Unemployment Compensation, Labor Disputes, and Strikes

Unemployment Compensation, Labor Disputes, and Strikes

April 11, 2024
Unemployment Compensation, Labor Disputes, and Strikes
Introduction
UC Eligibility and Disqualification
Labor disputes among workers and employers may involve
The UC program generally does not provide UC benefits to
temporary work stoppages. Strikes occur when workers
the self-employed, individuals who are unable to work, or
initiate the work stoppage. Lockouts happen when
individuals who do not have a recent earnings history.
employers refuse to allow employees to work.
Eligibility for UC benefits is based on attaining qualified
wages and employment in a position that is subject to
For 2023, the U.S. Bureau of Labor Statistics (BLS)
unemployment payroll taxes (i.e., Federal Unemployment
reported that a total of 33 major work stoppages involving
Tax Act or state unemployment taxes) as well as most state
1,000 or more workers began, impacting approximately
and local government employment. To receive UC benefits,
458,900 workers. This is the largest number of major work
claimants must be able, available, and actively searching for
stoppages since 2000 (when there were 39). Because of the
work. UC claimants generally may not refuse suitable work,
complexity of most labor disputes, BLS’ estimates do not
as defined under state laws, and must maintain their UC
distinguish between strikes and lockouts in its work
eligibility. The methods states use to determine eligibility
stoppage statistics.
vary across state UC programs. An ineligible individual is
prohibited from receiving UC benefits under a state’s laws
Workers involved in a strike or lockout may or may not be
until the condition serving as the basis for ineligibility no
members of a union. In the case of strikes or lockouts
longer exists. UC eligibility is generally determined on a
involving union members, unions may provide their
weekly basis.
members with payments in the form of strike assistance if
they have the financial resources to do so. Additionally,
In addition, states may disqualify claimants who lost their
there has been state and federal legislation introduced to
jobs because of inability to work, voluntarily quit without
provide striking workers with income replacement through
good cause, were discharged for job-related misconduct, or
the Unemployment Compensation (UC) program.
refused suitable work without good cause. In this situation,
which is distinct from ineligibility, an individual has no
This In Focus discusses the role of UC in labor disputes and
rights to UC benefits until she or he requalifies under a
strikes, including current UC eligibility and disqualification
state’s laws, usually by serving a predetermined
related to labor disputes as well as examples of recent state
disqualification period or obtaining new employment. In
and federal legislation to expand UC access in labor dispute
some situations, UC benefits may be reduced or wage
situations. It also summarizes the role of union strike
credits may be cancelled for disqualified individuals.
assistance.
Work Stoppages and UC
Unemployment Compensation
Federal law does not specify whether an individual
The joint federal-state UC program provides income
experiencing a period of unemployment due to a labor
support through UC benefit payments. The UC program is
dispute should be considered ineligible or disqualified for
financed through employer taxes imposed by the Federal
UC benefits. Most state laws will find that claimants who
Unemployment Tax Act (FUTA) and state payroll taxes
voluntarily left the job due to a labor dispute are subject to
required under each state’s State Unemployment Tax Act
disqualification and would not be eligible for UC until the
(SUTA). Although there are broad requirements under
labor dispute is resolved. Unions generally oppose this
federal law regarding UC benefits and financing, state
approach and assert that access to UC is beneficial to the
specifics are set out under each state’s laws. States
economy by supporting striking workers while they
administer UC benefits with U.S. Department of Labor
exercise their right to strike for better pay and workplace
(DOL) oversight, resulting in 53 different UC programs
conditions. In contrast, employers generally oppose
operated in the states, the District of Columbia, Puerto
expanding UC benefits to actively striking workers, arguing
Rico, and the U.S. Virgin Islands. The UC program’s two
that such entitlement would punish employers by
main objectives are to (1) provide temporary partial wage
effectively funding the strikes through increases in the
replacement to involuntarily unemployed workers and (2)
employers’ state UC taxes, which help fund the UC
stabilize the economy during recessions.
program.
For additional background on UC, see CRS In Focus
In most states, when a striking worker is deemed
IF10336, The Fundamentals of Unemployment
disqualified for UC because of the labor dispute, there is no
Compensation.
reduction or cancellation of UC benefit entitlement. Instead,
the denial period remains in place until the dispute is
resolved. Once resolved, the worker may be eligible to
receive UC if she or he continues to be unemployed. Table
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Unemployment Compensation, Labor Disputes, and Strikes
5-11 in DOL, Employment and Training Administration,
A New Jersey proposal to reduce the state disqualification
2023 Comparison of State Unemployment Insurance Laws,
period for UC benefits for striking workers from 30 to 14
provides a broad summary of how states disqualify
days was enacted (signed into New Jersey law on April 24,
individuals involved in a labor dispute. (Table 5-12 of the
2023; retroactively effective for UC benefit claims on or
same document provides a broad summary of exclusions
after January 1, 2022). Additionally, in 2024 at least one
from disqualification.
state is considering state-level legislation to provide UC to
striking workers after a waiting period: Washington (seven
Striking
days).
Striking involves walking off the job or refusing to report to
work. Most state UC laws typically require that an
At the federal level, Representative Adam Schiff introduced
individual be treated as disqualified for UC until the
the Empowering Striking Workers Act of 2023 (H.R. 6063)
resolution of the labor dispute. States generally have
in the 118th Congress. The bill would require states to pay
exceptions for workers who are not participating in the
UC to individuals who were unable to work due to a labor
dispute but have lost work because of it (e.g., nonunion
dispute as defined by the National Labor Relations Act (29
office workers who were laid off might not be disqualified
U.S.C. §152). UC benefits under this proposal would be
since they had no control or voice in the union strategy.) In
required to be paid to a claimant the earlier of (1) 14 days
some states, a worker not involved in a labor dispute who
after the date the strike began, (2) the date the lockout
refuses to cross a picket line during the dispute would be
began, (3) the date the employer hired permanent
considered to have voluntarily left work and might also be
replacement workers, or (4) the date the strike or lockout
disqualified from receiving UC.
ended and the worker became unemployed.
Exceptions to Strike Disqualification
Also in the 118th Congress, S. 3140 and H.R. 6071, both
In two states, New Jersey and New York, striking workers
called the Unemployment Insurance Modernization and
are no longer disqualified for UC once a waiting period of
Recession Readiness Act, were introduced by Senator Ron
14 days has been met.
Wyden and Representative Donald Beyer, respectively.
Among other provisions, Section 216 of S. 3140 /H.R.
Lockouts
6071 would prohibit states from denying UC benefits in
A lockout occurs when an employer refuses to allow
certain situations based on strikes or lockouts or the failure
employees to work. Employers may use a lockout to
of an employer to follow certain federal or state labor laws.
attempt to obtain more leverage in collective bargaining
negotiations. Depending on the circumstances, when an
Union Strike Assistance
employer locks out workers from the job site, some states
Because most strike actions will disqualify union members
may allow those locked-out workers to begin to receive UC.
from receiving UC benefits, established unions sometimes
have a strike fund, paid by members’ dues, to help support
Other Situations
union members during strikes. If a strike is authorized,
Some states may authorize payment of UC benefits for
union members may be eligible to receive strike benefits.
striking workers if the strike is because an employer failed
For example, in the 2023 United Automobile, Aerospace,
to conform to federal or state labor laws or the employer
and Agricultural Implement Workers of America (UAW)
did not follow the collective bargaining agreement.
strike against Ford, General Motors, and Stellantis, the
UAW provided up to $500 per week as a strike pay,
Legislative Proposals: UC for Striking
payable beginning at the end of the first week of
Workers
unemployment. Other unions offer more limited support for
During 2023, several states considered state-level
some striking members, such as the Screen Actors Guild-
legislation that would have provided UC to striking workers
American Federation of Television and Radio Artists
after a waiting period: California (14 days), Connecticut (14
(SAG-AFTRA) Emergency Financial Assistance/Disaster
days), Illinois (14 days), Massachusetts (30 days), and New
Relief Fund, which provided limited grants to members
York (reducing from 14 to 7 days). None of these bills have
who were experiencing an “urgent financial need” because
been enacted. For example, the California bill passed both
of the SAG-AFTRA 2023 strike.
chambers before being vetoed by Governor Newsom. The
governor stated that an expansion of UC eligibility would
Julie M. Whittaker, Specialist in Income Security
increase California’s outstanding UC federal loan (which
Katelin P. Isaacs, Specialist in Income Security
was already at approximately $20 billion), and thus was one
reason for his veto.
IF12633

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Unemployment Compensation, Labor Disputes, and Strikes

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