FAQ: Unemployment Benefits Due to COVID-19

According to the latest unemployment projections from the St. Louis Federal Reserve, the COVID-19 emergency is likely to cost 47 million jobs and push the unemployment rate above 30%. Unsurprisingly, the number of unemployment claims filed has reached historic levels. For the week ending on March 21, a record 3.3 million Americans filed initial jobless claims with an estimated 2.65 million to follow in the next week. The various state departments of unemployment are overwhelmed with claims and Wisconsin is no exception. The Wisconsin Department of Workforce Development, which handles unemployment claims in the State, reported that a typical week the number of calls it receives is roughly 24,000. However, during this emergency, the Department reported it is now receiving a staggering 1.5 million calls per week. Since March 15th, Wisconsin unemployment filings reached nearly 222,000, compared to roughly 13,000 filing during the same time last year. As a result, many Wisconsinites have questions about the unemployment process. This article will address many of the frequently asked questions.

Question One: Am I Eligible for Unemployment If I Have Been Laid Off Due to the Coronavirus?

Generally, yes. Wisconsin unemployment benefits are available to any worker who is unemployed through no fault of his own. Many employers are unable to operate during this time due to Governor Ever’s March 24th Safer-At-Home Order. In response, many employers are reducing their workforce on a temporary basis with the intention of hiring back its employees once the emergency concludes. Regardless of the exact language used – furloughed, laid off, terminated, fired, etc. – employees are eligible for unemployment benefits if they are unemployed through no fault of their own.

Question Two: My Employer Has Not Fired Me But My Workplace Is Closed And I Have No Hours to Work, Am I Eligible for Unemployment?

Assuming you meet the monetary criteria and weekly eligibility requirement, you will be eligible for unemployment. If you are unemployed through no fault of your own, you are eligible for benefits in the State of Wisconsin. An employer does not need to formally fire an employee for the employee to be eligible for unemployment. Where an employer has no hours for you to work and the business is closed due to the coronavirus, you will be eligible for unemployment as if you had been formally fired. Even those workers who have had their hours reduced, but are still working, may be eligible for unemployment in certain circumstances.

Question Three: I Am Self-Quarantining Due to the Coronavirus, Will I Be Eligible for Unemployment Benefits?

Generally, no. To receive unemployment benefits, an individual must be unemployed through no fault of his or her own. While many businesses have been closed due to the coronavirus, many essential services continue to operate. If your workplace remains open and has hours for you to work, you will likely not be eligible for unemployment benefits while you self-quarantine.

While you may not be eligible for unemployment benefits, the federal government has provided relief to workers suffering from the coronavirus. The Families First Coronavirus Response Act (FFCRA) goes into effect on April 2nd. Among other provisions, it provides for Emergency Paid Sick Leave for most workers affected by the coronavirus. This Act now allows an eligible employee to take paid sick leave because the employee is:

  1. Subject to a federal, state or local quarantine or isolation order related to COVID-19;
  2. Advised by a health care provider to self-quarantine due to COVID-19 concerns;
  3. Experiencing COVID-19 symptoms and seeking medical diagnosis;
  4. Caring for an individual subject to a federal, state, or local quarantine or isolation order or advised by a health care provider to self-quarantine due to COVID-19 concerns;
  5. Caring for the employee’s child if the child’s school or place of care is closed or the child’s care provider is unavailable due to public health emergency; or
  6. Experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor.

If an employee meets any of these categories, the employer will be responsible for providing 80 hours of paid sick leave at the employee’s regular rate or two-thirds of the employee’s regular rate if the employee falls under categories 4, 5, or 6 above. This paid sick leave provision will remain in effect until December 31, 2020.

Question Four: I Am Sick At Home With the Coronavirus, Will I Be Eligible For Unemployment Benefits?

No. Eligible unemployment applicants must be able to work, available for work, and actively seeking suitable work. If you are so ill that you are unable to work, you would not meet these criteria. However, you should be aware that you may be eligible for unemployment benefits if you have subject to a mandatory quarantine by federal, state or local government.

Irrespective of the individual’s unemployment benefit eligibility, he or she may still be covered under existing laws concerning sick leave including the Family and Medical Leave Act (FMLA). Also, as stated above, the FFCRA provides coronavirus-related paid sick leave effective April 2nd.

Question Five: With So Many Businesses Temporarily Closing Due to Coronavirus, Am I Required to Look For Work to Receive Unemployment Benefits?

The normal requirement to receive unemployment benefits in Wisconsin is that the individual must complete 4 work search actions per week. However, by Executive Order of Governor Evers on March 18th, the work search requirement has been waived for the duration of the coronavirus emergency.

Question Six: Is There Any Additional Unemployment Assistance Available In Response to the Coronavirus Emergency?

The federal government has enacted legislation that provides additional unemployment assistance to the unemployed. The Relief for Workers Affected by Coronavirus Act has received much attention due to the direct payments provision which provides up to $1,200 in direct cash payment to applicable Americans. However, the relief bill also extends additional coverage to the States for its unemployed individuals. Qualifying individuals may receive up to an additional $600 per week in unemployment benefits, above and in excess of any state provided benefits, for the next four months (ending on July 31, 2020). In Wisconsin, most persons receive the state weekly maximum benefit of $340 per week. With the federal stimulus bill, you may receive an additional $600 per week, or $940 per week total in unemployment benefits.

Additionally, federal law may extend existing benefits. Under Wisconsin law, unemployment benefits are provided for a maximum of 26 weeks. However, the federal relief bills may extend unemployment benefits beyond existing limits to qualifying states – up to an additional 26 weeks. At this time, it has not been determined if Wisconsin qualifies for extended benefits, but if so, it may provide additional relief to those economically affected by the coronavirus.

Conclusion

This article has sought to provide answers to commonly asked questions regarding unemployment benefits in Wisconsin during this challenging time. Governments continue to aggressively monitor and address challenges faced by the Coronavirus and we may expect to see additional remedial legislation and updates in the future. For legal advice regarding unemployment benefits, or for any other employment law issues you may be facing, please contact us 262-652-5050 for a free consultation.

Contractual issues during a pandemic

The current coronavirus pandemic has caused local and national disruptions that will have a short and long term effect. These disruptions have affected our schools, jobs, and businesses. Some of us might be wondering how a contract we signed might be affected by this pandemic. Parties to a contract can attempt to negotiate around these disruptions. But what if the parties cannot come to an agreement? What follows is a description of some legal doctrines that could be implicated in such contractual scenarios.

Force Majeure

A standard clause found in contracts is the force majeure/impossibility clause (hereinafter “force majeure”). Force majeure is when an extreme event beyond the control of the obligor arises and prevents the impacted party from performing the contract. An example of this is when a natural disaster prevents an obligor from delivering goods or services. If the natural disaster prevents the obligor from performing, then the obligor can be excused from performing because of the force majeure event.

Things to consider in a matter that involves force majeure

  1. “Is the extreme event listed in the force majeure clause?”;
    1. If the event is not listed, then the obligor is not excused from performance and will be in breach of the contract if he does not perform even if a non-listed event does occur.
  2. “Which party is bearing most of the principal non-payment obligations?” (whoever is that party is the primary beneficiary of a force majeure clause);
    1. In a sale of goods transaction, the seller bears the principal non-payments obligations and therefore, would want a broad force majeure clause.
  3. “Do the parties have the ability to terminate the contract if a force majeure event continues for a certain length of time?”
  4. “Does the dispute resolution clause (if there is one) apply to the force majeure clause, or does it go straight to the court?”
    1. Research shows that force majeure-related events are typically arbitrated.
  5. “Is the force majeure event covered or excluded by the parties’ insurance policy?”
  6. “What duty does the obligor have to the other party(ies) if a force majeure event occurs? Does he have to mitigate? Notify the obligee(s)?”

List of Force Majeure Events:

  1. Natural disasters (floods, earthquakes, severe weather)
  2. Pandemics, epidemics, quarantines
  3. Violence such as war, terror attacks, civil unrest
  4. Government action (eminent domain, condemnation, changes in laws/regulations, a government’s authority failure to act on a timely basis)
  5. Organized labor activities, strikes
    1. Have to look at if the obligor caused the strike (lockout of employees or bad faith bargaining)
  6. Shortages of power, supplies, transportation, and infrastructure
    1. Have to look at if the obligor caused the shortage or could have planned ahead.

List of Force Majeure Events that are excluded

  1. Changes in economic circumstances
  2. Subcontractor defaults
  3. Equipment failure
  4. Banking system failure

How have Wisconsin Courts interpreted and applied Force Majeure clauses

A Plaintiff argued that a lease continued in effect beyond a date under its force majeure clause.[1] The Plaintiff alleged that the combination of private and governmental inaction constituted a force majeure event.[2] The contract in Goldstein stated that the duration of the lease would be extended for a period equal to the period of force majeure event.[3] The court in Goldstein held that because it is presumed that parties to a contract know what laws and regulations will affect the ability to get a permit; thus, the failure to obtain the permit is not deemed a force majeure event. The court, in this case, also noted that only one party had the right to invoke the force majeure clause, and that was not the Plaintiff.

What if the contract/agreement does not have a “Force Majeure” clause?

Doctrine of Impossibility or Impracticality

If a contract contains no force majeure clause, then the doctrine of impossibility or impracticality might be invoked. These two doctrines excuse the obligor from performing under a contract if the performance is excessively burdensome due to an unforeseeable event that is not within the obligor’s control. 

Although there is not a lot of Wisconsin law precedent regarding the doctrine of impossibility or impracticality, there is Wis. Jury Instruction(JI)—Civil 3062. Which provides that:

“If performance of a contract is possible only if a certain state of facts continues to exist, then a cessation or termination of the state of facts which makes performance impossible will excuse failure to perform. But if performance becomes impossible by reason of contingencies which should have been foreseen by a party, then such party is not excused from the duty to perform.”

            A court would look at the facts and determine if the case satisfies the excessively burdensome standard. The Covid-19 pandemic is a unique circumstance that might allow a party to invoke one of these doctrines. A court would first have to look at a number of factors, some of which are considered in force majeure, to determine if one of the doctrines excuses nonperformance.

Frustration of Purpose Doctrine

 Frustration of purpose doctrine applies to contracts for goods and services. It is different from the doctrine of impossibility/impracticality because it can be invoked in cases where an event fundamentally changes the purpose of the contract. If the principal purpose of the contract is frustrated, at no fault of a contracting party, then the doctrine may apply to excuse nonperformance.  There is a high bar to meet when invoking this doctrine because the frustrating event must have been a primary purpose of entering into the contract. Furthermore, the event at issue must not have been within the risks contemplated by the contract.

            Wisconsin courts have held that to render a contract unenforceable because of a frustration of purpose, it requires that (1) the party’s principal purposes in making the contract is frustrated; (2) without that party’s fault; (3) by the occurrence of an event, the non-occurrence of which was a basic assumption on which the contract was made.[4] The court in In re Estate of Shepard determined a contract was enforceable because a flight instructor could no longer teach a student, due to the student’s death. [5]


Conclusion

Rizzo & Diersen S.C. is here to help you or your business navigate these legal issues. Contact our office at 262-652-5050 with any questions you may have regarding the coronavirus pandemic disruptions.


[1] Goldstein v. Lindner, 2002 WI App 122, ¶ 20

[2] Id. at ¶ 29.

[3] Id. at ¶ 30.

[4] In re Estate of Sheppard, 2010 WI App 105 at ¶ 13.

[5] Id. at ¶ 15.

Filing Bankruptcy isn’t Your Only Option

by Atty Piermario Bertolotto, Rizzo & Diersen, SC

filing bankruptcy, attorney, rizzo and diersen, wisconsin, racine, kenosha, westosha, milwaukee

Many events can force you into bankruptcy. These can include unemployment, layoffs or creditors being more aggressive in collection efforts.

Bankruptcy May Not Be Your Only Option

Since these events are often common, many people immediately consider bankruptcy because they’ve been told that bankruptcy is their only option. Or perhaps their bank has commenced a foreclosure action to force a sale of their home. Faced with that, many homeowners think they have no other option but to file bankruptcy and “let their house go.”

Many Options Are Available To You

That conclusion could well be wrong. Bankruptcy doesn’t have to be your only choice. In fact, in Wisconsin, it’s rare that a foreclosure of a primary residence is the sole driving force for a bankruptcy. There are many defenses, programs, and options available to you. Often, you can reinstate or modify the mortgage.

Bankruptcy Should Be The Last Option

Bankruptcy might be the only alternative. But usually, it should be the last option after all others are exhausted. It should be used only when there are many other negative financial factors besides a foreclosure lawsuit.

Contact Us

If you are thinking about bankruptcy, the first thing to do is to gather all of your financial information. Then strongly consider talking to a bankruptcy professional. You not only want to get advice but also discuss – in detail – all of your alternatives.

A professional opinion will give you needed information about the bankruptcy process, all the alternatives, and all of the associated costs.

Contact our bankruptcy attorneys today.

Growing Your Business

wisconsin, racine, kenosha, westosha, milwaukee, business, growing business

Structuring Business Plans For Individuals And Small Businesses

For numerous individuals and small business owners, the last few years have been filled with tight budgets and many challenges to maintain jobs, cut costs, and compete in their respective markets.  The challenges have been brought mostly because of the state of the economy and the tight job market in recent years.  As part of Attorney Bertolotto’s business law practice, he has the continuing opportunity to assist individuals and small businesses in structuring their business, planning for future business growth and sales, and long term planning.

Planning Your Business In The New Year

Many hope that this year will be a year filled with great achievements, business growth, and economic stability.  Entrepreneurs understand very well the value of planning, setting goals, working towards achieving them, and still have a certain degree of flexibility to modify the plan and goals as the year progresses.  We have summarized below a short, non-exclusive list of steps that many are taking to develop and grow their respective businesses in the new year.  The list is not meant as a static roadmap, but suggestions to take into consideration to devise a plan and foment forward thinking in your respective business enterprise to help achieve planned goals for the year.

A Plan Is Essential

First and foremost, you need a plan.  Without a plan, you are setting yourself up for failure.  It is always a good thing to take a look at the big picture because daily we all tend to concentrate on details and lose track of how those work with each other to get us one step closer to achieving the goals we have set.  Setting specific goals as part of our plan lends itself to keeping us focused on achieving them and turning the plan into a reality.  As part of devising a plan, it is important to establish budgets and look at past years and experiences to be able to avoid surprises and minimize the unexpected.  Constantly reviewing past successes and failures is a necessary tool to tailor a plan, set goals, and stay on track to achieve them.

Current Trends And Developments

Keeping up with and understanding the current trends and developments in our respective industries is essential to implementing a successful plan.  Continuing education in our respective fields and participating in professional groups always helps to sharpen one’s skills, as well as understanding how technology can save time and money, and which technological advances make sense to invest in and implement to facilitate reaching the goals we have set.

Constant Review Of The Plan Is Essential

Finally, a constant and continuing review of the plan and goals set will enable any business owner to modify their plan and make sure it is dynamic enough to overcome unforeseen challenges.  The suggestions mentioned above, coupled with a solid business structure, will enhance success.

Contact our attorneys today.

Tax Season

Tax Problems With Small Business Owners

tax, tax return, tax returns, kenosha, racine, westosha, milwaukee, wisconsin, business, businesses, small businessMany of the tax problems we help resolve at Rizzo & Diersen, S.C. involve small business owners who know how to provide a service but do not appear to understand the concept of self-employment taxes and their effect on the business.  Several years ago, I wrote a short article discussing the importance for small business owners to understand this concept, properly plan for self-employment taxes, and timely pay them.  Those principles are still true today, and with tax time already here, business owners who have not adequately planned or have not been paying throughout the year are in for a rude awakening.

Social Security Payments

As an employee, to receive social security payments when you retire, you and your employer must pay into the Social Security system during your working years.  The Federal Insurance Contribution Act (FICA) is the federal legislation that requires that contributions be made by both the employee and the employer into the Social Security fund.  This is usually done by the employer withholding from your paycheck 6.2% of your wages that are subject to Social Security tax (up to a certain limit) and 1.45% of your wages that are subject to Medicare tax for a total deduction from your paycheck of 7.65%.  Your employer is then required to match this 7.65% for a total payment to the Internal Revenue Service of 15.3% of wages.  It is important to note here that this is in addition to federal and state income tax withholding.

The Self-Employed

For the self-employed, usually sole proprietors and single-member entities, there is corresponding federal legislation called the Self-Employed Contribution Act (SECA).  This is a double whammy to the self-employed because you are both the employee and the employer and, therefore, are responsible for the entire 15.3% on any earnings that your company makes, subject to the upper limit on the Social Security tax.   These taxes are also subject to the estimated tax payment rules, the same as income tax.

Trust Funds Cannot Be Discharged In Bankruptcy

Failure to pay these taxes can be devastating for both your business and you personally.  That is because these types of taxes are considered “Trust Fund” taxes which means they cannot be discharged in bankruptcy and will be assessed against you.  This means all your assets will become subject to levy and seizure in addition to your business assets.

Careful Planning Is Essential

Careful planning throughout the year will minimize the self-employment tax.  Accountants and financial planners can counsel small business owners and assist business owners in implementing various strategies to minimize self-employment tax liability.  A common strategy used is to increase your business-related expenses, as this will cause a reduction in net income, and correspondingly reduce the amount of self-employment tax.   Contrary to some beliefs, regular deductions, such as the standard deduction or itemized deductions, will not lower self-employment tax. Similarly, deductions for health insurance, IRA contributions, or 401(k) contributions will not reduce self-employment tax liability.

The Self-Employment Tax

Same as many other taxes, whether we like it or not, self-employment tax is here to stay.  Timely payments, planning, and learning how to minimize it will ensure that they do not become unmanageable.

Contact our tax attorneys today.