On April 15, 2020, Governor Evers signed into law 2019 Wisconsin Act 185 (“Act 185”). Many of Act 185’s provisions aim to take advantage of and/or facilitate the various enactments of the federal Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). In addition to Act 185’s provisions affecting Wisconsin school districts, which were thoroughly discussed in a previous Legal Update, Act 185’s provisions impact public and private employers in several different ways. This Legal Update discusses a few of those provisions.
Temporary Suspension of the One-Week Waiting Period for Unemployment Insurance Benefits.
Because of the significant and abrupt change to the economy resulting from the COVID-19 public health emergency, many employers were (and continue to be) forced to make decisions about whether to retain, furlough, lay off or terminate employees. The numerous changes to unemployment benefits has complicated those decisions.
The CARES Act provides payments to individuals who become eligible for unemployment benefits as a result of COVID-19. The CARES Act unemployment insurance benefits are in addition to those benefits provided under state unemployment benefits provisions, and are to be paid beginning the first week of unemployment. Wisconsin unemployment insurance laws, however, typically require individuals to wait one week after becoming unemployed before they are eligible to receive unemployment benefits. Act 185 suspends the one-week waiting period so that unemployed individuals in Wisconsin can receive benefits beginning the first week of unemployment. This temporary suspension of the one week waiting period applies to claims made with respect to benefit years beginning after March 12, 2020, and before February 7, 2021.
Claimants who filed an application for unemployment benefits during the week of March 15, 2020 or later will not have to wait the one-week period. The Department of Workforce Development (“DWD”) will provide retroactive payments for those benefits, but the process for making those payments is still being determined. According to DWD, payments are expected to be made beginning April 25, 2020.
Unemployment Insurance Benefits Paid in relation to COVID-19 are not Charged to Employer Accounts.
In addition to the above, as a result of Act 185, certain unemployment benefits related to COVID-19 will not be charged to employer accounts. DWD will review unemployment insurance benefit claims filed between March 12, 2020, and December 31, 2020, to determine whether such claims relate to the COVID-19 public health emergency. If DWD finds that the claim is related to the COVID-19 public health emergency, the unemployment insurance benefits paid out on the individual’s claim will be charged to the state’s balancing account rather than the employer’s account, and for certain nonprofit employers and public employers, the benefits will be paid out of the DWD’s administrative account through state appropriations. Wis. Stat. § 108.07(5)(bm).
In the near term, these changes mean federal and state funds will be used to pay unemployment benefits to individuals who become unemployed as a result of COVID-19 without charging those benefits to individual employer accounts. In the long term, DWD has acknowledged that if demand for unemployment benefits reduces the state’s fund below a certain level, it could result in a higher tax schedule for all employers in order to maintain the state’s fund. DWD has created an FAQ section on its website for both employees claiming benefits and for employers.
First Responders and Workers’ Compensation.
Public and private employers of employees who are first responders should also be aware of changes to how determinations of compensability of a claimed injury under workers compensation law will be made in certain cases.
For purposes of establishing a workers’ compensation claim, certain injuries sustained by first responders from March 12, 2020, through a date thirty (30) days after the termination of the public health emergency order are afforded a rebuttable presumption that the injury is work related. Wis. Stat. § 102.03(6). Act 185 defines “first responder” as “an employee of or volunteer for an employer that provides firefighting, law enforcement, or medical treatment of COVID-19, and who has regular, direct contact with, or is regularly in close proximity to, patients or other members of the public requiring emergency services, within the scope of the individual’s work for the employer.” Wis. Stat. § 102.03(6)(a). The presumption applies to injuries found to be caused by COVID-19 during the public health emergency order and to injuries sustained after a first responder is exposed to persons with confirmed cases of COVID-19 in the course of employment. In order for a first responder employee to establish application of the presumption, a claim made under this new provision must be supported by a specific diagnosis from a physician or a positive COVID-19 test. The presumption may be rebutted by evidence showing the employee was exposed to COVID-19 outside of the employee’s work for the employer.
Suspension of Employer Duty regarding Personnel Records.
Wisconsin law requires that all public and private sector employers permit an employee, upon request, to inspect the employee’s personnel documents which are used or which have been used in determining that employee’s qualifications for employment, promotion, transfer, additional compensation, termination or other disciplinary action, and medical records. Generally, under Wis. Stat. § 103.13, such inspection of personnel records must take place reasonably close to the employee’s place of employment, during normal business hours, and within seven (7) working days of the request.
Act 185 suspends this requirement during the public health emergency declared on March 12, 2020. During the period of the public health emergency, employers need not respond to the requests within seven (7) working days, and need not provide an opportunity to inspect the records near the place of employment or during normal business hours. Wis. Stat. § 103.13(2m).
Employers are advised that the obligation to provide employee access to personnel records still exists, Act 185 simply suspends the timeline and the manner of inspection. It may still be advisable to provide requested records in a timely fashion, included via electronic or regular mail delivery, depending on the specific circumstances.
Tax Exclusion for Amounts Forgiven under the Paycheck Protection Program.
Finally, Act 185 adopts a number of tax provisions from the CARES Act designed to lower the tax burden for individuals and businesses. The tax provisions are numerous and relate to a variety of tax issues, including stimulus loans, early withdrawals from retirement funds, deductions for charitable contributions, employer payment of employee student loans, and qualified improvement property deductions.
One such provision allows private employers to exclude from taxable income the portion of a Paycheck Protection Program (“PPP”) loan that is forgiven. The CARES Act provides PPP loans expressly for the purpose of maintaining employee wages and benefits, and for other qualifying expenses. PPP loans will be forgiven if borrowing businesses fulfill certain requirements set by the federal government. Under state and federal tax laws, loan amounts that are forgiven would generally be considered taxable income to the borrowing business. The CARES Act, however, provides a taxable income exclusion for the amounts forgiven under PPP loans.
Act 185 adopts the CARES Act provisions excluding loan amounts forgiven under the PPP loan from a borrowing business’s taxable income. This means that small businesses that obtain a PPP loan that is later forgiven will not have to pay federal or Wisconsin state taxes on the forgiven amount of the loan. This change puts Wisconsin tax law in closer alignment with federal tax law with respect to stimulus money under the CARES Act. It also helps promote the purposes of the CARES Act by further incentivizing small businesses to utilize stimulus funds.
For questions regarding this article, please contact the author,
or your Strang, Patteson, Renning, Lewis & Lacy, S.C., attorney.