Unemployment Compensation (Insurance)
and Military Service
Julie M. Whittaker
Specialist in Income Security
January 13, 2011
Congressional Research Service
7-5700
www.crs.govJune 27, 2012
The House Ways and Means Committee is making available this version of this Congressional Research Service
(CRS) report, with the cover date shown, for inclusion in its 2012 Green Book website. CRS works exclusively
for the United States Congress, providing policy and legal analysis to Committees and Members of both the
House and Senate, regardless of party affiliation.
Congressional Research Service
RS22440
CRS Report for Congress
Prepared for Members and Committees of Congress
Unemployment Compensation (Insurance) and Military Service
Summary
The Unemployment Compensation (UC) program contains several provisions relevant to current
and former military service personnel and their families. The UC program does not provide
benefits for military servicemembers on active duty. However, former active duty military
personnel (and certain reservists) separated from active duty may be eligible for Unemployment
Compensation for Ex-Servicemembers (UCX).
Spouses of military service personnel who voluntarily quit a job to accompany their spouses on
account of a military transfer may be eligible for UC benefits, based on the laws of the state
where the civilian spouse was employed.
Military service of business owners, employees, and employees’ spouses may impact the state
unemployment tax rate that certain employers face. States may choose to create provisions that
remove or limit these tax increases in certain situations.
Individuals should contact their state’s unemployment agency to obtain information on how to
apply for and receive unemployment benefits based upon military service. The U.S. Department
of Labor (DOL) maintains a website with links to each state’s agency at
http://www.workforcesecurity.doleta.gov/map.asp.
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Unemployment Compensation (Insurance) and Military Service
Contents
Unemployment Compensation Benefit Eligibility for Former Military Personnel ......................... 1
UCX Financing................................1
UCX Eligibility and Benefit Level ........................................................................................1
Self-Employed and Sole Proprietor Ex-Servicemembers .. 1
UCX Eligibility and Benefit Level.................................................2
UCX Financing........................................... 2
Active Duty and UCX ..........................................................................2
Civilian Spouses Who Quit Employment Because of Military Spouse Transfers ..........................2
Transferred Spouse Exception (Unconditional on Military Service)............................... 2
Conditions for UCX Eligibility .......................................3
Military Spouse Exception .................................................... 2
Self-Employed and Sole Proprietor Ex-Servicemembers .................................................3
Impact of Military Service on Employers’ State Unemployment Taxes ........................................4
Tables
Table 1. Unemployment Compensation Benefit Eligibility for Workers Who Voluntarily
Quit Because of a Spousal Transfer.. 3
Civilian Spouses Who Quit Employment Because of Military Spouse Transfers ........................... 3
Transferred Spouse Exception (Unconditional on Military Service) ........................................ 4
Military Spouse Exception ..........................................................................................3
Contacts
Author Contact Information ................................... 4
Impact of Military Service on Employers’ State Unemployment Taxes.......................................... 5
Tables
Table 1. Unemployment Compensation Benefit Eligibility for Workers Who Voluntarily
Quit Because of a Spousal Transfer...................................................................................5........... 4
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Unemployment Compensation (Insurance) and Military Service
Unemployment Compensation Benefit Eligibility
for Former Military Personnel
Unemployment Compensation for Ex-Servicemembers (UCX)1 provides income support while
former active duty military personnel or reservists2 released from active duty search for work.
The Emergency Unemployment Compensation Act of 1991 (P.L. 102-164) provides that exservicemembersformer
servicemembers be treated the same as other unemployed workers with respect to benefit levels,
the waiting period for benefits, and benefit duration.3
Once entitlement to regular unemployment benefits is exhausted, ex-former servicemembers may qualify
qualify for both Emergency Unemployment Compensation (EUC08) and the Extended Benefit
(EB)
payments if those programs are active and available in their states.4 As of this writing, absent
absent congressional action, the EUC08 program’s authorization will terminate on the week
ending on or
before January 3, 2012, for all unemployed persons.
The federal government funds these benefits through the transfers from the appropriate military
services’ budgets5 to the Unemployment Trust Fund6 (UTF) to reimburse the appropriate states
for the UCX benefits distributed to unemployed ex-servicemembers. For FY2010, approximately
$1.571 million in unemployment benefits (UCX, EUC08, EB, and the since expired $25 federal
additional compensation benefit) were distributed to former military personnel.
Military personnel on active duty do not qualify for regular state Unemployment Compensation
(UC) or UCX benefits because they are considered to be working.
UCX Eligibility and Benefit Level
Ex-servicemembers generally apply for UCX benefits in the state where they are searching for
employment. UC eligibility criteria and benefits vary by state. The ex-servicemembers must meet
the same criteria that civilian workers are required to meet for their UC benefit eligibility. Thus,
two ex-servicemembers with the same earnings and work history may qualify for different
1
Established by the Ex-servicemen’s Unemployment Act of 1958 (P.L. 85-848, 5 U.S.C. §§ December 31, 2012, for all unemployed persons.
UCX Financing
Unlike regular unemployment compensation (UC) benefits, UCX benefits and any subsequent EB
benefits are not paid for by state unemployment taxes. Instead, the state submits the amount of
UCX paid by the state to the federal government and the former employing service (for example,
the Air Force) pays for the UCX benefits out of its operating budget.5 The federal government
funds these UCX benefits through the transfers from the appropriate military services’ budgets to
the Unemployment Trust Fund (UTF) to reimburse the appropriate states for the UCX benefits
distributed to unemployed former servicemembers. EUC08 benefits are paid from general funds
from the U.S. Treasury and are not paid out of the former employer’s operating budget.
For example, if a former naval officer living in California claimed UCX benefits, the Navy would
transfer funds from its operating budget into the Federal Employees Compensation Account
within the UTF. The funds would then be transferred to the California UTF account in order to
reimburse California for those UCX benefit expenditures.6
1
Established by the Ex-servicemen’s Unemployment Act of 1958 (P.L. 85-848, 5 U.S.C. §§8521-8525) in 1958.
In this report, the terms reserves or reservists include the Army and Air National Guard and their servicemembers.
3
Previously, in 1982, Congress had placed restrictions on benefits for ex-former servicemembers (P.L. 97-362). In
addition to
a number of restrictive eligibility requirements, ex-former servicemembers were required to wait four weeks
from the date of
their separation from the service before they could receive benefits. The maximum number of weeks of
benefits an exservicemembera former servicemember could receive based on employment in the military was 13 (as compared with 26
weeks under the
regular UC program for civilian workers).
4
For information on the EUC08 benefit, see CRS Report RS22915, Temporary Extension of Unemployment Benefits:
Emergency Unemployment Compensation (EUC08), by Katelin P. Isaacs, and Julie M. Whittaker, and Alison M. Shelton.
. For information on
the Extended Benefit program, see CRS Report RL33362, Unemployment Insurance: Available
Unemployment Benefits and Legislative Activity, by Programs and Benefits, by
Katelin P. Isaacs, and Julie M. Whittaker, and Alison M. Shelton.
5
For example, if a former naval officer claimed UCX benefits, the Navy would transfer funds into the UTF to pay for
those benefits.
6
For details on the Unemployment Trust Fund, see CRS Report RS22077, Unemployment Compensation (UC) and the
Unemployment Trust Fund (UTF): Funding UC Benefits, by Julie M. Whittaker.
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Unemployment Compensation (Insurance) and Military Service
amounts of benefits if they file for UCX in different states. The equivalent military measurement
of wages and time in service are used to determine eligibility and benefit levels. 7
If the ex-servicemember was originally in the active duty military, he or she must have left
military service under honorable conditions and either completed a full term of service or have
been released early under a qualifying reason. If the ex-servicemember was a reservist formerly
on active duty, he or she must have been on active duty for at least 90 continuous days. UCX
benefits are not payable during periods in which the ex-servicemember is eligible to receive
certain allowances or educational assistance allowances from the Survivors’ and Dependents’
Educational Assistance Program or the Department of Veterans’ Affairs Vocational Rehabilitation
and Education Program. Participation in the Montgomery GI bill does not preclude receipt of
UCX benefits; however, having student status does limit UC benefit eligibility in most states and
these limitations would extend to those workers receiving UCX benefits. Many states exclude
workers while they attend school and some states include vacation periods in that exclusion.
Self-Employed and Sole Proprietor Ex-Servicemembers
When an ex-servicemember was previously self-employed or was a sole-proprietor, the worker
would have been excluded from receiving UC benefits. After active duty, if the ex-servicemember
is unemployed, the ex-servicemember would qualify for UCX benefits based on military service.
However, most states require that the worker be searching for employment and would not cover a
worker who was reestablishing self-employment or a small business. 8
UCX Financing
The UCX benefit is funded by the federal government through its federal account in the
Unemployment Trust Fund (UTF)9. Each state is reimbursed by the federal government for each
unemployed worker whose base period wages included federal military wages.
Civilian Spouses Who Quit Employment Because of
Military Spouse Transfers
Civilian spouses who quit their employment because their military spouse was transferred may
not qualify for UC benefits. Many state UC programs do not award UC benefits to workers who
7
.
5
See CRS Report RS22077, Unemployment Compensation (UC) and the Unemployment Trust Fund (UTF): Funding
UC Benefits, by Julie M. Whittaker, for an explanation of how funds are transferred.
6
Former federal worker unemployment benefits (UCFE) are reimbursed in the similar way. For example, a former
civilian Department of Defense (DOD) worker’s UCFE benefit would be paid from a transfer of funds from DOD to
the appropriate state account within the UTF. One substantial difference in benefit determination for UCFE as
compared to UCX is that an individual’s UCFE benefit would be based upon where the individual had worked rather
(continued...)
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A former servicemember may receive a combined unemployment benefit (UC and UCX) if the
unemployment benefit is based upon a period that included military service as well as other
employment. In this case, the proportional amount of the benefit that is attributable to military
service would be charged to the agency.
For FY2011, approximately $1.868 billion in unemployment benefits was distributed to former
military personnel based upon military service. Of the total amount paid, $948 million was for
UCX and EB benefits (and thus paid by the former employing service) and the remaining $920
million was for EUC08 (and paid from the general fund of the Treasury).
UCX Eligibility and Benefit Level
Former servicemembers generally apply for UCX benefits in the state where they are searching
for employment. (This is different than in the regular UC program, where benefits are determined
by the location of the former place of employment.) UC eligibility criteria and benefits vary by
state. The former servicemembers must meet the same criteria that civilian workers are required
to meet for their UC benefit eligibility. Thus, two former servicemembers with the same earnings
and work history may qualify for different amounts of benefits if they file for UCX in different
states. The equivalent military measurement of wages and time in service are used to determine
eligibility and benefit levels.7
Active Duty and UCX
Active military personnel are considered to be working and thus cannot qualify for UCX or
regular state Unemployment Compensation (UC) benefits.
Conditions for UCX Eligibility
If the former servicemember was originally in the active duty military, he or she must have left
military service under honorable conditions and either completed a full term of service or have
been released early under a qualifying reason.
Reservists and UCX Eligibility
If the former servicemember was a reservist formerly on active duty, he or she must have been on
active duty for at least 90 continuous days.
(...continued)
than where the individual lives.
7
The state in which the former servicemember files for a claim determines the UCX benefit level and duration. The
weekly and maximum amounts of UCX payable to an individual under the UCX program are determined under the
applicable state laws. The UCX benefit is required to be the same amount, on the same terms, and subject to the same
conditions as the state UC that would be payable to the individual under the applicable state law. The individual’s
federal military service and federal military wages (including the value of housing) are assigned or transferred as
employment and wages covered by
that state law, subject to the use of the applicable Schedule of Remuneration. That
is, for claims purposes, military
wages are determined by the pay grade at separation from military service. A wage
table is provided by the federal
government to calculate the equivalent civilian wages for each military pay grade.
8
An exception to this are those states that offer a Self-Employment Assistance (SEA) program. See CRS Report
R41253, The Self-Employment Assistance (SEA) Program, by Katelin P. Isaacs.
9
See CRS Report RS22077, Unemployment Compensation (UC) and the Unemployment Trust Fund (UTF): Funding
UC Benefits, by Julie M. Whittaker, for an explanation of how funds are transferred.
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These tables are provided each January. For January 2011’s schedule, see Unemployment Insurance Program Letter 0612, found at http://wdr.doleta.gov/directives/attach/UIPL/uipl06-12.pdf.
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Unemployment Compensation (Insurance) and Military Service
UCX and Training/Education
UCX benefits are not payable during periods in which the former servicemember is eligible to
receive certain allowances or educational assistance allowances from the Survivors’ and
Dependents’ Educational Assistance Program or the Department of Veterans’ Affairs Vocational
Rehabilitation and Education Program. Participation in the Montgomery GI bill does not preclude
receipt of UCX benefits; however, having student status does limit UC benefit eligibility in most
states and these limitations would extend to those workers receiving UCX benefits. Many states
exclude workers while they attend school and some states include vacation periods in that
exclusion.8
Self-Employed and Sole Proprietor Ex-Servicemembers
When a former servicemember was previously self-employed or was a sole-proprietor, the worker
would have been excluded from receiving UC benefits. After active duty, if the former
servicemember is unemployed, the former servicemember would qualify for UCX benefits based
on military service. However, most states require that the worker be searching for employment
and would not cover a worker who was reestablishing self-employment or a small business.9
Civilian Spouses Who Quit Employment Because of
Military Spouse Transfers
Civilian spouses who quit their employment because their military spouse was transferred may
not qualify for UC benefits. Many state UC programs do not award UC benefits to workers who
quit their jobs because a spouse was transferred, deeming this as a “voluntary quit.” The laws of
three states (Maryland, Ohio, and Texas) go further and include a specific disqualification for
claimants who quit work to relocate with a spouse until certain additional income is generated.
However, Maryland and Texas both exempt military spouses from this disqualification.
The disqualification following a “voluntary quit” continues until the claimant returns to work,
completes a specified duration of work, and earns wages of a specified amount. In other states,
the disqualification is time-limited. These states penalize the worker for quitting, but recognize
that economic conditions may be such that even a person who diligently seeks work may find
none. The reasoning is that beyond a certain point, if a diligent job seeker is still unemployed,
such continuing unemployment is attributable to labor market conditions rather than their
decision to quit. Thus, spouses relocating to areas of high unemployment or limited opportunities
may become eligible for benefits even if initially disqualified.
8
See Chapter 5 “Nonmonetary Eligibility” of the U.S. Department of Labor, Employment and Training
Administration, Comparison of State Unemployment Laws 201, Washington, DC, 2011, p. 5-31 through 5-33.
http://ows.doleta.gov/unemploy/pdf/uilawcompar/2011/nonmonetary.pdf.
9
An exception to this are those states that offer a Self-Employment Assistance (SEA) program. See CRS Report
R41253, The Self-Employment Assistance (SEA) Program, by Katelin P. Isaacs.
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Transferred Spouse Exception (Unconditional on Military Service)
Twenty-three states six states and the District of Columbia allow workers who quit because of their spouse’s
job transfer to receive UC
benefits. Table 1 lists these states, designating them in the column
labeled “Spouse Transfer”
with a “Y.”
Military Spouse Exception
In addition to the 23 states 26 states and the District of Columbia allowing UC benefits if a worker quits to
accompany a spouse who has
been transferred, 1312 states have special exceptions for workers who
quit to join their transferred
military spouse. These exceptions are labeled as “Military only” in
Table 1 . Thus, a total of 36
states38 states and the District of Columbia allow the civilian spouse of a
transferred military servicemember to receive UC benefits.
Table 1. Unemployment Compensation Benefit Eligibility for Workers Who
Voluntarily Quit Because of a Spousal Transfer
State
Spouse Transfer
Alabama
State
Spouse Transfer
Montana
Military only
Alaska
Y
Nebraska
Y
Arizona
Y
Nevada
Y
Arkansas
Y
New Hampshire
Y
California
Y
New Jersey
Military only
Colorado
Y
New Mexico
Military only
Connecticut
Y
New York
Y
Delaware
Y
North Carolina
Y
District of Columbia
Military onlyY
North Dakota
Florida
Military only
Ohio
Georgia
Military only
Oklahoma
Y
Hawaii
Y
Oregon
Y
Pennsylvania
Y
Idaho
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State
Spouse Transfer
State
Illinois
Y
Rhode Island
Y
Indiana
Y
South Carolina
Iowa
Spouse TransferY
Military only
South Dakota
Kansas
Y
Kentucky
Military only
Louisiana
Tennessee
Texas
Military only
Utah
Maine
Y
Maryland
Military only
Massachusetts
Michigan
Y
Military onlyIowa
Kansas
Kentucky
Y
Military only
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
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Tennessee
Texas
Military only
Utah
Y
Military only
Y
Military only
Y
Vermont
Virginia
Washington
Y
West Virginia
Minnesota
Y
Wisconsin
Mississippi
Military only
Wyoming
Wisconsin
Y
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Unemployment Compensation (Insurance) and Military Service
State
Mississippi
Spouse Transfer
Military only
State
Wyoming
Spouse Transfer
Military only
Missouri
Source: CRS compilation from Comparison of State Unemployment Insurance Laws, 2010 (and internal errata), and
interim updates2011, U.S. Department of
Labor, Employment and Training Administration, Office of Workforce
Security. Additional requirements may be
imposed to qualify for these exceptions.
Impact of Military Service on Employers’ State
Unemployment Taxes
State unemployment taxes are levied on employers based on a combination of established rates
and the employer’s past history of its workers using the UC system. Generally, employers with a
greater history of unemployed workers would have a worse experience rating and would pay
higher state unemployment taxes. Military service of business owners or employees may impact
the tax rate that certain employers face. Furthermore, if workers who quit to join a transferred
military spouse receive UC benefits, this may impact the overall state unemployment tax burden
of most, if not all, of the state’s employers. Below are some examples of these situations:
•
A business owner, if called up for active military service, may need to lay off
some or all of the business’s workers. Once the business owner returns from
military service, the revival of the business may mean that the small business
may face a new, higher state unemployment tax rate.
•
If the servicemember serves for less than two years, some of the worker’s UCX
benefit may be based on nonmilitary work. (These workers receive a hybrid
UC/UCX benefit.) In some states, their former (civilian) employers may face a
state unemployment tax increase as a result.
•
Workers who quit their jobs and move to accompany their military spouse may
receive UC benefits in 36 states38 states and the District of Columbia. These states do not
charge UC benefits to
employer accounts when workers voluntarily quit their
jobs to accompany a
transferred military spouse. The benefits paid to a worker
accompanying a
military spouse generally would not increase the state
unemployment taxes of the
worker’s former employer. However, these benefits
are still charged to the state’s
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Unemployment Compensation (Insurance) and Military Service
account within the UTF. As a result, the cost of the
benefits are passed on to the
state’s employers as a socialized cost and may
increase the overall state
unemployment tax rate.
States may choose to create provisions that remove or limit these tax increases in certain
situations. For example:
•
In Illinois, business owners who are called to active duty from the reserve and
had to close their firms are not charged for the increases attributable to UC
benefits for the workers who lose their jobs on account of the closure. When the
business owner returns and reopens his or her business, the business’s state
unemployment tax rate is not increased.
•
Maine, South Dakota, Montana, Virginia, Washington, and Wyoming provide for
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•
Some states provide for the non-charging of benefits for unemployment directly
resulting from
reinstatement of another employee upon his or her completion of uniformed
service duty.
Author Contact Information
Julie M. Whittaker
Specialist in Income Security
jwhittaker@crs.loc.gov, 7-2587
uniformed service duty.
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