Agency alleges unemployment law changes would increase court system costs

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The independent body that reviews administrative law decisions has slammed the state Department of Workforce Development over proposed changes to circuit court reviews of unemployment benefit decisions.

Specifically, the Labor and Industry Review Commission alleges the DWD has misrepresented the effects and origins of a proposal to transfer and change the procedures for judicial review of certain decisions.

The Department of Workforce Development is working on a response to the memo, which was sent Wednesday afternoon to members of the state Legislature, the Department of Administration, the DWD and the Unemployment Insurance Advisory Council.

The council makes suggestions to the Legislature about changes to the state’s unemployment benefits law, and the DOA, which supports state agencies such as the DWD and LIRC.

At Thursday’s meeting of the Unemployment Insurance Advisory Council, management member Edward Lump, a small business representative for the Wisconsin Restaurant Association, asked if the council would be discussing the memo.

However, Janell Knutson, non-voting chairperson for the council and director of the legal department for the unemployment division of the DWD, said the memo would not be discussed at the meeting because it was not sent in time to add to the agenda.

“We are preparing a point-by-point analysis in response,” said Knutson at the meeting, “and we will put it on the next agenda.”

In general, when an unemployment claimant wants to appeal a decision made by an administrative law judge, it makes an appeal to the Labor and Industry Review Commission. Then, if the claimant wishes to appeal LIRC’s decision, it may appeal the case to a circuit court. Also, the DWD may appeal a LIRC decision.

The laws governing those types of appeals are found under the state’s worker’s compensation statutes, and the DWD is proposing transferring those laws to the chapter containing the state’s unemployment insurance statutes. It also is proposing some changes to those statues. The council is reviewing the proposal.

According to the memo, Knutson incorrectly told the council at its Sept. 17 meeting that LIRC previously asked for similar changes to those statutes involving circuit court appeals, and although Knutson suggested LIRC create a proposal, it failed to do so.

Rather, LIRC alleges that representatives from the agency attended the meeting to ask for the council’s support on proposed law changes to streamline the unemployment appeals process, correct drafting errors and repeal parts that were obsolete.

Knutson, according to the memo, asked if LIRC had considered changes to the circuit court transfer statutes, and Schwalbe said “no” because it would be significant undertaking for LIRC.

Moreover, the DWD, LIRC alleges, never contacted LIRC about the circuit court transfer proposal although LIRC’s attorneys have handled unemployment insurance cases for decades, and the DWD incorrectly told the council that the proposed changes would have a “negligible fiscal effect” on the DWD, LIRC and other parties.

According to the memo, if the DWD becomes a party to all unemployment benefit appeals cases, it will incur significant costs because more than 100 cases are filed each year and LIRC has needed hundreds of attorney hours to handle the litigation. LIRC also notes that cases involving the DWD have “required extensive briefing and procedural delays,” so the change would increase LIRC’s costs.

DWD’s court costs are already skyrocketing. The DWD has spent, as of July 31, more than $550,000 on court costs relating to unemployment insurance as of July 31, according to report given by the unemployment division’s treasurer. Last year, the DWD’s court costs were about $289,000.

The memo also outlined LIRC’s opposition to some of the changes the DWD is proposing. The changes include requiring that the DWD be named as a party in all appeals of unemployment benefits decisions to the circuit courts.

That change would be a “trap,” according to LIRC, because not all employers or employees appealing the decision would know to name the DWD as a party, and any appeal filed in the circuit court that doesn’t name DWD as a defendant would have to be dismissed.

When a LIRC decision is appealed to a circuit court, the judge reviews whether the commission’s interpretation and application of the law is reasonable. But adding the DWD would complicate that review, according to the memo, because it would “add a third voice.”

Other changes LIRC criticized in its memo included one that would not require the DWD to have appeared at LIRC proceedings in order to appeal an order, and another that would not require a circuit court to agree to a case brought before it if no party resides in that county. Follow @erikastrebel