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# 3400 - MICHIGAN: UNEMPLOYMENT INSURANCE

Who is required to pay unemployment insurance taxes?

A liable employer is an employing unit that either:

1. employed one or more employees in each of any 20 different weeks in a calendar year;
2. paid $1,000 or more in payroll in calendar year to employees covered by unemployment insurance;
3. acquire the trade, organization, or business, or at least 75% of the assets of a liable employer.

MESA TAX QUESTIONS

7310 Woodward Ave., Room 202

Detroit, MI 48202

MESA Customer Service office: 800-638-3994

You may obtain a copy of an important book for your records by contacting:

MESA EMPLOYER HANDBOOK

MESA External Relations

7310 Woodward Ave., Room 602

Detroit, MI 48202

-- 1994, RefGuide

UNEMPLOYMENT & EMPLOYER PROTESTS

Effective February 2, 2001, several Unemployment Agency (UA) rules were approved. One of the rules eliminates the requirement for employers to respond to notifications from the UA about the filing of unemployment claims unless the employer believes there is a problem. Here are some examples:

• If an employee's unemployment claim is denied, it is not necessary because your account will not be charged. In this case, the Weekly Benefit Amount and Benefits Weeks Allowed fields on form UA 1575E will be 0".

• If the employee will receive benefits, but your account will not be charged, there is no reason to protest the claim. IF you account is not being charged for benefits, zero will be entered in the Maximum Charge column. The potential amount of benefits payable will appear in the Non-Charge Amount column.

• If there is a reference code 24 next to your business name, there is no need to protest. This code means that the UA is aware that the employee separation may be disqualifying. It also means that--either because the claimant has not earned enough after separation to satisfy a "rework," or because a disqualification may results in a benefit reduction--the UA will be investigating the separation and issuing a nonmonetary determination.

As an employer, you might receive another Agency from--usually Form UA 1707, Request for Information Relative to Possible Ineligibility or Disqualification--asking about the details of the separation. Be sure to respond promptly to that form. However, it is not necessary to send a protest in addition to your response.

Other changes include rules that:

• indicate what the UA must do to notify employers of charges and credits under the wage record system for calculating unemployment benefits;

• clarify what ware the possible reasons for good cause by a jobless worker to file a work registration late;

• make necessary changes for the Agency to convert to a phone system for filing initial claims;

• change the waiver of seeking work requirement if the unemployment rate reaches 7.5% statewide, instead of at the county level.

Questions? Call the UA Customer Relations hotline at 1-800-638-3994.

-- May 2001, Unemployment Agency's Michigan Employer Advisor

UNEMPLOYMENT INSURANCE CHANGES

Note: See next article about additional tax and benefit changes effective in 2002 and 2003.

After new legislation, after procedure and programming changes, after training of Agency staff and after a statewide public education campaign, Michigan's new and improved system for handling claims for jobless benefits is here.

The conversion from a wage request to a wage record system begins with new unemployment claims filed on and after October 1, 2000. The conversion had been set for December 31, 2001, but was bumped up by legislation signed into law by Gov. Engler in June.

What is a wage record system? Wage record is a method of determining unemployment insurance (UI) benefits based on quarterly employee wage reports already filed by employers with the Unemployment Agency (UA). Under federal law, employers are required to submit each employee's quarterly wage records. The outgoing system was called "wage request" because UA contacted employers for weekly wage and separation information whenever a former employee filed a claim for jobless benefits. Employers and claimants should quickly notice big improvements in the claim process. These include:

• Michigan employers will no longer have to complete up to one million UA forms annually, requesting weekly wage information. This will save employers and UA countless hours in processing time as well as mailing cost.
• Laid-off workers will know immediately upon filing their claims how much they may get in unemployment benefits, if they are otherwise eligible, rather than wait up to 14 days.
• By converting to wage record now, the federal government will provide most of the funding to cover Michigan's conversion costs. The state of Michigan will save from $3 to $5 million a year.
• Some provisions of Michigan's unemployment insurance system will undergo major changes under wage record. They include:
• Base Period: Rather than qualifying on the basis of the most recent 52 weeks, the base period will be the first four of the last five completed calendar quarters. If a person is unable to qualify on that basis, then the last four completed quarters will be considered.
• Qualifying Wages: Rather than using a minimum of 20 credit weeks, wage record will use total base period earnings. The base period of the claim is usually the first four of the last five completed calendar quarters.
• Weekly Benefit Amount: Rather than using 67% of after-tax earnings, wage record will use the calculations of 4.1% of high quarter wages plus $6 for each dependent claimed, up to five dependents. For instance, if a claimant earned $2,000 in his or her high quarter and had two dependents, he or she would be entitled to a weekly benefit amount of $94. Or: $2,000 x .041 = $82; $6 x 2 dependents = $12; and $82 + $12 = $94. The maximum benefit allowed will be the same as under current law, $300.
• Benefit Duration: Rather than 75% of credit weeks (subject to a maximum of 26 weeks), wage record will use 40% of base period wages divided by the weekly benefit amount. For a worker with total base period wages of $3,400 and a weekly benefit amount of $94, the calculation is: $3,400 x .40 = $1,360. $1,360/$94 is 14.47 = 14 (results are rounded to the nearest half-number).

Where can employers get more information about the wage record system? The UA's Employer Customer Relations hotline is 1-800-638-3994; the Claimant Customer Relations hotline is 1-800-638-3995. Information also is available on the UA's Web site at www.miua.com, plus a special wage record edition of the Agency's Employers Handbook is available.

-- 2001, Michigan Employer Advisor

CHANGES TO MICHIGAN'S UNEMPLOYMENT LAW:

Taxable wage base drops to $9,000 per employee

On April 11, 2002, the Michigan House of Representatives and Senate passed legislation that will make several changes to the state's unemployment insurance (UI) law, including a drop in the taxable wage base to $9,000 and an increase in the maximum weekly unemployment benefit amount.. Governor Engler must sign the bill, however, before it becomes law, and he is expected to do so.

Below are some of the major provisions of the legislation that affect employers and the UI tax program. All of the tax provisions take effect in calendar year 2003.

• The wage base, which is used to tax employers for the unemployment insurance program, will drop $500, from $9,500 to $9,000. Had the change been in effect in 2001, Michigan employers would have saved $42 million.
• The minimum tax rate that Michigan employers may be charged for state UI taxes will drop from 0.1 to 0.06%. As a result, a qualified employer's annual unemployment tax bill could be as little as $5.40 per employee. The change results from reductions to the Non-Chargeable Benefits Component in the tax rate formulas of employers who have not had any benefit charges for nine years. The change will affect approximately 61,000 Michigan employers.
• The Chargeable Benefit Component in employers' tax rates will edge up in 2003. The rate will increase to 6.3% from 6.0%. About 19,000 employers will be affected. The increase, however, should be negligible, as the higher rate will be applied against the lower taxable wage base of $9,000.
• Employers who pay $200 or less in wages to an employee in the base period of an unemployment claim will not have those charges applied against their tax accounts. The charges, instead, will be applied to the Non-Chargeable Benefits Account.
• Michigan's Indian Tribes will be treated in a way similar to local and state units of government. As a result of changes in federal law, Michigan has amended its law to consider Tribes as reimbursing employers, unless they elect to be contributing.
• A Bureau practice regarding the treatment of voluntary job leaving has become law. Workers have the burden of proving they left their jobs involuntarily or with good cause attributable to the employer.
• The recent law changes also require the Bureau to create and maintain a secure Internet website that will enable employers to determine if the Bureau has received their correspondence and their protests of benefit payments.
• Finally, in cases where workers voluntarily leave their jobs, employers can notify the Bureau within 30 days that their accounts should not be charged. They can have their charges removed and charged to the Non-Chargeable Benefits Account retroactive to the date of the Bureau's monetary determination.

The maximum benefit amount climbs to $362 a week in 2002

Below are some of the major provisions of the legislation that affect jobless workers claiming unemployment benefits.

• The maximum weekly benefit amount increases to $362 from the current $300 level.

The benefit increase does not affect every unemployment claim. The increase applies to about 60% of all claims - basically, those receiving the current maximum of $300 per week. A person's weekly unemployment benefit amount is calculated by multiplying the largest amount of wages received in any one of the base period quarters by 4.1%. For each dependent, $6 is added to the individual's weekly benefit. Under the recent changes the weekly benefit amount will be capped at $362. Examples of weekly benefit amount calculations follow:

Example #1: A worker with high quarter wages of $7,318 or less and no dependents will not see any increase in his/her weekly benefit amount. ($7,318 x 4.1% = $300.)

Example #2: A worker with high quarter wages of $7,561 and no dependents would receive a weekly unemployment benefit of $310. ($7,561 x 0.041 = $310.)

Example #3: A worker with high quarter wages of $8,000 and two dependents would receive a weekly unemployment benefit of $340. [$8,000 x 0.041 = $328 plus $12 ($6 per dependent) = $340.]

Example #4: A worker with high quarter wages of $8,830 or more would receive the maximum weekly benefit of $362. ($8,830 x 4.1% = $362.03, rounded down to $362.)

The higher benefit amount will apply to current and new claims as of the legislation's effective date. The increases, however, do not affect existing federally -funded Temporary Extended Unemployment Claims claims.

• Benefit duration will increase for some.

For new claims filed after the legislation's effective date, the formula for determining how many weeks of benefits a jobless worker will receive has changed. The multiplier will increase from 40% of base period wages to 43%. The maximum number of weeks an individual can receive, however, remains capped at 26, and the minimum remains at 14 weeks.

The formula for determining benefit duration will be: multiply the worker's total base period wages by 43% and divide the answer by the weekly benefit amount.

Example: Total base period wages = $5,898; weekly benefit amount = $161. $5,898 x 43% = $2,536.14 $161 = 15.75. Round down to nearest half-week. The number of allowed weeks is 15.5.

• Severance pay affects benefits

Jobless benefits will be offset by severance pay the worker receives or that is allocated by the employer. Salary continuation and other remuneration intended as continuing wages resulting from the separation will also offset benefits. Supplemental Unemployment Benefits (SUB) paid by some employers are not used as an offset.

• Disqualification provisions changed.

Jobless workers suspended for misconduct in connection with their work will be disqualified from receiving benefits, subject to requalification provisions.

Disqualifications that had required six weeks of requalification will now require 13 weeks. Offenses affected by this change include: failure to apply for or accept suitable work; failure to report to a former employer for work; job loss due to absence from work because of incarceration; discharge reduced to disciplinary layoff or suspension for participation in a strike or other concerted action not authorized by the recognized bargaining representative; failure to report back to the temporary help firm within seven days of completing services for a client.

Disqualifications that had required 13 weeks of requalification will now require 26 weeks. Offenses affected by this change include: assault and battery, theft or willful destruction of property in connection with the individual's work; theft after receiving notice of a layoff or discharge; illegally ingesting, injecting, inhaling or possessing a controlled substance on the employer's premises; and refusal to submit to a drug test, or testing positive.

Workers who voluntarily leave their jobs must earn 12 times their weekly benefit amount to requalify, while those who are suspended or fired for general misconduct must earn 17 times their weekly benefit to requalify.

Those who refuse offers of work that pay at least 70% of the gross pay rate they received from their last job will be denied benefits.

• Fraud penalties raised.

If benefit payments totaling less than $500 are collected due to false statements or misrepresentation, the jobless worker will be penalized by an amount equal to two times the benefits received.

In cases involving benefit payments totaling $500 or more collected because of false statements or misrepresentation, the jobless worker will be penalized by an amount equal to four times the benefits received.

In cases where parties embezzle monies from the UI trust fund in an amount less than $500, they will be penalized by an amount equal to two times the funds they received.

In embezzlement cases involving $500 or more, the penalty amount is four times the amount received.

-- May 2002, Bureau of Workers' & Unemployment Compensation Fact Sheet #97 and #98

SIXTEEN WAYS TO AVOID LOSING YOUR UNEMPLOYMENT APPEAL

Probably more unemployment compensation cases are lost than are won. "In most cases, you will not win unless the facts and the law are in your favor. It is possible, however, to bungle a potential winner." (William DeMartini, Chief Administrative Law Judge 1979-82, California UI Appeals Board)

The following list covers the most common mistakes parties make in appeal cases.

1. File your appeal on time. An appeal to the Board must be filed (in person at the Job Center or postmarked) within 15 calendar days of the mailing date of the decision. There are no provisions for extension of time and if you file late, you face a heavy burden in proving you were prevented from filing on time Also, it is strongly recommended that you state clearly the reasons for the appeal. 

2. Prepare your case early and on the proper issues(s) You should identify the issue involved in the appeal and begin preparing for the hearing as soon as you learn of the appeal -either when you decide to appeal or when you receive a copy of another party's appeal.

Be careful not to overlook multiple issues in a decision. The claimant's benefit entitlement may be combined with an overpayment, or combine voluntary leaving and availability. Also check the hearing notice, as the referee may signal a need to consider a different section of law at the hearing than the one used by the Job Center, such as voluntary leaving instead of discharge, or Section 3 instead of 402 (e).

Time is very important. Secure your documents and witnesses immediately. If you wait until you receive notice of the hearing to seek counsel, your advocate will have far less time to prepare.

3. Plan to get right to the point at the hearing. As you prepare your case, remember that a clear and concise presentation is generally better. Avoid drowning your main point in a cascade of background material. Concentrate on the legal issues which control eligibility. Be sure you know who has the burden of proof; it governs how much you need to present.

4. If you have a problem with the hearing date, request a new hearing date promptly. Unless you face a dire unanticipated emergency, you will not be granted a last-minute change in hearing date.

5. Make early requests to subpoena witnesses whose attendance you cannot control. Subpoenas are up to you to serve. A subpoena served on a witness the day, or even the day before the hearing may be unenforceable.

6. Don't subpoena witness(s) against you. This happens more than you might think. Be sure you know each witness's testimony before bringing them to the hearing. Do not count on an adverse witness turning friendly because he or she is subpoenaed or under oath at the hearing.

7. When in doubt, present testimony. First-hand testimony is always better than a written statement or document. Moreover, a valid hearsay objection to a document may cause the referee to discount the document completely.

8. Show up on time. Do not count on a referee waiting beyond the scheduled time for you to appear. If you have a last minute emergency or an unforeseen delay en route, contact the referee office immediately.

Follow the advice on the hearing notice to arrive early. You can review the Job Canter documents in advance and avoid facing a "surprise from the file" during the hearing.

9. Present the eyewitness. This is one of the most common mistakes. Offering a witness who has no firsthand knowledge of the event in question is a waste of time and could cost you the case.

10. Object to hearsay evidence of the other side. They have the right to object to any evidence of yours which is hearsay, so you should object to theirs.

11. Present the key document. Be prepared to leave it with the referee. Photocopies are acceptable but bring along the original in case the other side tries to challenge it. If you do not possess a key document, it can be subpoenaed in the same manner as a witness.

12. Summarize voluminous written material. Evidence is judged on quality, not quantity. Submitting a bewildering stack of papers can hurt you rather than help you. If you feel you must, then at least prepare a summary to help the referee and Board take proper note of the items. Be aware, however, that the other side has a right to challenge your summary and to examine the original material from which the summary was compiled.

13. In questioning your witness, avoid leading questions. A leading question is one which suggests the answer, often a "yes" or "no". These types of questions detract from the credibility of the witness. In eliciting the direct testimony of the your witness, ask short questions which allow the witness to relate a fact or describe an event in his or her own way. (You may ask leading questions when cross-examining a witness of the other party, however.)

14. Explain technical terms, occupational slang and strange customs of the trade. If it's not commonly understood outside of your business, trade or profession, explain it. Otherwise, you may confuse the referee, the Board and the courts (if it goes that far) and receive a disappointing decision.

15. Avoid excessive cross-examination. It is very rare for a party to make his or her case on cross-examination. More commonly, you can lose the case by unintentionally giving the witness the chance to repeat and elaborate upon all the adverse testimony just given. However, make sure any claimant statement, related to the issue being ruled on, and which is not considered factual, is refuted during the hearing.

16. Do not assume the referee knows every law enacted or every decision issued. You can reasonable assume the referee will know about a point of law in the unemployment field, but offering the referee copies of, or the citations to, unemployment court decisions related to your case would not hurt.

Statues and decisions outside of the unemployment field should be accurately cited, and a copy of the pertinent material provided if possible.

-- January 1996, Penn-Jersey Assn's "The Keystone"