A draft bill Democrats are circulating would repeal Wisconsin's ban on unemployment insurance for people who receive Social Security Disability Insurance payments. (Getty Images)

After a federal court decision rolled back a Wisconsin law that blocked disability payment recipients from collecting unemployment insurance, Democratic lawmakers have drafted legislation that repeals that law.

“Our job is to correct mistakes or ensure that someone’s rights aren’t taken from them. And when this statute originally passed, I think that’s exactly what it did,” said Sen. Kristin Dassler-Alfheim (D-Appleton) in a phone interview Tuesday after circulating the draft legislation earlier in the day.

“The good news is the court has come down and we now have the proper stance. Now, it’s our job to ensure that those rights aren’t infringed on again,” she said.

Dassler-Alfheim’s draft bill is co-authored by state Rep. Christine Sinicki (D-Milwaukee). It codifies a ruling in July by U.S. District Judge William Conley that ordered the Department of Workforce Development (DWD) to stop denying unemployment insurance applications from people who collect Social Security Disability Insurance (SSDI).

Conley ruled a year ago that the 2013 Wisconsin law disqualifying Social Security Disability Insurance recipients from collecting unemployment insurance violated two federal laws: The Americans with Disabilities Act and the Rehabilitation Act. The ruling came in response to a class-action lawsuit filed in 2021 opposing the state’s ban on jobless pay for people on SSDI.

Conley delayed imposing a remedy in his July 17, 2024, decision. While DWD never indicated plans to appeal the ruling, the department continued to enforce the 2013 law, blocking jobless pay for people on SSDI.

A year after his first decision, Conley ordered DWD to stop enforcing the law, and on Aug. 20, issued a follow-up order on behalf of two groups of people in the original lawsuit.

DWD must pay jobless benefits to applicants between Sept. 7, 2015 — when the SSDI-unemployment ban law was last revised — and July 30, 2025, who were denied because they received SSDI payments. Those applicants must demonstrate that they were eligible for unemployment insurance except for the SSDI ban, Conley wrote.

DWD must also pay back people who had originally been awarded jobless pay but were then required to return the money because they were on SSDI, the judge ordered.

Conley ruled that applicants are not eligible for state jobless pay for weeks in which they received Pandemic Unemployment Assistance, a federal program that was created at the beginning of the COVID-19 pandemic.

A first-term lawmaker, Dassler-Alfheim said her career in the insurance and financial industry attuned her to the issue that the SSDI ban on jobless pay raised.

“Being keenly aware when people have limitations on income is just something that I’ve always paid attention to,” Dassler-Alfheim said. “Anytime you’ve got restrictions on people . . . when they’re trying to work and something goes wrong, to not be able to give them the compensation — it’s just not right.”

The federal Social Security Administration program allows disability insurance recipients to work part-time if they are able to, and encourages them to do so under programs that ensure they do not lose their disability payments or their medical coverage under Medicaid.

When Wisconsin banned SSDI recipients from unemployment pay, however, DWD under the administration of former Gov. Scott Walker discounted the possibility that people enrolled in the federal disability program might be able to work. A DWD proposal at the time asserted that disability payment recipients who applied for unemployment insurance were probably “double-dipping” and committing “fraud.”

The law was originally enacted in 2013, then amended in 2015, also during the Walker administration. 

The law “really was discrimination,” Dassler-Alfheim said Tuesday. “There’s no reason that that should have taken place.”

DWD proposal could blunt ruling’s impact

Waiting in the wings, however, is a proposal from the current DWD staff that critics say would undo the impact of Conley’s decision.

The proposal is part of the package that the department has submitted to the state Unemployment Insurance Advisory Council — a joint labor-management body that for decades has negotiated and recommended changes to the state’s jobless pay law. DWD presented its proposals — 12 in all — to the council in August.

The department’s proposal on unemployment pay for SSDI recipients calls for offsetting an applicant’s jobless pay by the applicant’s SSDI payment, “to prevent the payment of duplicative government benefits for the replacement of lost earnings or income, regardless of an individual’s ability to work.” 

The recipient’s monthly SSDI payment would be divided into fractions allocated for each week of jobless pay, and the equivalent amount of that payment would be subtracted from the recipient’s weekly unemployment check.

For many SSDI recipients that would wipe out their jobless pay entirely, according to unemployment insurance lawyer Victor Forberger. 

For example, a person who gets $1,000 from SSDI each month and is awarded unemployment pay would have $250 deducted each week from their unemployment benefits. 

“Very few SSDI recipients have a weekly unemployment insurance benefit of more than $250,” Forberger said in an interview in July — meaning that they would probably not collect any jobless pay at all despite qualifying for it. 

In a statement Tuesday, DWD defended the proposal.

The administration of Gov. Tony Evers has three times proposed budgets that would end the ban on UI for SSDI recipients on the grounds that “denying unemployment insurance (UI) benefits to social security disability insurance (SSDI) recipients was discriminatory,” DWD’s statement said.

Those same proposals included offset provisions. DWD said that those proposals “mirrored the treatment [of] SSDI with the treatment of pensions and lump sum payments under UI law.” Those payments can similarly reduce an unemployment insurance award. 

Lawmakers on the state Legislature’s Joint Finance Committee threw all those changes out of the budget each time, however. 

Conley’s July 2024 opinion found barring jobless pay for SSDI recipients violated federal law, the DWD statement said. But, the department statement added, his ruling also “noted that offsets to the receipt of SSDI have been upheld by other courts.” 

Conley’s most recent orders blocked DWD from enforcing the SSDI unemployment insurance ban, “but did not order an offset,” said the DWD statement, calling the judge’s order “consistent with DWD’s policy position.”

“DWD has already begun processing payments for individuals who receive SSDI,” the statement said. “DWD will continue [to] meet the requirements of the court’s order and any legislation that is signed into law.”

Forberger said reducing jobless pay by the amount of a recipient’s SSDI payment would effectively nullify the court’s ruling, however. “It would perpetuate the discrimination,” he said. 

SSDI benefits are “a bare minimum and in some cases not even that,” Forberger said. People enrolled in SSDI and who also take jobs “need to do this work to support themselves.”

Dassler-Alfheim told the Wisconsin Examiner that she would oppose including the offset proposal in a UI revision bill. 

“If they lose that job that they have gone out of their way to get, even though they’re disabled, they certainly deserve to be compensated for their unemployment at the same rate, under the same scruples, as anybody else,” Dassler-Alfheim said.

“These are people that are doing exactly what society wants them to do — not sitting home on a disability check,” she added. “Why would we disincentivize by removing benefits if they were to lose their job for something they didn’t do?”

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