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Issue
Should PIA continue to push for withdrawal of the executive order issued
by the Clinton Administration in July 2000 that would allow the use of
state unemployment insurance money to fund voluntary leave for new parents
for up to one year?
Status
The Federal Unemployment Tax Act (FUTA) limits eligibility for receiving
UI to those who are “unemployed through no fault of their own”
and who are “able and available” for work. The Department of
Labor is authorized to interpret these definitions as long as it does
not change the statutory meaning contained in FUTA. In mid-2000 a DOL
reinterpretation went into effect that allows states to declare new parents
eligible for UI. In order to permit parents to actually take leave and
receive UI funds, states must make statutory changes to their unemployment
insurance laws to expand eligibility. Implementing legislation has been
introduced in more than half of the states since that time. Massachusetts
passed a bill, but the governor vetoed it in favor of a different type
of approach.
A lawsuit
has been filed, to which PIA joined an amicus brief, requiring the withdrawal
of the executive order. No action has yet been taken by the court.
- Concerns
The executive order raises a number of issues for employers.
- For
65 years, unemployment insurance benefits have been limited to unemployed
workers who are “able and available” for employment. This
executive order is an unprecedented expansion of who is “unemployed,”
which will end up costing employers millions more in taxes. Parents
who voluntarily choose to have a baby or adopt should not be confused
with people who become unemployed through no fault of their own.
- This
expansion will deplete UI trust funds. Many states are below recommended
reserves. If those reserves are depleted beyond a certain amount,
it will result in an added surtax on employers.
- If the
courts choose to uphold the DOL’s assertion that this expansion
is appropriate under the federal UI law, states could be forced to
pay a 700 percent penalty — that means even higher taxes.
- Family
leave is currently limited to companies with 50 or more employees.
Small businesses would end up subsidizing the voluntary leave of employees
in larger businesses.
- The
regulation permits employees to receive UI benefits even if they do
not intend to return to work with the same employer. Businesses will
be subsidizing workers not returning to their original jobs.
Position
PIA should support efforts to rescind the executive order.
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