Changes in unemployment insurance legislation in 2001; at the State level, enactments included increases of maximum weekly benefit amounts, modifications to voluntary quit provisions, and extensions of coverage to Indian tribes; one Federal bill enacted will affect the Federal-State unemployment insurance program - Unemployment Insurance Laws, 2001 - United States - Statistical Data Included

Monthly Labor Review, Jan, 2002 by Loryn Lancaster, Anne Vogel

During 2001, one Federal enactment affected the Federal-State unemployment insurance program. The "Economic Growth and Tax Relief Reconciliation Act of 2001" (P.L. 107-16) will affect the unemployment insurance program in two ways. First, the voluntary withholding rate of Federal income taxes on unemployment insurance benefits has been reduced from 15 percent to 10 percent. The amendment applies to amounts paid after the 60th day after enactment, which pertains to payment made on and after August 7, 2001. Those States that contain generic language in their unemployment insurance State laws, as regards the withholding requirement, can implement the new percentage without a law change. However, the five States that have provisions that include the 15-percent rate language will need to amend their State unemployment insurance laws before the withholding rate can change. Second, the exclusion of employer-provided educational assistance from the Federal Unemployment Tax Act definition of wages has been extended to graduate education and the exclusion is permanent for both undergraduate and graduate education courses. This amendment is effective with respect to courses that students began after December 31, 2001. The States have the option of amending their unemployment insurance State laws to include this provision.

The "Consolidated Appropriations Act, 2001," requires those States that have federally recognized Indian tribes within their borders amend their laws to treat Indian tribes similarly to State and local governments. Of the 34 States under mandate to amend their laws, 22 had done so by December 18, 2001. Although not required, Arkansas enacted legislation about Indian tribes. In addition, one State is operating under an Executive Order and another under a savings clause.

As was noted in last year's article, 15 State legislatures introduced bills generally following the guidelines set forth in the "Birth and Adoption-Unemployment Compensation" final rule, effective August 14, 2000; none of the bills were enacted. Eighteen State Legislatures followed suit in 2001, with the same result of zero enactments.

Enactments of State unemployment insurance laws include the majority of States (approximately 43) increasing their maximum weekly benefit amounts either through legislation or automatic provisions; some other States modifying the voluntary quit provision for circumstances related to domestic violence, and many States expanding coverage to service performed for an Indian tribe.

Following is a summary of some significant changes in State unemployment insurance laws during 2001.

Arizona

Coverage. An Indian tribe includes a tribal unit, a subdivision or subsidiary of an Indian tribe, and a business wholly owned by an Indian tribe. The definition of "employment" includes service performed for an Indian tribe, resulting in unemployment insurance coverage of such services and to exclude coverage of certain services. An Indian tribe may either pay contributions or elect to make reimbursements. Under certain circumstances, the reimbursement election will be terminated when a tribe fails to make the required payments; provides for reinstatement when the failure is corrected. Extended benefits not reimbursed by the Federal Government must be financed 100 percent by the Indian tribe.

Financing. Reimbursable employers are exempt from the Job Training Tax. The Job Training Tax is imposed under certain conditions.

Arkansas

Administration. The disclosure of wage and unemployment insurance information to the U.S. Department of Housing and Urban Development (HUD) and to representatives of public housing agencies concerning applicants for or participants in housing assistance programs administered by HUD will be allowed. The disclosure of employee unemployment insurance information to the State of Arkansas Disability Determination for Social Security Administration and, pursuant to a subpoena, the Arkansas Insurance Department Workers' Compensation Fraud Investigation Unit will be allowed. Beginning July 1, 2001, applications for review and redeterminations must be made the first time charges appear on an employer's account; subsequent charges for the same claimant in the same benefit year may not be challenged. The director will be required to report to the Employment Security Department Advisory Council on a quarterly basis as to any uses of stabilization tax proceeds deposited into the Employment Security Special Fund. Changes reference from appeal referee to appeal hearing officer. The term of office for members of the Board of Review has been changed from 2 to 4 years, and 4-year terms are to run concurrently with the term of the Office of the Governor. The Chairman of the Board of Review will be required to have a 4-year term beginning with the 2003 appointment.

Benefits. Testing positive for illegal drugs under a Department of Transportation qualified drug screening program, in accordance with the employer's bona fide written drug policy will be considered misconduct that can lead to a disqualification for benefits. Work offered to an individual by a base-period or last employer at earnings equal to or greater than the individual earned from the base-period or last employer will be deemed suitable work, unless certain factors are applicable (such as, failure to meet prevailing conditions, risk to heath, safety, morals, and so forth) and it would be contrary to good conscience to deem such work suitable. A "seasonal industry" is defined as an industry in which, among other things, it is customary to lay off 40 percent or more of the average monthly number of workers for at least 4 consecutive months during a regularly recurring period of each year. Vacation payments received due to a permanent separation from employment may not be disqualifying nor deductible from unemployment insurance. The application period of a disqualification for willful false statement changes from 2 to 5 years. Beginning, July 1, 2001, overpayments can be collected only by deduction from future benefits after 10 years; interest will be imposed on overpayments due to fraud; and a 10-percent penalty will be assessed on fraud overpayments not repaid within 1 year.