is multiplied) was $9,000 per year. After: The Taxable Wage Base is temporarily increased to $9,500 per year, until the balance in the state s Unemployment Trust Fund reaches $2.5 billion. Bonding in the Private Bond Market Will Pay Off Debt and Interest Before: Michigan owed $3.2 billion to the federal government for loans to pay benefits, plus interest. Negative-balance employers were being charged a special solvency tax to pay the federal interest, but it was inadequate. All employers Federal Unemployment Tax Act (FUTA) taxes were increasing each year to pay off the debt. After: Michigan has secured private bonding which has paid off the debt and interest to the federal government, and an Obligation Assessment will be used to pay off the bonding. The Unemployment Compensation Trust Fund will be solvent (resetting to a zero balance with regular tax payments building up the Fund). No more solvency tax will be assessed, and the FUTA tax will go back to 0.6% per year.

4 Page 4 The Obligation Assessment is calculated as follows: [(2012 UI Tax Rate) x (OA Ratio)] + [(Base Assessment) (Taxable Wage Base)] The values for 2012 are as follows: OA ratio = Base Assessment = $42.00 Taxable Wage Base = $9, AMENDMENTS MODIFY EXPERIENCE RATING PROVISIONS The Period Required for Full Experience Rating is Reduced in Phases Before: It took 5 years for an employer s own history of benefit charges and tax payments to be used in calculating the employer s unemployment tax rate. After: For an employer becoming liable under the law beginning in 2012, it will take 4 years for the employer s full history of benefit charges and tax payments to be used in calculating the employer s unemployment tax rate. For an employer becoming liable under the law beginning in 2013 and thereafter, it will take 3 years for the employer s full history of benefit charges and tax payments to be used in calculating the employer s unemployment tax rate. The Look-Back Period for the Benefit Ratio Component is Phased Down Before: The Chargeable Benefits Component of an employer s tax rate was calculated using the employers most recent 5 years (60 months) of benefit charges and unemployment tax payments) After: In 2012, an employer s most recent 4 years of benefit charges and unemployment tax payments will be used in calculating the Chargeable Benefits Component of the employer s unemployment tax rate. In 2013 and thereafter, the an employer s most recent 3 years of benefit charges and unemployment tax payments will be used.

5 Page 5 Period of Inactivity for Resumption of New Employer Rate Changes Before: An employer that resumed a business after more than 8 quarters of inactivity was treated as a new employer with the new employer tax rate of 2.7%. After: An employer resuming business after 12 quarters will be treated as a new employer. A Successor Employer Will Be Notified of Benefit Charges Before: When a business was transferred to a new ( successor ) employer, the successor did not receive notices of benefit charges to the former ( predecessor ) employer s account, even though those charges would affect the successor employer s tax rate. After: The successor will receive notices of charges to the predecessor s account. OTHER AMENDMENTS AFFECTING EMPLOYERS Penalty Increased for Late, Incomplete, or Erroneous Wage Report Before: When an employer was late in filing a quarterly Wage Detail Report, or the report was incomplete or erroneous, a $25.00 penalty was imposed. Also, two quarterly reports were required: Tax Report and Wage Detail Report. After: The UIA will notify the employer of something clearly erroneous in the Report and will give the employer 14 days to make the correction, without penalty. However, if the report is late or incomplete, or if the employer does not supply corrected information within the 14 days, a penalty of $50.00 will apply. In addition, a penalty of $ will apply for each full additional quarter that the report is late, incomplete, or erroneous. Beginning in 2013, only a single quarterly report will be required, rather than the 2.

6 Page 6 Fraud Penalty Imposed Directly on Corporate Owners/Directors Before: Fraud penalties only applied to corporate entities, themselves, not to corporate owners or directors. After: Penalties can be applied to owners and directors in their individual capacities. Quarterly Reports Must Be Filed On-Line Before: Employers could file quarterly reports on paper, or on-line using the Agency s Employer Web Account Manager ( EWAM ) site. After: Beginning in 2014, employers with more than 5 employees must file quarterly reports on-line. Beginning in 2015, all employers must file quarterly reports on-line, although an employer with 5 or fewer employees showing economic hardship can receive a limited extension for beginning to file on-line. Spread-out of Payment for First Quarter Before: The contribution (unemployment tax) payment for each calendar quarter was due by the 25 th day of the month following the end of the calendar quarter. After: For an employer with 25 or fewer employees that incurred 50% or more of its annual tax liability the previous year during the first quarter, the employer can request to spread out that first quarter liability evenly over the remaining quarters of the year without incurring interest charges. MAJOR AMENDMENTS AFFECTING CLAIMANTS A claimant will be required to conduct a systematic and sustained work search, and prove it by either reporting the details online; mailing/faxing the details to the UIA; or reporting the details in person at a Michigan Work! Agency office. A claimant will be disqualified for voluntarily leaving work for 3 days of no-call/no-show. Previously, it was a disqualification under the discharge for misconduct provision. A claimant who negligently loses a pre-requisite for the job (such as a driver license) will be disqualified for voluntarily leaving the work.

7 Page 7 A claimant who wishes to avoid disqualification by asserting that he/she left the job for medical reasons must present medical verification; evidence that he/she unsuccessfully tried to obtain alternative work from the employer; and evidence he/she unsuccessfully tried to obtain a leave of absence from the employer. When a claimant owes restitution and has returned to work, the law now allows the UIA to process an administrative garnishment of the claimant s wages, rather than using the slower and more expensive judicial garnishment by going through a court. Severance pay that reduces benefits in the week(s) to which the employer allocates it, or in the week paid, will also be wages considered in setting up a subsequent claim. An overpayment over $3,500 due to intentional misrepresentation is now a felony under the Michigan Penal Code. The formula for reducing a claimant s benefits due to earnings in a week changes from now until October 1, 2015: Before: Benefits were reduced by 50 for every dollar earned, and the combination of benefits and wages could not exceed 1.5 times the worker s weekly unemployment benefit amount. After: Benefits are reduced by 40 for every dollar earned, and the combination of benefits and wages cannot exceed 1.6 times the worker s weekly unemployment benefit amount. Here s how the calculations work, before and after October 1, In this example, the claimant s weekly benefit rate is $ and the claimant earns $ that week: INSTRUCTIONS FOR THIS STEP NEW CALCULATION FORMER

8 Page 8 STEPS UNTIL 9/30/15 CALCULATION RESUMES 10/1/15 A B Enter the weekly unemployment benefit amount. Enter the amount of the gross earnings (before taxes) in the calendar week (Sunday through Saturday week). Round down to the nearest whole dollar. $120 $120 $140 $140 C Multiply B by 0.4 / Divide B by 2" $56 $70 D Subtract C from A. Round down to the nearest whole dollar. If the result is zero or less than zero, enter 0" as your answer. $64 $50 E Add together B and D. $204 $190 F Multiply A by 1.6/Multiply A by 1.5 $192 $180 G H Subtract F from E. Round down your answer to the nearest whole dollar. If the result is zero or less than zero, enter 0" as your answer. Subtract G from D. Round down your answer to the nearest whole dollar. The answer you get will be the amount of the unemployment benefit payment for the week. $12 $10 $52 $40 WHO HAS THE BURDEN OF PROOF? WHAT MUST THEY PROVE? Voluntary Leaving The employer has the burden to show that the claimant initiated the separation from the job The claimant has the burden to show that the leaving was with good cause attributable to the employer. Generally, good cause will be attributable to the employer if the worker notified the employer of a problem at the worksite, and the employer did not, or could not, correct it. If the claimant never notified the employer that there was a problem at the worksite that needed correction, that becomes a possible defense the employer can raise. Discharge for Misconduct The employer has the burden to show that: the discharge was for misconduct, and the misconduct was connected with the work "[Misconduct in an unemployment compensation case is]... conduct evincing such wilful or wanton disregard of an employer's interests as is found in deliberate violations or

9 Page 9 disregard of standards of behavior which the employer has the right to expect of his employee, or in carelessness or negligence of such degree or recurrence as to manifest equal culpability, wrongful intent or evil design, or to show an intentional and substantial disregard of the employer's interests or of the employee's duties and obligations to his employer. On the other hand, mere inefficiency, unsatisfactory conduct, failure in good performance as the result of inability or incapacity, inadvertencies or ordinary negligence in isolated instances, or good-faith errors in judgment or discretion are not to be deemed 'misconduct' within the meaning of the [unemployment compensation] statute." Refusal of Work The employer has the burden to show that: job offer was made he offered work was suitable the claimant refused the work The burden then shifts to the claimant to show good cause for the refusal of suitable work. UNDERSTANDING THE APPEAL PROCESS First step is the Determination. After a timely protest, a Redetermination is issued. A timely appeal from a Redetermination results in a hearing (in person or by telephone) before an Administrative Law Judge (ALJ) Have PROPER Witness at the Hearing The proper witness is the one who can testify as to facts within his or her own knowledge, based upon his or her own observations of the events pertinent to the case. Bring Pertinent Documents to the Hearing Documents must be authenticated at the hearing by a competent witness, in order to be accepted into evidence. For example, if the issue is attendance, attendance documents must be introduced by the keeper of the business records for the employer. Documents previously sent to the UIA are not part of the Judge s file and must be offered as exhibits at the hearing. Unless accepted by the Judge as exhibits, the documents will not be considered by the Judge or at later appeal stages. Consider Using the UIA Advocacy Program

10 Page 10 An Advocate is provided at no cost to the employer or claimant Employer or claimant chooses a local advocate who represents either claimants or employers (not both) Party has a consultation with the Advocate, usually by telephone, in advance of the hearing The Advocate will, in most cases, be present with the claimant or employer at the hearing to represent the claimant or employer Assistance is available, toll-free: and follow menu prompts. UIA TUBE (WEBCASTS) AVAILABLE ON-LINE: Go to UIA s home page at and click on Webcasts. Follow that link to the page listing various employer webcasts, including one summarizing the recent amendments to the law.