JEFFERSON CITY – The Missouri House has perfected legislation to keep Missouri’s unemployment insurance program in compliance with federal mandates and protect federal funding that Missouri employers receive. The mandates were required under the federal Trade Adjustment Extension Act of 2011, and are billed as a way to combat fraud and protect the integrity of states’ unemployment funds.
The legislation is House Bill 611, sponsored by Rep. Bill Lant. The bill addresses these provisions:
Prohibition of Non-Charging
One provision in HB 611 would require employers to provide separation information more quickly. The Trade Adjustment Extension Act of 2011 prohibits relieving an employer from charges of benefit payments (known as non-charging) when the employer fails to respond timely or adequately to a written request for separation information. In most states, including Missouri, an employer’s state unemployment tax rate is based upon an experience rating in which employers that have more claims or charges against their unemployment insurance account have a higher tax rate. Under current law, benefits paid to a claimant erroneously may not be charged to the employer’s account. Under HB 611, the benefits would be charged to the employer’s account if the erroneous payment is made because the employer did not provide timely or inaccurate information. Although a state may impose a stricter standard, it must impose the minimal federal standard by Oct. 21, 2013.
Expansion of Fraud Penalties
Another provision of HB 611, as mandated by the Trade Adjustment Extension Act of 2011, is designed to penalize claimants who fraudulently continue to accept unemployment benefits after returning to work. House Bill 611 requires states to impose a penalty of 15 percent of the amount of overpayment to be deposited in the state’s unemployment insurance trust fund. Again, while a state may impose a stricter standard, it must impose the minimal federal standard by Oct. 21, 2013.
Failure to comply with these two mandates carries a heavy price, according to Brendan Cossette, Missouri Chamber director of legislative affairs and assistant general counsel.
If legislation to address these federal mandates is not passed, our state is in jeopardy of losing Federal Unemployment Tax Act (FUTA) credits and federal unemployment insurance grants Missouri currently receives. Losing FUTA tax credits would cost Missouri employers $859 million annually. Losing federal grants would cost Missouri approximately $46 million the state receives each year to administer the unemployment compensation system. Missouri would also lose $13 million in federal funds the Department of Economic Development-Division of Workforce Development receives each year to administer re-employment services.
Expansion of New Hire Directory Reporting
Another mandate of the Trade Adjustment Extension Act of 2011 is designed to address current gaps in employment service registration by more stringent use of the federal New Hire Directory. HB 611 would expand the definition of a newly hired employee to include a rehired employee who was separated for at least 60 days. The New Hire Directory was created to help states with the collection of child support payments. The directory also assists states in cross-checking claimants with new hires to limit payments to individuals who have returned to work.
If Missouri fails to pass this mandate, Missouri’s Title IV-D State Plan will be out of compliance with federal requirements. This could lead to the loss of all federal funding for the Tile IV-D program – more than $58 million. It would also risk the loss of federal funding for the Temporary Assistance for Needy Families (TANF) program – up to $217 million.
The Missouri Chamber of Commerce and Industry (www.mochamber.com) was founded in 1923 and is the largest business organization in Missouri, representing almost 3,000 employers, providing more than 425,000 jobs for Missourians.