2023 Wisconsin Statutes & Annotations › Chapter 108 - Unemployment insurance and reserves. › 108.16 - Unemployment reserve fund.

108.16
Unemployment reserve fund.
(1)
For the purpose of carrying out the provisions of this chapter there is established a fund to be known as the “Unemployment Reserve Fund," to be administered by the department without liability on the part of the state beyond the amount of the fund. This fund shall consist of all contributions and moneys paid into and received by the fund pursuant to this chapter and of properties and securities acquired by and through the use of moneys belonging to the fund.
(2)
(a)
A separate employer's account shall be maintained by the department as to each employer contributing to said fund.
(b)
Each employer's account shall be credited with all its contributions paid into the fund, and shall be charged with all benefits duly paid from the fund to its employees based on their past employment by it, except as otherwise specified in this chapter.
(c)
Any reference in this chapter to eligibility for, or to payment of, benefits “from an employer's account", or any similar reference, shall mean benefits payable or paid from the fund based on past employment by the employer in question.
(d)
The fund shall be mingled and undivided, and nothing in this chapter shall be construed to grant to any employer or employee any prior claim or right to any part of the fund.
(e)
Except as provided in par. (em), benefits shall be charged against a given employer's account as of the date that the department issues the payment covering such benefits. Each benefit payment shall be promptly issued and shall, in determining the experience or status of the account for contribution purposes, be deemed paid on the date the payment is issued.
(em)
Benefits improperly charged or credited to an employer's account for any reason other than adjustment of payroll amounts between 2 or more employers' accounts shall, when so identified, be credited to or debited from that employer's account and, where appropriate, recharged to the correct employer's account as of the date of correction. Benefits improperly charged or credited to an employer's account as a result of adjustment of payroll amounts between 2 or more employers' accounts shall be so charged or credited and, where appropriate, recharged as of the date on which the department issues the benefit payment. This paragraph shall be used solely in determining the experience or status of accounts for contribution purposes.
(f)
The department shall promptly advise the employer as to benefits charged to its account.
(g)
Whenever the department receives a request of 2 or more partnerships consisting of the same partners to be treated as separate employers prior to October 1 of any year, the department shall apportion the balance in any existing account of the partnerships among the separate employers on January 1 following the date of receipt of the request in proportion to the payrolls incurred in the businesses operated by each of the employers in the 4 completed calendar quarters ending on the computation date preceding the date of receipt of the request and shall calculate the reserve percentage of each separate employer in accordance with the proportion of the payroll attributable to that employer. Section 108.18 (2) is not made applicable to the separate employers by reason of such treatment. For purposes of s. 108.18 (7), the department shall treat the partnerships as separate employers on November 1 preceding that January 1. For purposes of s. 108.18 (7) (b) and (c), the department shall treat the separate employers as existing employers on that January 1.
(h)
Whenever, prior to October 1 of any year, the department receives a written request by all partnerships consisting of the same partners which have elected to be treated as separate employers for the partnerships to be treated as a single employer, the department shall combine the balances in the existing accounts of the separate employers into a new account on January 1 following the date of receipt of the request and shall calculate the reserve percentage of the single employer in accordance with the combined payroll attributable to each of the separate employers in the 4 completed calendar quarters ending on the computation date preceding that January 1. Section 108.18 (2) is not made applicable to the single employer by reason of such treatment. For purposes of s. 108.18 (7), the department shall treat the partnerships as a single employer on November 1 preceding that January 1. For purposes of s. 108.18 (7) (b) and (c), the department shall treat the single employer as an existing employer on that January 1.
(3)
The fund's treasurer shall write off:
(a)
Any overpayment for which the claimant's liability to reimburse the fund is established under s. 108.22 (8) or any assessment under s. 108.04 (11) (cm) for which a final determination has been issued under s. 108.09 upon receipt of certification by the department that reasonable efforts have been made to recover the overpayment or the amount of the assessment and that the amount due is uncollectible.
(b)
Any overpayment of benefits that was made under the circumstances described in s. 108.22 (8) (c), upon certification by the department to that effect.
(c)
Any nonrecoverable payment made without fault on the part of the intended payee.
(4)
(a)
Consistently with sub. (5), all contributions payable to the fund shall be paid to the department, and shall promptly be deposited by the department to the credit of the fund, with custodians that the department may from time to time select, who shall hold, release and transfer the fund's cash in a manner approved by the department. Payments from the fund shall be made upon vouchers or drafts authorized by the department, in the manner that the department may from time to time approve or prescribe. Any procedure thus approved or prescribed shall be considered to satisfy, and shall be in lieu of, any and all statutory requirements, for specific appropriation or other formal release by state officers of state moneys prior to their expenditure, which might otherwise be applicable to withdrawals from the fund.
(b)
The department shall designate a treasurer of the unemployment reserve fund, who shall be either a regular salaried employee of the department or the state treasurer and shall serve as treasurer of the fund until a successor designated by the department has assumed the duties of this office.
(c)
The treasurer of the fund shall give a separate bond conditioned upon the faithful performance of these duties pursuant to s. 19.01 (2), which bond shall be considered likewise conditioned upon the faithful performance by his or her subordinates of their duties, in such amount as may be fixed by the department. All premiums upon the bond required pursuant to this section when furnished by an authorized surety company or by a duly constituted governmental bonding fund shall, except as otherwise provided in this section, be paid from the interest earnings of the fund, but shall not exceed one-fourth of one percent, per year, of the amount of the bond.
(5)
(a)
All money received for the fund shall promptly upon receipt be deposited to the fund's credit in the “Unemployment Trust Fund" of the United States, in the manner that the secretary of the treasury of the United States, or other authorized custodian of the U.S. unemployment trust fund, may approve, so long as the U.S. unemployment trust fund exists and maintains for this state a separate book account, for the purposes of this chapter, from which no other state or agency can make withdrawals, any other statutory provision to the contrary notwithstanding.
(b) The department shall requisition from this state's account in the “Unemployment Trust Fund" necessary amounts from time to time, shall hold such amounts consistently with any applicable federal regulations, and shall make withdrawals therefrom solely for benefits and for such other unemployment insurance payments or employment security expenditures as are expressly authorized by this chapter and consistent with any relevant federal requirements.
(c)
While the state has an account in the “Unemployment Trust Fund", public deposit insurance charges on the fund's balances held in banks, savings banks, savings and loan associations and credit unions in this state, the premiums on surety bonds required of the fund's treasurer under this section, and any other expense of administration otherwise payable from the fund's interest earnings, shall be paid from the administrative account.
(6)
The department shall maintain within the fund a “balancing account," to which shall be credited:
(a)
All interest earnings, on moneys belonging to the fund, received by, or duly apportioned to, the fund, as of the close of the quarter in which the interest accrued.
(b)
Any reimbursement made pursuant to s. 108.04 (13) (d).
(c)
Any balance credited to an employer's account, if and when the employer ceases to be subject to this chapter, except as provided in sub. (8).
(d)
Any reimbursement made under s. 108.07 (6).
(e)
The amount of any benefit check duly issued and delivered or mailed to an employee, if the benefit check has not been presented for payment within one year after its date of issue.
(f)
Any amount available for such crediting under s. 108.14 (8n) (e) or 108.141.
(g)
Any payment or other amount received for the balancing account under s. 108.15, 108.151, 108.152, or 108.155.
(h)
Any amount of solvency contribution or special contribution received for or transferred to the balancing account pursuant to s. 108.18 (8) to (9m).
(i) Any federal reimbursement of benefits paid under any federal unemployment benefit program administered by the department.
(j)
Any federal reimbursement of benefits paid under this chapter, except as this chapter or a federal agreement requires otherwise.
(k)
All payments to the fund from the administrative account as authorized under s. 108.20 (2m).
(L)
The amount of any overpayments that are recovered by the department by setoff pursuant to s. 71.93 or the amount of any overpayments resulting from fraud or failure to report earnings that are recovered by the department by offset pursuant to 26 USC 6402 (f).
(m)
Any amounts transferred to the balancing account from the unemployment interest payment fund.
(n)
The amount of any penalty collected under s. 108.04 (11) (bh) that accounts for the minimum penalty required to be assessed and deposited into the fund under 42 USC 503 (a) (11).
(o)
Any erroneous payment recovered under s. 108.22 (8e).
(p)
Any amount transferred from the federal employment security administration account under 42 USC 1101 (d) (1) (B).
(6m)
There shall be charged against the fund's balancing account:
(a)
The benefits thus chargeable under sub. (7) (a) or (b) or s. 108.04 (1) (f), (5), (5g), (7) (u), (7m), (8) (a) to (c), (13) (c) or (d) or (16) (e), 108.07 (3), (3r), (5) (am) 2. and (bm) 3. a., (5m), and (6), 108.133 (3) (f), 108.14 (8n) (e), 108.141, 108.15, 108.151, or 108.152.
(b)
Any benefits paid under any federal unemployment benefit program administered by the department, pending their reimbursement.
(c)
The overdraft write-offs thus chargeable under subs. (7) (c) and (7m).
(d)
Any negative balance of a closed employer account, except as provided in sub. (8).
(e)
Any overpayment of benefits or assessment that is written off under sub. (3), except, in the case of an overpayment, if it is chargeable to an employer's account under s. 108.04 (13).
(f)
The amount of any substitute check issued under sub. (11).
(g)
Any payments of fees or expenses assessed by the U.S. secretary of the treasury and charged to the department under 26 USC 6402 (f).
(h)
Any amount paid to correct a payment under s. 108.22 (8e) that is not recovered or recoverable.
(i)
Any amount restored to the account of an employer subject to reimbursement financing under s. 108.04 (13) (d) 4.
(j)
Any amount transferred to the account under sub. (6w) as provided in s. 108.151 (7) (i).
(6w)
The department shall maintain within the fund an uncollectible reimbursable benefits account to which the department shall credit all amounts received from employers under s. 108.151 (7) and all amounts transferred from the fund's balancing account as provided in s. 108.151 (7) (i).
(6x)
The department shall charge to the uncollectible reimbursable benefits account the amount of any benefits paid from the fund's balancing account that are reimbursable under s. 108.151 but for which the department does not receive reimbursement after the department exhausts all reasonable remedies for collection of the amount.
(7)
(a)
All benefits shall be paid from the fund. Benefits chargeable to an employer's account shall be so charged, whether or not such account is overdrawn. All other benefits shall be charged to the fund's balancing account.
(b)
Benefit payments made with respect to an employer's account shall be charged directly against the fund's balancing account only when such payments cannot under this chapter be or remain charged against the account of any employer.
(c)
Whenever, as of any computation date, the net overdrafts then charged against an employer's account would, even if reduced by any contributions known or subsequently discovered to be then payable but unpaid to the account, exceed 10 percent of the employer's annual payroll amount used in determining the employer's reserve percentage as of that computation date, the department shall write off, by charging directly to the fund's balancing account, the amount by which such overdrafts would if thus reduced exceed 10 percent of the employer's payroll.
(7m)
The fund's treasurer may write off, by charging to the fund's balancing account, any delinquent contribution, reimbursement in lieu of contribution, assessment, tardy payment or filing fee, or interest for which the employer's liability to the fund was established under s. 108.10, upon receipt of certification by the department that reasonable efforts have been made to recover the delinquency and that the delinquency is uncollectible.
(8)
(a)
For purposes of this subsection a business is deemed transferred if any asset or any activity of an employer, whether organized or carried on for profit, nonprofit or governmental purposes, is transferred in whole or in part by any means, other than in the ordinary course of business.
(b) If the business of any employer is transferred, the transferee is deemed a successor for purposes of this chapter if the department determines that all of the following conditions have been satisfied:
1.
The transferee has continued or resumed the business of the transferor, in the same establishment or elsewhere; or the transferee has employed substantially the same employees as those employed by the transferor in connection with the business transferred.
2.
The transfer included at least 25 percent of the transferor's total business as measured by comparing the payroll experience assignable to the portion of the business transferred with the transferor's total payroll experience for the last 4 completed quarters immediately preceding the date of the transfer.
3.
The same financing provisions under s. 108.15, 108.151, 108.152, or 108.18 apply to the transferee as applied to the transferor on the date of the transfer.
4.
The department has received a written application from the transferee requesting that it be deemed a successor. Unless the transferee satisfies the department that the application was late as a result of excusable neglect, the application must be received by the department on or before the contribution payment due date for the first full quarter following the date of transfer. The department shall not accept a late application under this subdivision more than 90 days after its due date.
(c)
Notwithstanding par. (b), if the business of an employer is transferred, the transferee is deemed a successor for purposes of this chapter if the department determines that all of the following conditions have been satisfied:
1.
The transferee is a legal representative or trustee in bankruptcy or receiver or trustee of a person, partnership, limited liability company, association or corporation, or guardian of the estate of a person, or legal representative of a deceased person.
2.
The transferee has continued or resumed the business of the transferor, either in the same establishment or elsewhere, or the transferee has employed substantially the same employees as those the transferor had employed in connection with the business transferred.
3.
The same financing provisions under s. 108.15, 108.151, 108.152, or 108.18 apply to the transferee as applied to the transferor on the date of transfer.
(cm)
The filing of a voluntary petition in bankruptcy by an employer or the filing of an involuntary petition in bankruptcy against an employer under 11 USC 1101 to 1330 or the confirmation of a plan under 11 USC 1101 to 1330 does not render the employer filing the petition or against whom the petition is filed a successor under par. (c).
(d)
Notwithstanding par. (b), if the business of an employer of a kind specified in par. (c) 1. is transferred, the transferee is deemed a successor for purposes of this chapter if the transferee would have been a successor under par. (e) but for the intervening existence of the successor employer under par. (c).
(e)
Notwithstanding par. (b), a transferee is deemed a successor for purposes of this chapter, if the department determines that all of the following conditions are satisfied:
1.
At the time of business transfer, the transferor and the transferee are owned, managed, or controlled in whole or in substantial part, either directly or indirectly by legally enforceable means or otherwise, by the same interest or interests. Without limitation by reason of enumeration, it is presumed unless shown to the contrary that the “same interest or interests" includes the spouse, child, or parent of the individual who owned, managed or controlled the business, or any combination of more than one of them.
2.
The transferee has continued or resumed the business of the transferor, either in the same establishment or elsewhere; or the transferee has employed substantially the same employees as those the transferor had employed in connection with the business transferred.
3.
The same financing provisions under s. 108.15, 108.151, 108.152, or 108.18 apply to the transferee as applied to the transferor on the date of the transfer.
(em)
If, after the transferee of a business has been deemed a successor under par. (e), the department determines that a substantial purpose of the transfer of the business was to obtain a reduced contribution rate, then the department shall treat the transfer as having no effect for purposes of this chapter and shall, retroactively to the date of the transfer, reassign to the transferor all aspects of the transferor's account experience and liability that had been assigned to the transferee, together with all aspects of the transferee's account experience related to the transferred business, and shall recompute the transferor's contribution rate as provided in par. (h).
(f)
The successor shall take over and continue the transferor's account, including its positive or negative balance and all other aspects of its experience under this chapter in proportion to the payroll assignable to the transferred business and the liability of the successor shall be proportioned to the extent of the transferred business. The transferor and the successor shall be jointly and severally liable for any amounts owed by the transferor to the fund and to the administrative account at the time of the transfer, but a successor under par. (c) is not liable for the debts of the transferor except in the case of fraud or malfeasance.
(g)
If not already subject to this chapter, a successor shall become an employer subject to this chapter on the date of the transfer and shall become liable for contributions or payments in lieu of contributions, whichever is applicable, from and after that date, using the contribution rate assigned or assignable to the transferor on the date of transfer.
(h)
The department shall redetermine the contribution rate of a successor that is subject to this chapter immediately prior to the effective date of a transfer as of the applicable computation date effective for contributions payable beginning in the first calendar year following the date of the transfer of the business. The department shall thereafter redetermine the contribution rate whenever required by s. 108.18. For the purposes of s. 108.18, the department shall determine the experience under this chapter of the successor's account by allocating to the successor's account for each period in question the respective proportions of the transferor's payroll and benefits which the department determines to be properly assignable to the business transferred.
(i)
The account taken over by the successor shall remain liable with respect to accrued benefit and related rights based on employment in the transferred business, and all such employment is deemed employment performed for the successor.
(im)
Notwithstanding pars. (b) to (i), a transferee who is not subject to this chapter on the date of transfer of a business shall not be deemed a successor to the transferor if the department determines that the transfer occurred solely or primarily for the purpose of obtaining a lower contribution rate for the transferee than the rate that would otherwise apply if the transferee were deemed a new employer. In determining whether a business was transferred solely or primarily for the purpose of obtaining a lower contribution rate for the transferee than the rate that would otherwise apply, the department shall use objective factors, which may include the cost of acquiring the business, whether the transferee continued the business enterprise of the transferred business, the length of time that the business enterprise was continued, or whether a substantial number of new employees were hired for the performance of duties unrelated to the business activity conducted by the transferor prior to the transfer.
(j)
If not already subject to this chapter, a transferee that is not a successor shall become an employer subject to this chapter on the date of the transfer and shall become liable for contributions or payments in lieu of contributions, whichever is applicable, from and after that date.
(k)
Any time a business is transferred, as provided in par. (a), both the transferor and the transferee shall notify the department in writing of the transfer, within 30 days after the date of transfer; and both shall promptly submit to the department in writing such information as the department may request relating to the transfer.
(L) A professional employer organization is not considered to be the successor to the employer account of its client under this section by virtue of engaging the prior employees of the client to perform services for the client under an employee leasing agreement.
(m)
If any person knowingly makes or attempts to make a false statement or representation to the department in connection with any investigation to determine whether an employer qualifies to be deemed a successor under par. (e) or (im) or any other provision of this chapter for the purpose of determining the assignment of a contribution rate, or if any person knowingly advises another person to do so, including by willful evasion, nondisclosure, or misrepresentation, the person is subject to the following penalties:
1.
If the person is an employer, then the department shall assign the employer the highest contribution rate assignable under this chapter for the year, during which the violation or attempted violation occurs and the 3 succeeding years, except that if the department assigns the employer the highest contribution rate for any such year under other provisions of this chapter or if the increase in the employer's contribution rate under this subdivision would be less than 2 percent on its payroll for any year, then the department shall increase the employer's contribution rate by 2 percent on its payroll for each year in which a penalty applies under this subdivision.
2.
If the person is not an employer, the person may be required to forfeit not more than $5,000.
3.
The person is guilty of a Class A misdemeanor.
(n)
The department shall utilize uniform procedures to identify businesses that are transferred under this subsection.
(o)
Paragraphs (e) 1., (em), (h), (im), and (m) shall be interpreted and applied, insofar as possible, to meet the minimum requirements of any guidance issued by or regulations promulgated by the U.S. department of labor.
(9)
(a)
Consistently with 26 USC 3305, relating to federal instrumentalities that are neither wholly nor partially owned by the United States nor otherwise specifically exempt from the tax imposed under 26 USC 3301:
1.
Any contributions required and paid under this chapter for any year by any such instrumentality, including any national bank, shall be refunded to that instrumentality in case this chapter is not certified with respect to such year under 26 USC 3304.
2.
No national banking association is required to comply with any provisions or requirements under this chapter, to the extent that such compliance would be contrary to 26 USC 3305.
(10)
All money withdrawn from the fund shall be used solely in the payment of benefits, exclusive of expenses of administration, and for refunds of sums erroneously paid into the fund, for refund of a positive net balance in an employer's reimbursement account under ss. 108.15 (4), 108.151 (5), and 108.152 (4) on request by the employer, for expenditures made pursuant to s. 108.161 and consistently with the federal limitations applicable to s. 108.161, and for payment of fees and expenses for collection of overpayments resulting from fraud or failure to report earnings that are assessed by the U.S. secretary of the treasury and charged to the department under 26 USC 6402 (f).
(10m)
Except as provided in s. 108.17 (3m), the department shall not pay any interest on any benefit payment or any refund, or collect any interest on any benefit overpayment.
(11)
The fund's treasurer may issue a substitute check to an employee to replace a check that is canceled under sub. (6) (e), if the employee makes application therefor within 6 years after the date of issue of the original check.
(12)
The fund's treasurer shall estimate at the end of each calendar quarter the earnings rate payable on the fund's bank balances and the earnings rate payable by the federal unemployment account under title XII of the Social Security Act (42 USC 1321 to 1324) for the following quarter. Based on these estimates, the treasurer shall pay for the cost of banking services incurred by the fund in the following quarter either by maintaining compensating bank balances or by payment for the services from the appropriation under s. 20.445 (1) (ne), whichever payment method is estimated to yield the highest net earnings for the fund.
(13)
If the secretary determines that employers in this state that are subject to a requirement to pay a federal unemployment tax might experience a lower tax rate if this state were to loan moneys to the fund under s. 20.002 (11) (b) 3m., the secretary shall request the secretary of administration to make one or more transfers to the fund in the amount required to maintain a favorable federal tax experience for employers. The secretary shall not request a transfer under this subsection if the outstanding balance of such transfers at the time of the request would exceed $50,000,000. Whenever the secretary determines that the balance of the fund permits repayment of a transfer, in whole or in part, without jeopardizing the ability of the department to continue to pay other liabilities and costs chargeable to the fund, the secretary shall repay the department of administration for the amount that the secretary determines is available for repayment. The secretary shall ensure that the timing of any repayment accords with federal requirements for ensuring a favorable tax experience for employers in this state.
History:  1971 c. 53; 1973 c. 247; 1975 c. 343; 1977 c. 133; 1979 c. 52; 1979 c. 110 s. 60 (13); 1981 c. 36; 1983 a. 8, 99, 368; 1985 a. 17 ss. 39 to 56, 66; 1985 a. 29; 1987 a. 27; 1987 a. 38 ss. 107 to 111, 134; 1987 a. 255; 1989 a. 56 s. 259; 1989 a. 77, 359; 1991 a. 89, 221; 1993 a. 112, 373, 490, 492; 1995 a. 118, 225; 1997 a. 39; 1999 a. 15, 83; 2001 a. 35; 2003 a. 197; 2005 a. 86, 253; 2007 a. 59; 2009 a. 287; 2011 a. 198, 236; 2013 a. 20, 36; 2015 a. 55, 86, 334; 2017 a. 157; 2019 a. 185; 2021 a. 231; s. 35.17 correction in (9) (a) 1.
Whether an employee is potentially eligible for unemployment compensation benefits is immaterial in determining contribution or tax liability based on that employee's services. Hanmer v. DILHR, 92 Wis. 2d 90, 284 N.W.2d 587 (1979).
In the case of a merger, the “time of business transfer" under sub. (8) (e) 1. refers to that point in time immediately prior to the effective date of the merger. First Federal Savings Bank v. LIRC, 200 Wis. 2d 786, 547 N.W.2d 796 (Ct. App. 1996), 93-2158.
Assuming, without deciding, that a Chapter 11 bankruptcy reorganization resulted in a “transfer" under sub. (8) (a), the reorganized company in this case was mandatory successor under sub. (8) (e) 1. Sub. (8) (e) 1. broadly refers to whether an employer is “owned, managed, or controlled in whole or in substantial part, either directly or indirectly by legally enforceable means or otherwise, by the same interest or interests." Given this broad language and a company's retention of six of its eight officers, including its chief operating officer and corporate controller, the Labor and Industry Review Commission reasonably determined that the company was “managed ... in substantial part ... directly ... by the same ... interests" as before its reorganization. Neenah Foundry Co. v. LIRC, 2015 WI App 18, 360 Wis. 2d 459, 860 N.W.2d 524, 14-1113.
The interests-of-justice factors are not part of the excusable-neglect analysis under sub. (8) (b) 4. Friendly Village Nursing & Rehab, LLC v. DWD, 2022 WI 4, 400 Wis. 2d 277, 969 N.W.2d 245, 20-0520.
Excusable neglect is the only justification for accepting a late successorship application under sub. (8) (b) 4. Excusable neglect means an error that a reasonably prudent person would have committed under the same circumstances. The inquiry is context dependent and requires a showing of something more than ordinary neglect or carelessness. A party seeking relief under an excusable-neglect provision must offer a persuasive explanation for its mistake by pointing to specific incidents that occurred at the time of the mistake. When the record is silent, or contains only speculation about the reasons for an applicant's mistake or its failure to take reasonably prudent precautions, there is no basis on which to excuse the neglect. Friendly Village Nursing & Rehab, LLC v. DWD, 2022 WI 4, 400 Wis. 2d 277, 969 N.W.2d 245, 20-0520.
There is no statutory requirement for the Department of Workforce Development to contact a business and alert it to a report regarding business transfer. The statutes place compliance with all registration and application requirements squarely on businesses. Friendly Village Nursing & Rehab, LLC v. DWD, 2022 WI 4, 400 Wis. 2d 277, 969 N.W.2d 245, 20-0520.