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Rules Clearinghouse No. 22-010   Proposed Final Draft
  March 4, 2022
ORDER OF THE WISCONSIN
DEPARTMENT OF WORKFORCE DEVELOPMENT
    The Wisconsin Department of Workforce Development adopts the following order to repeal DWD 111.05 and Figure DWD 147.02; to amend DWD 102.02 (2), 102.02 (3) (am) (intro.) and 2., 103.01 (2), 132.04 (1) and (2) (intro.), 132.04 (3), 147.01 (2), 147.02, 149.001 (2) (c) 1.; to repeal and recreate Figure DWD 102.02 (2) and DWD 150 (title); and to create DWD 102.02 (3) (am) (Note) and DWD 147.02 (Note), relating to converting references from Standard Industrial Classification codes to the North American Industry Classification System codes; and other minor technical changes to the unemployment insurance program.
The Governor approved the scope statement for this rule, SS 116-21, on December 22, 2021. The scope statement was published in register No. 792B, on December 27, 2021. This rule was approved by the Governor on March 3, 2022.
Analysis Prepared by the Department of Workforce Development
Statutes Interpreted
Chapter 108, Stats.
Statutory Authority
Section 108.14 (2), Stats.
Explanation of Statutory Authority
Under s. 108.14 (2), Stats., the department may adopt and enforce all rules which it finds necessary or suitable to carry out the unemployment insurance program.
Plain Language Analysis
The Wisconsin unemployment insurance program is administered under chs. DWD 100-150. The rule replaces current references to Standard Industrial Classification (SIC) codes in chs. DWD 102 and 147 with 2022 North American Industry Classifications System (NAICS) codes. NAICS codes were first adopted in 1997 to replace the SIC code system. SIC codes have not been updated since 1987 and do not reflect modern changes in the economy.
Under s. 108.18 (2), Stats., an employer's initial contribution rate to the unemployment trust fund is based on certain factors, including whether the employer is "engaged in the construction of roads, bridges, highways, sewers, water mains, utilities, public buildings, factories, housing, or similar construction projects." See s. 108.18 (2) (c), Stats. Chapter DWD 102 requires the Department to determine whether an employer is engaged in those projects based, in part, on whether the employer's primary business activity is specified in groups assigned in the SIC manual.
In addition, certain employment may be excluded from unemployment insurance coverage, including certain service for a seasonal employer, which is an employer the Department designates as satisfying specified criteria, including being classified by the Department as primarily engaged in the following activities: agricultural production, agricultural services, forestry, or commercial fishing, hunting or trapping. Sections 108.02 (15) (k) 19. and 108.066 (3) (a) 2., Stats. Chapter DWD 147 requires the Department to determine whether an employer is primarily engaged in those activities based on specified groups assigned in the SIC manual.
The rule replaces the above references to SIC codes with NAICS codes to bring the rules up to date with current federal terminology and modern designation codes.
The rule also makes the following minor and technical changes:
Amends s. DWD 103.01 (2) so that the rule aligns with ch. 108, Stats.
Repeals s. DWD 111.05, related to filing certain employer reports, because it is obsolete.
Amends s. DWD 132.04 (1) to correct cross-references to ch. 108, Stats.
Amends s. DWD 149.001 (2) (c) 1. to correct a reference to the Labor and Industry Review Commission to be consistent with the definition of “commission” in s. DWD 100.02 (9).
Repeals and recreates the title for ch. DWD 150 from Miscellaneous to Forms to reflect the purpose of that chapter.
Summary of, and comparison with, existing or proposed federal regulations
Federal regulations require that state laws conform to and substantially comply with federal unemployment laws. 20 C.F.R. § 601.5.
Comparison with rules in adjacent states
Minnesota uses NAICS codes to determine construction industry employers (Minn. Stat. Ann. § 268.051 (5) (b)). Illinois uses SIC codes to determine tax rates (820 Ill. Comp. Stat. Ann. 405/1500 (B)). It appears that Michigan and Iowa do not reference SIC codes or NAICS codes for unemployment employer determinations or tax rates.
Summary of factual data and analytical methodologies
This rule does not depend on complex data analysis. The rule changes are largely minor and technical in nature. The Department reviewed Wisconsin statutes, administrative rules, and other states’ laws to determine the use of NAICS codes instead of SIC codes.
Analysis and supporting documents used to determine effect on small business or in preparation of an economic impact analysis
The rule will have no significant economic effect on small businesses as defined in s. 227.114 (1), Stats. and there is no economic impact created by this rule because the rule changes are either minor and technical or do not affect current employers tax rates. The Statement of Scope for the rule was posted for 14 days to solicit comments on economic impact from the public and no comments were received. The Department consulted the Unemployment Insurance Advisory Council regarding the rule.
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