With the latest Federal Reserve Bank of Philadelphia index ranking [3] Wisconsin 49th out of 50 in economic outlook, high unemployment in Wisconsin is a problem that is not likely to go away any time soon. But, instead of trying to fix the economy in Wisconsin, Governor Scott Walker's Department of Workforce Development (DWD) is finding new ways to disqualify the unemployed from collecting benefits. This is unlikely to do anything but compound Wisconsin's economic woes.

The Center for Media and Democracy (CMD) has reported [4] on extreme, sweeping changes in the State's unemployment law. These changes would benefit employers at the expense of the unemployed by making it significantly harder to obtain benefits. Since unemployment benefit claims do significantly affect an employer's tax rate [5], Wisconsin employers have an interest in finding more ways to disqualify more people. But even before this legislation was introduced, the DWD has gradually helped stack the deck against the unemployed.

Department to the Unemployed: "Give Us Our Money Back!"

For instance, the Department of Workforce Development has been reopening or reinvestigating old cases and reversing initial determinations that originally allowed benefits. For example, a teacher, whom we'll call Amy, was terminated in 2009 but continued to work an unrelated, part-time job while she concentrated on finding another teaching job. She consistently reported factually all the information the DWD required and collected her unemployment benefits. When she called the department to ask an unrelated question, the DWD reexamined her case and told her to pay back almost $30,000, a staggering amount for someone who has been underemployed for four years.

This is one of many examples encountered by the unemployment clinic of the DWD changing eligibility for an individual then asking for benefits back. In most cases, these are individuals who are already struggling, who have been forced to take lower-paying jobs, or are still unemployed or underemployed. And in almost all cases, this money has already been spent on basic needs while that person has struggled to find employment in a difficult job market.

Victor Forberger, a labor and employment law attorney in the Madison area and an expert in the field of Unemployment Insurance law, explained, "This is different than in the past. They [the DWD] are consciously trying to look at old cases and trying to find ways to disqualify people." However, he continued, "those repayment orders are being overturned [on appeal] because there's nothing really there."

Forberger is concerned by the department's actions: "The problem that I fear is that a lot of people are just accepting ... these decisions [by not fighting them] and thinking, 'Well, you know, there's no way to collect, I have no money,' and not realizing that they're putting themselves on the hook to DWD for years on end."

Between Initial Investigations and Appeals Process, System is Rigged Against Employees

Many factors have led to the department mistakenly denying benefits when claimants first apply. Due to the increase in unemployment over the last four years, the department has been understaffed, overworked, and has supplemented its workforce with temporary workers. These investigators are not always trained properly, and in some cases, are trained to simply review cases and identify fraud. This creates the presumption that the claimants are committing some kind of fraud.

To make matters more difficult, after receiving a denial of benefits, an individual's only legal recourse is to file a timely appeal, but there are problems with the neutrality of this process as well. Attorney Forberger expressed concern that the Administrative Law Judges who hear these appeals are criticized for taking too much time to explain the law. He says they're being informed of the percentage of cases where they rule on behalf of claimants "as if it's a problem."

Wisconsin, the First State to Implement an Unemployment Insurance Program, May Be the First to Virtually Eliminate it

Now Wisconsin, the first state to implement Unemployment Insurance [6] (in 1932), may be the first to virtually eliminate it, due to the extreme nature of the new laws introduced to the legislature. Attorney Forberger explained the collective effects all these changes could have: "I definitely see a worst case scenario in which unemployment [insurance benefit payment] becomes a very rare ... thing."

One of the disqualifications for unemployment insurance is when someone is terminated for misconduct connected with their employment. Right now, this is a relatively high standard (meaning you have to do something really bad to be disqualified for unemployment benefits) that has been in place since 1941, but the proposed law significantly lowers that standard from a "willful and wanton disregard for the employer's interests" to a "substantial fault" standard. As Bob Anderson, attorney at Legal Action [7] of Wisconsin, explained in an interview with the Milwaukee Journal Sentinel [8], "You could have an employee who is 25% at fault and the employer is 75% at fault ... and you will lose your benefits."

With all the new ways to disqualify those claiming unemployment insurance, on top of the increasingly rigged system, actually receiving an unemployment benefit check might soon become a privilege for a lucky few instead of the social safety net it was intended to be.

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*Note: Laura Steigerwald is a law student at UW-Madison and is the student administrator for the Unemployment Appeals Clinic where Attorney Victor Forberger is the managing attorney. She is also a legal intern at CMD. The Unemployment Appeals Clinic is a non-profit organization that pairs law students with attorneys to help individuals with unemployment insurance matters. The views expressed here should not be considered as an official statement on behalf of the Unemployment Appeals Clinic, Inc.