[Federal Register Volume 60, Number 211 (Wednesday, November 1, 1995)]
[Notices]
[Pages 55604-55611]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-27101]
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DEPARTMENT OF LABOR
Federal-State Unemployment Compensation Program: Unemployment
Insurance Program Letters Interpreting Federal Unemployment Insurance
Law
The Employment and Training Administration interprets Federal law
requirements pertaining to unemployment compensation (UC) as part of
its role in the administration of the Federal-State UC program. These
interpretations are issued in Unemployment Insurance Program Letters
(UIPLs) to the State Employment Security Agencies (SESAs). The UIPLs
described below are published in the Federal Register in order to
inform the public.
UIPL 29-83 Change 2
Secondary adjustments are a part of many State experience rating
plans. This UIPL provides States with additional guidance concerning
those secondary adjustments which may be used in determining reduced
rates for employers.
UIPL 22-87, Change 1
UIPL 22-87, issued in 1987, consolidated several issuances
concerning the treatment of pensions received by claimants for UC. This
Change 1 to UIPL 22-87 provides further guidance on the subject.
Specifically, it deals with the requirements concerning pensions when
amounts are rolled over into eligible retirement plans. It was issued
in response to numerous questions on the subject which were raised by
States trying to determine how to deal with rollovers.
UIPL 17-95, Change 1
Public Law 103-465, commonly known as the legislation on ``GATT''--
The General Agreement on Tariffs and Trade, included a provision that,
effective with weeks beginning after January 1, 1997, requires States
to deduct and withhold Federal income tax from UC if the individual so
elects. UIPL 17-95 explained the change in UC law, discussed its
effective date and provided model language for States to use in
amending State UC law. Change 1 to UIPL 17-95 advised States of the
Department of Labor's position concerning priorities when a claimant
subject to withholding required under State law also requests the
withholding of income tax.
UIPL 35-95
As a result of the increased use of telephone or other electronic
methods of UC tax collection and benefit claimstaking, the Department
has found it necessary to issue this UIPL in order to ensure that
States are aware of the Department's position concerning the use of the
new technology as it relates to the UC program. This UIPL sets forth
the Department's position on the various issues involved and interprets
the relevant law and regulation.
UIPL No. 1-96
The Department issues several types of directives in order to set
forth official agency policy concerning the programs administered by
the Department. Questions have been raised by several groups regarding
what weight these directives carry as interpretations of Federal law.
As a result, this directive was issued to clarify the status of these
directives.
UIPL 2-96
It came to the Department's attention that several States restrict
the approval of training to that which is provided within the State.
Since 1974, it has been the express position of the Department that
such restrictions are contrary to the requirements of the Federal
Unemployment Tax Act. This directive was issued to restate and
reinforce that position.
[[Page 55605]]
Dated: October 26, 1995.
Timothy M. Barnicle,
Assistant Secretary of Labor.
Department of Labor
Employment and Training Administration, Washington, D.C. 20210
Classification: UI
Correspondence Symbol: TEURL
Dated: September 28, 1995
Directive: Unemployment Insurance Program Letter of No. 29-83 Change 2
To: All State Employment Security Agencies
From: Mary Ann Wyrsch, Director, Unemployment Insurance Service
Subject: Experience Rating--Permissible Secondary Adjustments
1. Purpose. To provide States with additional guidance concerning
those secondary adjustments which may be used in determining reduced
rates for employers.
2. References. The Federal Unemployment Tax Act (FUTA); the Social
Security Act (SSA); Unemployment Insurance Program Letter (UIPL) No.
29-83, dated June 23, 1983 and UIPL No. 29-83, Change 1, dated
September 24, 1991 (both published at 56 Fed. Reg. 54891 (October 23,
1991)); and Employment Security Memorandum (ESM) No. 9, dated July
1940.
3. Background. Secondary adjustments are a part of many State
experience rating plans. They are adjustments, permissible under
limited conditions, to the measure of an employer's experience which
bear no relation to the employer's experience. The most typical example
of a secondary adjustment is the triggering of a particular rate
schedule due to the unemployment fund's balance. Recently a question
has been raised as to whether payments by employers to funds other than
the State's unemployment fund may be used as secondary adjustments.
This UIPL provides the Department's position.
Rescissions: None
Expiration Date: September 30, 1996
4. Discussion.
a. Federal law. As a condition of employers in a State receiving
the additional credit, the State's law must be certified as meeting the
requirements of Section 3303, FUTA, which provides, in pertinent part,
as follows--
(a) STATE STANDARDS.--A taxpayer shall be allowed an additional
credit under Section 3302(b) with respect to any reduced rate of
contributions permitted by a State law, only if the Secretary of
Labor finds that under such law--
(1) no reduced rate of contributions to a pooled fund or to a
partially pooled account is permitted to a person (or group of
persons) having individuals in his (or their) employ except on the
basis of his (or their) experience with respect to unemployment or
other factors bearing a direct relation to unemployment risk during
not less than the 3 consecutive years immediately preceding the
computation date * * *.
The term ``pooled fund'' is defined in Section 3303(c)(2), FUTA, as
``an unemployment fund or any part thereof * * * into which the total
contributions of persons contributing thereto are payable, in which all
contributions are mingled and undivided, and from which compensation is
payable to all individuals eligible for compensation from such fund.''
Similarly, Section 3303(c)(3), FUTA, defines ``partially pooled
account'' as a ``part of an unemployment fund * * *.'' Section 3306(f),
FUTA, defines ``unemployment fund'' as ``a special fund * * * for the
payment of compensation * * *.'' These provisions establish an explicit
linkage between experience rating and payments to the unemployment fund
from which unemployment compensation (UC) is paid.
b. Secondary Adjustments. As noted in ESM No. 9 UIPL No. 29-83,
the Department and its predecessor agencies have approved experience
rating plans using secondary adjustments which are not related to an
employer's experience. The following explanation of secondary
adjustments (derived in part from ESM No. 9) is from page 10 of the
attachment to UIPL 29-83:
The requirement that a reduced rate must be based on the
employer's experience makes it necessary to maintain the influence
of that experience in the determination of the reduced rate granted
to an employer. The measurement of experience may be subjected to
adjustments by the application of other factors bearing no relation
to an employer's experience only if the basic experience factor has
not been so impaired by combination with such other factors that the
employer's own experience is no longer the basic determinant of his
reduced rate.
* * * * *
A secondary adjustment that results in a reduction of rates has
been found not to be an unreasonable distortion of the experience
factor if the reduction is the same for all rated employers and if
the reduction is not applied to employers not otherwise entitled to
a reduced rate based on their own experience. [Emphasis in
original.]
Although UIPL 29-83 is broadly written, it should not be read to
permit the introduction of any factor unrelated to an employer's
experience. It is the position of the Department that, to meet the
requirements of Section 3303(a)(1), FUTA, secondary adjustments must
directly serve the purpose of the unemployment fund.
A secondary adjustment, by definition, involves the intrusion of a
factor unrelated to experience into the State's experience rating
system. It does not follow that any intrusion is permissible. In fact,
these intrusions have in the past been limited as described in UIPL 29-
83. As discussed in item 4.a. above, experience rating is explicitly
linked to payments to the unemployment fund. Therefore, the
introduction of a factor which does not directly serve the purpose of
the unemployment fund (i.e., the payment of UC) is an unacceptable
intrusion into experience rating.
A payment to fund other than the unemployment fund is not a factor
directly serving the unemployment fund's purpose and may not be used in
determining the rate of an individual employer. This applies to
payments to State general funds (for example, income or sales tax
payments) as well as to payments which could potentially be used for
payments of UC.\1\ Similarly, the balance in another State fund may not
be used to trigger rate schedules for the unemployment fund since the
other fund does not directly serve the purpose of the unemployment
fund.
\1\The principal in certain State funds (often called reserve
funds) may be used for any or all of the following purposes: the
payment of UC, loans to the State's unemployment fund, or the
payment of interest on advances made under Title XII, SSA. Reserve
fund interest is used for non-UC purposes such as training or
economic development activities. To date, all State reserve funds
have been created with a concurrent reduction in the amount payable
to the State's unemployment fund. Thus, the reserve funds have
deprived the unemployment fund of assets and interest earnings.
Moreover, there is no guarantee that the State will not amend its
law to authorize use of reserve fund moneys for non-UC purposes.
This is because, unlike unemployment funds, reserve funds are not
subject to the ``immediate deposit'' with ``withdrawal'' standards
of Sections 3304(a) (3) and (4), FUTA, and Sections 303(a) (4) and
(5), SSA, which assure unemployment fund moneys will be used for the
payment of UC. Finally, payment of interest on advances made under
Title XII, SSA, from the unemployment fund is prohibited by Section
303(c)(3), SSA, and Section 3304(a)(17), FUTA. Thus, payments of
interest do not serve the purposes of the unemployment fund.
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A review of previously approved secondary adjustments indicates
that the Department has limited approval only to adjustments directly
serving the purpose of the unemployment fund.\2\
[[Page 55606]]
For example, the triggering of rate schedules generates sufficient
revenues for the payment of UC. Factors related to socialized costs,
including the experience factor in benefit-wage ratio States, serve to
make the fund whole for costs which are not otherwise funded through
experience rates. These costs include UC not charge to a specific
employer or charged to an employer who has gone out of business.
\2\Voluntary contributions were originally considered to be
acceptable secondary adjustments since they are paid into the
unemployment fund, thereby directly servicing the fund's purpose.
Since Section 3303(d), FUTA, now contains specific authorization for
voluntary contributions, their status as secondary adjustments is
moot. Section 3303(d) was added to FUTA in 1947 to ``give express
statutory sanction to the administrative interpretation which has
permitted voluntary contributions . . .'' and to ``provide for a
definite period within which voluntary contributions must be made .
. .'' (H. Rep. No. 759, 80th Cong., 1st Sess. (1947)).
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5. Action Required. State agency administrators are requested to
review existing State law provisions to ensure that Federal law
requirements as set forth in this UIPL are met. Prompt action,
including corrective legislation, should be taken to assure Federal
requirements are met.
7. Inquiries. Direct questions to the appropriate Regional Office.
Department of Labor
Employment and Training Administration, Washington, D.C. 20210
Classification: UI
Correspondence Symbol: TEURL
Dated: June 19, 1995
Directive: Unemployment Insurance Program Letter No. 22-87 Change 1
To: All State Employment Security Agencies
From: Mary Ann Wyrsch, Director, Unemployment Insurance Service
Subject: Whether Unemployment Compensation must be Reduced when Amounts
are Rolled Over into Eligible Retirement Plans
1. Purpose. To provide guidance concerning the Federal unemployment
compensation (UC) law requirements relating to the deduction from UC of
``rollovers'' of retirement funds.
2. References. The Internal Revenue Code of 1986 (IRC), including
section 3304(a)(15) of the Federal Unemployment Tax Act (FUTA) and
section 402; and Unemployment Insurance Program Letter (UIPL) No. 22-
87, 52 Fed. Reg. 22546 (1987). UIPL 22-87 was released April 30, 1987,
but erroneously dated April 30, 1988.
3. Background. Section 3304(a)(15), FUTA, requires, as a condition
for employers in a State to receive credit against the Federal
unemployment tax, that the amount of UC payable to an individual be
reduced for any week which begins in a period with respect to which the
individual is ``receiving a governmental or other pension, retirement
or retired pay, annuity, or any other similar periodic payment which is
based on the previous work of such individual . . .'' This section of
FUTA goes on to provide certain exceptions to this requirement not
relevant to this Change 1.
Rescissions: None.
Expiration Date: June 30, 1996.
Section 402(c), IRC, provides for the transfer of ``eligible
rollover distributions'' from a ``qualified trust'' to an ``eligible
retirement plan.'' (Section 402(c)(8) of the IRC provides definitions
of ``qualified trust'' and ``eligible retirement plan.'' Section
402(c)(4) defines ``eligible rollover distribution.'') If all the
requirements of Section 402, IRC, are met, including that the transfer
of the payment is made within 60 days of receipt by the individual,
then the payments will not be included in gross income for Federal
income tax purposes.
In light of the retirement pay provisions of Section 3304(a)(15),
FUTA, the question has arisen whether States are required to reduce UC
when distributions are rolled over. This Change 1 is issued to provide
the Department of Labor's position on this question.
4. Effect of Rollovers. If a rollover from a qualified trust into
an eligible retirement plan is not subject to Federal income tax, then
it is not considered to be ``received'' by the individual for purposes
of Section 3304(a)(15), FUTA. A non-taxable rollover does not represent
a payment to the individual for purposes of retirement. Instead, it
merely effectuates a change with respect to the retirement plan under
which the amounts are maintained. Therefore, it is not considered to be
``received'' and States are not required to reduce UC due to such
rollovers. However, if any distribution (or part of a distribution)
from a qualified trust is subject to Federal income tax, then that
amount is considered to be ``received'' for purposes of the FUTA and UC
must be reduced if otherwise required by Section 3304(a)(15).
States should also be aware that, when any distribution is paid as
a lump sum, FUTA does not require a reduction in UC. In this case, it
is not necessary to determine if the payment is ``received'' by the
individual. As discussed on page 6 of UIPL 22-87, FUTA does not require
UC to be reduced due to the receipt of non-periodic, lump sum
retirement payments. Further, FUTA only requires reduction of UC due to
receipt of amounts based on the previous work of the individual.
Therefore, for example, if a distribution is paid to a surviving
spouse, the spouse's UC need not be reduced.
5. Action Required. State Administrators should provide this
information to appropriate staff.
6. Inquiries. Inquiries should be directed to the appropriate
Regional Office.
Department of Labor
Employment and Training Administration, Washington, D.C. 20210
Classification: UI
Correspondence Symbol: TEURL
Dated: September 28, 1995
Directive: UNEMPLOYMENT INSURANCE PROGRAM LETTER NO. 17-95 CHANGE 1
To: ALL STATE EMPLOYMENT SECURITY AGENCIES
From: MARY ANN WYRSCH, Director, Unemployment Insurance Service
Subject: Priority of Withholding from Unemployment Compensation (UC)
1. Purpose. To advise States of the Department of Labor's position
concerning priorities when a claimant subject to withholding required
under State law also requests the withholding of income tax.
2. References. The Internal Revenue Code of 1986 (IRC), as amended,
including the Federal Unemployment Tax Act; Title III of the Social
Security Act (SSA); Section 702 of P.L. 103-465; 26 C.F.R. 31-3402(i)-
2; and Unemployment Insurance Program Letter (UIPL) 17-95.
3. Background. UIPL 17-95, dated February 28, 1995, provided
guidance concerning the withholding of income tax from UC. This Change
1 provides guidance on a matter left unresolved in that UIPL: the
priority of withholding when other amounts are also to be withheld from
the same payment of UC.
4. Discussion. Federal law requires withholding from UC in certain
cases. Under Section 303(a)(1), SSA, States must have ``methods of
administration'' for enforcing amounts owed to the unemployment fund.
The principal ``method of administration'' for collecting these
overpayments is the offsetting of amounts from future payments of UC.
Also, States are required to withhold certain child support obligations
under Section 303(e)(2), SSA.
Rescissions: None
Expiration Date: September 30, 1996
Additional provisions of the SSA gives States the option of
withholding other amounts from UC. Section 303(d)(2), SSA, provides for
the withholding of Food Stamp
[[Page 55607]]
overissuances from UC. Section 303(g), SSA, authorizes interstate
offset of overpayments as well as offsets of overpayments between State
UC and Federal UC programs where the State acts as an agent for the
Department of Labor.
Unlike the above forms of withholding, withholding of income tax is
voluntary on the part of the claimant. Giving priority to the voluntary
withholding of income tax would frustrate the ``involuntary''
withholding requirements.
Section 3402(p)(2), IRC, provides that, for withholding purposes, a
payment of UC shall be treated as if it were a payment of wages by an
employer to an employee. Implementing regulations at 20 C.F.R.
31.3402(i)-2 provide that an employee may request the employer to
withhold an additional amount from the employee's wages. The employer
must comply with the employee's request, but only to the extent that
the requested amount does not exceed the amount remaining after the
employer has withheld all amounts required to be withheld by Federal,
State and local laws.
Based on the above, the Department has concluded that amounts
required to be withheld under State law must be withheld prior to any
voluntary withholding requested by the claimant. The Department
continues to leave to the States the matter of priorities among amounts
that are required to be withheld. Although States are encouraged to be
more specific on this point, Section (4) of the attached revised draft
language does not specify any priorities among the required
withholdings. States may, of course, also make any changes to the draft
language necessary to conform with State usage.
5. Action Required. State agencies should take action to assure
that the above position is reflected in State law. States not using the
draft language are reminded that they will need to submit a plan to the
appropriate Regional Office no later than September 30, 1996.
6. Inquiries. Inquiries should be directed to the appropriate
Regional Office.
7. Attachment. Revised Draft Language to Implement a Voluntary
Withholding Program.
Attachment to UIPL 17-95, Change 1--Revised Draft Language To Implement
a Voluntary Withholding Program
(1) An individual filing a new claim for unemployment
compensation shall, at the time of filing such claim, be advised
that:
(A) Unemployment compensation is subject to Federal, State and
local income tax;
(B) Requirements exist pertaining to estimated tax payments;
(C) The individual may elect to have Federal income tax deducted
and withheld from the individual's payment of unemployment
compensation at the amount specified in the Federal Internal Revenue
Code;
(D) The individual may elect to have State income tax deducted
and withheld from the individual's payment of unemployment
compensation at the rate of ____ percent;
(E) The individual may elect to have local income tax deducted
and withheld from the individual's payment of unemployment
compensation at the rate of ____ percent;
(F) The individual may elect to have State and local income
taxes deducted and withheld from the individual's payment of
unemployment compensation for other States and localities outside
this State at the percentage established by such State or locality;
and
(G) The individual shall be permitted to change a previously
elected withholding status.
(2) Amounts deducted and withheld from unemployment compensation
shall remain in the unemployment fund until transferred to the
Federal, State or local taxing authority as a payment of income tax.
(3) The commissioner shall follow all procedures specified by
the United States Department of Labor and the Federal Internal
Revenue Service pertaining to the deducting and withholding of
income tax.
(4) Amounts shall be deducted and withheld under this section
only after amounts are deducted and withheld for any overpayments of
unemployment compensation, child support obligations, food stamp
overissuances or any other amounts required to be deducted and
withheld under this Act.
Department of Labor
Employment and Training Administration, Washington, D.C. 20210
Classification: UI
Correspondence Symbol: TEUMI
Dated: June 28, 1995
Directive: Unemployment Insurance Program Letter No. 35-95
To: All State Employment Security Agencies
From: Mary Ann Wyrsch, Director, Unemployment Insurance Service
Subject: The Department of Labor's Position on Issues and Concerns
Associated With the Utilization of Telephone and Other Electronic
Methods in the Unemployment Insurance (UI) Program
1. Purpose. To advise State Employment Security Agencies (SESAs) of
the Department of Labor's position regarding issues relating to
telephone or other electronic methods of processing in the UI program.
2. Background. Several SESAs are developing, exploring, or
implementing a variety of innovative approaches to UI tax and benefit
claimstaking and processing utilizing new and developing electronic
information/communication technologies. The technologies include, but
are not limited to, interactive voice response units (IVRs) for
continued claims (inquiry and filing), telephone initial claimstaking,
and electronic funds transfer for collecting UI taxes and paying
benefits. These approaches continue the movement of the UI program
toward a ``paperless'' system, thereby reducing office traffic and
making it more easy and convenient for claimants and employers to
transact UI business.
Insofar as SESAs have planned for or implemented new methods of
claimstaking, issues have arisen requiring a response from the
Department. Since there has not been an authoritative statement of the
Department's position on this matter, the Department's position is set
forth below.
Rescissions: None
Expiration Date: June 30, 1996
3. Position.
The Department's overall position is to promote methods of
administration which ensure that UI applicants are afforded prompt and
efficient service, and also ensures that pertinent Federal requirements
are met by the claimant and SESA. To this end, the Department believes
that SESAs should move toward fully implementing telephone claimstaking
or other electronic methods of filing (e.g., computer terminals at
kosks in one-stop centers etc.) for both initial and continued claims
filing processes. The UI Information Technology Support Center (ITSC)
will support the nationwide expansion of telephone claims technology.
Any system planned or implemented to provide ease and convenience
for filing claims must, however, provide safeguards to meet the
requirement of Section 303(a)(1) of the Social Security Act (SSA), that
the State have in place such methods of administration reasonably
calculated to insure the full payment of UI when due. In other words,
there must be methods in place to protect against improper payments and
fraud. Also, prior to filing an application (oral or IVR telephone
system or other electronic method (touchscreen or computer keyboard)),
claimants must be advised that the law provides penalties for false
statements including penalties for perjury in regard to citizenship/
immigration status. Since the State is required to establish a
[[Page 55608]]
record of the claim, the claimant should also be advised that his/her
answers will cause a record to be produced.
A. Initial Claimstaking.
(1) Verification of Claimant Identity/Signature.
There is no Federal requirement that a claimant provide a signature
on a claim form. Any such requirement would be pursuant to State law.
However, Section 303(a)(1) of the SSA, requires that a State have such
methods of administration to reasonably insure the full payment of
unemployment compensation when due. In addition, Section 1137(a)(1),
SSA, requires States to require the individual to furnish his/her
Social Security Number as a condition of eligibility for benefits.
These Federal provisions mean, among other things, that a State must
have a system to reasonably insure that the name and Social Security
Number used to establish eligibility for unemployment compensation
belongs to the individual filing the claim.
(2) Identification of Ethnic Background and Handicapped Status.
The Department's regulations at 29 CFR Parts 31 and 32 require
recipients of Department of Labor grant funds to collect, maintain and
make available data as may be necessary to ascertain compliance with
the requirements of the nondiscrimination statutes (Title VI of the
Civil Rights Act of 1964, as amended; Section 504 of the Rehabilitation
Act of 1973, and the Age Discrimination Act of 1975, as amended).
Unemployment Insurance Program Letter UIPL) Nos. 46-89 and 46-89,
Change 1, set forth the guidelines and requirements that State agencies
must follow in collecting the data (at the time an individual files a
new initial claim), and reporting the data relative to the unemployment
insurance program.
There is no Federal requirement regarding the method to be utilized
by the State to obtain the information (i.e., orally to a claimstaker,
IVR, self-entry at a computer keyboard or touchscreen, completing a
response on a hardcopy document or other method (e.g., recorded on
tape)). However, the information must be given voluntarily by the
individual and the State agency may not change the response of the
applicant. The applicant also has the right to refuse to provide the
information and such refusal will not subject such individual to any
adverse action or treatment. Therefore, any telephone or other
electronic claims filing system must be able to accommodate a ``no
response'' answer.
(3) Child Support and Other Obligations.
Section 303(e)(2)(A)(i) of the SSA requires each State agency to
``require each new applicant for unemployment compensation to disclose
whether or not such applicant owes child support obligations (as
defined in the last sentence of paragraph (1).'' UIPL Nos. 1-82 and 15-
82 set forth the basic requirements for States to follow in
implementing the statute. Essentially, the disclosure requires a
``yes'' or ``no'' response to a question on any child support owed when
individuals file a new initial claim.
Effective January 1, 1997, among other Federal law amendments,
Section 3304(a)(18) of the Federal Unemployment Tax Act (added by P.L.
103-465 enacted December 8, 1994) requires States to offer voluntary
withholding of Federal income tax for all unemployment compensation
(includes State UI, UCFE/UCX, TRA, DUA, etc.) payments made after
January 1, 1997. UIPL No. 17-95 advised State agencies of the
provisions and furnished guidelines on implementation. States will need
to include questions during the new initial claim filing process on
whether the individual elects or declines to have income tax withheld
(mandatory for Federal, and optional for State or local tax withholding
if authorized by State law).
Additionally, other Federal law provisions permit States, if the
States have provisions in their State laws, to withhold amounts from
unemployment compensation to pay health insurance premiums and food
stamp over-issuances. Such provisions would also require asking
claimants to provide responses to questions at the time of filing
initial claims.
For any of the above obligations, other than obtaining the needed
information at the time of filing an initial claim, there is no Federal
requirement for the method to be utilized by the State to obtain the
information. The State agency may obtain the information orally, by
IVR, keyboard or touchscreen entry, on a hardcopy document or other
method.
(4) Citizenship or National Status.
Section 1137(d)(1)(A) of the SSA requires that each State require,
as a condition of eligibility for unemployment compensation, ``a
declaration in writing by the individual, (or, in the case of an
individual who is a child, by another on the individual's behalf),
under penalty of perjury, stating whether or not the individual is a
citizen or national of the United States, that the individual is in a
satisfactory immigration status.'' State laws require that individuals
be able and available for work in order to be determined eligible for
benefits. If an alien is not in ``satisfactory immigration status,''
such individual cannot be considered eligible for unemployment
compensation. The Department issued guidance and instruction to States
for implementation of Section 1137(d) and determining eligibility for
aliens in UIPL Nos. 1-86; 12-87; 12-87, Change 1; and 6-89. The
instructions provide that all applicants for unemployment compensation
provide a ``yes'' or ``no'' response to a question on the new initial
claim form or other form, asking if the applicant is a ``U.S. citizen
or national.'' If the answer is ``no'', then an alien ID number is to
be provided from registration documentation issued by the Immigration
and Naturalization Service (INS) or such other documentation as the
State determines constitutes reasonable evidence (Section 1137(d)(2).
The above actions required of the applicant constitute ``in writing.''
In the case of telephone or other electronic method initial claims
filing, it is the Department's position, that if the claimant takes
action to produce a record indicating citizenship and immigration
status, such as entry of data through a touchtone phone (IVR system) or
through a computer keyboard or touchscreen response (at a kiosk) in
response to a question, such action is a ``declaration in writing by
the individual.'' However, a claimant's oral response to a
claimstaker's question, and then the claimstaker's entry onto a form or
into an electronic format, does not constitute such a declaration
because the individual claimant is not making the electronic record him
or herself, but such record is being made by a third party where an
error could be made unbeknown to the claimant. In other words, the
claimant must make the ``declaration in writing,'' not the claimstaker.
If the SESA utilizes the latter procedure to take initial claims, the
SESA must have an alternate means of obtaining an answer from the
claimant that will satisfy the Federal requirement. Examples of such
alternate means include recording the conversation on tape or obtaining
the claimant's ``declaration in writing'' on a continued claim or other
hard copy document.
In addition to the ``declaration in writing'' requirement of
Section 1137(d)(1)(A), the provision also states that the declaration
is made ``under penalty of perjury.'' However, it is the Department's
position that State law must be followed regarding whether a claimant's
statement (``declaration in writing'') is in a form that can uphold a
perjury conviction. Therefore, the two tests for what constitutes a
``declaration in writing'' and for what is needed
[[Page 55609]]
under State law to uphold a ``penalty for perjury,'' must be met in
order to comply with Section 1137(d)(1)(A) of the SSA. A SESA must
consider both factors when designing and implementing a telephone or
other electronic methods initial claims filing process.
(5) Not a Citizen or National--Presentation of Documentation.
Section 1137 (d)(2) of the SSA provides that if--
An individual is not a citizen or national of the United States,
there must be presented either--
(A) alien registration documentation or other proof of
immigration registration from the Immigration and Naturalization
Service that contains the individual's alien admission number or
alien file number * * *, or
(B) Such other documents as the State determines constitutes
reasonable evidence indicating a satisfactory immigration status.
Therefore, neither Sections 1137(d)(2) (A) or (B) of the SSA may be
satisfied by information obtained by telephone (orally or IVR) or entry
via a computer keyboard or touchscreen.
In order to satisfy the Federal law requirements, if a SESA
utilizes a method of claimstaking other than in-person filing, and the
claimant indicates a noncitizenship status, the SESA (State) must
require that the claimant submit ``alien registration documentation or
other proof of immigration registration from the INS that contains the
individual's alien admission number or alien file number.''
(Requirement of Section 1137 (d)(2)(A).) Since an alien cannot allow
his/her original INS documentation to leave his/her person, it is the
Department's position that a photostatic copy of the document(s)
submitted by mail or facsimile (FAX) transmission would suffice to meet
the requirements of the Section in lieu of viewing the original
document(s), particularly when taken in conjunction with the provisions
of Section 1137 (d)(2)(B). That Section provides that the individual
can submit such other documents as the State determines constitutes
reasonable evidence indicating a satisfactory immigration status. This
will allow the SESA to proceed with verification with INS required by
Section 1137 (d)(3). The provisions of Section 1137(d)(2)(B) are also
utilized when an individual cannot produce documentation that provides
an alien admission or file number. Copies of such documents must then
be sent to the INS for verification of status in accordance with
Section 1137 (d)(4)(B)(i).
The Department is in the process of resolving with the INS the
differences between the Systematic Alien Verification for Entitlements
(commonly called SAVE) program manual distributed by the INS requiring
all entitlement agencies to have applicants present original documents
(which must be kept on the person of the alien at all times) and the
provision of Section 1137(d)(2)(B) that authorizes the State to accept
such other documents as the State determines constitutes reasonable
evidence indicating a satisfactory immigration status (which could be
copies). The SAVE manual does not appear to giver any consideration to
a method of filing other than in-person.
B. Other Program Areas.
(1) Unemployment Compensation for Ex-servicemembers (UCX) Claim--
Use of Form ETA-841 (Formerly ES 970).
Form ETA-841 is an optional form and is not needed to establish UCX
eligibility since all required information is on the DD Form 214 or
information received from the Louisiana Claims Control Center (LCCC)
based on a SESA's inquiry. Therefore, States implementing telephone or
other electronic methods of initial claim filing do not have to
complete and have the claimant sign Form ETA-841.
(2) UCX Claim--Eligibility in the Absence of DD Form 214.
Under a telephone or other electronic method of initial claim
filing, if the claimant does not present copy no. 4 of his/her DD Form
214 or SESA filing procedures do not require submittal of a copy,
eligibility for UCX may be established based on an inquiry to the LCCC
to verify the validity of data that was transmitted to the SESA in
response to the SESA's original notification to the LCCC that a claim
was filed. However, such eligibility may be established only if the
LCCC provides a copy of copy no. 5 of DD Form 214 to the SESA. While it
is not mandatory, the Department believes it is a preferable procedure
to have the claimant present, or submit by mail or FAX, a copy of copy
no. 4 of DD Form 214 to the SESA.
(3) Trade Readjustment Allowances (TRA) Claim--Employer Signature
on Form TRA-855A.
Neither Federal law nor regulations require an employer's signature
on the form. Therefore, the required information employers provide may
be obtained by telephone or computer interface.
(4) Extended Benefits (EB) and TRA--Tangible Evidence of Work
Search.
The Department's regulations at 20 CFR Part 615 implement the
provisions of the Federal-State Extended Unemployment Compensation Act
(EB Act). 20 CFR 615.8(g)(1) requires that an individual claiming EB
shall make a systematic and sustained effort (as defined in 20 CFR
615.2(0)(8)) to search for suitable work (as defined in 20 CFR
615.8(d)(4)) each week after notification of his/her job prospects, and
will furnish the State agency with each claim, tangible evidence of
such efforts. The Department's regulations at 20 CFR 617.17(a)
implementing the provisions of the Trade Act of 1974, as amended,
require that the EB work test be satisfied for each week of TRA
claimed. 20 CFR 615.2(o)(9) defines ``tangible evidence'' as a written
record that can be verified that includes the actions taken, methods of
applying for work, types of work sought, dates and places where work
was sought, and the name of the employer or person contacted and the
outcome.
Most States' telephone or other electronic methods of claim filing
systems will not suffice for the EB or TRA programs. Therefore, States
utilizing a telephone or other electronic method of claims filing must
have an alternative system in place to obtain the detailed information
of a systematic and sustained search for work required as tangible
evidence on weekly claims for EB and TRA to comply with the EB
regulatory requirements. As examples, a State could set up a telephone
tape system, which would enable claimants to describe their detailed
work search over the phone, or, a State could require hard copy
documents to be submitted for each week claimed that provide the
required information.
4. Action. SESA Administrators should inform appropriate staff of
the Department's position set forth in this program letter. The
position set forth should be followed by SESAs in the design or
implementation of any telephone or other electronic claims filing
method.
5. Contact. Questions concerning this issuance should be directed
to the appropriate Regional Office.
Department of Labor
Employment and Training Administration, Washington, D.C. 20210
Classification: UI
Correspondence Symbol: TEURL
Dated: October 5,1995
Directive: Unemployment Insurance Program Letter No. 1-96
To: All State Employment Security Agencies
From: Mary Ann Wyrsch, Director, Unemployment Insurance Service
Subject: The Legal Authority of Unemployment Insurance Program Letters
and Similar Directives
[[Page 55610]]
1. Purpose. To advise States of the position of the Department of
Labor (Department) regarding the legal authority for Unemployment
Insurance Program Letters (UIPLs) and other Departmental directives
which affect the Federal-State Unemployment Insurance (UI) Program.
2. References. The Administrative Procedure Act (APA), 5 U.S.C.
551-559; the Social Security Act (SSA); and the Federal Unemployment
Tax Act (FUTA).
3. Background. Departmental directives for the UI program include
UIPLs, General Administration letters (GALs), Handbooks, the Employment
Security Manual (ESM) and various transmittals of model legislation for
implementing Federal law requirements. These directives are issued to
the States under authority delegated by the Secretary of Labor.
The Department issues directives to set forth official agency
policy. These directives state or clarify the Department's position,
particularly with respect to the Department's interpretation of the
minimum Federal requirements for conformity or compliance, thereby
assuring greater uniformity of application of such requirements by the
States. Oftentimes these directives provide information in the public
interest which is vital to guiding the States' courses of operations.
States have raised questions regarding what weight these directives
carry as interpretations of Federal law. These inquiries have come from
State legislators, State Attorney General offices, other State
officials and attorneys in Legal Services. It has sometimes been argued
that, since the interpretations in these directives are not found in
the Code of Federal Regulations, they have no legal effect. This UIPL
is issued to advise States that these directives do, in fact, have
legal effect.
Rescissions: None
Expiration Date: October 31, 1996
4. Discussion. The APA contains requirements to determine which
rules are subject to its notice and comment procedures (ultimately
leading to publication in the Code of Federal Regulations) to have
force and effect as well as provisions for those rules which are not
subject to those procedures. The APA, originally enacted on June 11,
1946, and later revised by P.L. 89-554 (5 U.S.C. 551-559) was passed in
part to assist the various Federal Government agencies in their
administration of statutes under their jurisdiction. The APA recognizes
that some functions and some operations of Federal agencies do not lend
themselves to a formal procedure. For this reason, the APA provides for
different types of rules including ``substantive'' or ``legislative''
rules and ``interpretative'' rules. Section 553(b) of the APA, which
requires that a general notice of proposed rule making must be
published in the Federal Register, makes two exceptions to this
requirement, one of which is relevant here as follows:
Except when notice or hearing is required by statute, this
subsection does not apply--
(A) to interpretative rules, general statements of policy, or
rules of agency organization, procedure, or practice; * * *.
The test for determining if a rule is interpretative, and thus not
subject to the requirement of a published notice of proposed rule
making, is found in Gibson Wine Co., Inc. v. Snyder et al., 194 F.2d
329 (D.C. Cir. 1952). In Gibson, the court addressed an interpretative
ruling transmitted by the Deputy Commissioner of the Internal Revenue
Service. The court stated on page 331:
Administrative officials frequently announce their views as to
the meaning of statutes or regulations. Generally speaking, it seems
to be established that ``regulations,'' ``substantive rules'' or
``legislative rules'' are those which create law, usually
implementary to an existing law; whereas interpretative rules are
statements as to what the administrative officer thinks the statute
or regulation means. [Emphasis supplied.]
Under Gibson, an interpretative rule is one which explains or
defines particular terms in a statute or is an opinion of an official,
having authority on a particular subject, as to the meaning of a
statute or regulation. Id. at 331-332.
British Caledonian Airways, Ltd. v. C.A.B., 584 F.2d 982 (D.C. Cir.
1978), is a leading case concerning the use of interpretative rules.
The court stated that the agency was ``construing the language and
intent of the existing statute and regulations in order to * * * remove
uncertainty'' which is ``a function peculiarly within the ability and
expertise of the agency.'' Id. at 991. The agency's actions were
entirely appropriate ``to illuminate the meaning'' of its regulations.
Id. at 993. Another court has stated that, when interpretative rules
reiterate or explain an explicit statutory obligation, they can even
help ``make sense'' of inconsistent statutory direction created by acts
of Congress as long as they do not impose a new procedure or obligation
which is not derived from the language of the statute or regulation.
American Hospital Association v. Bowen, 640 F. Supp. 453, 460 (D.D.C.
1986).
In Cabais v. Egger, 690 F.2d 234 (D.C. Cir. 1982), the court held
that a UIPL was not subject to the APA notice and comment procedures
when it construed the language and intent of a statute and reminded
States of existing duties, and where the UIPL did not grant or deny
rights nor impose obligations which did not already exist in
statute.\1\
\1\The Cabais court did, however, conclude that, in one area, a
UIPL did create a substantive rule since, contrary to the broad
latitude granted to the states in the statute, the UIPL imposed ``an
obligation on the States not found in the statute itself.'' Id. at
239.
---------------------------------------------------------------------------
Even if an interpretative rule has a wide ranging effect or a
``substantial impact'' on individuals, this does not mean it is subject
to notice and comment procedures. Following the U.S. Supreme Court
decision in Vermont Yankee Nuclear Power Corp. v. Natural Resources
Defense Council Inc., 435 U.S. 519, 524 (1978) that courts are
generally not free to impose on agencies requirements that exceed those
required by the APA, courts have rejected the ``substantial impact''
test. See Cabais, 690 F.2d at 237-238); Rivera v. Becerra, 714 F.2d 887
(9th Cir. 1983). The Rivera court, which specifically addressed UIPLs,
stated that agencies are not required to comply with a notice and
comment procedure for interpretative rules which have a substantial
effect because Congress considered the matter and explicitly excepted
interpretative rules and general statements of policy from this
procedure. Id. at 890-891. The court observed that agencies now freely
issue interpretative rules as guidance and that unnecessarily
restrictive procedures should not be imposed beyond that contemplated
by the APA. Id.
5. Action Required. State Administrators are requested to provide
the above information to the appropriate staff.
6. Inquiries. Direct questions to the appropriate Regional Office.
Department of Labor
Employment and Training Administration, Washington, DC 20210
Classification: UI
Correspondence Symbol: TEURL
Dated: October 5, 1995.
Directive: Unemployment Insurance Program Letter 2-96
To: All State Employment Security Agencies
From: Mary Ann Wyrsch, Director, Unemployment Insurance Service
Subject: Approval of Training for Individuals who Reside in or File
from Another State
[[Page 55611]]
1. Purpose. To inform States of the Department of Labor's position
relating to the approval of training for individuals who reside in or
file an unemployment compensation (UC) claim from another State.
2. References. Sections 3304(a)(8) and 3304(a)(9)(A) of the Federal
Unemployment Tax Act (FUTA); Draft Legislation to Implement the
Employment Security Amendments of 1970 * * * H.R. 14705 (1970 Draft
Legislation), Unemployment Insurance Program Letter (UIPL) 1276, dated
July 22, 1974; and 20 C.F.R. Part 616.
3. Background. The Department has discovered that some States
restrict the approval of training to that which is provided within the
State. Since 1974, it has been the express position of the Department
that such restrictions are contrary to the requirements of Sections
3304(a)(8) and (9)(A), FUTA. This UIPL is issued to restate this
position.
4. Applicable Provisions of Federal Law. Section 3304(a)(8), FUTA,
requires that a State law, as a condition of certification for credit
against the Federal unemployment tax, provide that:
Rescissions: None
Expiration Date: October 31, 1996
Compensation shall not be denied to an individual for any week
because he is in training with the approval of the State agency (or
because of the application, to any such week in training, of State
law provisions relating to availability for work, active search for
work, or refusal to accept work).
The expressed intent of Congress in enacting this section was ``to
act to remove the impediments to training which remains in our
unemployment insurance system.'' (H.R. Rep. No. 612, 91st Congress, 1st
Session 17).
Section 3304(a)(9)(A), FUTA, further requires a State law to
provide that:
Compensation shall not be denied or reduced to an individual
solely because he files a claim in another State (or a contiguous
country with which the United States has an agreement with respect
to unemployment compensation) or because he resides in another State
(or such a contiguous country) at the time he files a claim for
unemployment compensation.
The expressed intent of Congress in enacting this section was to
remove provisions of law ``which reduce the benefits, or otherwise
penalize workers who reside elsewhere than in the State in which they
worked and earned their right to benefits,'' because such provisions
``are not only inequitable to the individual claimant and injurious to
the proper function of the unemployment system but inhibit among
workers a very desirable mobility which is important to our economy.''
(H.R. Rep. No. 612, 91st Congress, 1st Session 17).
5. Department of Labor Position. Section 3304(a)(8), FUTA,
prohibits the denial of UC to an individual undertaking training ``with
the approval of the State agency.'' In the 1970 Draft Legislation, the
Department stated that ``each State is free to determine what training
is appropriate'' and ``what criteria are established for approval of
training.'' As a result, the 1970 Draft Legislation provided only
suggested criteria. Since then, the Department has, however, required
that States apply ``reasonable'' criteria for the approval of training,
and taken the position that the refusal of approval of training solely
because the training is conducted in another State would be
inconsistent with Sections 3304 (a)(8) and (a)(9)(a), FUTA. (See UIPL
1276, Section (A)(4)).
Limiting approval of training to that within a State would create
an unreasonable burden on an individual residing in or filing a UC
claim from another State, with the result that the individual would be
discouraged from participating in training. In cases where such
individuals cannot reasonably be expected to commute to training in a
State in which they do not reside, individuals would have no choice but
to choose between attending training or receiving UC. This result would
be inconsistent with the expressed intent of Congress in enacting the
approved training provision.
Further, Section 3304(a)(9)(A), FUTA, precludes denial of UC to an
individual who files a claim or resides in another State (or a
contiguous country with which the United States has an agreement with
respect to UC) at the time he or she files a claim for UC. A State's
refusal to approve training solely because it is conducted in another
State is plainly inconsistent with this requirement. This result is
also plainly inconsistent with the expressed intent of Congress since
it inhibits the individual's mobility.
Limiting approval of training to institutions certified by the
State Board of Education, or a similar State entity, also limits the
approval of training to that undertaken within the State. This creates
the same problems with Federal law as discussed in the two preceding
paragraphs. States wishing to limit training to certified institutions
must, therefore, provide for the approval of training taken at an
institution certified by the State Board of Education or similar entity
in the State in which the institution is located.
If the individual is attending training in another State,
sufficient information must be collected to determine if the individual
is attending training which is approvable under the appropriate State
law. For interstate claims, the authority to approve training rests
with the liable State. However, the liable State may adopt a
determination by the agent State approving training for a particular
individual or delegate such authority to the agent State. In fact,
liable States should place as much reliance as possible on the
recommendation of the agent State since the agent State is usually in
the best position to know the individual's personal situation and its
own labor market. Similarly, in a combined-wage claim, the paying State
has the authority to approve training. The paying State may also adopt
a determination by another State or delegate the authority for approval
of training to the other State. Further, a transferring State must
transfer wages and reimburse the paying State as provided in 20 CFR
Part 616, without regard to approval of training by the paying State.
The paying State may not refuse to approve training solely because the
individual has no (or insufficient) covered wages or employment to
qualify for benefits in the paying State.
6. Action Required. States are to examine their current law,
regulations, and procedures relating to the approval of training for
individuals who reside in another State or who have filed either
interstate or combined-wage claims and determine whether the current
law, regulations, and procedures conform to the requirements of Federal
law. If they do not, the State must notify the appropriate Regional
Office of the Department of Labor as to how and when the law will be
amended or the regulations and procedures changed.
7. Inquiries. Inquiries should be directed to your Regional Office.
[FR Doc. 95-27101 Filed 10-31-95; 8:45 am]
BILLING CODE 4510-30-M
