UIPL24-10.pdf

ETA Advisory File Text

Attachment FAC Nonreduction Rule Questions and Answers Method of Computing the Weekly Benefit Amount 1. Question The Nonreduction Rule applies to the method governing the computation of regular compensation under the state s UC law. What does this mean Answer This language refers only to the state s mathematical formula for computing an individual s weekly benefit amount WBA including any dependent s allowance. The language precludes states from substituting the federally-funded FAC for state-financed benefits by for example applying an across-the-board reduction in WBAs for regular compensation by an amount equal to the FAC. The Nonreduction Rule does not apply to provisions of state UC law addressing The base period including wages needed to qualify for UC and alternative base periods ABPs . Base period provisions determine whether an individual has sufficient labor force attachment to qualify for UC in the first place an event that precedes the computation of the WBA. As a result a state may under UIPL No. 14-09 add an ABP to qualify for a UC modernization incentive payment without triggering application of the Nonreduction Rule. The number of weeks of UC payable with respect to a benefit year. These provisions affect the duration of UC not the computation of the WBA. Nonmonetary eligibility provisions such as able and available requirements voluntary quits discharges for misconduct or refusals of suitable work. As the term nonmonetary eligibility suggests these eligibility matters are unrelated to the method of computing the WBA. Waiting periods. These provisions address how long an individual must wait before becoming eligible to receive UC not the method of computing the WBA. Reductions in UC due to earnings retirement pay severance pay wages in lieu of notice or other payments. These reductions are made after the state has applied its method for computing the individual s WBA. Permissible intercepts from UC such as recoveries of overpayments or intercepts of child support. These intercepts are made after the state has applied its method for computing the individual s WBA. 2 Penalties for fraud claims including reduction in benefit rights and additional assessments such as interest fines and penalty amounts. These provisions impose penalties and are not part of the method of computing the WBA. 2. Question Since the FAC program was created the balance in my state s unemployment fund has dropped. If my state wants to amend its UC law to reduce the weekly benefits payable to improve its solvency does the Nonreduction Rule still apply Answer Yes. The Nonreduction Rule does not contain an exception for actions related to state solvency concerns. 3. Question. My state s law as in effect on December 31 2008 provides that the WBA will be adjusted each year based on the state-wide average weekly wage. Since t his adjustment will result in increasing the WBA my state is considering temporarily suspending this adjustment. Would such a suspension violate the Nonreduction Rule Answer Yes. The Nonreduction Rule applies to the average WBA which would otherwise have been payable during such period under the State law as in effect on December 31 2008. Emphasis added. Thus the suspension of a requirement for adjusting the WBA that was in effect on December 31 2008 violates the Nonreduction Rule. Modification of WBA 4. Question Does any reduction resulting from a change in the method of computing the WBA of regular compensation mean the FAC agreement will be terminated Answer No. The FAC law precludes only a modification resulting in an average WBA payable during the period of the agreement that is less than the average WBA which would otherwise have been payable under the State law as in effect on December 31 2008. This means the FAC law permits a change in the method that reduces the WBA but simultaneously is offset by a different change in the method that increases the WBA. Thus for example a state could change its method of computing the WBA to reduce the maximum WBA while also changing its method of computing dependents allowances to result in an increase. If this situation occurs the Department will be required to determine if a decrease in the average WBA has occurred. A state may not obtain this offset by using a law change unrelated to the method of computing the WBA. For example a change liberalizing nonmonetary eligibility could not be used for this offset as it does not rel ate to the method of computing the WBA. 3 Period of Applicability of Nonreduction Rule 5. Question. After what date may my state change the method of computing the WBA to reduce the average WBA without violating the Nonreduction Rule Answer. The FAC law provides that a state may not reduce the average WBA payable during the period of the FAC agreement. . . . While the FAC Agreements will continue in effect to govern such matters as overpayments Section 2002 e 3 of the FAC law provides that FAC ceases to be payable for weeks of unemployment beginning after December 7 2010. Thus the Department interprets the Nonreduction Rule as applying to weeks of unemployment beginning on or before December 7 2010. As a result to avoid issues under the Nonreduction Rule any change to state law resulting in a reduction of the average WBA must be made effective after this date. Note that if the FAC law is amended to extend FAC to a new date beyond December 7 2010 the Nonreduction Rule also will be extended to the same new date.