The law that extended emergency jobless benefits and temporarily cut payroll taxes (H.R. 3630) included several little-noticed provisions intended to update the country’s unemployment insurance system by making changes within the state programs.
The measure, which passed both houses of Congress on Feb. 17, 2012, was signed into law by President Barack Obama on Feb. 22. Rep. Dave Camp, R-Mich., and one of the bill’s sponsors, issued a statement describing the changes as “historic,” saying that the reforms would “help the unemployed get the training and resources they need to move from an unemployment check to a paycheck.”
Among the changes that will occur under the newly enacted provision are the following:
States will be able to apply for waivers enabling them to implement reforms, such as using unemployment insurance funds to subsidize employment.
Up to 10 states will be allowed to test Georgia Works-type programs, which place the jobless in training positions while they continue to collect weekly checks.
The federal government will pick up some of the expenses associated with state “work-sharing” programs, which can help reduce layoffs. Under such a program, for example, a business could cut the hours of five workers by 20 percent each, rather than laying off one worker. The business could then use unemployment insurance money to supplement the workers’ wages to help make up for the lost hours.
National job-search requirements will be established for all benefits recipients, in order to eliminate the state-by-state approach currently in existence.
States will be required to reassess the eligibility of workers for their unemployment insurance — confirming, for instance, that a person receiving long-term benefits is actively searching for a job. That reassessment provides an opportunity to tailor career counseling and other re-employment services to the long-term jobless.
States will also receive $1 billion to assist with skills testing for the long-term unemployed, underemployed and self-employed. The U.S. Department of Labor already provides funding to assess the work-readiness of the unemployed, but the legislation makes it a requirement for those who have been jobless for more than 26 weeks.
States are permitted to screen applicants for illegal drugs if they lost their job due to a failed or refused drug test, or if they are applying for a position that requires testing.
Work-Sharing Provision Essential Part of Bill
Dean Baker, co-director of the Center for Economic and Policy Research, called the work-sharing provision of the law, “a rare victory of common sense and bipartisanship in Washington.” The existing unemployment insurance system, he noted, tends to encourage layoffs, since unemployed workers can typically collect benefits equal to half of their wages. Work-sharing, or short-time compensation as it is referred to in the law, allows workers who had their hours reduced to receive benefits equal to half of their reduction in pay.
"This benefits both employee and employer,” Baker said. “Workers will be able to remain on their job and not lose valuable skills, getting most of their previous wages but working fewer hours. Employers will be able to keep trained workers on their workforce and once demand picks up, they won't have to hire and train new people, they just increase hours for the existing staff.”
As to the tax cut and unemployment insurance benefits extension, the bill maintains a two-percentage-point payroll tax cut for 160 million wage-earners through the end of 2012. It also keeps additional weeks of unemployment insurance benefits for the long-term jobless, though it starts to taper the maximum weeks of benefits to 73 from 99. In addition, it prevents a sharp drop in reimbursement rates for doctors who accept Medicare.
On signing the bill, Obama said, “Now my message to Congress is: Don’t stop here. Keep going. Keep taking the action that people are calling for to keep this economy growing.”
Joanne Deschenaux, J.D., is SHRM’s senior legal editor.