Unemployment Compensation (UC) and Family Leave

Unemployment Compensation (UC) and Family Leave

Updated February 26, 2018
Unemployment Compensation (UC) and Family Leave
Introduction
may combine state family leave insurance benefits with
In general, unemployed workers who voluntarily exit the
unpaid leave. At the state level, there has been interest in
workforce for the care of a family member—including the
using the UC program to provide income support to
birth, adoption, or care of a child—would be ineligible for
workers on unpaid leave covered by the FMLA. Currently,
unemployment compensation (UC) based upon their lack of
states do not have the authority to provide UC benefits to
availability for work. Yet some of these individuals may be
workers who are absent from work or unemployed as a
eligible for UC benefits once they are available for work.
result of family caregiving responsibilities.
From 2000 until 2004, states had the ability to create a
program using UC funds to provide benefits to individuals
For more information on states that offer paid family leave
on leave or otherwise unemployed after the birth or
insurance, see CRS Report R44835, Paid Family Leave in
adoption of a child (i.e., to use UC to support workers on
the United States.
parental leave). No state created such a program.
Why UC Benefits Are Not Available to
Unemployment Compensation
an Individual Not Working Because of
The joint federal-state UC program provides income
the Birth or Adoption of a Child?
support through UC benefit payments. Although there are
Depending on the state’s UC laws and regulations, there are
broad requirements under federal law regarding UC
three potential reasons why UC benefits may not be
benefits and financing, the specifics are set out under each
available to an individual who is unemployed or on a leave
state’s laws. States administer UC benefits with U.S.
of absence because of the birth or adoption of a child. The
Department of Labor (DOL) oversight, resulting in 53
individual may be
different UC programs operated in the states, the District of
Columbia, Puerto Rico, and the Virgin Islands. The UC
1. ineligible or disqualified because he or
program’s two main objectives are to (1) provide temporary
she is categorically excluded in state UC
partial wage replacement to involuntarily unemployed
law or regulation,
workers and (2) stabilize the economy during recessions.
2. disqualified because the reason the
UC Eligibility
individual left a job is not considered for
good cause, or
To receive UC benefits, claimants must meet state
3. ineligible because he or she is not able,
eligibility requirements, including
available, and actively searching for

work.
loss of job through no fault of their own or had to quit
job for a “good cause” reason.
Specific State UC Law

To be eligible for UC benefits, individuals generally must
a sufficient, recent work and earnings history.
be laid off from a job and unemployed with respect to a

given week. Under some state UC laws, workers taking
must be able, available, and actively searching for work.
family leave or other leaves of absence because of an
inability to work due to medical reasons may be considered
Although federal law establishes these broad requirements,
categorically ineligible for UC benefits.
state law and regulations determine the specific thresholds
and definitions. DOL produces a compilation of state laws
Did Not Quit for “Good Cause”
and regulations, including state definitions of each of the
In all states, individuals who leave their work voluntarily
terms. See DOL, 2017 Comparison of State Unemployment
must meet the state’s good cause requirements if they are
Insurance Laws, at https://workforcesecurity.doleta.gov/
not to be disqualified from receiving UC. In many states,
unemploy/comparison2017.asp.
good cause is explicitly restricted to reasons connected with
UC and Paid Family Leave
the work, attributable to the employer, or involving fault on
the part of the employer. Some states specifically consider
Although the Family and Medical Leave Act of 1993
quitting due to family obligations stemming from the illness
(FMLA; P.L. 103-3, as amended) provides eligible workers
or disability of an immediate family member a good cause.
with a federal entitlement to unpaid leave for a limited set
(For those states, see Table 5.5 in DOL, 2017 Comparison
of family caregiving needs (including the care of and
of State Unemployment Insurance Laws, at
bonding with a new child), no federal law requires private-
https://workforcesecurity.doleta.gov/unemploy/pdf/
sector employers to provide paid leave of any kind.
uilawcompar/2017/nonmonetary.pdf.)
Currently, employees may access paid family leave if
offered by an employer, and some workers in certain states
https://crsreports.congress.gov

Unemployment Compensation (UC) and Family Leave
Not Meeting the Able, Available, and Actively
Although as many as 15 states introduced legislation to
Searching for Work Criteria
provide for BAA-UC, their efforts were met with strong
All states require that individuals be able, available, and
opposition from business interests, and little headway was
actively conducting a job search to qualify for UC benefits.
made toward implementation of BAA-UC. No state passed
Individuals taking unpaid family leave due to family
such a BAA-UC law. In Massachusetts, a three-year BAA-
caregiving needs may not meet this availability standard
UC pilot program was enacted by the legislature as an
and would, therefore, be ineligible for UC during that time.
amendment to a supplemental budget bill, but was vetoed
Once an individual is available for work (as defined by the
on August 20, 2000. It was returned with instructions to
state), he or she may become eligible for benefits if the
consider Governor Cellucci’s own proposal: an employer
underlying cause of unemployment had been considered for
tax credit of 50% of wages (up to $2,550 per employee)
good cause (i.e., has not disqualified the worker).
paid to employees on leave, with infants or newly adopted
children. The state’s legislature adjourned without taking up
The Birth and Adoption UC Regulation
the governor’s proposal.
(BAA-UC, “Baby UI”) [Repealed]
For a short time, beginning in 2000 under the Clinton
On June 26, 2000, a lawsuit was filed in federal court
Administration, states had the ability to create a program to
seeking to bar the Clinton Administration from
provide UC benefits to individuals on parental leave or who
implementing BAA-UC program regulations (see LPA, Inc.
were unemployed after the birth or adoption of a child. In
v. Chao, 211 F.Supp. 2d 160 (D.D.C. 2002)). The lawsuit
qualifying for UC under this program, the individual would
was rejected by a federal district court in the District of
not have been required to be able and available for work in
Columbia on July 24, 2002, by which time the
the sense traditionally used by DOL and the states. Instead,
Administration had changed. The court ruled that the
parents of newborns and newly adopted children would
plaintiffs lacked standing to challenge the rule since no
have been viewed as meeting the federal able-and-available
state had implemented a BAA-UC experiment.
requirements (as implemented through state laws) under the
premise that the parents’ long-term attachment to the
Repeal
workforce would be strengthened and promoted by the
On December 4, 2002, after a review of the BAA-UC Final
payment of UC benefits. On June 13, 2000, DOL published
Rule as part of a DOL-wide review of all regulations, the
the Birth and Adoption UC (BAA-UC) Final Rule in the
Bush Administration proposed a repeal of the BAA-UC
Federal Register at 65 Federal Register 37210, at
regulation. DOL concluded that the BAA-UC experiment
https://www.federalregister.gov/documents/2000/06/13/00-
was poor policy and a misapplication of federal UC law
14801/birth-and-adoption-unemployment-compensation.
relating to able-and-available requirements.
The BAA-UC Experiment
The BAA-UC experiment was removed from federal
The final regulation establishing the voluntary BAA-UC
regulations by a final rule published in the Federal Register
experiment, colloquially referred to as “Baby UI,” went into
on October 9, 2003, effective November 10, 2003. (See
effect on August 14, 2000. The regulation allowed states to
U.S. Department of Labor, “CFR Part 604, Unemployment
use their UC programs to provide UC benefits to parents
Compensation—Trust Fund Integrity Rule; Birth and
who take unpaid leave under the FMLA or other approved
Adoption Unemployment Compensation; Removal of
unpaid leave or otherwise take time off from employment
Regulations; Final Rule,” 68 Federal Register 58539,
after the birth or adoption of a child.
October 9, 2003, at https://www.gpo.gov/fdsys/pkg/FR-
2003-10-09/pdf/03-25507.pdf.)
States were required to elect the voluntary program by
enacting legislation to make BAA-UC a part of their UC
Paid Parental Leave in the President’s
programs. DOL provided model legislation to the states in
FY2019 Budget
U.S. Department of Labor, Unemployment Insurance
The President’s budget proposal for FY2019 would require
Program Letter No. 26-00, on May 31, 2000, at
states to establish a paid parental leave benefit by 2020
https://wdr.doleta.gov/directives/attach/UIPL26-00.cfm.
using the UC program as its administrative framework.
States would be required to provide six weeks of benefits to
Controversy and Lawsuit
a worker on leave or otherwise absent from work for the
The BAA-UC experiment was highly controversial.
birth or adoption of the worker’s child. States would have
Opponents argued that the program changed the
discretion to determine the parameters of eligibility and
fundamental purpose of the UC system by (1) changing the
financing for this new paid parental leave benefit. (The
definition of able and available for work and (2) potentially
same parental leave proposal was also included in the
negatively impacting the solvency of state UC programs
President’s budget proposal for FY2018.)
(i.e., through additional program expenditures). Proponents
supported using the program as a tool for expanding the use
Julie M. Whittaker, Specialist in Income Security
of family and medical leave. (For examples of the
Katelin P. Isaacs, Analyst in Income Security
assertions, see the U.S. Congress, House Committee on
Ways and Means, Subcommittee on Human Resources,
IF10643
Unemployment Compensation and the Family and Medical
Leave Act, 106th Cong., 2nd sess., March 9, 2000, 106-114,
at https://www.gpo.gov/fdsys/pkg/CHRG-106hhrg69340/
pdf/CHRG-106hhrg69340.pdf.)
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Unemployment Compensation (UC) and Family Leave

Disclaimer
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