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Wisconsin Unemployment Insurance Changes

Unemployment insurance claimants in Wisconsin now have to wait one week after their separation of employment for their unemployment benefits to begin. Employers and the unemployment trust fund will likely save a great deal of money because of this change, which appeared in this year's budget bill rather than as a result of formal proposal, bill, or recommendation from the UI Advisory council, a committee with both management and employee representatives charged with making legislative recommendations and insuring state compliance with federal laws. The practical effect of this change is that it will prevent workers with temporary layoffs from claiming and receiving unemployment benefits during short layoffs lasting less than one week.

Additionally, Wis. Stat. § 108.04(8) has been amended to disqualify employees from unemployment benefits if they refuse to take a drug test required for new applicants or have job offers withdrawn due to failed drug tests. However, this could create a problem because of the potential conflict it creates with federal law. State unemployment benefits are funded by federal taxes through the Federal Unemployment Tax Act (FUTA). FUTA contains a provision requiring the denial of federal tax credits in states which deny unemployment benefits in cases where employees refuse new work offered if the conditions of the work offered are "substantially less favorable to the individual than those prevailing for similar work in the locality". In the past, Wisconsin has made sure to abide by this requirement by stricly enforcing the "substantially less favorable" standard. The potential problem with the drug test amendment to the law, which like the one week waiting period, did not pass through the unemployment advisory council, is that an employee could now theoretically argue that pre-employment drug testing is not the prevailing condition of employment for other similar jobs and positions. This puts the federal subsidy for the Wisconsin unemployment benefit program in jeopardy because the state law potentially conflicts with FUTA.

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Attorney Nicholas M. McLeod is an associate attorney at Alan C. Olson & Associates, S.C. If you have questions about unemployment insurance, please contact him at: [email protected]

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