UI Forum (ADP Unemployment Group)
First Quarter 2012
Voluntary Quit – UI Ineligibility Not Automatic
Many employers assume if a worker voluntarily quits a job, then he or she cannot collect unemployment insurance (UI) benefits. An individual cannot be barred from filing a claim simply because he or she resigned, and while many quits are disqualifying, a denial of benefits is not automatic. Normally, in order to be granted UI payments, the voluntary quit must be for “good cause attributable to the employer.” The good news for employers is that the “burden of proof” falls on the former worker to prove good cause for leaving the job before an unemployment decision allowing benefits would be issued.
The following reasons are examples where voluntarily quitting generally results in a denial of UI benefits, because they are not considered to be attributable to the employer.
- To attend school
- To seek or accept other work
- To get married
- To stay at home with children
- Job abandonment, i.e., no call-no show for three or more days
Reasons for quitting that may be considered good cause attributable to the employer often center around employment conditions that change from the time of hire or breaches in the employment contract. Such changes are usually regarded as detrimental to the worker’s interest, so UI benefits will be allowed. Examples include:
- Significant reduction in hours or pay
- Demotion or loss of responsibility
- Change in worksite location
- Violation of wage and hour laws
- Harassment or discrimination
- Working conditions detrimental to a worker’s health or safety
Additional “good cause” reasons for quitting exist which aren’t attributable to the employer; rather, they fall into a category often called “compelling personal reasons.” In these situations, it is deemed that the worker has no reasonable alternative other than to leave the job. Examples include:
- Quit for medical reasons, upon the advice of a doctor
- Quit to care for an ill or dependent parent or child
- Quit to follow a transferred or military spouse
Keep in mind that state UI laws vary and the circumstances of each worker’s separation are typically unique, so employers must not assume all voluntary quits are equal or that unemployment benefits will automatically be denied. Be sure to document the details of any separation and provide complete information to your ADP Unemployment Group representatives. Their guidance and expertise will help you achieve the best outcome allowed under the law when pursuing an unemployment claim.
Emergency Unemployment Compensation Extended
The Emergency Unemployment Compensation (EUC) Program was extended as part of a larger tax relief and job creation bill that was signed into law on February 22, 2012. This new law not only extends federally funded EUC benefits, but also continues the 100% federal financing of state extended benefits (EB) through December 31, 2012.
The legislation calls for a reduction in the total number of benefit weeks provided, based on unemployment rates in each state. The reduction will occur in three phases – a maximum of between 89 and 99 weeks from March through May 2012; a maximum of 79 weeks from June through August 2012; and a maximum of 73 weeks from September through December 2012.
Pushing back the expiration of the EUC program recognizes a need to still assist the long-term unemployed, while the modification of the total benefit weeks takes into account current economic forecasting, which predicts lower unemployment rates by the end of the year.
Since EUC and state EB will continue to be federally funded through December, the vast majority of employers will not be liable for unemployment costs associated with these payments (the feds may not pick up state EB costs for Indian tribes and government entities, due to a long-standing federal law).
Legislation Will Help Move Workers Off Unemployment and Into Jobs
The Middle Class Tax Relief and Job Creation Act of 2012 (HR 3630) was signed by President Obama on February 22, 2012. In addition to the EUC extension outlined in the above article, the legislation contains a number of provisions to assist unemployed workers with re-entry into the workforce.
Funding of nearly $1 billion will be available to states to assist the unemployed through a number of programs and initiatives. These include: Reemployment Services and Assessments for the long-term unemployed; enhancement and expansion of Work Share programs (a.k.a. Short-Time Compensation) throughout the states; and reemployment pilot programs in which unemployed persons will be placed in training positions or jobs.
Additional provisions in the Act aimed at improving the UI system include: national job search requirements for all persons collecting state and federal UI benefits; a requirement for states to reduce current state and federal UI benefit checks in order to recover prior overpayments more quickly and effectively; and permission for states to screen and drug test any individual applying for UI benefits who either: 1) lost his or her job because of drug use, or 2) is seeking a job that generally requires a drug test.
Through better control of UI benefit payouts and focused efforts on returning the unemployed to the workforce, it is anticipated that in the long run employers will see reduced claims costs, which could then impact UI taxes and also contribute to trust fund solvency recovery.
U.S. DOL Issues UI Integrity Guidance to States
Employers Risk Loss of Non-Charge
The U.S. Department of Labor (USDOL) recently issued guidance to the states on how to administer the “Prohibition of Non-charging Due to Employer Fault” language that was enacted late in 2011. The intention of the federal statute is to protect the integrity of the Unemployment Insurance (UI) Program through efforts to deter actions or behaviors that result in improper benefit payments. The new law says all states must prohibit non-charging of unemployment insurance (UI) benefits to an employer’s account, if the unemployment agency determines benefits were erroneously paid, due to a pattern of failure on the part of the employer or its agent to respond to a request for information, or of providing insufficient information.
This means you could remain liable for benefits paid even if you win the UI hearing, which in turn could increase claim costs and impact your tax rates.
The business community has expressed some concern with the USDOL interpretation of the UI Integrity law, which seems to permit states to disregard some statutory provisions or apply stricter consequences than what is stated in the federal Act. The national employer advocacy organization, UWC, Inc. – Strategic Services in Unemployment and Workers’ Compensation, noted the following with regard to the USDOL guidance to the states:
- The states are instructed to apply the prohibition of non-charging provision to any other requests for information required for the establishment of a claim for UC (i.e., wage information, weeks worked, etc.) in addition to separation information, if the employer is potentially chargeable for the overpaid benefits in question.
- The states must determine whether the employer’s or agent’s response provides sufficient facts to enable them to make the correct determination under state law.
- If an employer uses a third party agent to respond on its behalf to the state agency, then the actions of the agent will be considered when determining a pattern of behavior. A pattern is established based on the pattern of the agent’s behavior overall and not only with respect to its behavior related to each individual client/employer. A “pattern” means a minimum of two instances of such behavior.
- Once a determination has been made not to relieve charges, the prohibition will continue for each overpaid week until the agency determines that the claimant is no longer eligible and stops making payments.
- The USDOL interpretation with respect to reimbursing employers is that states are prohibited from relieving employers from reimbursement under the same conditions that apply to contributing employers.
- The determination of non-charging will be made by the paying state, which will notify the transferring state how employers must be charged.
- State laws providing for good cause waiver of reporting must be extremely limited (e.g. agency error or disaster)
- Although the effective date of required state statutory changes is not until an erroneous payment after October 21, 2013, a state may opt to prohibit relief from charging before this date
UWC President, Doug Holmes, has commented that the USDOL guidance is broader and perhaps somewhat inconsistent with the actual UI Integrity language that was enacted. UWC has also drafted model legislation for states to consider using to hopefully bring about consistency and mitigate the impact on employers.
This new federal UI Integrity language and the USDOL guidance to the states points to a trend in which employers are expected to improve the quality of information provided to state unemployment agencies at the front end of the UI claim process, rather than waiting until a hearing to provide details. With the USDOL reporting that the second leading cause of UI overpayments (totaling millions of dollars) is a lack of sufficient separation information provided by employers, UI Integrity laws enacted at the state level will effectively halt the credit or non-charge to an employer’s unemployment account, as a consequence of not providing sufficient details in the initial stages of the claim, even if that employer prevails at an unemployment hearing,
We will monitor the states as they amend their laws to be in compliance with the federal UI Integrity language. In the interim, employers should take all necessary steps to gather complete and accurate details at the time a separation occurs and provide this information to their ADP Unemployment Group representative.
Senate Bill 447 seeks to address UI trust fund solvency issues through benefit reductions and tax increases. On the benefits side, the legislation seeks to implement a one-week waiting period before UI benefits may be paid, and to change the current 26-week maximum duration of benefits to a sliding scale ranging between 12-20 weeks. On the tax side, an increase in the taxable base from $8,500 to $9,500 in 2013 is proposed, as well as changes to the surcharges currently in place. SB 447 was approved in the Senate Committee on February 24, 2012 and is now in the House Committee. The bill language can be found at:
The maximum weekly benefit amount decreased from $549 to $523 as of January 1, 2012.
UI Integrity legislation has been introduced as HB 5632. This bill would not permit a reversal of benefits charges, if UI payments were erroneously paid because the employer failed to respond to a claim timely or adequately, and had an established pattern of that type of failure.
Also, the maximum weekly benefit amount range increased from $388-$531 to $403-$549 as of January 1, 2012. The range takes dependents’ allowances into account. Also, the maximum weeks of regular benefits decreased from 26 to 25.
The maximum weekly benefit amount increased from $348 to $354 as of January 1, 2012.
The maximum weekly benefit amount increased from $598 to $611 as of January 1, 20112.
The maximum weekly benefit amount range, which includes dependents allowances, increased from $387-$524 to $400-$539 as of January 1, 2012.
The maximum weekly benefit amount increased from $358 to $368 as of January 1, 2012.
The maximum weekly benefit amount increased from $457 to $467 as of January 1, 2012.
The maximum weekly benefit amount increased from $470 to $495 as of January 1, 2012.