1.1A bill for an act1.2relating to unemployment insurance; modifying unemployment insurance and 1.3workforce development provisions;amending Minnesota Statutes 2010, sections 1.4116L.17, subdivision 1; 116L.561, subdivision 7; 268.035, subdivisions 4, 19a, 1.520, 23, 23a, 29, 32; 268.051, subdivisions 5, 6, 8; 268.057, subdivision 2; 268.07, 1.6subdivisions 2, 3b; 268.085, subdivision 3; 268.095, subdivision 10; 268.115, 1.7subdivision 1; 268.184, subdivisions 1, 1a; Laws 2009, chapter 78, article 3, 1.8section 16.1.9BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:1.10ARTICLE 11.11UNEMPLOYMENT INSURANCE POLICY1.12    Section 1. Minnesota Statutes 2010, section 268.035, subdivision 19a, is amended to 1.13read:1.14    Subd. 19a. Immediate family member. "Immediate family member" means 1.15an individual's spouse, parent, stepparent, grandparent, son or daughter, stepson or 1.16stepdaughter, or grandson or granddaughter.1.17EFFECTIVE DATE.This section is effective July 1, 2011, and applies to 1.18determinations and appeal decisions issued on or after that date.1.19    Sec. 2. Minnesota Statutes 2010, section 268.035, subdivision 23, is amended to read:1.20    Subd. 23. State's average annual and average weekly wage. (a) On or before 1.21June 30 of each year, the commissioner shall calculate the state's average annual wage and 1.22the state's average weekly wage in the following manner:2.1    (1) The sum of the total monthly covered employment reported by all employers 2.2for the prior calendar year is divided by 12 to calculate the average monthly covered 2.3employment.2.4    (2) The sum of the total wages paid for all covered employment reported by 2.5all employers for the prior calendar year is divided by the average monthly covered 2.6employment to calculate the state's average annual wage.2.7    (3) The state's average annual wage is divided by 52 to calculate the state's average 2.8weekly wage.2.9    (b) For purposes of calculating the amount of taxable wages, the state's average 2.10annual wage applies to the calendar year following the calculation.2.11    (c) For purposes of calculating (1) the state's maximum weekly unemployment 2.12benefit amount available on any benefit account under section 
         268.07, subdivision 2a, 2.13and (2) the wage credits necessary to establish a benefit account under section 268.07,2.14subdivision 2
         , the state's average weekly wage applies to the one-year period beginning 2.15the last Sunday in October of the calendar year of the calculation.2.16EFFECTIVE DATE.This section is effective October 28, 2012.2.17    Sec. 3. Minnesota Statutes 2010, section 268.035, subdivision 23a, is amended to read:2.18    Subd. 23a. Suitable employment. (a) Suitable employment means employment in 2.19the applicant's labor market area that is reasonably related to the applicant's qualifications. 2.20In determining whether any employment is suitable for an applicant, the degree of risk 2.21involved to the health and safety, physical fitness, prior training, experience, length 2.22of unemployment, prospects for securing employment in the applicant's customary 2.23occupation, and the distance of the employment from the applicant's residence is 2.24considered.2.25    (b) In determining what is suitable employment, primary consideration is given to the 2.26temporary or permanent nature of the applicant's separation from employment and whether 2.27the applicant has favorable prospects of finding employment in the applicant's usual or 2.28customary occupation at the applicant's past wage level within a reasonable period of time.2.29    If prospects are unfavorable, employment at lower skill or wage levels is suitable 2.30if the applicant is reasonably suited for the employment considering the applicant's 2.31education, training, work experience, and current physical and mental ability.2.32    The total compensation must be considered, including the wage rate, hours of 2.33employment, method of payment, overtime practices, bonuses, incentive payments, and 2.34fringe benefits.3.1    (c) When potential employment is at a rate of pay lower than the applicant's former 3.2rate, consideration must be given to the length of the applicant's unemployment and the 3.3proportion of difference in the rates. Employment that may not be suitable because of 3.4lower wages during the early weeks of the applicant's unemployment may become suitable 3.5as the duration of unemployment lengthens.3.6    (d) For an applicant seasonally unemployed, suitable employment includes 3.7temporary work in a lower skilled occupation that pays average gross weekly wages equal 3.8to or more than 150 percent of the applicant's weekly unemployment benefit amount.3.9    (e) If a majority of the applicant's weeks of employment in the base period includes 3.10part-time employment, part-time employment in a position with comparable skills and 3.11comparable hours that pays comparable wages is considered suitable employment.3.12    Full-time employment is not considered suitable employment for an applicant if a 3.13majority of the applicant's weeks of employment in the base period includes part-time 3.14employment.3.15    (f) To determine suitability of employment in terms of shifts, the arrangement of 3.16hours in addition to the total number of hours is to be considered. Employment on a 3.17second, third, rotating, or split shift is suitable employment if it is customary in the 3.18occupation in the labor market area.3.19    (g) Employment is not considered suitable if:3.20    (1) the position offered is vacant because of a labor dispute;3.21    (2) the wages, hours, or other conditions of employment are substantially less 3.22favorable than those prevailing for similar employment in the labor market area;3.23    (3) as a condition of becoming employed, the applicant would be required to join a 3.24company union or to resign from or refrain from joining any bona fide labor organization; 3.25or3.26(4) the employment is with a staffing service and less than 45 25 percent of the 3.27applicant's wage credits are from a job assignment with the client of a staffing service.3.28(h) A job assignment with a staffing service is considered suitable only if 45 253.29percent or more of the applicant's wage credits are from job assignments with clients of 3.30a staffing service and the job assignment meets the definition of suitable employment 3.31under paragraph (a).3.32    Sec. 4. Minnesota Statutes 2010, section 268.035, subdivision 32, is amended to read:3.33    Subd. 32. Weekly unemployment benefit amount. "Weekly unemployment benefit 3.34amount" means the amount of unemployment benefits computed under section 268.07, 3.35subdivision 2, paragraph (b) 2a.4.1    Sec. 5. Minnesota Statutes 2010, section 268.051, subdivision 8, is amended to read:4.2    Subd. 8. Special assessment for interest on federal loan. (a) If on October 31 of 4.3any year, the commissioner, in consultation with the commissioner of management and 4.4budget, determines that an interest payment will be due during the following calendar year 4.5on any loan from the federal unemployment trust fund under section 
         268.194, subdivision 4.66
         , a special assessment on taxpaying employers will be in effect for the following calendar 4.7year. The legislature authorizes the commissioner, in consultation with the commissioner 4.8of management and budget, to determine the appropriate level of the assessment, from 4.9two percentup to eight percent of the total quarterly unemployment taxes due based upon 4.10determined rates and assigned assessments under subdivision 2, that will be necessary to 4.11pay the interest due on the loan.4.12    (b) The special assessment must be placed into a special account from which the 4.13commissioner must pay any interest that has accrued on any loan from the federal 4.14unemployment trust fund provided for under section 
         268.194, subdivision 6. If, at the end 4.15of each calendar quarter, the commissioner, in consultation with the commissioner of 4.16management and budget, determines that the balance in this special account, including 4.17interest earned on the special account, is more than is necessary to pay the interest that has 4.18accrued on any loan as of that date, or will accrue over the following calendar quarter, 4.19the commissioner must immediately pay to the trust fund the amount in excess of that 4.20necessary to pay the interest on any loan.4.21    Sec. 6. Minnesota Statutes 2010, section 268.07, subdivision 2, is amended to read:4.22    Subd. 2. Benefit account requirements. (a) Unless paragraph (b) applies, to 4.23establish a benefit account:4.24(1) using the primary base period under section 268.035, subdivision 4, paragraph 4.25(a), an applicant must have:4.26    (i) wage credits in the high quarter of $1,000 or more; and4.27    (ii) wage credits, in other than the high quarter, of $250 or more; or4.28(2) using the secondary base period under section 268.035, subdivision 4, paragraph 4.29(b), An applicant must have total wage credits in the highapplicant's four quarter base 4.30period of $1,000 or more at least: (1) $2,400; or (2) 5.3 percent of the state's average 4.31annual wage rounded down to the next lower $100, whichever is higher.4.32(b) To establish a new benefit account within 52 calendar weeks following the 4.33expiration of the benefit year on a prior benefit account, an applicant must meet the 4.34requirements of paragraph (a) and must have performed services in covered employment 4.35in a calendar quarter that started after the effective date of the prior benefit account. The 5.1wage creditswages paid for those services must be at least eight times the weekly benefit 5.2amount on the prior benefit account enough to meet the requirements of paragraph (a), 5.3and have been reported on wage detail under section 268.044. One of the reasons for 5.4this paragraph is to prevent an applicant from establishing a second benefit account as a 5.5result of one loss of employment.5.6EFFECTIVE DATE.This section is effective for applications for unemployment 5.7benefits made on or after October 28, 2012, except that in paragraph (b), the striking of 5.8"wage credits" and the insertion of "wages paid" and the insertion of "and have been 5.9reported on wage detail under section 268.044" are effective the day following final 5.10enactment.5.11    Sec. 7. Minnesota Statutes 2010, section 268.07, subdivision 3b, is amended to read:5.12    Subd. 3b. Limitations on applications and benefit accounts. (a) An application for 5.13unemployment benefits is effective the Sunday of the calendar week that the application 5.14was filed. An application for unemployment benefits may be backdated one calendar week 5.15before the Sunday of the week the application was actually filed if the applicant requests 5.16the backdating at the time the application is filed. An application may be backdated only if 5.17the applicant had no employment during the period of the backdating. If an individual 5.18attempted to file an application for unemployment benefits, but was prevented from filing 5.19an application by the department, the application is effective the Sunday of the calendar 5.20week the individual first attempted to file an application.5.21    (b) A benefit account established under subdivision 2 is effective the date the 5.22application for unemployment benefits was effective.5.23    (c) A benefit account, once established, may later be withdrawn only if:5.24    (1) the applicant has not been paid any unemployment benefits on that benefit 5.25account; and5.26(2) a new application for unemployment benefits is filed and a new benefit account is 5.27established at the time of the withdrawal.5.28    A determination or amended determination of eligibility or ineligibility issued under 5.29section 
         268.101, that was sent before the withdrawal of the benefit account, remains in 5.30effect and is not voided by the withdrawal of the benefit account. A determination of 5.31ineligibility requiring subsequent earnings to satisfy the period of ineligibility under 5.32section 268.095, subdivision 10, applies to the weekly unemployment benefit amount on 5.33the new benefit account.5.34    (d) An application for unemployment benefits is not allowed before the Sunday 5.35following the expiration of the benefit year on a prior benefit account. Except as allowed 6.1under paragraph (c), an applicant may establish only one benefit account each 52 calendar 6.2weeks.6.3EFFECTIVE DATE.This section is effective October 28, 2012, and applies 6.4retroactively from July 1, 2011.6.5    Sec. 8. Minnesota Statutes 2010, section 268.085, subdivision 3, is amended to read:6.6    Subd. 3. Payments that delay unemployment benefits. (a) An applicant is not 6.7eligible to receive unemployment benefits for any week with respect to which the applicant 6.8is receiving, has received, or has filed for payment, equal to or in excess of the applicant's 6.9weekly unemployment benefit amount, in the form of:6.10    (1) vacation pay, sick pay, or personal time off pay, also known as "PTO," paid 6.11upon temporary, indefinite, or seasonal separation. This clause does not apply to (i) 6.12vacation pay, sick pay, or personal time off pay, paid upon a permanent separation from 6.13employment, or (ii) vacation pay, sick pay, or personal time off pay, paid from a vacation 6.14fund administered by a union or a third party not under the control of the employer;6.15    (2) severance pay, bonus pay, sick pay, and any other payments, except earnings 6.16under subdivision 5, and back pay under subdivision 6, paid by an employer because of, 6.17upon, or after separation from employment, but only if the payment is considered wages at 6.18the time of payment under section 
         268.035, subdivision 29; or6.19    (3) pension, retirement, or annuity payments from any plan contributed to by a base 6.20period employer including the United States government, except Social Security benefits 6.21that are provided for in subdivision 4. The base period employer is considered to have 6.22contributed to the plan if the contribution is excluded from the definition of wages under 6.23section 
         268.035, subdivision 29, clause (1).6.24    If the pension, retirement, or annuity payment is paid in a lump sum, an applicant is 6.25not considered to have received a payment if (i) the applicant immediately deposits that 6.26payment in a qualified pension plan or account, or (ii) that payment is an early distribution 6.27for which the applicant paid an early distribution penalty under the Internal Revenue 6.28Code, United States Code, title 26, section 72(t)(1).6.29    (b) This subdivision applies to all the weeks of payment. Payments under paragraph 6.30(a), clause (1), are applied to the period immediately following the last day of employment. 6.31The number of weeks of payment is determined as follows:6.32    (1) if the payments are made periodically, the total of the payments to be received is 6.33divided by the applicant's last level of regular weekly pay from the employer; or6.34    (2) if the payment is made in a lump sum, that sum is divided by the applicant's last 6.35level of regular weekly pay from the employer.7.1    (c) If the payment is less than the applicant's weekly unemployment benefit amount, 7.2unemployment benefits are reduced by the amount of the payment.7.3EFFECTIVE DATE.This section is effective for determinations issued on or 7.4after August 7, 2011.7.5    Sec. 9. Minnesota Statutes 2010, section 268.095, subdivision 10, is amended to read:7.6    Subd. 10. Ineligibility duration. (a) Ineligibility from the payment of all 7.7unemployment benefits under subdivisions 1 and 4 is for the duration of the applicant's 7.8unemployment and until the end of the calendar week that the applicant had total earnings7.9wages paid in subsequent covered employment of eight times the applicant's weekly 7.10unemployment benefit amount sufficient to meet one-half of the requirements of section 7.11268.07, subdivision 2, paragraph (a).7.12    (b) Ineligibility imposed under subdivisions 1 and 4 begins on the Sunday of the 7.13week that the applicant became separated from employment.7.14    (c) In addition to paragraph (a), if the applicant was discharged from employment 7.15because of aggravated employment misconduct, wage credits from that employment are 7.16canceled and cannot be used for purposes of a benefit account under section 
         268.07, 7.17subdivision 2.7.18EFFECTIVE DATE.This section is effective October 28, 2012, and applies to 7.19all requalifications after that date.7.20    Sec. 10. Laws 2009, chapter 78, article 3, section 16, is amended to read:7.21    Sec. 16. ENTREPRENEURSHIP FOR DISLOCATED WORKERS.7.22    Subdivision 1. Authorization. Minnesota has been awarded a federal grant by 7.23the United States Department of Labor under the Project GATE (Growing America 7.24Through Entrepreneurship) program to assist certain dislocated workers in starting a 7.25business. Providing unemployment benefits while the dislocated worker is receiving 7.26services such as entrepreneurial training, business counseling, and technical assistance 7.27will assist in the success of this pilot project. In order to provide unemployment benefits to 7.28individuals enrolled in this pilot program, the commissioner of employment and economic 7.29development is authorized to waive:7.30(1) the availability for suitable employment requirements of Minnesota Statutes, 7.31section 
         268.085, subdivision 1, clause (5),7.32as well as (2) the earnings deductibility provisions of Minnesota Statutes, section 7.33268.085, subdivision 5
         , for individuals enrolled in this pilot project. and8.1(3) the 32 hours of work limitation of Minnesota Statutes, section 268.085, 8.2subdivision 2, clause (6).8.3    Subd. 2. Limitations. A maximum of 500 applicants for unemployment benefits are 8.4authorized to receive a waiver.8.5    Subd. 3. Expiration date. The authorization under subdivision 1 expires June 8.630, 2012.8.7EFFECTIVE DATE.This section is effective the Sunday following final enactment.8.8ARTICLE 28.9UNEMPLOYMENT INSURANCE HOUSEKEEPING8.10    Section 1. Minnesota Statutes 2010, section 268.035, subdivision 4, is amended to read:8.11    Subd. 4. Base period. (a) "Base period," unless otherwise provided in this 8.12subdivision, means the last most recent four completed calendar quarters before the 8.13effective date of an applicant's application for unemployment benefits if the application 8.14has an effective date occurring after the month following the last most recent completed 8.15calendar quarter. The base period defined in this paragraph is considered the primary base 8.16period. The base period under this paragraph is as follows:

8.178.188.19If the application for unemployment 
                  		benefits is effective on or between these 
                  		dates:The base period is the prior:8.20February 1 - March 31January 1 - December 318.21May 1 - June 30April 1 - March 318.22August 1 - September 30July 1 - June 308.23November 1 - December 31October 1 - September 30

8.24    (b) If an application for unemployment benefits has an effective date that is during 8.25the month following the last most recent completed calendar quarter, then the base period 8.26is the first four of the last most recent five completed calendar quarters before the effective 8.27date of an applicant's application for unemployment benefits. The base period defined 8.28in this paragraph is considered the secondary base period. The base period under this 8.29paragraph is as follows:

8.308.318.32If the application for unemployment 
                  		benefits is effective on or between these 
                  		dates:The base period is the prior:8.33January 1 -  January 31October 1 - September 308.34April 1 -  April 30January 1 - December 318.35July 1 -  July 31April 1 - March 318.36October 1 -  October 31July 1 - June 30

9.1    (c) If the applicant has insufficient wage credits to establish a benefit account under 9.2paragraph (a) or (b), but during the base period under paragraph (a) or (b) an applicant 9.3received workers' compensation for temporary disability under chapter 176 or a similar 9.4federal law or similar law of another state, or if an applicant whose own serious illness 9.5caused a loss of work for which the applicant received compensation for loss of wages 9.6from some other source, the applicant may request an extended base period as follows:9.7    (1) if an applicant was compensated for a loss of work of seven to 13 weeks, the 9.8base period is the first four of the last most recent six completed calendar quarters before 9.9the effective date of the application for unemployment benefits;9.10    (2) if an applicant was compensated for a loss of work of 14 to 26 weeks, the base 9.11period is the first four of the last most recent seven completed calendar quarters before the 9.12effective date of the application for unemployment benefits;9.13    (3) if an applicant was compensated for a loss of work of 27 to 39 weeks, the base 9.14period is the first four of the last most recent eight completed calendar quarters before the 9.15effective date of the application for unemployment benefits; and9.16    (4) if an applicant was compensated for a loss of work of 40 to 52 weeks, the base 9.17period is the first four of the last most recent nine completed calendar quarters before the 9.18effective date of the application for unemployment benefits.9.19(d) If the applicant has insufficient wage credits to establish a benefit account 9.20using the secondary base period under paragraph (b), an alternate base period of the last9.21most recent four completed calendar quarters before the effective date of the applicant's 9.22application for unemployment benefits will be used. Establishment of a benefit account is 9.23in accordance with section 
         268.07, subdivision 2.9.24    (e) No base period under paragraph (a), (b), (c), or (d) may include wage credits 9.25upon which a prior benefit account was established.9.26(f) Regardless of paragraph (a), the secondary base period in paragraph (b) must 9.27be used if the applicant has more wage credits under that base period than under the 9.28primary base period in paragraph (a).9.29    Sec. 2. Minnesota Statutes 2010, section 268.035, subdivision 20, is amended to read:9.30    Subd. 20. Noncovered employment. "Noncovered employment" means:9.31    (1) employment for the United States government or an instrumentality thereof, 9.32including military service;9.33    (2) employment for a state, other than Minnesota, or a political subdivision or 9.34instrumentality thereof;9.35    (3) employment for a foreign government;10.1    (4) employment for an instrumentality wholly owned by a foreign government, 10.2if the employment is of a character similar to that performed in foreign countries by 10.3employees of the United States government or an instrumentality thereof and the United 10.4States Secretary of State has certified that the foreign government grants an equivalent 10.5exemption to similar employment performed in the foreign country by employees of the 10.6United States government and instrumentalities thereof;10.7    (5) employment covered under United States Code, title 45, section 351, the 10.8Railroad Unemployment Insurance Act;10.9    (6) employment covered by a reciprocal arrangement between the commissioner and 10.10another state or the federal government that provides that all employment performed by an 10.11individual for an employer during the period covered by the reciprocal arrangement is 10.12considered performed entirely within another state;10.13    (7) employment for a church or convention or association of churches, or an 10.14organization operated primarily for religious purposes that is operated, supervised, 10.15controlled, or principally supported by a church or convention or association of churches 10.16described in United States Code, title 26, section 501(c)(3) of the federal Internal Revenue 10.17Code and exempt from income tax under section 501(a);10.18    (8) employment of a duly ordained or licensed minister of a church in the exercise of 10.19a ministry or by a member of a religious order in the exercise of duties required by the 10.20order, for Minnesota or a political subdivision or an organization described in United 10.21States Code, title 26, section 501(c)(3) of the federal Internal Revenue Code and exempt 10.22from income tax under section 501(a);10.23    (9) employment of an individual receiving rehabilitation of "sheltered" work in 10.24a facility conducted for the purpose of carrying out a program of rehabilitation for 10.25individuals whose earning capacity is impaired by age or physical or mental deficiency 10.26or injury or a program providing "sheltered" work for individuals who because of an 10.27impaired physical or mental capacity cannot be readily absorbed in the competitive labor 10.28market. This clause applies only to services performed for Minnesota or a political 10.29subdivision or an organization described in United States Code, title 26, section 501(c)(3) 10.30of the federal Internal Revenue Code and exempt from income tax under section 501(a) 10.31in a facility certified by the Rehabilitation Services Branch of the department or in a day 10.32training or habilitation program licensed by the Department of Human Services;10.33    (10) employment of an individual receiving work relief or work training as part of 10.34an unemployment work relief or work training program assisted or financed in whole or 10.35in part by any federal agency or an agency of a state or political subdivision thereof. 10.36This clause applies only to employment for Minnesota or a political subdivision or an 11.1organization described in United States Code, title 26, section 501(c)(3) of the federal 11.2Internal Revenue Code and exempt from income tax under section 501(a). This clause does 11.3not apply to programs that require unemployment benefit coverage for the participants;11.4    (11) employment for Minnesota or a political subdivision as an elected official, a 11.5member of a legislative body, or a member of the judiciary;11.6    (12) employment as a member of the Minnesota National Guard or Air National 11.7Guard;11.8    (13) employment for Minnesota, a political subdivision, or instrumentality thereof, 11.9as an employee serving only on a temporary basis in case of fire, flood, tornado, or 11.10similar emergency;11.11    (14) employment as an election official or election worker for Minnesota or a 11.12political subdivision, but only if the compensation for that employment was less than 11.13$1,000 in a calendar year;11.14    (15) employment for Minnesota that is a major policy-making or advisory position 11.15in the unclassified service, including those positions established under section 
         43A.08, 11.16subdivision 1a
         ;11.17    (16) employment for a political subdivision of Minnesota that is a nontenured major 11.18policy making or advisory position;11.19    (17) domestic employment in a private household, local college club, or local 11.20chapter of a college fraternity or sorority performed for a person, only if the wages paid 11.21in any calendar quarter in either the current or prior calendar year to all individuals in 11.22domestic employment totaled less than $1,000.11.23    "Domestic employment" includes all service in the operation and maintenance of a 11.24private household, for a local college club, or local chapter of a college fraternity or 11.25sorority as distinguished from service as an employee in the pursuit of an employer's 11.26trade or business;11.27    (18) employment of an individual by a son, daughter, or spouse, and employment of 11.28a child under the age of 18 by the child's father or mother;11.29    (19) employment for a personal care assistance provider agency by an immediate 11.30family member of a recipient who provides the direct care to the recipient through the 11.31personal care assistance program under section 
         256B.0659;11.32(20) employment of an inmate of a custodial or penal institution;11.33    (21) employment for a school, college, or university by a student who is enrolled 11.34and is regularly attending classes at whose primary relation to the school, college, or 11.35university is as a student. This does not include an individual whose primary relation to 11.36the school, college, or university is as an employee who also takes courses;12.1     (22) employment of an individual who is enrolled as a student in a full-time program 12.2at a nonprofit or public educational institution that maintains a regular faculty and 12.3curriculum and has a regularly organized body of students in attendance at the place 12.4where its educational activities are carried on, taken for credit at the institution, that 12.5combines academic instruction with work experience, if the employment is an integral 12.6part of the program, and the institution has so certified to the employer, except that this 12.7clause does not apply to employment in a program established for or on behalf of an 12.8employer or group of employers;12.9    (23) employment of university, college, or professional school students in an 12.10internship or other training program with the city of St. Paul or the city of Minneapolis 12.11under Laws 1990, chapter 570, article 6, section 3;12.12    (24) employment for a hospital by a patient of the hospital. "Hospital" means an 12.13institution that has been licensed by the Department of Health as a hospital;12.14    (25) employment as a student nurse for a hospital or a nurses' training school by 12.15an individual who is enrolled and is regularly attending classes in an accredited nurses' 12.16training school;12.17    (26) employment as an intern for a hospital by an individual who has completed a 12.18four-year course in an accredited medical school;12.19    (27) employment as an insurance salesperson, by other than a corporate officer, if all 12.20the wages from the employment is solely by way of commission. The word "insurance" 12.21includes an annuity and an optional annuity;12.22    (28) employment as an officer of a township mutual insurance company or farmer's 12.23mutual insurance company operating under chapter 67A;12.24    (29) employment of a corporate officer, if the officer directly or indirectly, including 12.25through a subsidiary or holding company, owns 25 percent or more of the employer 12.26corporation, and employment of a member of a limited liability company, if the member 12.27directly or indirectly, including through a subsidiary or holding company, owns 25 percent 12.28or more of the employer limited liability company;12.29    (30) employment as a real estate salesperson, by other than a corporate officer, if all 12.30the wages from the employment is solely by way of commission;12.31    (31) employment as a direct seller as defined in United States Code, title 26, section 12.323508;12.33    (32) employment of an individual under the age of 18 in the delivery or distribution 12.34of newspapers or shopping news, not including delivery or distribution to any point for 12.35subsequent delivery or distribution;13.1    (33) casual employment performed for an individual, other than domestic 13.2employment under clause (17), that does not promote or advance that employer's trade or 13.3business;13.4    (34) employment in "agricultural employment" unless considered "covered 13.5agricultural employment" under subdivision 11; or13.6    (35) if employment during one-half or more of any pay period was covered 13.7employment, all the employment for the pay period is considered covered employment; 13.8but if during more than one-half of any pay period the employment was noncovered 13.9employment, then all of the employment for the pay period is considered noncovered 13.10employment. "Pay period" means a period of not more than a calendar month for which a 13.11payment or compensation is ordinarily made to the employee by the employer.13.12    Sec. 3. Minnesota Statutes 2010, section 268.035, subdivision 29, is amended to read:13.13    Subd. 29. Wages. (a) "Wages" means all compensation for services, including 13.14commissions; bonuses, awards, and prizes; severance payments; standby pay; vacation and 13.15holiday pay; back pay as of the date of payment; tips and gratuities paid to an employee by 13.16a customer of an employer and accounted for by the employee to the employer; sickness 13.17and accident disability payments, except as otherwise provided in this subdivision; and the 13.18cash value of housing, utilities, meals, exchanges of services, and any other goods and 13.19services provided to compensate for an employee's services, except:13.20    (1) the amount of any payment made to, or on behalf of, an employee under a plan 13.21established by an employer that makes provision for employees generally or for a class 13.22or classes of employees, including any amount paid by an employer for insurance or 13.23annuities, or into a plan, to provide for a payment, on account of (i) retirement or (ii) 13.24medical and hospitalization expenses in connection with sickness or accident disability, 13.25or (iii) death;13.26    (2) the payment by an employer of the tax imposed upon an employee under United 13.27States Code, title 26, section 3101 of the Federal Insurance Contribution Act, with respect 13.28to compensation paid to an employee for domestic employment in a private household of 13.29the employer or for agricultural employment;13.30    (3) any payment made to, or on behalf of, an employee or beneficiary (i) from or 13.31to a trust described in United States Code, title 26, section 401(a) of the federal Internal 13.32Revenue Code, that is exempt from tax under section 501(a) at the time of the payment 13.33unless the payment is made to an employee of the trust as compensation for services as an 13.34employee and not as a beneficiary of the trust, or (ii) under or to an annuity plan that, at 13.35the time of the payment, is a plan described in section 403(a);14.1    (4) the value of any special discount or markdown allowed to an employee on goods 14.2purchased from or services supplied by the employer where the purchases are optional and 14.3do not constitute regular or systematic payment for services;14.4    (5) customary and reasonable directors' fees paid to individuals who are not 14.5otherwise employed by the corporation of which they are directors;14.6    (6) the payment to employees for reimbursement of meal expenses when employees 14.7are required to perform work after their regular hours;14.8    (7) the payment into a trust or plan for purposes of providing legal or dental services 14.9if provided for all employees generally or for a class or classes of employees;14.10    (8) the value of parking facilities provided or paid for by an employer, in whole or in 14.11part, if provided for all employees generally or for a class or classes of employees;14.12    (9) royalties to an owner of a franchise, license, copyright, patent, oil, mineral, 14.13or other right;14.14    (10) advances or reimbursements for traveling or other bona fide ordinary and 14.15necessary expenses incurred or reasonably expected to be incurred in the business of the 14.16employer. Traveling and other reimbursed expenses must be identified either by making 14.17separate payments or by specifically indicating the separate amounts where both wages 14.18and expense allowances are combined in a single payment;14.19    (11) residual payments to radio, television, and similar artists that accrue after 14.20the production of television commercials, musical jingles, spot announcements, radio 14.21transcriptions, film sound tracks, and similar activities;14.22    (12) supplementalpayments made to supplement unemployment benefits paid under 14.23a plan established by an employer, that makes provisions for employees generally or for a 14.24class or classes of employees for the supplementing of unemployment benefits under the 14.25written terms of an agreement, contract, trust arrangement, or other instrument.if the plan 14.26provides benefits that are only supplemental to, and does not replace or duplicate any state 14.27or federal unemployment benefits. The plan must provide that funds are paidsupplemental 14.28payments solely for the supplementing of weekly state or federal unemployment benefits. 14.29The plan must provide that any supplemental benefits are payablepayments only iffor 14.30those weeks the applicant has applied for allbeen paid regular, extended, or additional 14.31unemployment benefits available. The plan must provide that supplemental benefits14.32payments, when combined with the applicant's weekly unemployment benefits available14.33paid, may not exceed the applicant's regular weekly pay. The plan must not allow the 14.34assignment of supplemental benefits payments or provide for any type of additional 14.35payment upon the employee's withdrawal from the plan, or quitting of employment or the 14.36termination of the plan. The plan must not require any consideration from the applicant 15.1and must not be designed for the purpose of avoiding the payment of Social Security 15.2obligations, or unemployment taxes on money disbursed from the plan;15.3    (13) sickness or accident disability payments made by the employer after the 15.4expiration of six calendar months following the last calendar month that the individual 15.5worked for the employer;15.6    (14) disability payments made under the provisions of any workers' compensation 15.7law;15.8    (15) sickness or accident disability payments made by a third-party payer such as 15.9an insurance company; or15.10    (16) payments made into a trust fund, or for the purchase of insurance or an annuity, 15.11to provide for sickness or accident disability payments to employees under a plan or 15.12system established by the employer that provides for the employer's employees generally 15.13or for a class or classes of employees.15.14    (b) Nothing in this subdivision excludes from the term "wages" any payment 15.15made under any type of salary reduction agreement, including payments made under a 15.16cash or deferred arrangement and cafeteria plan, as defined in United States Code, title 15.1726, sections 401(k) and 125 of the federal Internal Revenue Code, to the extent that the 15.18employee has the option to receive the payment in cash.15.19    (c) Wages includes payments made for services as a caretaker. Unless there is a 15.20contract or other proof to the contrary, compensation is considered as being equally 15.21received by a married couple where the employer makes payment to only one spouse, or 15.22by all tenants of a household who perform services where two or more individuals share 15.23the same dwelling and the employer makes payment to only one individual.15.24    (d) Wages includes payments made for services by a migrant family. Where services 15.25are performed by a married couple or a family and an employer makes payment to only 15.26one individual, each worker is considered as having received an equal share of the 15.27compensation unless there is a contract or other proof to the contrary.15.28    (e) Wages includes advances or draws against future earnings, when paid, unless 15.29the payments are designated as a loan or return of capital on the books of the employer 15.30at the time of payment.15.31    (f) Wages includes payments made by a subchapter "S" corporation, as organized 15.32under the Internal Revenue Code, to or on behalf of officers and shareholders that are 15.33reasonable compensation for services performed for the corporation.15.34    For a subchapter "S" corporation, wages does not include:16.1    (1) a loan for business purposes to an officer or shareholder evidenced by a 16.2promissory note signed by an officer before the payment of the loan proceeds and recorded 16.3on the books and records of the corporation as a loan to an officer or shareholder;16.4    (2) a repayment of a loan or payment of interest on a loan made by an officer to the 16.5corporation and recorded on the books and records of the corporation as a liability;16.6    (3) a reimbursement of reasonable corporation expenses incurred by an officer and 16.7documented by a written expense voucher and recorded on the books and records of 16.8the corporation as corporate expenses; and16.9    (4) a reasonable lease or rental payment to an officer who owns property that is 16.10leased or rented to the corporation.16.11    Sec. 4. Minnesota Statutes 2010, section 268.051, subdivision 5, is amended to read:16.12    Subd. 5. Tax rate for new employers. (a) Each new taxpaying employer that does 16.13not qualify for an experience rating under subdivision 3, except new employers in a high 16.14experience rating industry, must be assigned, for a calendar year, a tax rate the higher of 16.15(1) one percent, or (2) the tax rate computed, to the nearest 1/100 of a percent, by dividing 16.16the total amount of unemployment benefits paid all applicants during the 48 calendar 16.17months ending on June 30 of the prior calendar year by the total taxable wages of all 16.18taxpaying employers during the same period, plus the applicable base tax rate and any 16.19additional assessments under subdivision 2, paragraph (c).16.20    (b) Each new taxpaying employer in a high experience rating industry that does not 16.21qualify for an experience rating under subdivision 3, must be assigned, for a calendar year, 16.22a tax rate the higher of (1) that assigned under paragraph (a), or (2) the tax rate, computed 16.23to the nearest 1/100 of a percent, by dividing the total amount of unemployment benefits 16.24paid to all applicants from high experience rating industry employers during the 48 16.25calendar months ending on June 30 of the prior calendar year by the total taxable wages 16.26of all high experience rating industry employers during the same period, to a maximum 16.27provided for under subdivision 3, paragraph (b), plus the applicable base tax rate and any 16.28additional assessments under subdivision 2, paragraph (c).16.29    (c) An employer is considered to be in a high experience rating industry if:16.30    (1) the employer is engaged in residential, commercial, or industrial construction, 16.31including general contractors;16.32    (2) the employer is engaged in sand, gravel, or limestone mining;16.33    (3) the employer is engaged in the manufacturing of concrete, concrete products, 16.34or asphalt; or17.1    (4) the employer is engaged in road building, repair, or resurfacing, including bridge 17.2and tunnels and residential and commercial driveways and parking lots.17.3    (d) The commissioner must send to the new employer, by mail or electronic 17.4transmission, noticedetermination of the tax rate assigned. An employer may appeal the 17.5assignmentdetermination of a tax rate in accordance with the procedures in subdivision 6, 17.6paragraph (c).17.7    Sec. 5. Minnesota Statutes 2010, section 268.051, subdivision 6, is amended to read:17.8    Subd. 6. NoticeDetermination of tax rate. (a) On or before each December 15, 17.9the commissioner must notify each employer by mail or electronic transmission of the 17.10employer's tax rate, along with any additional assessments, fees, or surcharges, for the 17.11following calendar year. The noticedetermination must contain the base tax rate and the 17.12factors used in determining the employer's experience rating. Unless an appeal of the tax 17.13rate is made, the computed tax rate is final, except for fraud or recomputation required 17.14under subdivision 4 or 4a, and is the rate at which taxes must be paid. A recomputed tax 17.15rate under subdivision 4 or 4a is the rate applicable for the quarter that includes the date of 17.16acquisition and any quarter thereafter during the calendar year in which the acquisition 17.17occurred. The tax rate is not subject to collateral attack by way of claim for a credit 17.18adjustment or refund, or otherwise.17.19    (b) If the legislature, after the sending of the determination of tax rate, changes any 17.20of the factors used to determine the rate, a new tax rate based on the new factors must be 17.21computed and sent to the employer.17.22    (c) A review of an employer's tax rate may be obtained by the employer filing an 17.23appeal within 20 calendar days from the date the determination of tax rate notice was sent 17.24to the employer. Proceedings on the appeal are conducted in accordance with section 17.25268.105
         .17.26    (d) The commissioner may at any time upon the commissioner's own motion correct 17.27any error in the employer's tax rate.17.28    Sec. 6. Minnesota Statutes 2010, section 268.057, subdivision 2, is amended to read:17.29    Subd. 2. Priority of payments. (a) Any payment received from a taxpaying 17.30employer must be applied in the following order:17.31    (1) unemployment insurance taxes; then17.32    (2) special assessment for interest on any federal loan; then17.33    (3) workforce development fee assessment; then17.34    (4) interest on past due taxes; then18.1    (5) penalties, late fees, administrative service fees, and costs.18.2    (b) Paragraph (a) is the priority used for all payments received from a taxpaying 18.3employer, regardless of how the employer may designate the payment to be applied, 18.4except when:18.5    (1) there is an outstanding lien and the employer designates that the payment made 18.6should be applied to satisfy the lien;18.7    (2) the payment is for back pay withheld from an applicant under section 
         268.085, 18.8subdivision 6
         , paragraph (b);18.9    (3) the payment is specifically designated by the employer to be applied to an 18.10outstanding overpayment of unemployment benefits of an applicant;18.11    (4) a court or administrative order directs that the payment be applied to a specific 18.12obligation;18.13    (5) a preexisting payment plan provides for the application of payment; or18.14    (6) the commissioner, under the compromise authority of section 
         268.067, agrees to 18.15apply the payment to a different priority.18.16    Sec. 7. Minnesota Statutes 2010, section 268.115, subdivision 1, is amended to read:18.17    Subdivision 1. Definitions. The terms used in this section have the following 18.18meaning:18.19    (1) "Extended unemployment benefit period" means a period that lasts for a 18.20minimum of 13 weeks and that:18.21    (i) Begins with the third week after there is a state "on" indicator; and18.22    (ii) Ends with the third week after there is a state "off" indicator.18.23    No extended unemployment benefit period may begin before the 14th week 18.24following the end of a prior extended unemployment benefit period.18.25    (2) There is a "state 'on' indicator" for a week if:18.26    (i) for that week and the prior 12 weeks, the rate of insured unemployment:18.27    (a) equaled or exceeded 120 percent of the average of the rates for the corresponding 18.2813-week period ending in each of the prior two calendar years, and was five percent or 18.29more; or18.30    (b) equaled or exceeded six percent; or18.31    (ii) The United States Secretary of Labor determines that the average rate of 18.32seasonally adjusted total unemployment in Minnesota for the most recent three months 18.33for which data is published equals or exceeds 6.5 percent and this rate equals or exceeds 18.34110 percent of the rate of the corresponding three-month period in either of the prior 18.35two calendar years.19.1    (3) There is a "state 'off' indicator" for a week if:19.2    (i) under clause (2)(i), for that week and the prior 12 weeks, the requirements for a 19.3"state 'on' indicator" are not satisfied; or19.4    (ii) under clause (2)(ii) the requirements for a "state 'on' indicator" are not satisfied.19.5    (4) "Rate of insured unemployment," means the percentage derived by dividing the 19.6average weekly number of applicants filing continued requests for regular unemployment 19.7benefits in the most recent 13-week period by the average monthly covered employment 19.8for the first four of the last most recent six completed calendar quarters before the end 19.9of that 13-week period.19.10    (5) "Regular unemployment benefits" means unemployment benefits available to 19.11an applicant other than extended unemployment benefits and additional unemployment 19.12benefits.19.13    (6) "Eligibility period" for an applicant means the period consisting of the weeks 19.14remaining in the applicant's benefit year within the extended unemployment benefit period 19.15and, if the benefit year ends within the extended unemployment benefit period, any weeks 19.16in the extended unemployment benefit period.19.17    (7) "Exhaustee" means an applicant who, in the eligibility period:19.18    (i) the benefit year having not expired has received the maximum amount of regular 19.19unemployment benefits that were available under section 
         268.07; or19.20    (ii) the benefit year having expired, has insufficient wage credits to establish a new 19.21benefit account; and19.22has no right to any type of unemployment benefits under any other state or federal laws 19.23and is not receiving unemployment benefits under the law of Canada.19.24    Sec. 8. Minnesota Statutes 2010, section 268.184, subdivision 1, is amended to read:19.25    Subdivision 1. Administrative penalties. (a) The commissioner must penalize 19.26an employer if that employer or any employee, officer, or agent of that employer, is 19.27in collusion with any applicant for the purpose of assisting the applicant to receive 19.28unemployment benefits fraudulently. The penalty is $500 or the amount of unemployment 19.29benefits determined to be overpaid, whichever is greater.19.30    (b) The commissioner must penalize an employer if that employer or any employee, 19.31officer, or agent of that employer (1) made a false statement or representation knowing it 19.32to be false, (2) made a false statement or representation without a good faith belief as to 19.33correctness of the statement or representation, (3) knowingly failed to disclose a material 19.34fact, or (4) made an offer of employment to an applicant when, in fact, the employer had 19.35no employment available, but only if the employer's action:20.1     (i) was taken to prevent or reduce the payment of unemployment benefits to any 20.2applicant;20.3    (ii) was taken to reduce or avoid any payment required from an employer under 20.4this chapter or section 
         116L.20; or20.5    (iii) caused an overpayment of unemployment benefits to an applicant.20.6    The penalty is $500, or 50 percent of the overpaid or reduced unemployment benefits 20.7or payment required, whichever is greater.20.8    (c) The commissioner must penalize an employer if that employer failed or refused 20.9to honor a subpoena issued under section 
         268.105, subdivision 4, or section 
         268.188. The 20.10penalty is $500 and any costs of enforcing the subpoena, including attorney fees.20.11    (d) Penalties under this subdivision are in addition to any other penalties and subject 20.12to the same collection procedures that apply to past due taxes. Penalties must be paid 20.13within 30 calendar days of assessment and credited to the contingent account.20.14    (e) The assessment determination of the penalty is final unless the employer files an 20.15appeal within 20 calendar days after the sending of notice determination of the penalty to 20.16the employer by mail or electronic transmission. Proceedings on the appeal are conducted 20.17in accordance with section 
         268.105.20.18    Sec. 9. Minnesota Statutes 2010, section 268.184, subdivision 1a, is amended to read:20.19    Subd. 1a. Notification and misreporting penalties. (a) If the commissioner finds 20.20that any employer or agent of an employer failed to meet the notification requirements of 20.21section 
         268.051, subdivision 4, the employer must be assessed a penalty of $5,000 or two 20.22percent of the first full quarterly payroll acquired, whichever is higher. Payroll is wages 20.23paid as defined in section 
         268.035, subdivision 30. The penalty under this paragraph 20.24must be canceled if the commissioner determines that the failure occurred because of 20.25ignorance or inadvertence.20.26    (b) If the commissioner finds that any individual advised an employer to violate the 20.27employer's notification requirements under section 
         268.051, subdivision 4, the individual, 20.28and that individual's employer, must each be assessed the penalty in paragraph (a).20.29    (c) If the commissioner finds that any person or agent of a person violated the 20.30reporting requirements of section 
         268.0435 or 
         268.046, the person must be assessed a 20.31penalty of $5,000 or two percent of the quarterly payroll reported in violation of section 20.32268.0435
          or 
         268.046, whichever is higher. Payroll is wages paid as defined in section 20.33268.035, subdivision 30
         .20.34    (d) Penalties under this subdivision are in addition to any other penalties and subject 20.35to the same collection procedures that apply to past due amounts from an employer. 21.1Penalties must be paid within 30 calendar days after sending of the notice determination21.2of penalty.21.3    (e) The assessment determination of a penalty is final unless the person assessed 21.4files an appeal within 20 calendar days after sending of the notice determination of the 21.5penalty by mail or electronic transmission. Proceedings on the appeal are conducted in 21.6accordance with section 
         268.105.21.7ARTICLE 321.8WORKFORCE DEVELOPMENT21.9    Section 1. Minnesota Statutes 2010, section 116L.17, subdivision 1, is amended to read:21.10    Subdivision 1. Definitions. (a) For the purposes of this section, the following terms 21.11have the meanings given them in this subdivision.21.12    (b) "Commissioner" means the commissioner of employment and economic 21.13development.21.14    (c) "Dislocated worker" means an individual who is a resident of Minnesota at the 21.15time employment ceased or was working in the state at the time employment ceased and:21.16    (1) has been permanently separated or has received a notice of permanent separation 21.17from public or private sector employment and is eligible for or has exhausted entitlement 21.18to unemployment benefits, and is unlikely to return to the previous industry or occupation;21.19    (2) has been long-term unemployed and has limited opportunities for employment 21.20or reemployment in the same or a similar occupation in the area in which the individual 21.21resides, including older individuals who may have substantial barriers to employment by 21.22reason of age;21.23    (3) has been terminated or has received a notice of termination of employment as a 21.24result of a plant closing or a substantial layoff at a plant, facility, or enterprise;21.25    (4) has been self-employed, including farmers and ranchers, and is unemployed as a 21.26result of general economic conditions in the community in which the individual resides 21.27or because of natural disasters;21.28    (5) has been permanently separated from employment in a restaurant, bar, or 21.29lawful gambling organization from October 1, 2007, to October 1, 2009, due to the 21.30implementation of any state law prohibiting smoking. This clause expires August 1, 2012;21.31    (6) is a veteran as defined by section 
         197.447, has been discharged or released from 21.32active duty under honorable conditions within the last 36 months, and (i) is unemployed 21.33or (ii) is employed in a job verified to be below the skill level and earning capacity of 21.34the veteran; or22.1(7) is an individual determined by the United States Department of Labor to be 22.2covered by trade adjustment assistance under United States Code, title 19, sections 2271 22.3to 2331, as amended; or22.4    (7) (8) is a displaced homemaker. A "displaced homemaker" is an individual who 22.5has spent a substantial number of years in the home providing homemaking service and 22.6(i) has been dependent upon the financial support of another; and now due to divorce, 22.7separation, death, or disability of that person, must find employment to self support; or (ii) 22.8derived the substantial share of support from public assistance on account of dependents 22.9in the home and no longer receives such support.22.10    To be eligible under this clause, the support must have ceased while the worker 22.11resided in Minnesota.22.12    (d) "Eligible organization" means a state or local government unit, nonprofit 22.13organization, community action agency, business organization or association, or labor 22.14organization.22.15    (e) "Plant closing" means the announced or actual permanent shutdown of a single 22.16site of employment, or one or more facilities or operating units within a single site of 22.17employment.22.18    (f) "Substantial layoff" means a permanent reduction in the workforce, which is 22.19not a result of a plant closing, and which results in an employment loss at a single site 22.20of employment during any 30-day period for at least 50 employees excluding those 22.21employees that work less than 20 hours per week.22.22EFFECTIVE DATE.This section is effective the Sunday following final enactment.22.23    Sec. 2. Minnesota Statutes 2010, section 116L.561, subdivision 7, is amended to read:22.24    Subd. 7. Reports. Each contractor shall report to the commissioner on a quarterly 22.25basis in a format to be determined by the commissioner.22.26Data collected on individuals under this subdivision are private data on individuals 22.27as defined in section 
         13.02, subdivision 12, except that summary data may be provided 22.28under section 
         13.05, subdivision 7.