Unemployment Insurance: Legislative Issues
in the 113th Congress
Julie M. Whittaker
Specialist in Income Security
Katelin P. Isaacs
Analyst in Income Security
January 25, 2013
Congressional Research Service
7-5700
www.crs.gov
R42936
CRS Report for Congress
Pr
epared for Members and Committees of Congress
Unemployment Insurance: Legislative Issues in the 113th Congress
Summary
The 113th Congress may face a number of issues related to currently available unemployment
insurance programs: Unemployment Compensation (UC), temporary Emergency Unemployment
Compensation (EUC08), and Extended Benefits (EB). With the national unemployment rate
decreasing but still high, the weekly demand for regular and extended unemployment benefits
continues at high levels. Congress deliberated multiple times on whether to extend the
authorization for several key temporary unemployment insurance provisions in the 112th Congress
and may do so again in the 113th Congress. The signing of P.L. 112-240 on January 2, 2013, now
means that the EUC08 program expires the week ending on or before January 1, 2014. The 100%
federal financing of the EB program expires on December 31, 2013. In addition, the option for
states to use three-year EB trigger lookbacks (the period of time considered in determining an
active EB program within a state) expires the week ending on or before December 31, 2013.
The 113th Congress will face these expirations as well as likely unemployment insurance policy
issues, including unemployment insurance financing. Among other items, policy discussions may
focus on the appropriate length and availability conditions of unemployment benefits.
This report provides a brief overview of the three unemployment insurance programs—UC,
EUC08, and EB—that may currently pay benefits to eligible unemployed workers.
This report will be updated when relevant legislation in the 113th Congress is introduced.
Congressional Research Service
Unemployment Insurance: Legislative Issues in the 113th Congress
Contents
Overview of Unemployment Insurance Programs ........................................................................... 1
Unemployment Compensation Program ................................................................................... 2
Emergency Unemployment Compensation Program ................................................................ 3
Current EUC08 Benefit Availability ................................................................................... 4
Impact of Federal “Non-Reduction” Rule on State UC Laws ............................................. 5
Extended Benefit Program ........................................................................................................ 6
Legislative Activity in the 113th Congress ....................................................................................... 7
Enacted Legislation in 112th Congress ............................................................................................. 7
Budget Control Act of 2011 (P.L. 112-25) ................................................................................. 7
The Trade Adjustment Assistance Extension Act of 2011 (P.L. 112-40) .................................. 8
The Temporary Payroll Tax Cut Continuation Act of 2011 (P.L. 112-78) ................................ 8
The Middle Class Tax Relief and Job Creation Act of 2012 (P.L. 112-96) .............................. 8
Unemployment Insurance Extensions in P.L. 112-96: Changes in EUC08
Structure and Maintenance of EB Provisions................................................................... 9
Unemployment Compensation Reforms in P.L. 112-96 .................................................... 11
Emergency Unemployment Compensation Reforms and Reemployment
Strategies for Claimants in P.L. 112-96 .......................................................................... 12
Short-Time Compensation and Self-Employment Assistance Provisions in P.L.
112-96 ............................................................................................................................ 12
The American Taxpayer Relief Act of 2012 (P.L. 112-240) .................................................... 13
Figures
Figure 1. Sequence of Unemployment Benefits: UC, EUC08, and EB ........................................... 2
Figure 2. P.L. 112-96 Changes to EUC08 Program ....................................................................... 10
Contacts
Author Contact Information........................................................................................................... 14
Congressional Research Service
Unemployment Insurance: Legislative Issues in the 113th Congress
he unemployment insurance (UI) system has two primary objectives: (1) to provide
temporary, partial wage replacement for involuntarily unemployed workers; and (2) to
Tstabilize the economy during recessions. In support of these goals, several UI programs
may currently provide benefits for unemployed workers.
Overview of Unemployment Insurance Programs
In general, when eligible workers lose their jobs, the joint federal-state Unemployment
Compensation (UC) program may provide up to 26 weeks of income support through the
payment of regular UC benefits. UC benefits may be extended in two ways: (1) for up to 47
weeks by the temporarily authorized Emergency Unemployment Compensation (EUC08)
program; and (2) for up to 13 or 20 weeks by the Extended Benefit (EB) program if certain
economic situations exist within the state.1 Figure 1 depicts the sequence of currently available
unemployment benefits.
1 For detailed information on each of these programs, see CRS Report RL33362, Unemployment Insurance: Programs
and Benefits, by Julie M. Whittaker and Katelin P. Isaacs. Certain groups of workers may qualify for income support
from additional UI programs, including Trade Adjustment Assistance (TAA), Reemployment Trade Adjustment
Assistance (RTAA), and Disaster Unemployment Assistance (DUA). Workers who lose their jobs because of
international competition may qualify for income support through the TAA program or the RTAA (for certain workers
aged 50 or older). Workers may be eligible to receive DUA benefits if they are not eligible for regular UC and their
unemployment may be directly attributed to a declared natural disaster. For more information on the TAA and RTAA
programs, see CRS Report R42012, Trade Adjustment Assistance for Workers, by Benjamin Collins.
Congressional Research Service
1
Unemployment Insurance: Legislative Issues in the 113th Congress
Figure 1. Sequence of Unemployment Benefits: UC, EUC08, and EB
Source: Congressional Research Service.
Unemployment Compensation Program
The joint federal-state UC program, authorized by the Social Security Act of 1935 (P.L. 74-271),
provides unemployment benefits for up to a maximum of 26 weeks.2 Former U.S. military
servicemembers may be eligible for unemployment benefits through the unemployment
2 Arkansas and Illinois provide up to 25 weeks; Michigan, Missouri, and South Carolina provide up to 20 weeks; and
the maximum duration of UC in Florida and Georgia is variable, based on the state unemployment rates. For more
details on these states with less than 26 weeks of UC available, see CRS Report R41859, Unemployment Insurance:
Consequences of Changes in State Unemployment Compensation Laws, by Katelin P. Isaacs. In addition, the maximum
UC duration is 28 weeks in Montana and 30 weeks in Massachusetts. In conjunction with federal unemployment
benefits, however, UC duration is capped at 26 weeks.
Congressional Research Service
2
Unemployment Insurance: Legislative Issues in the 113th Congress
compensation for ex-servicemembers (UCX) program.3 The Emergency Unemployment
Compensation Act of 1991 (P.L. 102-164) provides that ex-servicemembers be treated the same
as other unemployed workers with respect to benefit levels, the waiting period for benefits, and
benefit duration.
Although federal laws and regulations provide broad guidelines on UC benefit coverage,
eligibility, and benefit determination, the specifics regarding UC benefits are determined by each
state. This results in essentially 53 different programs.4 Generally, UC eligibility is based on
attaining qualified wages and employment in covered work over a 12-month period (called a base
period) prior to unemployment. All states require a worker to have earned a certain amount of
wages or to have worked for a certain period of time (or both) within the base period to be
monetarily eligible to receive any UC benefits. The methods states use to determine monetary
eligibility vary greatly. Most state benefit formulas replace approximately half of a claimant’s
average weekly wage up to a weekly maximum.
The UC program is financed by federal taxes under the Federal Unemployment Tax Act (FUTA)
and by state payroll taxes under the State Unemployment Tax Acts (SUTA). The 0.6% effective
net FUTA tax paid by employers on the first $7,000 of each employee’s earnings ($42 per worker
per year) funds both federal and state administrative costs, loans to insolvent state UC accounts,
the federal share (50% under permanent law, 100% temporarily under current law) of EB
payments, and state employment services.5
SUTA taxes on employers are limited by federal law to funding regular UC benefits and the state
share (50% under permanent law, 0% temporarily under current law) of EB payments. Federal
law requires that the state tax be on at least the first $7,000 of each employee’s earnings (it may
be more) and requires that the maximum state tax rate be at least 5.4%. Federal law also requires
the state tax rate to be based on the amount of UC paid to former employees (known as
“experience rating”). Within these broad requirements, states have great flexibility in determining
the SUTA structure of their state. Generally, the more UC benefits paid out to its former
employees, the higher the tax rate of the employer, up to a maximum established by state law.
Funds from FUTA and SUTA are deposited in the appropriate accounts within the Unemployment
Trust Fund (UTF).
Emergency Unemployment Compensation Program
On June 30, 2008, President George W. Bush signed the Supplemental Appropriations Act of
2008 (P.L. 110-252), which created a new temporary unemployment insurance program, the
EUC08 program. This was the eighth time Congress had created a federal temporary program to
extend unemployment compensation during an economic slowdown.6 State UC agencies
3 For more information on the UCX program, see CRS Report RS22440, Unemployment Compensation (Insurance)
and Military Service, by Julie M. Whittaker.
4 The District of Columbia, Puerto Rico, and the Virgin Islands are considered to be states in UC law.
5 FUTA imposes a 6.0% gross tax rate on the first $7,000 paid annually by employers to each employee. Employers in
states with programs approved by the federal government and with no delinquent federal loans may credit 5.4
percentage points against the 6.0% tax rate, making the minimum net federal unemployment tax rate 0.6%. See CRS
Report RS22954, The Unemployment Trust Fund (UTF): State Insolvency and Federal Loans to States, by Julie M.
Whittaker, for details on how delinquent loans affect the net FUTA tax.
6 The other programs became effective in 1958, 1961, 1972, 1975, 1982, 1991, and 2002. For more details on these
(continued...)
Congressional Research Service
3
Unemployment Insurance: Legislative Issues in the 113th Congress
administer the EUC08 benefit along with regular UC benefits. The authorization for this program
has been extended multiple times and currently is authorized through the week ending on or
before January 1, 2014.
Current EUC08 Benefit Availability
The EUC08 program has been amended eleven times, most recently by P.L. 112-240.7 The
EUC08 benefit amount is equal to the eligible individual’s weekly regular UC benefits and
includes any applicable dependents’ allowances. The most recent modifications to the underlying
structure of the EUC08 program were made by P.L. 112-96. These modifications included
changes to the number of weeks available in each EUC08 tier as well as the state unemployment
rates required to have an active tier in that state. These requirements were implemented during
2012 in three separate phases.8 Currently the following weeks of benefits are available in the tiers
listed below:
• Tier I is available in all states, with up to 14 weeks of EUC08 benefits provided
to eligible individuals.
• Tier II is available if the state’s total unemployment rate (TUR9) is at least 6%,
with up to 14 weeks provided to eligible individuals in those states.
• Tier III is available if the state’s TUR is at least 7% (or an insured
unemployment rate, IUR,10 of at least 4%), with up to 9 weeks provided to
eligible individuals in those states.
• Tier IV is if the state’s TUR is at least 9% or the IUR is 5%, with up to 10 weeks
provided to eligible individuals in those states.
(...continued)
programs, see CRS Report RL34340, Extending Unemployment Compensation Benefits During Recessions, by Julie M.
Whittaker and Katelin P. Isaacs.
7 The eleven amendments are P.L. 110-449, P.L. 111-5, P.L. 111-92, P.L. 111-118, P.L. 111-144, P.L. 111-157, P.L.
111-205, P.L. 111-312, P.L. 112-78, P.L. 112-96, and P.L. 112-240. Summary details on all of these laws are provided
in Table 1 of CRS Report R42444, Emergency Unemployment Compensation (EUC08): Current Status of Benefits, by
Julie M. Whittaker and Katelin P. Isaacs.
8 See CRS Report R42444, Emergency Unemployment Compensation (EUC08): Current Status of Benefits, by Julie M.
Whittaker and Katelin P. Isaacs, for details on how these changes were implemented.
9 The TUR is the ratio of unemployed workers to all workers (employed and unemployed) in the labor market. The
TUR is essentially a weekly version of the unemployment rate published by the Bureau of Labor Statistics (BLS) and
based on data from the BLS’ monthly Current Population Survey.
10 The IUR is the ratio of UC claimants divided by individuals in UC-covered jobs. The IUR is substantially different
from the TUR because it excludes several important groups: self-employed workers, unpaid family workers, workers in
certain not-for-profit organizations, and several other, primarily seasonal, categories of workers. In addition to those
unemployed workers whose last jobs were in the excluded employment, the insured unemployed rate excludes the
following: those who have exhausted their UC benefits (even if they receive EB or EUC08 benefits); new entrants or
reentrants to the labor force; disqualified workers whose unemployment is considered to have resulted from their own
actions rather than from economic conditions; and eligible unemployed persons who do not file for benefits.
Congressional Research Service
4
Unemployment Insurance: Legislative Issues in the 113th Congress
Current EUC08 Program Expiration
All tiers of EUC08 benefits are temporary and expire in the week ending on or before January 1,
2014. Thus, on December 28, 2013 (December 29, 2013, for New York), the EUC08 program
ends. There is no grandfathering of any EUC08 benefit after that date.
Impact of Federal “Non-Reduction” Rule on State UC Laws
In response to similar state UC financial stress following prior recessions, states typically reduced
the amount of UC benefits paid to individuals through reductions in the maximum benefit amount
or through changes in the underlying benefit calculations. Under two temporary provisions in
federal law, however, most states are prohibited from reducing UC benefit amounts through
changes to benefit calculation from February 2009 through December 2013.11 The
implementation of this “non-reduction” rule coincided with new state actions that reduced UC
benefit duration as an alternative means to decrease total UC benefit payments.12 As a result,
these changes in state UC benefit duration may be a state response to state UC financing shortfall.
The duration for current federal unemployment benefits—each tier of the EUC08 program and
any EB periods—are calculated based on state UC benefit duration. Thus, states that have enacted
laws to reduce the duration of regular UC benefits have also reduced the duration of EUC08 and
EB benefits.
Seven states have acted to decrease their maximum UC benefit durations after the non-reduction
rule was enacted:
• Arkansas decreased its state UC maximum duration from 26 weeks to 25 weeks,
effective March 30, 2011.
• Florida decreased the maximum UC duration from 26 weeks to a variable
maximum duration, depending on the state unemployment rate and ranging from
12 weeks up to 23 weeks. Up to 12 weeks will be available if the state
unemployment rate is 5% or less. Each 0.5% increase in the state unemployment
rate above 5% will add an additional week of UC benefit duration. Finally, up to
23 weeks of regular UC benefits will be available if the state unemployment rate
is at least 10.5%. This benefit reduction was effective January 1, 2012.
• Georgia decreased its UC maximum duration from 26 weeks to a variable
maximum duration that ranges between 14 weeks and 20 weeks, depending on
the unemployment rate in the state. A maximum UC duration of 14 weeks will be
available if the state unemployment rate is 6.5% or less. Each 0.5% increase in
11 An exception was made in P.L. 112-96 which maintained the “nonreduction rule” for the calculation of the regular
UC benefit amount, except in the case of state legislation that was enacted before March 1, 2012, but did not take effect
before January 1, 2012. The “nonreduction” rule prohibits states from decreasing average weekly benefit amounts
without invalidating their EUC08 federal-state agreements. States that made changes to the regular UC benefit amount
prior to March 1, 2012, however, would not invalidate their EUC08 federal-state agreements.
12 The current “nonreduction” rule was put into place when P.L. 111-205 amended P.L. 110-252. There was a similar,
but programmatically distinct “nonreduction” rule in P.L. 111-5, as amended, which prevented states from actively
changing the method of calculation of the UC weekly benefit amount to pay UC benefit amounts less than what would
have been paid under state law prior to December 31, 2008. No states acted to decrease UC benefit amounts between
December 31, 2008, and June 2, 2010, when the federal authorization for this earlier “nonreduction” rule expired.
Congressional Research Service
5
Unemployment Insurance: Legislative Issues in the 113th Congress
the state unemployment rate above 6.5% will add additional weeks of UC benefit
duration up to a maximum of 20 weeks of UC benefits if the state unemployment
rate is at least 9%.20 This benefit reduction was effective May 2, 2012.
• Illinois decreased its UC maximum duration from 26 weeks to 25 weeks,
effective January 1, 2012.
• Michigan decreased its UC maximum duration from 26 weeks to 20 weeks. This
change was effective for individuals filing an initial claim for UC benefits on or
after January 15, 2012.
• Missouri decreased its UC maximum duration from 26 weeks to 20 weeks,
effective April 13, 2011.
• South Carolina also decreased its UC maximum duration from 26 weeks to 20
weeks, effective June 14, 2011.
Extended Benefit Program
The EB program was established by the Federal-State Extended Unemployment Compensation
Act of 1970 (EUCA), P.L. 91-373 (26 U.S.C. 3304, note). EUCA may extend receipt of
unemployment benefits (extended benefits) at the state level if certain economic situations exist
within the state.
The EB program is triggered when a state’s insured unemployment rate (IUR) or total
unemployment rate (TUR) reaches certain levels.13 All states must pay up to 13 weeks of EB if
the IUR for the previous 13 weeks is at least 5% and is 120% of the average of the rates for the
same 13-week period in each of the two previous years. There are two other optional thresholds
that states may choose. (States may choose one, two, or none.) If the state has chosen a given
option, they would provide the following:
• Option 1: an additional 13 weeks of benefits if the state’s IUR is at least 6%,
regardless of previous years’ averages.
• Option 2: an additional 13 weeks of benefits if the state’s TUR is at least 6.5%
and is at least 110% of the state’s average TUR for the same 13 weeks in either of
the previous two years; an additional 20 weeks of benefits if the state’s TUR is at
least 8% and is at least 110% of the state’s average TUR for the same 13 weeks
in either of the previous two years.
Each state’s IUR and TUR are determined by the state of residence (agent state) of the
unemployed worker rather than by the state of employment (liable state). EB benefits are not
13 The TUR is the ratio of unemployed workers to all workers (employed and unemployed) in the labor market. The
TUR is essentially a weekly version of the unemployment rate published by the Bureau of Labor Statistics (BLS) and
based on data from the BLS’ monthly Current Population Survey. The IUR is the ratio of UC claimants divided by
individuals in UC-covered jobs. The IUR is substantially different from the TUR because it excludes several important
groups: self-employed workers, unpaid family workers, workers in certain not-for-profit organizations, and several
other, primarily seasonal, categories of workers. In addition to those unemployed workers whose last jobs were in the
excluded employment, the insured unemployed rate excludes the following: those who have exhausted their UC
benefits (even if they receive EB or EUC08 benefits); new entrants or reentrants to the labor force; disqualified workers
whose unemployment is considered to have resulted from their own actions rather than from economic conditions; and
eligible unemployed persons who do not file for benefits.
Congressional Research Service
6
Unemployment Insurance: Legislative Issues in the 113th Congress
“grandfathered” when a state triggers “off” the program. When a state triggers “off” of an EB
period, all EB benefit payments in the state cease immediately regardless of individual
entitlement.14
Temporary EB Trigger Modifications in P.L. 111-312
P.L. 111-312 made some technical changes to certain triggers in the EB program. P.L. 111-312, as
amended (most recently by P.L. 112-240), allows states to temporarily use lookback calculations
based on three years of unemployment rate data (rather than the permanent-law lookback of two
years of data) as part of their mandatory IUR and optional TUR triggers if states would otherwise
trigger off or not be on a period of EB benefits. Using a two-year versus a three-year EB trigger
lookback is an important adjustment because some states are likely to trigger off of their EB
periods in the near future despite high, sustained—but not increasing—unemployment rates.
States implement the lookback changes individually by amending their state UC laws. These state
law changes must be written in such a way that if the two-year lookback is working and the state
would have an active EB program, no action would be taken. But if a two-year lookback is not
working as part of an EB trigger and the state is not triggered on to an EB period, then the state
would be able to use a three-year lookback. Most recently, P.L. 112-240 extended the
authorization for the three-year EB trigger lookbacks. The authorization for the temporary EB
trigger modifications now expires the week ending on or before December 31, 2013.
The EB benefit amount is equal to the eligible individual’s weekly regular UC benefits. Under
permanent law, FUTA finances half (50%) of the EB payments and 100% of EB administrative
costs. States fund the other half (50%) of EB benefit costs through their SUTA. ARRA (P.L. 111-
5, most recently amended by P.L. 112-240) temporarily changed the federal-state funding
arrangement for the EB program. Currently, the FUTA finances 100% of EB benefits through
December 31, 2013. The one exception to the 100% federal financing is for those EB benefits
based on work in state and local government employment; those “non-sharable” benefits continue
to be 100% financed by the former employers.
Legislative Activity in the 113th Congress
There has been no legislative activity in the area of unemployment insurance as of the date of this
report.
Enacted Legislation in 112th Congress
Budget Control Act of 2011 (P.L. 112-25)
On August 2, 2011, President Obama signed into law the most recent measure adjusting the
public debt limit, as part of the Budget Control Act of 2011 (P.L. 112-25).15 The Budget Control
14 EB benefits on interstate claims are limited to two extra weeks unless both the agent state (e.g., Texas) and liable
state (e.g., Louisiana) are in an EB period.
15 For a detailed analysis of the Budget Control Act of 2011, see CRS Report R42506, The Budget Control Act of 2011:
(continued...)
Congressional Research Service
7
Unemployment Insurance: Legislative Issues in the 113th Congress
Act of 2011 establishes special procedures for congressional increases to the debt limit authorized
by the act.16 In certain situations these procedures may have an impact on unemployment
insurance benefits.17
The law authorizes increases to the debt limit by at least $2.1 trillion (and up to $2.4 trillion) in
three installments: (1) an initial increase of $400 billion; (2) an additional increase of $500
billion; and (3) an additional increase of an amount between $1.2 trillion and $1.5 trillion,
depending on certain subsequent actions.
The Trade Adjustment Assistance Extension Act of 2011
(P.L. 112-40)
On September 2, 2011, P.L. 112-40, an act to extend the Generalized System of Preferences, and
for other purposes, was introduced by Representative Camp. Title II subsection C of the act
requires (1) states to charge employers’ account when UC overpayments are the fault (through
action or inaction) of the employer, (2) states to assess a minimum 15% penalty on overpayments
due to claimant fraud, and (3) employers to report any “rehired employee” to the Directory of
New Hires. P.L. 112-40 was signed into law on October 21, 2011.
The Temporary Payroll Tax Cut Continuation Act of 2011
(P.L. 112-78)
P.L. 112-78, the Temporary Payroll Tax Cut Continuation Act of 2011, was introduced in the
House (by Representative Camp), passed by the House and the Senate, and signed into law by
President Obama on December 23, 2011. Among other provisions, P.L. 112-78 extended the
expiring UI laws for two months. Under P.L. 112-78, the authorization for the EUC08 program
was extended through the week ending on or before March 6, 2012; the 100% federal financing
of the EB program was extended until March 7, 2012; and the three-year lookback trigger option
for the EB program was extended until the week ending on or before February 29, 2012.
The Middle Class Tax Relief and Job Creation Act of 2012
(P.L. 112-96)
The Middle Class Tax Relief and Job Creation Act of 2012 (P.L. 112-96, signed on February 22,
2012) contained provisions that (1) made changes to the structure of the EUC08 program as well
as maintained temporary EB provisions; (2) reformed the UC program; (3) provided additional
(...continued)
The Effects on Spending and the Budget Deficit When the Automatic Spending Cuts Are Implemented, by Mindy R.
Levit and Marc Labonte.
16 For details on how the public debt limit is increased, see CRS Report RS21519, Legislative Procedures for Adjusting
the Public Debt Limit: A Brief Overview, by Bill Heniff Jr.
17 For specifics of these implications on UC, EB, and EUC08 see the Unemployment Compensation section in CRS
Report R42050, Budget “Sequestration” and Selected Program Exemptions and Special Rules, coordinated by Karen
Spar.
Congressional Research Service
8
Unemployment Insurance: Legislative Issues in the 113th Congress
reemployment services for EUC08 claimants; and (4) expanded the Short-Time Compensation
and Self-Employment Assistance programs in states.
Unemployment Insurance Extensions in P.L. 112-96: Changes in EUC08
Structure and Maintenance of EB Provisions
Under P.L. 112-96, the potential duration of EUC08 benefits available to eligible individuals was
altered. These changes are described in detail in CRS Report R42444, Emergency Unemployment
Compensation (EUC08): Current Status of Benefits, by Julie M. Whittaker and Katelin P. Isaacs.
In addition, Figure 2 provides a graphical summary of the changes to EUC08 under P.L. 112-96
as well as the total potential maximum duration for UC and EUC08 benefits resulting from these
changes.
Extended EUC08 Program Expiration and Eliminated Phase-Down
P.L. 112-96 extended EUC08 through the week ending on or before January 2, 2013. The phase-
down of the EUC08 program that had been available in previous extensions in the authorization
of EUC08 was eliminated by P.L. 112-96. Thus, there is no grandfathering of any EUC08 benefit
once the program’s authorization has ended.
“Grandfathering” of EUC08 Benefits if Number of Weeks Available in Tier
Subsequently Increases (or Decreases)
P.L. 112-96 continued to allow individuals to be grandfathered into the available weeks of a
particular EUC08 tier at the date of entrance into that new tier even if the number of weeks
available in that tier increased or decreased after that calendar date.18
EB and Railroad Benefits
P.L. 112-96 extended the 100% federal financing of EB through December 31, 2012, as well as
the option for states to use three-year lookbacks in their EB triggers until the week ending on or
before December 31, 2012.
P.L. 112-96 extended the temporary extended railroad unemployment benefits—authorized under
the American Recovery and Reinvestment Act (ARRA; P.L. 111-5), as amended—through
December 31, 2012, to be financed with funds still available under the Tax Relief, Unemployment
Insurance Reauthorization, and Job Creation Act of 2010 (P.L. 111-312).
18 For additional special considerations regarding the maximum potential weeks of EUC08 benefits available, see CRS
Report R42444, Emergency Unemployment Compensation (EUC08): Current Status of Benefits, by Julie M. Whittaker
and Katelin P. Isaacs.
Congressional Research Service
9
Unemployment Insurance: Legislative Issues in the 113th Congress
Figure 2. P.L. 112-96 Changes to EUC08 Program
Source: Congressional Research Service
Congressional Research Service
10
Unemployment Insurance: Legislative Issues in the 113th Congress
Unemployment Compensation Reforms in P.L. 112-96
Able, Available, and Actively Seeking Work Requirement Formalized
While all states had some type of requirements for the unemployed to be “able, available, and
actively seeking work,” federal law did not require states to have such laws. Under P.L. 112-96,
federal law now stipulates that states must require all workers receiving UC to be “able, available,
and actively seeking” work.
Demonstration Projects Using UC Funds
P.L. 112-96 authorized the U.S. Department of Labor to allow up to 10 states to conduct
demonstration projects to improve and accelerate the reemployment of UC claimants—although
these projects would have to operate for at least one year and would be prohibited from increasing
the net costs to a state’s account in the UTF. The demonstrations would only provide subsidies for
employer-provided training, such as wage subsidies, or provide direct disbursements, not to
exceed the weekly benefit amount of an individual, to employers who hire individuals receiving
UC to pay part of the cost of wages that exceed the individual’s prior benefit level. The U.S.
Labor Secretary may waive the withdrawal standard if requested by the state (state UTF funds
would be allowed to be used for purposes other than paying unemployment benefits). The U.S.
Labor Secretary may also waive the merit employee requirement if requested by the state. No
demonstration project may be approved for more than three years and all projects are required to
end by December 31, 2015.19 As of the publication date of this report, no state demonstration
project has been approved.
Other Reforms
P.L. 112-96 required that states recover 100% of any erroneous overpayment by reducing up to
100% of the UC benefit in each week until the overpayment is fully recovered. This requirement
allows states to waive such deduction if it would be contrary to equity and good conscience. It
authorizes for states to recover Federal Additional Compensation (FAC) overpayments through
deductions to regular UC benefits.
P.L. 112-96 required that the U.S. Labor Secretary designate standard data elements for any
information required under title III or title IX of the Social Security Act (SSA).
P.L. 112-96 clarified federal law to allow (but does not require) states to engage in drug testing
certain UC claimants under certain circumstances.
19 See Unemployment Insurance Program Letter (UIPL) 15-12 for the U.S. Department of Labor’s guidance to states to
apply for permission to conduct a demonstration at http://wdr.doleta.gov/directives/attach/UIPL/uipl_15_12.pdf. For a
list of applications and determinations, see the section on “Reemployment Demonstrations” at http://ows.doleta.gov/
unemploy/jobcreact.asp.
Congressional Research Service
11
Unemployment Insurance: Legislative Issues in the 113th Congress
Emergency Unemployment Compensation Reforms and Reemployment
Strategies for Claimants in P.L. 112-96
P.L. 112-96 required that all individuals receiving EUC08 be “able, available, and actively
seeking” work. An active work search for EUC08 claimants requires individuals (1) to register
with reemployment services, as required by the state; (2) to actively search for work that is
appropriate for the individual’s skill level and labor market availability; (3) to maintain a record
of work search activities; and (4) to provide work search activities records to the state when
requested.
P.L. 112-96 required states to provide reemployment and eligibility assessments to certain EUC08
claimants. EUC08 claimants must participate in reemployment services if referred. P.L. 112-96
provides $85 in federal funding per EUC08 claimant who receives reemployment and eligibility
assessments.
Under P.L. 112-96, if an individual received a EUC08 benefit overpayment, states must offset any
unemployment benefit payable to that individual. Any offset must be made in the same manner
(and subject to the same equity and good conscience criteria if applicable) as a regular UC
overpayment offset under each state’s law.
P.L. 112-96 maintained the “nonreduction rule” for the calculation of the regular UC benefit
amount, except in the case of state legislation that was enacted before March 1, 2012. The
“nonreduction” rule prohibits states from decreasing average weekly benefit amounts without
invalidating their EUC08 federal-state agreements. Under P.L. 112-92, states that made changes
to the regular UC benefit amount prior to March 1, 2012, however, would not invalidate their
EUC08 federal-state agreements.
P.L. 112-96 required that states pay EUC08 benefits before EB benefits. Before the enactment of
P.L. 112-96, states had the option to pay EB first. Alaska was the only state to pay EB first.
Short-Time Compensation and Self-Employment Assistance Provisions
in P.L. 112-96
P.L. 112-96 clarified requirements related to short-time compensation (STC or “worksharing”)
programs and provides temporary federal financing to support state worksharing programs.20 P.L.
112-96 temporarily federally finances 100% of STC benefits for up to three years and six months
in states that meet the new definition of an STC program, with a transition period for states with
existing STC programs that do not meet the new definition (currently 23 states and the District of
Columbia have STC programs). States without existing STC programs may enter into an
agreement with the U.S. Department of Labor (DOL) to receive federal reimbursement for
administrative expenses, as well as temporary federal financing of 50% of STC payments to
individuals for up to two years, with employers paying the other 50% of STC benefit costs. If a
state enters into an agreement with the U.S. Secretary of Labor and then subsequently enacts a
20 Worksharing is a program within the federal-state UC system that provides pro-rated unemployment benefits to
workers whose hours have been reduced in lieu of a layoff. In a typical example of worksharing, a firm that needs to
reduce its 100-person workforce by 20% would, in lieu of laying off 20 workers, instead reduce the work hours of the
entire workforce by 20%, on a temporary basis. For additional details, see CRS Report R40689, Compensated Work
Sharing Arrangements (Short-Time Compensation) as an Alternative to Layoffs, by Alison M. Shelton.
Congressional Research Service
12
Unemployment Insurance: Legislative Issues in the 113th Congress
law providing for STC, that state would be eligible to receive 100% of federal financing. The
Labor Secretary may award grants to eligible states, with one-third of each state’s grant available
for implementation and improved administration purposes and two-thirds of each state’s grant
available for program promotion and enrollment of employers. The maximum amount of all
grants to states authorized under P.L. 112-96 was $100 million. An additional $1.5 million was
provided for the U.S. DOL to submit a report to Congress and the President, within four years of
enactment, on the implementation of this provision, including a description of states’ best
practices, analysis of significant challenges, and a survey of employers in all states to determine
the level of interest in STC.
Under P.L. 112-96, states were authorized to set up Self-Employment Assistance (SEA) programs
for individuals who (1) have at least 13 weeks of remaining benefit entitlement through the
EUC08 and EB programs and (2) are participating in entrepreneurial training activities.21 SEA
benefits under these programs are available to up to 1% of all EB and EUC08 claimants in each
participating state. The combined SEA benefits available from EB and EUC08 for any particular
individual may not exceed 26 total weeks. SEA benefits available to EUC08 and EB claimants, as
authorized by P.L. 112-96, are paid in the same amount as UC benefits and participants are
exempt from any work availability and work search requirements. An individual receiving these
SEA benefits is able to stop participation and receive any remaining EB or EUC08 benefits.
P.L. 112-96 provided $35 billion in SEA grant funding for FY2012 and FY2013 to be distributed
to states based on applications to the U.S. DOL. These funds may be used for the purposes of
establishing or improving administration of SEA programs for regular UC, EB, or EUC08
claimants as well as promoting and enrolling eligible individuals. These grants funds will be
distributed to states with approved applications based on the percentage of unemployed
individuals in that state relative to the percentage of unemployed individuals in all states. Finally,
P.L. 112-96 required the U.S. DOL to establish model language for states that participate in SEA
programs as well as requiring U.S. DOL to provide technical assistance to states and establish
reporting requirements.
The American Taxpayer Relief Act of 2012 (P.L. 112-240)
The American Taxpayer Relief Act of 2012 (P.L. 112-240, signed on January 2, 2013), among
other provisions, retroactively extended the authorization of the EUC08 program through the
week ending on or before January 1, 2014. Thus, on December 28, 2013 (December 29, 2013, for
New York), the EUC08 program ends. P.L. 112-240 did not alter the elimination of the phase-
down of the EUC08 program that was enacted by P.L. 112-96. Thus, there is no grandfathering of
any EUC08 benefit after that date.
P.L. 112-240 also extended the 100% federal financing of EB through December 31, 2013, as
well as the option for states to use three-year lookbacks in their EB triggers until the week ending
on or before December 31, 2013.
P.L. 112-240 also extended the temporary extended railroad unemployment benefits—authorized
under the American Recovery and Reinvestment Act (ARRA; P.L. 111-5), as amended—through
December 31, 2013, to be financed with funds still available under the Tax Relief, Unemployment
21 For more details on SEA, including SEA benefits authorized for UC claimants, see CRS Report R41253, The Self-
Employment Assistance (SEA) Program, by Katelin P. Isaacs.
Congressional Research Service
13
Unemployment Insurance: Legislative Issues in the 113th Congress
Insurance Reauthorization, and Job Creation Act of 2010 (P.L. 111-312). In addition, P.L. 112-240
appropriated $250,000 in general funds from the Treasury for administrative expenses.
Author Contact Information
Julie M. Whittaker
Katelin P. Isaacs
Specialist in Income Security
Analyst in Income Security
jwhittaker@crs.loc.gov, 7-2587
kisaacs@crs.loc.gov, 7-7355
Congressional Research Service
14