Changes in Federal and State Unemployment Insurance Legislation in 2004
Lancaster, Loryn, Monthly Labor Review
State enactments include provisions relating to SUTA dumping, professional employer organizations, and staff leasing companies; voluntary quits; disqualification from benefits; noncharging benefits; pension offset; and financing; one Federal bill that was enacted made several changes, affecting the unemployment compensation program
During 2004, there was one Federal legislative enactment that affected the Federal-State unemployment insurance program. The SUTA (State unemployment tax acts) Dumping Prevention Act of 2004 (P.L. 108-295) was signed on August 9, 2004, and requires States to enact laws prohibiting SUTA dumping. SUTA dumping is an abusive practice used by some employers to manipulate experience-rating provisions of State law that apply when businesses are bought and sold. Briefly, the law establishes a nationwide minimum standard for curbing SUTA dumping. Under the law, States will be required to (a) prohibit practices that allow employers to pay lower State unemployment compensation taxes than their unemployment experience would otherwise allow; (b) have procedures to detect such practices; and (c) impose penalties on employers and financial advisors for knowingly violating (or attempting to violate) provisions of State law. States must enact these provisions as a condition of receiving administrative grants for operation of the unemployment compensation program. Thus, all States will need to amend their laws.
This act also authorizes States to access the Department of Health and Human Services' National Directory of New Hires (NDNH) for administration of the Federal or State unemployment compensation program. States' access to this directory allows for the quick detection of individuals who continue to collect unemployment compensation benefits after returning to work. This approach is a means of combating unemployment insurance fraud and preventing overpayments.
The following is a summary of some significant changes in State unemployment insurance legislation enacted in 2004.
Financing. Up to 15 percent of Reed Act monies were appropriated to administer the unemployment compensation law and public employment offices.
The 0.06 percent rate reduction applicable to certain employers has been extended from March 31, 2004, to March 31, 2006. Monetary entitlement. The weekly maximum benefit amount increased from $210 to $220, for benefit years beginning on or after July 4, 2004.
Administration. Upon the written request by a State district attorney, a municipal agency/attorney, a U.S. attorney, or the Federal Bureau of Investigation, the Alaska Department of Labor and Workforce Development may release to the requestor certain information for the investigation or prosecution of a crime or to enforce an order of a court in a criminal matter, including enforcing probation or parole conditions.
Appeals. Each member, manager, or employee of a limited liability company, including a limited partnership and a limited liability partnership, who is required to pay the contributions and interest owed by the limited liability company, including the limited partnership and the limited liability partnership, is permitted to appeal individually their duty to pay.
Coverage. For purposes of collecting delinquent contributions, the term "employer" also includes a member, manager, or employee of a limited liability company, including a limited partnership and a limited liability partnership, who, as manager, is under a duty to pay the required contributions.
Financing. The term "wages" excludes the amount of payment made, or benefit furnished, by the employer under a plan to provide educational assistance to or for the benefit of an employee if, at the time of the payment or the furnishing, it is reasonable to believe that the employee will be able to exclude the payment or benefit from income.