Today the general assembly has passed legislation to keep Missouri’s unemployment insurance program in compliance with federal mandates and protect federal funding that Missouri employers receive. House Bill 611, sponsored by Rep. Bill Lant was passed by a vote of 140-18. The bill includes provisions such as prohibition of non-charging, expansion of fraud penalties and expansion of new hire directory reporting.
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. Also attached to the legislation is language that would reform the unemployment insurance system in Missouri and would redefine “misconduct” for which an employee may be disqualified from unemployment benefits.
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. 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.
House Bill 611 requires states to impose a penalty of 15 percent of the amount of the fine for being out of compliance to be deposited in the state’s unemployment insurance trust fund.
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.
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 Title 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 bill also contains language from SB 28, which was championed by the Missouri Chamber to reform unemployment insurance in Missouri and redefine misconduct, and was sponsored by Sen. Will Kraus.
Currently, misconduct includes a “wanton or willful disregard of the employer’s interest and a disregard of standards of behavior.” However, Missouri Chamber employer members are seeing a narrow interpretation of that definition, making denying unemployment extremely difficult.
“Narrow interpretation of the definition of misconduct will continue to allow cases like these to erode the system without this legislation,” Dan Mehan, prsident and CEO of the Missouri Chamber, said. “This raises the costs on all employers who fund the system. We need to protect the system for the purpose it was intended.”
Currently, Missouri’s Unemployment Insurance Trust Fund is more than $500 million in the red. Unemployment insurance abuses – like those presented by lawmakers on the floor and many Missouri Chamber members – play a factor in that deficit.