Hunton Employment & Labor Perspectives

Unemployment compensation is a federal-state program that provides benefits to eligible workers who become unemployed through no fault of their own. Under the system, the IRS collects from employers an annual payroll tax pursuant to the Federal Unemployment Tax Act (FUTA). The states also collect a payroll tax on a quarterly basis, which they use to pay benefits. The states are permitted to determine their own benefit eligibility requirements, the amount and duration of benefits and set the tax structure for employers so long as their standards do not conflict with federal law.

Under most state programs, eligibility for unemployment benefits is a low hurdle. As such, the “great recession” overburdened most—if not all—state programs and lead to calls for legislative reform.  One such bill—CS/HB 7005—passed the Florida House’s Economic Affairs Committee on February 25, 2011, and will be taken up by the full Florida House in the 2011 legislative session. 

CS/HB 7005 is a reaction to the large increase in Florida’s benefits payouts—in 2010, the State’s unemployment rate hovered near 12%—and is touted by supporters as a catalyst for attracting new business. The Bill requires claimants to complete an initial skills review following a determination that they are eligible for benefits, which is reported to regional workforce board or career center. It also sets a maximum of 20 weeks for benefits payments and ties the number of available benefit weeks to the state’s unemployment rate, i.e., the higher the rate the greater the number of benefit weeks. In years 2012, 2013 and 2014, employers still would be permitted to pay their taxes in installments throughout the year; however, the Bill would reduce most employer’s tax rates through a 10% reduction to their benefit ratio calculation.
 
For purposes of determining eligibility for benefits after a voluntarily quit, the Bill would define “good cause” for leaving employment as that which “would compel a reasonable employee to cease his or her work.” The Bill also would expand the definition of misconduct disqualifying a worker from unemployment benefits to include conduct outside the workplace or working hours that demonstrates a “conscious disregard” of an employer’s interests (as opposed to willful and wanton disregard) and “a deliberate violation or disregard” of the employer’s “reasonable standards of behavior;” chronic absenteeism or tardiness in violation of a known policy or one or more unapproved absences following a written warning; willful and deliberate violations of state regulations or standards that would cause the employer to be sanctioned or lose an applicable license or certification; and violations of employer rules unless the claimant can demonstrate that the claimant did not know about the rule or the rule is either unlawful or not reasonably related to job environment and performance or enforced inconsistently. The Bill also specifies that under certain circumstances, criminal activity in connection with work need not be punishable by imprisonment to result in disqualification and a claimant in prison is disqualified from receiving benefits. In addition, the Bill provides that the number of weeks severance pay disqualifies an individual from benefits is equal to the amount of the severance divided by the employee’s weekly wage. 

Administratively, the Bill also codifies rules relating to claims process.  The Bill allows the exclusion of irrelevant, immaterial or repetitious evidence and allows for the admission of hearsay evidence under certain circumstances. It also would allow claimants to file appeals of benefit determinations made by the Appeals Commission in the appellate court nearest the claimant. Finally, the Bill would coordinate state and federal law such that federally-funded extended benefits could continue to be drawn down. Florida’s maximum weekly benefit amount of $275 would remain unchanged.                  

While it is too soon to say whether CS/HB 7005 will be seen as idea whose time has come, or an overreaction to an economic crisis, employers would be well-advised to monitor its progress and encourage their own state legislators to consider similar legislation.