NECA helps get things done!

Unemployment Compensation Loophole Closes January 6. NECA Helped!

For the past 34 years, certain unemployed people have been allowed to file for unemployment compensation in a state where they may never even have held a job, and states with lower maximum benefit levels have suffered for it. However, this gaping loophole in the federal regulations (20 CFR 616.6) slams shut on January 6, 2009.

Unemployment compensation is administered at both the federal and state levels. All states currently participate in a federal program entitled “The Interstate Agreement for Wage Combining.” Under current law, people who work in more than one state during the year before they lose their job are eligible to file what is called a “combined wage claim” (CWC) in any state.

And that’s where the practice of “forum shopping” comes in. What happens is, jobless people often travel to a state that offers more generous unemployment compensation benefits than the state in which they actually live in order to file a CWC. (Such claims have to be filed in person; they cannot be mailed in.) But, when the successful claimant goes home, it’s the state of residence that must pay the benefits —at the higher rate.

The Charleston (West Virginia) Daily Mail, which recently published a couple of articles on this subject, provides the following example:

“Consider a West Virginia resident who worked in both Ohio and West Virginia in 2007. In 2008, the person is laid off and decides to file a combined wage claim in Massachusetts. ... If qualified, he or she would receive the $600 maximum [weekly] benefit established by Massachusetts officials instead of the $424 maximum that West Virginia sets. The money would come from the West Virginia trust fund.”


Employers in states struggling to keep their unemployment compensation trust funds on sound footing as job losses increase fear that the amounts they have to pay for unemployment insurance will skyrocket beyond control if this situation is allowed to continue. Fortunately, it’s ending early next year.

On October 23, the Labor Department’s Employment and Training Administration published a Final Rule in The Federal Register that limits the combined wage claimant to filing only in a state where he or she worked during the base period to qualify for unemployment benefits. DoL also amended 20 CFR 616.7 (“Election to file a Combined Wage Claim”). The amendment adds a new paragraph to the regulation that requires a state that denies a CWC to notify the claimant of the option of filing the claim in another state in which he or she worked during the states base period.

For access to the Final Rule, go to www.doleta.gov/usworkForce/whatsnew/eta_default.cfm?id=1970

_____________________

NECA News thanks Steve Allred, manager of NECA’s West Virginia-Ohio Valley Chapter, for bringing this important development to our attention. Steve says, “Apparently, enough disgruntled employers contacted their elected officials and forced a change.”

And, we’d like to thank Nebraska-NECA Chapter Manager Ruth Chermok for providing this "fun fact" about why it took so long for this change to come about.

On November 2, 2007, the Labor Department published a notice of proposed rulemaking to amend the definition of ‘‘paying State’’ for purposes of CWCs filed under the Federal-State Unemployment Compensation program and closed off comments on that proposal on January 2, 2008. And, then ... nothing happened.

Ruth tells us, “We were having this battle in our area and our attorney discovered that this correction reg had been sitting on a desk in D.C. Our local labor commissioner office called that official on our behalf and within three days it was published.”

NECA helps get things done!