Academic journal article Monthly Labor Review

Changes in Unemployment Insurance Legislation during 1986

Academic journal article Monthly Labor Review

Changes in Unemployment Insurance Legislation during 1986

Article excerpt

Changes in unemployment insurance legislation during 1986

No major Federal legislation was enacted in 1986 that would require States to amend their unemployment insurance laws. However, Congress enacted Public Law 99-595 (untitled) which extends to December 31, 1992, the exclusion from coverage of aliens performing agricultural labor. States are not required to amend their laws to apply the alien exclusion.

An immigration reform bill, Public Law 99-603, was also enacted which includes an alien verification system that becomes effective in October 1988 in the States unless the U.S. Secretary of Labor provides a waiver. The system would be used to verify the eligibility for benefits of certain alien workers. The law specifies criteria States must meet to qualify for the waiver.

The Tax Reform Act, Public Law 99-514, amended the definition of gross income to include all unemployment benefits as taxable income for Federal income tax purposes. The act also made several technical amendments to the Federal Unemployment Tax Act.

In general, State legislatures took very little action in the area of unemployment insurance this year. Eight States amended their laws to cut the extended benefit amount payable to a claimant during a period in which Federal payments to States for extended benefits are reduced pursuant to a sequester order under the Balanced Budget and Emergency Deficit Control Act of 1985 (hereafter termed Gramm-Rudman-Hollings). Nine States amended their laws to include tips in the definition of covered wages for tax purposes.

Following is a summary of significant changes in State unemployment insurance (UI) laws during 1986.


Disqualification. An individual who was fired from a job or who voluntarily quit due to alcoholism may reestablish eligibility for extended benefits after he or she has earned remuneration equal to or in excess of five times the weekly benefit amount.

Penalties. The penalty for fraud against the UI system was changed from a misdemeanor conviction to imprisonment for 1 year or a fine of up to $20,000, or both.


Financing. Beginning January 1, 1987, the taxable wage base is increased from $8,000 to $9,000 and will rise to $10,000 on January 1, 1988. However, if the trust fund balance on June 30, 1987, is more than $350 million, the wage base for calendar year 1988 will be $9,000. The fund balance level at which the most favorable tax schedule would become effective has been changed from at least $250 million to $350 million.

Benefits. The percentage of the State's average weekly wage used to compute the maximum weekly benefit amount was lowered from 60 percent to 55 percent.

Disqualification. An individual's potential weeks of benefits will now be reduced if he or she receives severance allowances. Also, disqualifying income now includes sick pay or other similar periodic cash payments.

Administration. The Colorado Department of Labor and Employment's second-level appeals body was changed from the Unemployment Compensation Commission to the Industrial Claims Appeals Panel.


Disqualification. Conditions for benefit eligibility were added for individuals who leave part-time employment and would otherwise be ineligible for benefits.


Financing. The period over which an employer's experience rating account must be chargeable before he or she can qualify for other than the standard rate was reduced from 3 to 2 years. The benefit charging provisions were amended to specify that only contributing employers will be relieved of charges for benefits paid to an individual who voluntarily left work without good cause, was discharged for misconduct, or refused an offer of suitable work. The rate for new employers, except those in construction, is the average assessment rate for all employers. …

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