Unemployment

UNEMPLOYMENT BENEFITS REDUCED BY STATES

FROM AP, 28 FEB 2016

When Demetrius White recently lost his job as a $10-an-hour forklift driver loading pallets of shampoo, he applied for unemployment benefits to help support his family.

That aid will not last as long as it once did, because White is among the first group of people affected by a new Missouri law reducing the duration of jobless benefits. His $200-a-week checks will last no more than three months — just half as long as what has typically been available.

“That’s a dramatic change, really,” White said. “Thirteen weeks, I don’t know if I’ll be able to find a job.”

States traditionally have offered up to half a year of aid for the unemployed as they search for new jobs. But since the end of the Great Recession, eight states have reduced the number of weeks that people can draw benefits, while others have cut the amount of money the unemployed can collect.

The cutbacks generally are intended to help shore up unemployment insurance trust funds, which went insolvent in 35 states following the recession that began in 2008. The changes could save hundreds of millions of dollars for businesses that pay unemployment taxes.

President Barack Obama is pushing in the opposite direction. The White House warns that states are engaging in a “damaging erosion” of unemployment benefits. Obama’s budget plan would require all states to provide at least 26 weeks of benefits while expanding coverage to more part-time and intermittent workers.

The Republican-led Congress appears unlikely to approve the president’s plan during an election year. GOP governors and state lawmakers initiated many of the recent cutbacks to unemployment benefits. And they point to declining unemployment rates as evidence that jobs are getting easier to find.

“When there’s more jobs available, it’s kind of common sense — you shouldn’t need as long as a duration of unemployment benefits,” said Missouri Senate Majority Leader Mike Kehoe, a Republican who handled the legislation reducing benefits.

The 1935 Social Security Act prompted states to enact unemployment programs, which typically pay people about half the amount of their previous paychecks. In 1938, more than four-fifths of the states offered benefits for 16 weeks or less. But all states gradually increased their benefits to at least 26 weeks. South Carolina was the last to do so in 1968.

In 2011, Missouri became one of the first states to reverse course by cutting that to 20 weeks. Last year, the GOP-led Legislature overrode a veto by Democratic Gov. Jay Nixon to further shorten the benefits, linking their duration to the state’s unemployment rate. Because unemployment is below 6 percent, people can get no more than 13 weeks of benefits.

The new limit went into effect in January, even though a legal challenge brought by attorneys for the AFL-CIO is now before the Missouri Supreme Court. The lawsuit seeks to block the new law because of an alleged procedural violation by senators.

For some unemployed workers, the new state laws have added another layer of anxiety to an already unsettling situation.

White is one of about 36,000 Missouri workers who filed initial unemployment claims in January. A married father of two, he already has taken out a high-interest loan to help pay for his daughter’s college tuition. His wife remains employed as a teacher, but White said the family is starting to fall behind on bills, including electricity. He is afraid he will not be able to make mortgage payments.

“It’s been a struggle,” White, 43, said while picking up materials about temporary jobs from a state work center in Jefferson City. “I don’t have confidence of a job or hirings.”

The Missouri law is projected to reduce annual unemployment payouts by $83 million — a reduction of nearly one-fourth.

Neighboring Arkansas reduced its unemployment benefits to 20 weeks under a law that took effect last October. Those shortened benefits run out this month for some people, though the state won’t say how many.

South Carolina and Michigan also limit benefits to 20 weeks. Sliding scales linked to unemployment rates have resulted in limits of 16 weeks in Kansas, 14 in Georgia, 13 in North Carolina and 12 in Florida.

Some states also have reduced the maximum weekly payments, narrowed who can qualify and increased work-search requirements that can result in delayed or denied benefits if not met.

“We’ve experienced a wave of very drastic benefit reductions,” said Claire McKenna, a policy analyst at the National Employment Law Project, a New York-based group that serves as an advocate for low-wage workers and the unemployed.

Ohio could be the next state to shorten benefits. A bill by Rep. Barbara Sears would cut benefits to as few as 12 weeks by linking their duration to the unemployment rate. It also would make other benefit changes while trying to replenish an unemployment insurance trust fund that owes $773 million to the federal government.

The legislation is projected to reduce unemployment payments by an average of $475 million annually from 2018 to 2025.

Sears said some people who remain jobless for several months are “kind of settling in on unemployment and riding it until almost the last week before they’re re-engaging in the workforce.” A shorter benefit period could prompt them to find work, she said.

“When you know you’re going to go off of unemployment, there is an overwhelming urge to be less particular maybe about finding the exact job that you lost,” said Sears, a Republican from the Toledo area.

Advocates for the poor dispute that assertion. After the reductions in Florida, Georgia and North Carolina, the percentage of adults ages 25 to 54 with jobs in those states grew more slowly than the national average, according to the Economic Policy Institute, a Washington-based liberal think tank.

A coalition of Ohio health and human services groups has warned that shorter unemployment benefits could increase poverty. Some people will turn to food stamps or charities, sell their possessions or their blood plasma and run up credit card debt just to get by, said Lisa Hamler-Fugitt, executive director of the Ohio Association of Foodbanks and co-chair of Advocates for Ohio’s Future.

“Once you fall into poverty, the chances that you’re going to be able to get back out are going to be pretty difficult,” she said.

Business groups contend the benefit cutbacks are an appropriate way for workers to shoulder part of the costs of rebuilding depleted trust funds.

At one point following the recession, states owed a total of $51 billion to the federal government to repay loans for unemployment benefits. To recoup that, the U.S. government temporarily raised the unemployment tax paid by businesses in many of those states.

Besides Ohio, the only states still in federal debt are California, with $6.4 billion, and Connecticut, which owes about $100 million. But the Obama administration says just 20 states have enough reserves in their trust funds to weather a recession for a year. Obama has proposed to gradually increase employer taxes to help solidify the trust funds.

 

EMPLOYER ALERT – CHANGES IN UNEMPLOYMENT LAW

Florida’s Unemployment Compensation Law now has a broader definition of misconduct which will result in more employees being held ineligible for benefits based on the reason for their termination. As an employer, you need to be familiar with this change so that you can adjust your HR policies accordingly, and make an informed decision whether to contest a former employee’s application for benefits.

In general, an individual is entitled to benefits if they are laid off, terminated without cause, fired for poor performance, or resign with “good cause attributable to the employer” (i.e. if conditions at work are so bad that any reasonable person would feel they had no alternative but to resign). Individuals are ineligible for benefits if they are terminated for misconduct. Conduct which results in termination “for cause” under a company’s internal policies, however, does not always equate to conduct that is considered “misconduct” under the unemployment compensation law. That definition has now been expanded to include conduct that would not previously have resulted in a denial of benefits.

Under the new law, misconduct is defined as any action that demonstrates conscious disregard of an employer’s interests and is found to be a deliberate disregard or violation of reasonable standards of behavior, and may include activities that did not occur at the workplace or during working hours. This change broadens misconduct and makes it easier for an employer to deny benefits. Misconduct now includes violation of an employer’s policy that affects behavior outside the workplace (such as a rule prohibiting employees from making negative statements about the company on an employee’s personal facebook page).

The best practice is to review your current policies, and make sure you are providing written warnings for violations that would qualify as misconduct if repeated.

Other changes in the law, which primarily affect the procedures for claimants seeking benefits, include the following:

  • Benefit Payments: New claims must be paid by either the Florida Unemployment Compensation Debit Card or by direct deposit to the Claimant’s bank account (i.e. paper checks will no longer be used to pay benefits).
  • Online Filing and Certification of Weeks: All claims must now be filed electronically, and continuing claims must be updated electronically. The unemployment hotline is still available to answer questions about filings.
  • Work Search: Claimants are required on a weekly basis to contact five potential employers and provide this information via the Internet during their bi-weekly certification for benefits. You can use the Employ Florida Marketplace website (employflorida.com) to search thousands of postings and apply for jobs. If you are unable to make at least five employment contacts in a week, meeting with a representative at a local One-Stop Career Center for reemployment services can satisfy the requirement for that week.
  • Skills Review: Claimants must now complete an initial skills review over the Internet. The result of the review will be used by local One-Stop Career Centers to assist claimants with job searches.
  • Severance Pay: If a claimant’s severance pay per week is equal to or greater than the claimant’s weekly benefit amount, the claimant is not entitled to benefits for that week. Severance pay does not impact the total amount of benefits that can be paid on the claim.
  • Duration of Benefits: Effective January 1, 2012, The duration of benefits adjusts from the current maximum of 26 weeks to a range from 12 to 23 weeks, based upon the average unemployment rate in Florida for the third calendar quarter of the previous year. For example, the maximum number of weeks for 2012 will be based on the average unemployment rate in Florida for July, August and September 2011. When the average unemployment rate is 5 percent or less, the maximum duration of benefits will be 12 weeks. For each half-percent increase in the average unemployment, an additional week will be added to the calculation of the benefit duration beginning January 1 of the following calendar year. Should the average unemployment rate reach 10.5 percent or higher, a maximum of 23 weeks would be payable on a claim established during the following calendar year.

TIP OF THE DAY – KEEP UNEMPLOYMENT PREMIUMS DOWN BY DOCUMENTING EMPLOYEE DISCIPLINE

Because Florida is an “employment at will” state, an employer does not need “good cause” to terminate an employee. An employee terminated without good cause, however, will be entitled to receive unemployment compensation benefits. Because the number of claims awarded to your former employees has a direct impact on increases to your company’s unemployment compensation insurance premium, you should take steps to ensure that benefits are not awarded to employees who were fired for misconduct.

An employee who is terminated because their performance is not up to your standards, or because they are simply unable to perform the job, is entitled to benefits. Likewise, an employee whose excessive absenteeism is a result of a health issue is eligible for benefits. However, an employee who repeatedly, after warning, violates company policy is not entitled to unemployment compensation. That behavior qualifies as misconduct under the statute.

The key issue in unemployment compensation hearings (conducted when the employee applies for benefits and the company contests their entitlement) involving policy violations is whether the employee had notice that their behavior was unacceptable and was warned that future violations could result in termination. The best evidence you can present is a written warning, signed by the employee.

Remember to do the following:

(1) Put a warning in writing so that there is no dispute about what information was given to the employee.

(2) Note in the warning whether the employee has been verbally counseled for the same behavior in the past.

(3) State whether the conduct violates a company policy, and identify that policy.

(4) Have all employees sign a form acknowledging that they have received, understand and will abide by company policies.

(5) Have the employee sign the written warning, acknowledging receipt of it. You can include a space for the employee to make a statement if they disagree with the warning.

By following these steps, you can protect your company from being charger higher unemployment compensation premiums as a result of benefits awarded to former employees who continued to willfully violate company policy after repeated warnings.

TIP OF THE DAY – PROBATIONARY PERIOD FOR NEW HIRES

Many employers question the need for a probationary period for new hires, since Florida is an “employment at will” state.

One good reason to establish a 90-day probationary period is to protect the company from rate increases caused by unnecessary unemployment claims. “Employment at will” means that you can discharge an employee at any time with or without good cause, as long as you don’t run afoul of federal or state discrimination laws and whistleblower protections. However, employees who are terminated for legitimate business reasons where no employee misconduct is involved do qualify for unemployment compensation benefits. The exception to this is termination of employment during an established, initial 90-day probationary period that the employee was advised of at the time of hire.

Have new employees sign an acknowledgement that they are subject to a 90-day probationary period and will not become regular employees until the period is completed. This protects your company from rate increases resulting from unemployment compensation benefits paid to newly-hired employees who simply were not a good fit, or were let go for unsatisfactory performance in the first 90 days.

TIP OF THE DAY – PROBATIONARY PERIOD FOR NEW HIRES

Many employers question the need for a probationary period for new hires, since Florida is an “employment at will” state.

One good reason to establish a 90-day probationary period is to protect the company from rate increases caused by unnecessary unemployment claims. “Employment at will” means that you can discharge an employee at any time with or without good cause, as long as you don’t run afoul of federal or state discrimination laws and whistleblower protections. However, employees who are terminated for legitimate business reasons where no employee misconduct is involved do qualify for unemployment compensation benefits. The exception to this is termination of employment during an established, initial 90-day probationary period that the employee was advised of at the time of hire.

Have new employees sign an acknowledgement that they are subject to a 90-day probationary period and will not become regular employees until the period is completed. This protects your company from rate increases resulting from unemployment compensation benefits paid to newly-hired employees who simply were not a good fit, or were let go for unsatisfactory performance in the first 90 days.