1. Employer’s View of UI Legislation and Policy Issuesby
Douglas J. Holmes, President
UWC – Strategic Services on Unemployment & Workers’ Compensation
October 5, 2016

2. Legislation and Policy
Tax and Administrative Burden
Federal Compliance and Participation in Labor Exchange Systems
Access to tax credits and workforce development
Trust Fund Solvency
Integrity
Reemployment

3. and Policy – Employer Status
Legislation
and Policy – Employer Status
“Misclassification” suggests that employers misclassify individuals as independent contractors to reduce claims burden and tax obligations.
Employer status varies by program definition, federal and state law. (e.g. FUTA, SUTA, FLSA, Workers’ Compensation).
Impacts tax liability and benefit determinations and contribution rates
Some industries rely on independent contractors (construction, transportation, home telemarketing, IT workers)
Recent legislation to carve out motion picture project employers
Recent federal legislation to designate PEO status – state status still may differ
Audits by IRS, UI, WC, Wage and Hour, can result in significant back taxes and costs.
Changes in US DOL Audit performance measures emphasize finding misclassifications and audit findings.
Colorado legislation to improve education about employer and employment definitions before imposing penalties.

4. Legislation and Policy – Interaction with UI Agency
Point of Contact and Communication Method
Employer, TPA or service company
Electronic (including SIDES)
Using full SSN or Truncated SSN
Confidentiality concerns
Reporting Burden and Penalties
Section 252 of TAAEA of 2011 (Federal Requirement) and Failures to Respond to Requests related to benefit determinations
Earnings verification requests
Wage reporting definition requiring Standard Occupational Coding (SOC)
Senator Cantwell Amendment in Customs Trade Bill
WIOA performance
Workforce Information Advisory Council
Adequacy and Timeliness
UI due process (Java case) time lapse guidelines result in overpayments
Fraud and improper charging
Employer review of charges to accounts
Refusals of work, failure to search for work, working while claiming, pensions, vacation pay, separation pay and other payments that may reduce the WBA.

5. Legislation and Policy – Tax Burden and Trust Fund Solvency
Definition of Solvency
Federal Guidelines (1.0 AHCM) Too High for Some States
Takes money out of local economy
Increases taxes higher than states with expanding economies
Recent limitations on interest free cash flow loans effectively eliminate benefit for most states and employers
Tax Burden Issues
FUTA rates for current calendar year not known until November 10th
No “experience rating” guidelines
Tax base just one factor in addressing solvency
Benefit Payment Impact
Benefit amounts indexed to increase in many states
EB and Federal EUC triggering increases regular UI benefit payout
99 weeks of benefits (regular, EB and EUC) discouraged active search for work early in the claims, increased pay out and resulted in more long term unemployed
Maximum number of potential weeks and weekly benefit amount determination should be part of solvency discussion along with tax base, contribution rate, and financing of debt if trust fund balance goes negative or is projected to go negative.

6. Legislation and Policy – Integrity
BAM is the Wrong Measure for Error Rates
Small sample designed to assist with quality control
Decisions properly made on facts available should not be errors
Results in state policy to weaken work search and integrity measures
Integrity Measures are Positive – Need More Employer Interaction
TOP, NDNH, Wage Record Crossmatches are positive tools
What happens when an employer reports overpayments or fraud to the UI agency?
Collaboration needed on overpayments and identity theft

7. Legislation and Policy – Reemployment
Employment depends on Jobs
First there must be an environment that encourages employers to take the risk of hiring new employees – small business in particular
Enable job ready UI applicants to effectively seek employment
Develop positive value added relationships with employers, their representatives, jobs data base administrators, private sector employment agencies
Effectively connect UI claimants to resources to enable reemployment
Job Development Plan
OJT, customized training, apprenticeship
WOTC
ID barriers and referral
Connect with employers through systems (public and private)
UI claimants are job seekers; a small subset of potential employees
UI agencies should target individuals who are not job attached, not searching for work through hiring halls, and are job ready for referral to employers.
Use systems that employers normally use to recruit talent

8. Legislation and Policy Issues for 2017
Increased funding for REA and Reemployment Services for targeted UI claimants to return to work faster
Continued examination of state and federal UI systems and crossmatches to be used in UI administration
Updating systems hardware and software
Improved definition and information exchange to improve integrity, reduce error rates and facilitate reemployment
Review UI account solvency in anticipation of the next recession
Review of relationship between SSDI and UI
Review of EB triggers and EUC in anticipation of next recession