Nicole Roberson State Conformity and Compliance Team Federal-State Unemployment Compensation (UC) Legislative Seminar Benefit Standards

Compensation Paid Through Public Employment Offices Intended to ensure claimant attachment to the work force, i.e., test the involuntary character of the unemployment of individuals claiming UC. Requires claimants to be registered with the Employment Service unless specifically exempted. Federal-State Unemployment Compensation (UC) Legislative Seminar

Labor Standards Federal-State Unemployment Compensation (UC) Legislative Seminar

Suitability vs. Labor Standards Federal-State Unemployment Compensation (UC) Legislative Seminar

Required Coverage and Equal Treatment Federal-State Unemployment Compensation (UC) Legislative Seminar Requires coverage of services performed for entities to which section 3309, FUTA applies. Benefits must be paid on the same terms and subject to the same conditions as UC paid to any other services.

Required Coverage Unless there is an exemption for specific services from the definition of employment in FUTA those services must be covered when performed for a section 3309 entity. What are section 3309 entities? State and local governmental entities Certain nonprofit organizations Federally-recognized Indian tribes Federal-State Unemployment Compensation (UC) Legislative Seminar

Equal Treatment All qualifying, benefit formula, eligibility, and disqualification provisions applicable to other claimants must apply equally to claimants based on employment with section 3309, entities. The only exceptions are those related to between and within terms denials. Federal-State Unemployment Compensation (UC) Legislative Seminar

Between & Within Terms Denial Found in section 3304(a)(6)(A)(i) – (vi), FUTA Exceptions to the Equal Treatment requirement Required or permissive, depending on the type of services performed Federal-State Unemployment Compensation (UC) Legislative Seminar

Between and Within Terms Provisions (i): Requires between terms denial based on services performed in an instructional, research, or principal administrative, i.e., “professional,” capacity. (ii): Permits between terms denial based on all other (i.e., nonprofessional) services and retroactive payment to nonprofessionals if no work is available in second term and they have met claim filing requirements. Federal-State Unemployment Compensation (UC) Legislative Seminar

(iii): Requires within terms denial of benefits to professionals and nonprofessionals, including denial of benefits in “crossover” situations, within terms. (However, see (vi) below) (iv): Requires between and within terms denial of benefits to professionals and nonprofessionals employed by ESAs in educational institutions. Federal-State Unemployment Compensation (UC) Legislative Seminar Between and Within Terms Provisions Cont.

(v):Permits the state to apply the denial provisions of (i) through (iv) to employees of state and local governments and nonprofit organizations if they provide services to or on behalf of an educational institution. (vi): Permits the state to make the between and within terms denial provisions of (iii) and (iv) optional for nonprofessionals. States have some latitude in determining which parts of the optional between and within terms denial to apply. Federal-State Unemployment Compensation (UC) Legislative Seminar Between and Within Terms Provisions Cont.

Reasonable Assurance Agreement that the employee will perform services in the same or similar capacity during the ensuing academic year or term Must be a bona fide offer of employment Exists only if the economic terms and conditions are not substantially less than the previous year or term Federal-State Unemployment Compensation (UC) Legislative Seminar

Crossovers When an educational employee working in one capacity (e.g., professional) receives assurance of continued employment in the other capacity (e.g., nonprofessional). Federal-State Unemployment Compensation (UC) Legislative Seminar Term 1 Professional Non- professional Term 2 Professional Non- professional

Crossovers When the claimant leaves one type of employer to go to work for another. Federal-State Unemployment Compensation (UC) Legislative Seminar Term 2 Educational Institution Entity providing services to or on behalf of an educational institution ESA for educational institution Term 1 Educational Institution Entity providing services to or on behalf of an educational institution ESA for educational institution

Questions & Open Discussion Federal-State Unemployment Compensation (UC) Legislative Seminar

Agnes Wells State Conformity and Compliance Team Federal-State Unemployment Compensation (UC) Legislative Seminar Benefit Standards

Double Dip Individuals who have received UC during a benefit year must have had work since the beginning of such year in order to qualify for UC in the next benefit year Prevents individuals from qualifying for two benefit years on one separation from work Does not apply to combined wage claims Federal-State Unemployment Compensation (UC) Legislative Seminar

The term “work” means services for which remuneration is payable There must have been services performed – disability pay, vacation pay, back pay, etc. do not meet the definition of work State law determines how much work is required and whether it must be in covered employment Federal-State Unemployment Compensation (UC) Legislative Seminar What is work and how much is required?

Claimants in Approved Training Individuals in “approved training” may not be denied for not being available for work, actively seeking work, or refusing to accept work State law defines “approved training”; however, reasonable criteria must be applied (See UIPL 1276) States may not refuse to approve training solely because it is conducted in another state Federal-State Unemployment Compensation (UC) Legislative Seminar

Interstate and Combined-Wage Claims UC shall not be denied or reduced solely because an individual files a claim in another state (or Canada) or because he or she resides in another state (or Canada) Claimants must have base period employment and wages in the state where they establish their combined wage claim States must use the Interstate Benefit Payment Plan for combined wage claims Federal-State Unemployment Compensation (UC) Legislative Seminar

Cancellation of Wage Credits or Total Reduction of Benefit Rights UC may not be denied by reason of cancellation of wage credits or total denial of benefit rights for any reason except: Discharge for misconduct connected with work Fraud in connection with a claim for UC Receipt of disqualifying income Federal-State Unemployment Compensation (UC) Legislative Seminar

Misconduct is defined in state law. Many states follow Boynton Cab Co. v. Neubeck. Any definition in state law must be limited to misconduct connected with work. Fraud is defined in state law. All states have special disqualifications for fraud. Disqualifying income is also defined in state law – examples include wages, WC, vacation pay, wages in lieu of notice, etc. Income must be payable to be disqualifying. Federal-State Unemployment Compensation (UC) Legislative Seminar Misconduct, Fraud, and Disqualifying Income

“Cancellation of wage credits” means that although the employer paid taxes on the wages, they cannot be used to establish a claim No cancellation of wage credits (total or partial) is allowed except for the three reasons listed Federal-State Unemployment Compensation (UC) Legislative Seminar Cancellation of Wage Credits

“Total reduction of benefits” refers to the entire benefit year, not a single week of benefits State may impose a disqualification that is a partial reduction of benefit rights Federal-State Unemployment Compensation (UC) Legislative Seminar Total Reduction of Benefit Rights

Seasonality provisions restrict the payment of UC to workers who earned some or a substantial portion of their base period wages in employment defined in state law as “seasonal” Seasonality provisions are not a cancellation of wage credits because it restricts when the wage credits may be used, but does not cancel them Federal-State Unemployment Compensation (UC) Legislative Seminar Seasonality Provisions

Individuals who have wage credits from both seasonal and non-seasonal work are entitled to use all wage credits for periods of unemployment within seasons. However, during periods of unemployment outside of the designated season they may only use non- seasonal wage credits. States must employ a uniform method of charging for all claims, whether or not they are based on seasonal wages Federal-State Unemployment Compensation (UC) Legislative Seminar Seasonality Provisions Continued

Questions & Open Discussion Federal-State Unemployment Compensation (UC) Legislative Seminar

John McGucken State Conformity and Compliance Team Federal-State Unemployment Compensation (UC) Legislative Seminar Benefit Standards

Extended Benefits EB must be payable as provided in the Federal-State Extended Unemployment Compensation Act of 1970 (EUCA) States must conform to EUCA for certification for the normal tax credit Federal-State Unemployment Compensation (UC) Legislative Seminar

EB is payable in times of high and rising unemployment to individuals who have exhausted regular UC. With certain exceptions, the Federal government pays 50% of the costs of EB. EB is payable when a state meets the “triggers” based on the unemployment rate to qualify. Once an EB period triggers “on” it must last at least 13 weeks. Federal-State Unemployment Compensation (UC) Legislative Seminar Extended Benefits Overview

An EB period triggers “off” once the trigger criteria are not met. Once EB triggers off, it cannot trigger on again before the 14 th week after it triggers off. EB period begin the third week following the week that a state meets the “on” trigger. EB periods end the third week following the week that the state no longer meets the “on” trigger requirements. Federal-State Unemployment Compensation (UC) Legislative Seminar Extended Benefits Overview Cont.

Federal-State Unemployment Compensation (UC) Legislative Seminar Amount Payable

There are two EB triggers, one mandatory, one optional The mandatory trigger is based on the insured unemployment rate (IUR) The optional trigger is based on the total unemployment rate (TUR) Federal-State Unemployment Compensation (UC) Legislative Seminar Extended Benefit Triggers

Calculated for a 13-week period The IUR must be at least 5% and 120% of the average rate for the corresponding 13-week period for each of the preceding two calendar years or: At state option, an IUR of 6% by itself Federal-State Unemployment Compensation (UC) Legislative Seminar Mandatory IUR Trigger

Based on the seasonally adjusted TUR for the most recent 3 month period for which data for all states is published The TUR must be at least 6.5% and exceed 110% of the average rate for either or both of the previous the corresponding 3-month periods in the preceding two calendar years States adopting the TUR trigger must also provide for a “high unemployment period” during which additional weeks of EB are payable Federal-State Unemployment Compensation (UC) Legislative Seminar Optional TUR Trigger

The TUR must be at least 8% and exceed 110% of the average rate for either or both of the previous the corresponding 3-month periods in the preceding two calendar years Provides for up to 7 additional weeks of EB Federal-State Unemployment Compensation (UC) Legislative Seminar High Unemployment Period Trigger

Eligibility of Pregnant Claimants UC may not be denied solely on the basis of pregnancy or termination of pregnancy Entitlement must be determined on the same basis and under the same provisions applicable to all other claimants Federal-State Unemployment Compensation (UC) Legislative Seminar

Denial of UC to Athletes Between Seasons A “seasonality” provision that applies to professional athletes if “substantially all” of the services consist of participating in or training or preparing to participate between two successive seasons. Federal-State Unemployment Compensation (UC) Legislative Seminar

“Substantially all” means 90% or more Must have a reasonable assurance of performing such services in the later of such seasons Means a written contract; player’s offer to work and employer’s expressed interest in hiring the player; or the athlete’s readiness and intent to participate in the sport the next season Federal-State Unemployment Compensation (UC) Legislative Seminar Application of the Athletes Provision

An “athlete” may (at state option) include ancillary personnel such as managers, coaches, and trainers employed by professional teams, and referees and umpires employed by professional leagues or associations. Federal-State Unemployment Compensation (UC) Legislative Seminar What is an “Athlete”?

Eligibility of Aliens for UC UC shall not be payable to an alien unless the individual: was lawfully admitted for permanent residence at the time the services were performed; Was lawfully present for purposes of performing services; or Was permanently residing in the US under color of law at the time the services were performed. Federal-State Unemployment Compensation (UC) Legislative Seminar

Any information required to determine eligibility for UC must be uniformly required of all applicants Denial of compensation must be based on a “preponderance of the evidence.” An alien must be legally authorized to work at the time the work is performed. Additionally, aliens must be legally authorized to work at the time UC is claimed to be considered “available for work.” Federal-State Unemployment Compensation (UC) Legislative Seminar Eligibility of Aliens for UC

Treatment of Retirement Pay UC must be reduced by any pension, retirement, annuity, or similar periodic payment the individual is receiving. Reduction of UC is prohibited due to nontaxable pension rollover distributions. Federal-State Unemployment Compensation (UC) Legislative Seminar

Reduce benefits only when a base period or chargeable employer contributed to the plan if services for that employer affect eligibility for or increase the amount of the pension. Limit the amount of the reduction to take into account to contributions made by the individual to the retirement plan. Federal-State Unemployment Compensation (UC) Legislative Seminar State Options to Limit the Reduction

Voluntary Withholding of Federal Income Tax Claimants may voluntarily request that Federal taxes be withheld from UC. Withholding is currently at a rate of 10 percent. Withholding is after all mandatory deductions. Federal-State Unemployment Compensation (UC) Legislative Seminar

Withholding must be under a program approved by the Secretary of Labor. If states use the draft language provided by the Department, no formal plan is required. States may provide for the withholding of State and local taxes if they wish. Costs of withholding are allowable costs under the UI grant. Federal-State Unemployment Compensation (UC) Legislative Seminar Voluntary Withholding of Federal Income Tax Cont.

Questions & Open Discussion Federal-State Unemployment Compensation (UC) Legislative Seminar