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State Material

2003 State Legislative Highlights:
Expanding Unemployment Insurance
For Low-Wage, Women & Part-Time Workers

National Employment Law Project
(Revised August 8, 2003)

Click here for a state chart summary of 2003 legislation.

In recent years, policy makers in the states have actively debated unemployment insurance (UI) reforms to fill the gaps in the program that penalize low-wage, women and part-time workers. What follows is a summary of the state legislative reforms enacted in 2003.  It focuses on policies expanding the program to benefit more unemployed workers as well as selected state measures that undermine the UI safety net.

This was a year of both progress and setbacks for unemployed workers.  In 2003, over 30 states considered favorable reforms fueled in significant part by the rising levels of unemployment, while 16 states enacted substantive improvements to their UI programs.  New Mexico adopted comprehensive reforms expanding unemployment benefits to low-wage, part-time and women workers.  New Mexico formerly ranked as one the nation's most restrictive state UI programs.  On the negative side, more states came under attack as the business community lobbied for cuts in UI programs.  For example, Washington State significantly limited eligiblity for unemployment benefits and reduced the state's weekly benefit amounts.  As more workers keep applying for unemployment benefits, the challenge in 2004 will be to continue expanding the unemployment safety net while defending against further attacks on the program. 

Summary of Key Reforms
  • Low-Wage Worker Eligibility Reforms:  In 2003, three more states (Hawaii, New Mexico, Virginia) adopted the "alternative base period", a policy that expands eligibility for those workers who need their most recent earnings to qualify for UI.  In the past two years, seven new states have adopted the provision, which brings the total to 19 states nationwide.
  • Part-Time Worker Protections:  In 2003, five states (Maine, New Jersey, New Mexico, North Carolina, Washington) enacted laws allowing part-time workers to collect unemployment benefits while seeking part-time work.  These measures represent significant progress because it has been several years since any state adopted part-time worker reforms.
  • Family-Friendly UI Policies:  In 2003, six more states (Kansas, Indiana, New Mexico, Oklahoma, South Dakota, Texas) adopted provisions covering domestic violence as "good cause" for leaving work and collecting unemployment benefits.  In the past seven years, 24 states have adopted various forms of this measure.   Also in 2003, New Mexico became the fourteenth state to adopt a "dependant allowance" allowing workers to increase their unemployment benefits based on the number of children being cared for.  In addition, North Carolina expanded its law to allow more workers to collect unemployment benefits when they are forced to leave work for specific family reasons.
  • Long-Term Unemployment Benefits:  While Congress debated proposals to extend federal jobless benefits, seven states (Kansas, Massachusetts, New Hampshire, New Jersey, New Mexico, Oregon, Utah) adopted various measures to extend unemployment benefits to the long-term unemployed. 
Expanding Eligibility for Low-Wage & Part-Time Workers
  • Alternate Base Period

Due to outdated methods of processing UI claims, most states ignore three to six months of a worker's most recent earnings when a worker's eligibility for UI is determined. As a result, many low-wage workers with recent earnings are denied UI even though they may have worked and had substantial recent earnings that would otherwise be sufficient to qualify for UI. 

In 2003, at least ten states proposed adoption of the ABP.  The legislation was enacted in three new states, Hawaii, New Mexico and Virginia.  Kansas adopted an alternative base period that applies to injured workers specifically.  As a result, 19 states have now adopted the ABP, including seven new ABP states in the past two years.  In addition to Hawaii, New Mexico and Virginia, the list includes:  Connecticut (three-year pilot began January 2003), District of Columbia, Georgia (18-month pilot ending July 2004), Maine, Massachusetts, Michigan, New Hampshire, New Jersey, New York, North Carolina, Ohio, Oklahoma (suspended when trust fund reaches specified level), Rhode Island, Vermont, Washington and Wisconsin. 

  • Part-Time Workers

Nearly one-fifth of workers are part-time, often including large numbers of women and low-wage workers.  However, part-time workers cannot collect UI in many states because the rules require them to be "able and available" for full-time work.   In 2003, five states (Maine, New Jersey, New Mexico, North Carolina, Washington) enacted laws allowing part-time workers to seek less than full-time work to qualify for UI. As a result, at least 24 states now allow workers to look for less than full-time work under various circumstances.   Eight states give part-time workers complete parity of coverage with full-time workers.

New Mexico adopted the broadest provision covering anyone seeking part-time employment, not just those workers with a history of part-time work.   In Maine, the provision applies to workers who have a history of part-time work and are seeking "comparable" work, as well as to workers caring for ill or disabled family members.  Similarly in North Carolina, the protection applies to workers who previously worked part-time and are willing to accept work under "essentially the same conditions."  In New Jersey, existing part-time workers protections were expanded to apply to any worker who is seeking "essentially the same" part-time work, thus eliminating the requirement that the worker have "good cause" for limiting the scope of his work search.  By far the most restrictive provision was adopted in Washington State, requiring the worker to have been employed for at least 40 weeks of the year and at no more than 17 hours during any of these qualifying weeks.  This limited group of workers may collect unemployment benefits only if they are looking for work lasting 17 hours a week or less.

Leaving Work for Compelling Domestic Reasons

 While still in the minority, at least 15 states provide UI benefits to individuals forced to leave work due to a broad range of compelling domestic circumstances, including child care, domestic violence and other situations that significantly impact women workers.   In recent years, the number of states that have adopted laws expressly covering domestic violence survivors who leave work for "good cause" has increased significantly.

In 2003, six states (Kansas, Indiana, New Mexico, Oklahoma, South Dakota, Texas) adopted provisions covering domestic violence as "good cause" for leaving work and collecting unemployment benefits.  Montana also enacted a law eliminating the sunset on its domestic violence provision, and North Carolina adopted a law expanding its provision.  In the past seven years, 24 states have adopted various forms of this measure.  Indiana and Kansas enacted the broadest provisions in 2003.   Indiana specifically covers workers who are victims of stalking and sex offenses.  Both states adopted relaxed burdens of proof and more generous "suitable work" rules as applied to domestic violence survivors.  South Dakota adopted the most restrictive provision, rendering workers who return to abusive situations ineligible for benefits.

Also in 2003, New Mexico became the fourteenth state to adopt a "dependant allowance" allowing workers to increase their weekly unemployment benefits by $15 for each dependant (limited to children in New Mexico) being cared for by the worker.  In addition, North Carolina expanded its law to allow workers to collect unemployment benefits if they were forced to leave work to care for disabled family members.  North Carolina also reduced the penalty period to two weeks for workers who leave work to relocate with a spouse to another area, while removing the disqualification entirely for workers who leave their jobs to relocate after their spouse has been reassigned by the military (a similar provision was proposed in Georgia and New Jersey).  Washington State reduced its provision in this area, eliminating coverage for all workers to leave their jobs to follow a spouse while specifically covering only military spouses.

Increasing Unemployment Benefits
  • Extending Unemployment Benefits

In 2003, Congress twice continued the temporary program of federal jobless benefits, called Temporary Extended Unemployment Compensation (TEUC).  In May, the program was extended until December 31, 2003.  While Congress debated proposals to extend the 13-week program of federally funded extended benefits, six states (Kansas, Massachusetts, New Hampshire, New Jersey, New Mexico, Oregon, Utah) enacted laws providing additional unemployment benefits for the long-tern unemployed.  In Washington State, regular state unemployment benefits were reduced from 30 weeks to 26 weeks. The state laws extending unemployment benefits vary significantly in scope, as follows.

Oregon, the state with the nation's highest unemployment rate, now provides 20 weeks of state-funded extended benefits, supplementing the state's federally-funded unemployment benefits.  The state's program will last until September 27, 2003, after which time 6.5 weeks of additional benefits will be available through February 2004 in the event that Oregon no longer qualifies as a "high unemployment" eligible to receive 26 weeks of federal jobless benefits (Oregon is one of three states that currently qualifies for the 26-week federal program).  In New Hampshire, workers who exhaust their standard 13 weeks of federal jobless benefits will receive another 13 weeks of state-funded benefits (the program expires at the end of 2003).  In Utah, workers are entitled to receive five weeks of state-funded benefits, in addition to the federal extension (the program expires January 2004).  In Kansas, workers were provided with two weeks of state-funded extended benefits.

New Jersey adopted an entirely different approach, expanding its state law to allow more workers to qualify for the full 26 weeks of regular state unemployment benefits.  As a result, more workers will also qualify for additional weeks of federal jobless benefits, which is limited by the federal law to the lesser of 13 weeks or 50% of the worker's state unemployment benefits. The provision, which lasts until June 2005, changes the rules which determine how many weeks of regular benefits a worker receives by allowing the individual to collect up to 100% of his or her "base weeks" (weeks during the year before the layoff when the worker earned at least $103 per week) rather than only 75% as provided under the prior law.  As a result, more than 60,000 New Jersey workers will collect between two and three weeks of additional unemployment benefits.

Finally, two states enacted laws to help fill the gaps in eligiblity for the federal extended benefits program.  Massachusetts expanded the federal rule that requires at least 20 weeks of work or its "equivalent" during the base period of employment to qualify for federal jobless benefits.  As a result, more than 3,000 Massachusetts workers will qualify to receive 13 weeks of federal jobless benefits.  In addition, New Mexico enacted legislation to reduce the unemployment level required for the state to qualify for the Extended Benefits (EB) program, the permanent federal program providing 13 weeks of extended benefits to "high unemployment" states.  The federal government and the states equally share the cost of the EB program.  New Mexico is now one of nine states that provide such benefits when the regular unemployment rate reaches 6.5%.   Legislation is pending in Michigan (it recently passed the House) to adopt the optional EB formula.

  • Repealing the "Waiting Week"

Most states prevent workers from receiving UI benefits during the first week of their unemployment, which means that they receive one week less in benefits unless they stay on regular state UI for the full 26 weeks.  As of 2002, 13 states (Alabama, Connecticut, Delaware, Georgia, Iowa, Kentucky, Maryland, Michigan, Nevada, New Hampshire, New Jersey, Vermont and Wisconsin) limited or eliminated their waiting week.  In 2003, Wyoming removed the waiting week through 2005, and North Carolina enacted a law waiving the waiting week when authorized by the Governor in the case of a major industrial disaster. 

  • Increasing the Weekly Amount of Benefits

In 2003, only two states (Indiana, Virginia) increased their unemployment benefits by any meaningful amounts, while at least three states decreased or capped their weekly benefit levels (Arkansas, Washington, Minnesota). 

Maximum weekly unemployment benefits were increased in Indiana, from $336 to $408 over a four-year period.  In Virginia, a benefit increase enacted two years ago was scheduled to end, capping unemployment benefits at $268 per week effective January 2004.  Legislation passed this year maintaining the maximum benefit at $326 per week effective July 2004.  In Wyoming, the legislature removed the cap on unemployment benefits established in 1985, thus allowing the state's maximum unemployment benefits (currently $299 a week) to increase periodically with the state's average weekly wage.  In Arizona, the state with the nation's lowest maximum benefit, the Governor vetoed legislation that would have increased the maximum weekly benefit from $205 to $240.  The legislation was vetoed as a result of separate provisions that denied unemployment benefits to retail, seasonal and other low-wage workers.   

Social Security Offset

Federal law permits, but does not require, states to reduce UI benefits due to the receipt of pension income, including Social Security and Railroad Retirement pension benefits. Federal law also permits states to specifically exclude Social Security retirement benefits from their pension-offset laws. In 2003, Kansas passed a law excluding Social Security and Railroad Retirement benefits from its pension offset rules and Wyoming eliminated its prior law that had offset 50% of these government pension benefits. In addition, Virginia adopted an amendment that reduced its Social Security offset from 100% to 50%.

Employer Fraud Schemes

In the past year, federal policy makers and the states have focused on abuses promoted by accounting firms, employee leasing firms and other employers to avoid paying their full share of unemployment taxes.  Specifically, legislation has been enacted in at least four states (Arkansas, Maine, North Carolina and Washington) imposing new penalties on employers that seek to reduce their unemployment taxes by moving their payroll to newly-established corporations with no record of layoffs that pay minimal unemployment taxes.  This practice, called "SUTA Dumping" (standing for "state unemployment tax avoidance") negatively impacts state UI trust funds and shifts the tax burden to law-abiding employers. 

North Carolina and Washington enacted the broadest state provisions, applying to all employers and tax advisors that aid or abet the practice of SUTA Dumping.  Violations of the North Carolina statute rise to the level of a felony, carrying a presumptive sentence of six months incarceration and up to eight months for aggravated offenses in certain cases.  In Washington, violations carry a penalty of assignment of the highest tax rate for five quarters. In contrast, the Arkansas law applied only to employee leasing firms, making it unlawful to move "the wages of a client from one leasing company account to another company account with a lower rate."  Similarly, the Maine statute imposes a penalty of $100 per day for each violation by an employee leasing firm that "avoid[s] the calculation of the proper contribution rate."  

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