Tag Archives: unemployment

President Pledges Help to Long-Term Unemployed

unemployedPresident Obama’s State of the Union message last week got lots of attention, mostly because of his pledge to work around Congress if necessary to achieve his policy goals. Among the President’s aims is to reduce unemployment and boost employee earning power. To that end, he announced in his speech that he would require federal contractors to pay their employees a minimum wage of $10.10 an hour. That figure didn’t come out of thin air: It’s the same minimum wage Democrats in the Senate are seeking for all employees.

A couple of days ago, the President announced another initiative in his “Year of Action.” He will require the federal government to take steps to avoid discriminating against the long-term unemployed in hiring. The White House had already released a “Best Practices” guide for companies seeking to avoid this type of discrimination; according to the White House’s press release, more than 300 companies have signed on. Now, by the President’s Executive Order, federal agencies will also have to comply with these practices, which include screening job ads for language that discourages the unemployed, reviewing interviewing and hiring practices to make sure current employment isn’t weighted unfairly, and casting a wide net in recruitment and hiring efforts. The President also announced a new grant program for partnerships between employers and nonprofit groups that seek to prepare the long-term unemployed to return to the workforce and help them find jobs.

A few states prohibit discrimination against the unemployed. Once New Jersey, Oregon, and the District of Columbia passed these laws, it started to look like momentum was building in the states. However, subsequent efforts have stalled out or — in California — faced a veto. (Find current state law information at the Discrimination Against the Unemployed page at the website of the National Conference of State Legislators.)

Currently, federal law doesn’t prohibit this type of discrimination by private employers, but the Equal Employment Opportunity Commission held hearings a couple of years ago on the topic. Might the President’s move rekindle some interest?

 

Will Emergency Unemployment Compensation Benefits Expire?

unemployedThere was a sobering article in the New York Times this morning, “Extension of Benefits for Jobless Set to End.” Since the economy tanked in 2008, the federal government has made additional unemployment benefits available through the Emergency Unemployment Compensation (EUC) program. This program supplements the benefits available in each state to provide additional weeks of compensation.

Today, most states provide a maximum of 26 weeks of unemployment benefits to those who lose their jobs through no fault of their own. (A few states — including Florida, Georgia, and North Carolina — have cut back and offer fewer than 26 weeks.) A permanent federal program, in place since 1970, offers extended benefits in states where the unemployment rate is both high and increasing. Although a number of states still have relatively high unemployment rates, those rates have been high for a while now. As a result, these states don’t have increasing unemployment rates. Therefore, according to the Center on Budget and Policy Priorities (CBPP), no state currently provides benefits under the extended benefit program.

That leaves the EUC program as the only source of extended benefits for the long-term unemployed. The EUC program offers 14 to 47 additional weeks of benefits. (The number of weeks depends on the state’s unemployment rate; there’s an up-to-date chart of each state’s benefit offerings at “How Many Weeks of Unemployment Compensation Are Available?” at the CBPP’s website.) However, the entire EUC program is set to expire at the end of the year.

Congress has had to vote on this program a number of times in the past five years, and each time it has extended the program. As you may recall, however, this has been a particularly rough year for partisan fights over government funding. Congress still has to come up with a budget, as it agreed to do in ending the shutdown. As a result, the Times predicts that Congress is unlikely to continue the EUC program past the end of the year, with the result that 1.3 million people will immediately lose access to these additional benefits.

Do You Really Want to Contest Unemployment Benefits?

The unemployment rate is gradually declining, but my own personal barometer — based on the admittedly unscientific measurement of questions people ask me because they know I’m an employment lawyer — shows that interest in unemployment remains high. Employers and employees want to know the same thing: What reasons for leaving a job disqualify someone from getting benefits?

Here in California, the rules about eligibility for unemployment are among the most generous in the country. An employee who quits a job for good cause can still get benefits. Good cause includes not only job-related reasons (such as dangerous working conditions or harassment) but also circumstances wholly apart from work. For example, if you quit your job because you need to relocate with your spouse, escape domestic violence, or care for an ailing family member, you will likely be eligible for unemployment benefits.

Employees who are fired can get benefits unless the termination was based on misconduct. If that sounds like a low standard, that’s only because you haven’t heard how California defines the term. An employee has committed misconduct only if all of the following are true:

  • The employee owed a material duty to the employer, such as showing up for work.
  • The employee substantially breached that duty: A minor or one-time transgression isn’t enough to meet this requirement.
  • The employee showed a wanton or willful disregard for that duty. In other words, the employee wasn’t just careless or thoughtless but, instead, intentionally violated the duty or showed a reckless disregard for the consequences of your breach of the duty. Inefficiency, inability to perform the job, or good faith errors in judgment don’t meet this standard and won’t render someone ineligible for benefits.
  • The employee’s breach tends to materially harm the employer’s business interests.

That third factor is the key that unlocks benefits for many fired employees. Poor performance, mistakes, and even incompetence are not supposed to be enough to deny benefits: The intention requirement in the standard means the employee must have been making a choice, either to engage in wrongdoing or to perform poorly. An employee who really can’t do the job is supposed to get benefits. (For comprehensive — and comprehensible — information on unemployment in California, check out the Unemployment Insurance page at the website of the always awesome Employment Law Center.)

Some of the questions I’ve been asked lately (on the employer side) kind of remind me of that old Mad Magazine cartoon, “Unclear on the Concept.” Here are a couple of examples:

Can we ask employees to waive the right to collect unemployment in a severance agreement? Only if you don’t mind breaking the law. In California, unemployment benefits may not be waived. A contractual agreement by an employee to give up the right to apply for or collect unemployment is void and invalid. What’s more, severance pay ordinarily doesn’t count as “wages,” and so doesn’t reduce the amount of benefits a former employee can collect. (If severance is paid out over time as if it were wages, the employee may have to delay collecting benefits.)

Can we ask employees to agree that failing to meet our performance standards constitutes a voluntary quit? Same answer. It really doesn’t matter what you require employees to agree to: Employees are entitled to benefits when they lose their jobs unless they commit misconduct, as defined above, or quit without good cause, also as defined above. The EDD doesn’t care how you redefine these terms in a performance improvement plan or employment contract. If an employee is terminated because of poor performance, that is not a voluntary quit. In fact, employers who try this strategy might be facing more problems than an increase in unemployment claims: Requiring employees to sign a contract that you know you can’t enforce could arguably constitute an unfair business practice, which takes an employer into territory where huge damages can be awarded.

To return to the title of this post, it is almost never in the employer’s interest to try to contest benefits this aggressively. Fighting an employee’s claim on dodgy grounds will turn the employees you still have against you: They will find out about it, and they will not be feeling the love. It will take time and money to appeal employee claims. And you will make a bitter enemy of the employee you fired, one who has every incentive to file a lawsuit against your company. By all means, challenge claims by bad apples who are trying to game the system, who truly committed misconduct, who quit for no good reason, who stopped even trying to do their jobs months before you fired them. But otherwise, it’s generally best to let the system do what it’s supposed to do: provide some help to those who have lost their jobs through no fault of their own, until they can find new work.

Hiring and Firing Rates Stay Low

As reported in the New York Times, the Department of Labor recently released its Job Openings and Labor Turnover Survey. The survey asks employers about changes in their workforce over the past month: how many employees they started with, how many employees left or were hired, and how many employees they had at the end of the month.

The statistics show that the rate of involuntary separations — firings and layoffs – has stayed really low. Just over 1% of the total workforce were discharged or laid off in February 2013, the month for which the survey collected data. In fact, more employees quit voluntarily than were fired or laid off. However, the survey also revealed that hiring rates remain low, at 3.3%. With total separations, voluntary and involuntary, at 3.1%, you can see why the monthly job numbers continue to disappoint.

Among other things, these numbers mean that the unemployed are still quite likely to stay that way. There are just too few jobs opening up to absorb everyone who is looking for work. In response to this continuing problem, a few states and local governments — most recently, New York City — have passed laws prohibiting discrimination against the unemployed. Although these laws don’t magically expand the number of available jobs, they at least attempt to level the playing field by prohibiting employers from excluding those who are currently unemployed from consideration when hiring. For more information about these laws, and possible discrimination claims based on unemployed status, check out Discrimination Against the Unemployed.

No More 99ers: Federal Extensions of Unemployment Benefits Shortened

When unemployment rates are high, Congress has generally responded by passing legislation to supplement state unemployment insurance benefits. In keeping with this tradition, Congress passed the Emergency Unemployment Compensation (EUC) program in 2008 to provide additional weeks of eligibility to workers who had lost their jobs in the recession. Over time, the benefits available from state governments, plus four “tiers” of EUC, plus benefits available through the Extended Benefits program (a joint federal-state extension) added up to a potential total of 99 weeks of benefits. Some of the extra money available from Congress was dependent on the unemployment rate, so workers in some states weren’t eligible for the full 99 weeks. But many were, and some of the long-term unemployed took to calling themselves “the 99ers,” even before the Occupy movement made 99 the magic number dividing the haves and the have-nots.

Well, that number is changing. When Congress reauthorized the unemployment extension programs in February, it phased in a couple of changes intended to restrict benefits eligibility. First, it set higher unemployment rate thresholds a state must meet before qualifying for the benefits extension. And second, it decreased the total months of benefits available. Starting at the beginning of this month, those changes are taking effect.

Once unemployed workers have used up their state benefits (which last 26 weeks in most states, although a handful of states have cut back on this number too), the tiers of the EUC program become available as follows:

  • Tier 1: 20 weeks of benefits until September 2012; 14 weeks thereafter
  • Tier 2: 14 weeks of benefits, but only if the state unemployment rate is at least 6% (this trigger is new, beginning in June 2012)
  • Tier 3: 13 weeks of benefits until September 2012; nine weeks thereafter. This Tier is available only if state unemployment is at least 7% (this trigger has increased from the former requirement).
  • Tier 4: Six weeks of benefits until September 2012; ten weeks thereafter. The trigger for this Tier has been increased to 9%.

The extended benefits program offers an additional 13 to 20 weeks of benefits, based on the state unemployment rate. However, most states no longer qualify. The National Employment Law Project estimates that no states will qualify for extended benefits by September of 2012. The upshot is that by September of 2012, the maximum possible benefits available will drop by six weeks, to 93. Because no states are projected to continue qualifying for extended benefits, however, the true maximum will be 73 weeks — and that’s only in states whose unemployment rates remain quite high. Already, some states have stopped qualifying for Tier 4 benefits based on the trigger rate.

And that’s before we reach what has come to be known as the “financial cliff” at the end of the year. That’s when all federal extensions to unemployment are set to expire, along with the Bush-era tax cuts, and those automatic spending cuts Congress enacted to force itself to reach a budget agreement are set to take effect. If Congress doesn’t act on the unemployment piece, benefits will revert to the 26 weeks or less available from state governments. Ouch.

Adding Insult to Injury: States Cut Unemployment Benefits

 

In what seems to be a recurring theme these days, a number of states have decided that the best way to solve a financial crisis is to cut spending on those who need it the most. According to a report issued earlier this month by the National Employment Law Project (NELP), ten states cut unemployment benefits in their 2011 legislative sessions, despite continued high jobless rates nationwide. Here are some of the changes states have made (you can view the whole report, “Unraveling the Unemployment Insurance Lifeline,” at NELP’s website):

  • Six states (Arkansas, Florida, Illinois, Michigan, Missouri, and South Carolina) have cut the length of state benefits. Previously, all 50 states provided benefits for at least 26 weeks; a few states have now cut the maximum to 20 or 25 weeks. Florida has tied benefit cuts to the unemployment rate, with benefits lasting a maximum of 23 weeks when unemployment is highest, and only 12 weeks once unemployment falls to 5% or less. (The silver lining: There’s no danger of Florida reaching that number any time soon. Florida’s unemployment rate is more than 10.5%.) The federal government currently supplements state benefits, so that claimants in states with high unemployment rates are eligible for up to 99 total weeks. The additional federal benefits are calculated as a percentage of state benefits, however, so claimants in these six states will see significant changes. In a state that has cut benefits from 26 to 20 weeks, for example, the total state and federal benefit will be cut from 99 to 76 weeks.
  • A few states have also cut benefit amounts, by changing the formula for calculating benefits or capping the maximum benefit amount. In Indiana, for example, benefits will be based on the worker’s weekly earnings over an entire year, rather than in the highest paid quarter of that year. According to NELP’s report, this change will drop the average weekly benefit amount by $63.
  • Some states have adopted more restrictive eligibility and administrative requirements. Mostly, these have taken the form of making it more difficult for workers to qualify for benefits if they quit or are fired (rather than being laid off solely for economic reasons). A couple of states have also increased their earnings requirements (the minimum amount an employee must have earned during the base period) to qualify for benefits.

Insolvency is running high in state unemployment programs. According to NELP, the majority of states are borrowing from the federal government — to the tune of $40 billion — to continue paying benefits; interest payments on all of this debt will fall due next month. Continuing another nationwide fiscal trend, states have been generally unwilling to increase the unemployment tax rate on employers to close the gap. This might mean we can expect to see even more states getting even stingier with benefits as the cycle deepens.