Bill Text: MI HB5677 | 2017-2018 | 99th Legislature | Introduced
Bill Title: Employment security; sanctions; appeal process for employer or employee to contest an agency determination; modify, and reduce certain penalties for nonwillful errors and omissions on the part of the employer related to unemployment insurance tax payments. Amends secs. 32a & 54 of 1936 (Ex Sess) PA 1 (MCL 421.32a & 421.54).
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2018-03-06 - Bill Electronically Reproduced 03/01/2018 [HB5677 Detail]
Download: Michigan-2017-HB5677-Introduced.html
HOUSE BILL No. 5677
March 1, 2018, Introduced by Reps. Howrylak, Johnson and Barrett and referred to the Committee on Oversight.
A bill to amend 1936 (Ex Sess) PA 1, entitled
"Michigan employment security act,"
by amending sections 32a and 54 (MCL 421.32a and 421.54), section
32a as amended by 2017 PA 232 and section 54 as amended by 2017 PA
226.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 32a. (1) Upon application by an interested party for
review of a determination, upon request for transfer to an
administrative law judge for a hearing filed with the unemployment
agency
within 30 60 days after the mailing or personal service of a
notice of determination, or upon the unemployment agency's own
motion
within that 30-day 60-day period, the unemployment agency
shall review any determination. After review, the unemployment
agency shall in its discretion issue a redetermination affirming,
modifying, or reversing the prior determination and stating the
reasons for the redetermination, or may transfer the matter to an
administrative law judge for a hearing. If the unemployment agency
issues a redetermination, it shall promptly notify the interested
parties of the redetermination. The redetermination is final unless
within 30 days after the mailing or personal service of a notice of
the redetermination an appeal is filed with the unemployment agency
for a hearing on the redetermination before an administrative law
judge pursuant to section 33.
(2) The unemployment agency shall, for good cause, including
an administrative clerical error or evidence produced by an
interested party showing that a prior determination or
redetermination was not sent to the interested party's correct
address or an address ascertained under subsection (5), reconsider
a
prior determination or redetermination after the 30-day 60-day
period has expired and after reconsideration issue a
redetermination affirming, modifying, or reversing the prior
determination or redetermination, or transfer the matter to an
administrative law judge for a hearing. A reconsideration shall not
be made unless the request is filed with the unemployment agency,
or reconsideration is initiated by the unemployment agency with
notice to the interested parties, within 1 year after the date of
mailing or personal service of the original determination on the
disputed issue or, if the original determination involved a finding
of fraud, within 3 years after the date of mailing or personal
service of the original determination.
(3) If an interested party fails to file a protest within the
30-day
60-day period and the unemployment agency for good cause
reconsiders a prior determination or redetermination and issues a
redetermination, a disqualification, or an ineligibility imposed
thereunder, other than an ineligibility imposed due to receipt of
retroactive pay, the redetermination, disqualification, or
ineligibility does not apply to a compensable period for which
benefits were paid or are payable unless the benefits were obtained
as a result of an administrative clerical error, a false statement,
or a nondisclosure or misrepresentation of a material fact by the
claimant.
However, the redetermination is final unless within 30 60
days after the date of mailing or personal service of the notice of
redetermination an appeal is filed for a hearing on the
redetermination before an administrative law judge pursuant to
section 33.
(4) In addition to the transfer provisions in subsections (1)
and (2), both of the following apply:
(a) If both the claimant and the employer agree, the matter
may be transferred directly to an administrative law judge in a
case involving the payment of unemployment benefits.
(b) If both the unemployment agency and the employer agree,
the matter may be transferred directly to an administrative law
judge in a case involving unemployment contributions or
reimbursements in lieu of contributions.
(5) If a determination or redetermination includes a finding
that an interested party committed fraud, the unemployment agency
shall, in addition to sending the determination or redetermination
to the interested party's address of record, ascertain from the
department of state, the department of treasury, and the United
States Postal Service other known mailing addresses of the
interested party and send the determination or redetermination to
the most recent address.
(6) A claimant, employer, or interested party shall, during a
benefit year, notify the unemployment agency of a change in its
mailing address.
Sec. 54. (a) A person, including a claimant for unemployment
benefits, an employing entity, or an owner, director, or officer of
an employing entity, who willfully violates or intentionally fails
to comply with any of the provisions of this act, or a regulation
of the unemployment agency promulgated under this act for which a
penalty is not otherwise provided by this act is subject to the
following sanctions, notwithstanding any other statute of this
state or of the United States:
(i) If the unemployment agency determines that an amount has
been obtained or withheld as a result of the intentional failure to
comply with this act, the unemployment agency may recover the
amount obtained as a result of the intentional failure to comply
plus damages equal to 3 times that amount.
(ii) The unemployment agency may refer the matter to the
prosecuting attorney of the county in which the alleged violation
occurred for prosecution. If the unemployment agency has not made
its own determination under subdivision (i), the recovery sought by
the prosecutor must include the amount described in subdivision (i)
and 1 or more of the following penalties:
(A) Subject to redesignation under subsection (l), if the
amount obtained or withheld from payment as a result of the
intentional failure to comply is less than $25,000.00, then 1 of
the following:
(I) Imprisonment for not more than 1 year.
(II) The performance of community service of not more than 1
year but not to exceed 2,080 hours.
(III) A combination of (I) and (II) that does not exceed 1
year.
(B) If the amount obtained or withheld from payment as a
result of the intentional failure to comply is $25,000.00 or more
but less than $100,000.00, then 1 of the following:
(I) Imprisonment for not more than 2 years.
(II) The performance of community service of not more than 2
years but not to exceed 4,160 hours.
(III) A combination of (I) and (II) that does not exceed 2
years.
(C) If the amount obtained or withheld from payment as a
result of the intentional failure to comply is more than
$100,000.00, then 1 of the following:
(I) Imprisonment for not more than 5 years.
(II) The performance of community service of not more than 5
years but not to exceed 10,400 hours.
(III) A combination of (I) and (II) that does not exceed 5
years.
(iii) If the unemployment agency determines that an amount has
been obtained or withheld as a result of a knowing violation of
this act, the unemployment agency may recover the amount obtained
as a result of the knowing violation and may also recover damages
equal to 3 times that amount.
(iv) The unemployment agency may refer a matter under
subdivision (iii) to the prosecuting attorney of the county in
which the alleged violation occurred for prosecution. If the
unemployment agency has not made its own determination under
subdivision (iii), the recovery sought by the prosecutor must
include the amount described in subdivision (iii) and 1 or more of
the following penalties:
(A) Subject to redesignation under subsection (l), if the
amount obtained or withheld from payment as a result of the knowing
violation is $100,000.00 or less, then 1 of the following:
(I) Imprisonment for not more than 1 year.
(II) The performance of community service of not more than 1
year but not to exceed 2,080 hours.
(III) A combination of (I) and (II) that does not exceed 1
year.
(B) If the amount obtained or withheld from payment as a
result of the knowing violation is more than $100,000.00, then 1 of
the following:
(I) Imprisonment for not more than 2 years.
(II) The performance of community service of not more than 2
years but not to exceed 4,160 hours.
(III) A combination of (I) and (II) that does not exceed 2
years.
(b) An employing unit or an owner, director, officer, or agent
of an employing unit, a claimant, an employee of the unemployment
agency, or any other person who makes a false statement or
representation knowing it to be false, or knowingly and willfully
with intent to defraud fails to disclose a material fact, to obtain
or increase a benefit or other payment under this act or under the
unemployment compensation law of any state or of the federal
government, either for himself or herself or any other person, to
prevent or reduce the payment of benefits to an individual entitled
thereto or to avoid becoming or remaining a subject employer, or to
avoid or reduce a contribution or other payment required from an
employing unit under this act or under the unemployment
compensation law of any state or of the federal government is
subject to administrative fines and is punishable as provided in
this subsection, notwithstanding any other penalties imposed under
any other statute of this state or of the United States. For
benefit years beginning on or after May 1, 2017, to establish fraud
based on unreported earnings under this subsection, the
unemployment agency must have in its possession the weekly wage
information from the employer. A violation of this subsection is
punishable as follows:
(i) Subject to subdivisions (ii) and (iii), the unemployment
agency may recover the amount obtained as a result of the knowing
false statement or representation or the knowing and willful
failure to disclose a material fact and may also recover damages
equal to that amount. For a second or subsequent violation
described in this subdivision that occurs after the unemployment
agency has sent proper notice of the original violation to the
interested parties, the unemployment agency may recover damages
equal to 1.5 times the amount obtained.
(ii) Subject to subdivision (iii), if the unemployment agency
determines or redetermines or an administrative law judge, the
Michigan compensation appellate commission, or a court orders that
an impostor committed identity theft, the unemployment agency shall
attempt to recover from the impostor the amount obtained as a
result of the knowing false statement or representation or the
knowing and willful failure to disclose a material fact and may
also recover damages equal to 4 times that amount. As used in this
subdivision:
(A) "Identity theft" means that term as defined in section 24
of chapter VII of the code of criminal procedure, 1927 PA 175, MCL
767.24.
(B) "Impostor" means that term as defined in section 54f.
(iii) The unemployment agency may refer a matter under
subdivision (i) or (ii) to the prosecuting attorney of the county
in which the alleged violation occurred for prosecution. If the
unemployment agency has not made its own determination under
subdivision (i) or (ii), the recovery sought by the prosecutor must
include the amount described in subdivision (i) or (ii) and 1 or
more of the following penalties if the amount obtained is $1,000.00
or more:
(A) Subject to redesignation under subsection (l), if the
amount obtained or withheld from payment as a result of the knowing
false statement or representation or the knowing and willful
failure to disclose a material fact is $1,000.00 or more but less
than $25,000.00, then 1 of the following:
(I) Imprisonment for not more than 1 year.
(II) The performance of community service of not more than 1
year but not to exceed 2,080 hours.
(III) A combination of (I) and (II) that does not exceed 1
year.
(B) If the amount obtained or withheld from payment as a
result of the knowing false statement or representation or the
knowing and willful failure to disclose a material fact is
$25,000.00 or more, then 1 of the following:
(I) Imprisonment for not more than 2 years.
(II) The performance of community service of not more than 2
years but not to exceed 4,160 hours.
(III) A combination of (I) and (II) that does not exceed 2
years.
(C) If the knowing false statement or representation or the
knowing and willful failure to disclose a material fact made to
obtain or withhold an amount from payment does not result in a loss
to the unemployment agency, then the unemployment agency shall
attempt to recover an amount equal to 3 times the amount that would
have been obtained by the knowing false statement or representation
or the knowing and willful failure to disclose a material fact, but
not less than $1,000.00, and 1 of the following:
(I) Imprisonment for not more than 2 years.
(II) The performance of community service of not more than 2
years but not to exceed 4,160 hours.
(III) A combination of (I) and (II) that does not exceed 2
years.
(c) (1) Any employing unit or an owner, director, officer, or
agent of an employing unit or any other person failing to submit,
when due, any contribution report, wage and employment report, or
other reports lawfully prescribed and required by the unemployment
agency is subject to the assessment of an administrative fine for
each report not submitted within the time prescribed by the
unemployment agency. In the case of contribution reports not
received within 10 days after the end of the reporting month the
fine is 10% of the contributions due on the reports but not less
than $5.00 or more than $25.00 for a report. However, if the tenth
day falls on a Saturday, Sunday, legal holiday, or other
unemployment agency nonwork day, the 10-day period runs until the
end of the next day that is not a Saturday, Sunday, legal holiday,
or other unemployment agency nonwork day. In the case of all other
reports referred to in this subsection, the fine is $10.00 for a
report.
(2) Notwithstanding subdivision (1), any employer or an owner,
director, officer, or agent of an employer or any other person
failing to submit, when due, any quarterly wage detail report
required by section 13(2), or submitting an incomplete or erroneous
report and failing to file a corrected report within 14 days after
notification of an error by the agency, is subject to an
administrative
fine of $50.00 $25.00 for each report if the report
is filed not later than 30 days after the date the report is due,
$250.00
$125.00 if the report is filed more than 1 calendar quarter
after
the date the report is due, and an additional $250.00 $125.00
for each additional calendar quarter that the report is late. The
unemployment agency shall waive an administrative fine under this
subdivision if the report was the first of its type that was due
from a first-time filer and the violation was not deliberate or
willful.
(3) If a report is filed after the prescribed time and it is
shown to the satisfaction of the unemployment agency that the
failure to submit the report was due to reasonable cause, the
unemployment agency shall not impose a fine. The assessment of a
fine as provided in this subsection constitutes a final
determination unless the employer files an application with the
unemployment agency for a redetermination of the assessment
pursuant to section 32a.
(d) If any employee or agent of the unemployment agency or
member of the Michigan compensation appellate commission willfully
discloses confidential information obtained from any employing unit
or individual in the administration of this act for any purpose
inconsistent with or contrary to the purposes of this act, or a
person who obtains a list of applicants for work or of claimants or
recipients of benefits under this act uses or permits use of that
list for a political purpose or for a purpose inconsistent with or
contrary to the purposes of this act, he or she is guilty of a
misdemeanor punishable by imprisonment for not more than 90 days or
a fine of not more than $1,000.00, or both. Notwithstanding the
preceding sentence, if any unemployment agency employee, agent of
the unemployment agency, or member of the Michigan compensation
appellate commission knowingly, intentionally, and for financial
gain, makes an illegal disclosure of confidential information
obtained under section 13(2), he or she is guilty of a felony,
punishable by imprisonment for not more than 1 year and 1 day.
(e) A person who, without proper authority from the
unemployment agency, represents himself or herself to be an
employee of the unemployment agency for the purpose of securing
information regarding the unemployment or employment record of an
individual is guilty of a misdemeanor punishable by imprisonment
for not more than 90 days or a fine of not more than $1,000.00, or
both.
(f) A person associated with a college, university, or public
agency of this state who makes use of any information obtained from
the unemployment agency in connection with a research project of a
public service nature, in a manner as to reveal the identity of any
individual or employing unit from or concerning whom the
information was obtained by the unemployment agency, or for any
purpose other than use in connection with that research project, is
guilty of a misdemeanor punishable by imprisonment for not more
than 90 days or a fine of not more than $1,000.00, or both.
(g) As used in this section, "person" includes an individual;
owner, director, or officer of an employing entity; copartnership;
joint venture; corporation; receiver; or trustee in bankruptcy.
(h) This section applies even if the amount obtained or
withheld from payment has been reported or reported and paid by an
individual involved in a violation of subsection (a) or (b).
(i) An individual who violates this section is subject to the
sanctions of this section and, if applicable, section 62.
(j) Amounts recovered by the unemployment agency under
subsection (a) must be credited first to the unemployment
compensation fund and thereafter amounts recovered that are in
excess of the amounts obtained or withheld as a result of the
violation of subsection (a) must be credited to the penalty and
interest account of the contingent fund. Amounts recovered by the
unemployment agency under subsections (c), (d), (e), and (f) must
be credited to the penalty and interest account of the contingent
fund pursuant to section 10(6).
(k) Amounts recovered by the unemployment agency under
subsection (b) must be credited in the following order:
(i) From the penalty assessment recovered, an amount equal to
15% of any benefit overpayments resulting from fraud must be
credited to the unemployment compensation fund.
(ii) For the balance of deductions from unemployment insurance
benefits, to the liability for benefit repayment under this
section.
(iii) For all other recoveries, the balance must first be
credited to the unemployment compensation fund for repayment of any
remaining amounts owed, and then to the contingent fund to be
applied first to administrative sanctions and damages, then to
interest, and then to an amount equal to the representation fees
associated with advocacy assistance services provided under section
5a.
(l) A person who obtains or withholds an amount of
unemployment benefits or payments exceeding $3,500.00 but less than
$25,000.00 as a result of a knowing false statement or
representation or the knowing and willful failure to disclose a
material fact is guilty of a felony punishable as provided in
subsection (a)(ii)(A) or (iv)(A) or subsection (b)(iii)(A).
(m) The unemployment agency shall not make a determination
under this section that is based solely on a computer-identified
discrepancy in information supplied by the claimant or employer. An
unemployment agency employee or agent must examine the facts and
independently determine that the claimant or the employer is
responsible for a willful or intentional violation before the
unemployment agency makes a determination under this section.
Enacting section 1. This amendatory act takes effect 90 days
after the date it is enacted into law.
