UNEMPLOYMENT INSURANCE PROGRAM LETTER NO. 41-97.html

ETA Advisory File Text

Application of Between and Within Terms Denial to Head Start Program Personnel U.S. DEPARTMENT OF LABOREmployment and Training AdministrationWashington D. C. 20210 CLASSIFICATION UI CORRESPONDENCE SYMBOL TEUL ISSUE DATE September 30 1997 RESCISSIONS None EXPIRATION DATE Continuing DIRECTIVE UNEMPLOYMENT INSURANCE PROGRAM LETTER NO. 41-97 TO ALL STATE EMPLOYMENT SECURITY AGENCIES FROM GRACE A. KILBANEDirectorUnemployment Insurance Service SUBJECT Application of Between and Within Terms Denial to Head Start Program Personnel Purpose.To clarify the application of the between and within terms denial provisions of Section 3304 a 6 A of the Federal Unemployment Tax Act FUTA to Head Start program personnel. References.Section 3304 a 6 A FUTA P.L. 94-566 P.L. 95-19 Draft Language and Commentary to Implement the Unemployment Compensation Amendments of 1976--P.L. 94-566 and Supplement 4 1976 Draft Legislation dated August 26 1977 Unemployment Insurance Program Letter UIPL No. 40-79 dated August 3 1979 UIPL No. 41-83 dated September 13 1983 UIPL No. 30-85 dated July 12 1985 UIPL No. 15-92 dated January 27 1992 and UIPL No. 43-93 dated September 13 1993. Background.UIPL No. 40-79 set forth the Department's position on whether Head Start agencies are "educational institutions" for purposes of the quot between and within terms denial quot provisions required and or allowed by Section 3304 a 6 A FUTA. Subsequent amendments to the quot between and within terms denial quot provisions have raised questions about whether the treatment of Head Start services has changed. This UIPL reiterates the Department's position and provides specific discussion of the amendments made following the issuance of UIPL 40-79. Discussion.Section 3304 a 6 A FUTA requires as a condition for employers in a State to receive credit against the Federal unemployment tax that the State law provide that unemployment compensation UC be payable based on services to which Section 3309 a 1 FUTA applies in the same amount on the same terms and subject to the same conditions as UC payable on the basis of other service subject to State law. The major mandates of this Section are 1 coverage of services performed for State and local governments and their instrumentalities and nonprofit organizations as defined under Section 3309 a 1 FUTA 2 equal treatment in the payment of UC to employees of such entities and 3 denial of UC based on certain educational services performed for such entities between and within academic terms. These conditions are required for employers in a State to receive credit against the Federal unemployment tax. UIPL No. 43-93 describes the optional and required denial provisions in clauses i through vi of Section 3304 a 6 A FUTA. The six clauses are described below Clause i requires unless the specified conditions are met the denial between two successive academic years or terms based on instructional research and principal administrative services performed for an educational institution. Clause ii permits under specified conditions the between years or terms denial based on all other i.e. quot nonprofessional quot services performed for an educational institution and retroactive payment based on those services if no work is available in the second term and the individuals have otherwise met the eligibility requirements. Clause iii requires the within terms denial of benefits during an established and customary vacation period or holiday recess based on all services performed for an educational institution. Clause iv requires the between and within terms denial of benefits based on all services performed in an educational institution while in the employ of an educational service agency ESA . Clause v permits the State to implement the denial provisions of i through iv for services performed by governmental entities or nonprofit organizations if such services are provided to or on behalf of an educational institution. Clause vi permits the State to make the between and within terms denial provisions of clauses iii and iv optional based on the quot nonprofessional quot services described in clause ii . Interpretation and Application.The between and within terms denial provisions apply only to services performed 1 for an educational institution 2 in an educational institution while employed by an ESA or 3 to or on behalf of an educational institution by a governmental entity or nonprofit organization. Whether Head Start Agencies are Educational Institutions under Clauses i and ii of Section 3304 a 6 A FUTA. Head Start programs are comprehensive developmental programs designed to meet children's needs in the health medical dental mental nutritional social and education areas. The goal is child adjustment and development at the emotional and social levels rather than school-type training. Whether Head Start agencies are quot educational institutions quot was discussed in UIPL 40-79. That UIPL stated that Head Start programs operated by Community Action Groups do not meet the criteria of quot educational institutions quot and the between and within terms denial does not therefore apply to services performed for such groups. UIPL 40-79 stated however that when a local board of education operates a Head Start program as an integral part of the school system in facilities of an educational institution with Head Start workers as employees of the board and the schools in every respect subject to all employing policies such as hiring firing working conditions as other employees performing services for the educational institution then such workers are considered to be employed by an educational institution. As such these workers are subject to the denial provisions in the same manner as are all other educational institution employees. This remains the Department's position. Application of Clauses iv and v Section 3304 a 6 A FUTA to Head Start Services. UIPL 40-79 did not address clauses iv and v as these provisions were not added until 1983. UIPL 41-83 advised the States of the addition of these clauses to Federal law but did not discuss Head Start agencies. Clause iv applies to services performed for an ESA. Clause iv defines an ESA as quot a governmental agency or governmental entity which is established and operated exclusively for the purpose of providing such services to one or more educational institutions. quot Since Head Start agencies do not exist exclusively for the purpose of providing services to educational institutions they are not ESAs. Clause v permits States to apply the between and within terms denial to services quot provided to or on behalf of quot an educational institution by a governmental entity or nonprofit organization to which Section 3309 a 1 FUTA applies. UIPL 41-83 states that the words quot provided to quot require only that the services provided to the educational institution give some benefit or support to the institution. The words quot on behalf of quot are more restrictive. They apply-- to those employees of a governmental entity or nonprofit organization who perform services as an agent of or on the part of an educational institution. This situation could arise therefore only where an employee of a governmental entity or nonprofit organization performed services as an agent of or on the part of an educational institution in such a representative capacity. Whether services are quot provided to or performed on behalf quot of an educational institution depends on the facts present in each individual case. Thus if State law contains a provision implementing optional clause v a case-by-case determination must be made to determine if Head Start services are quot provided to or on behalf of an educational institution quot assuming that the Head Start agency is a governmental entity or nonprofit organization to which Section 3309 a 1 FUTA applies. If a State law implements optional clause v the application to Head Start programs may be limited as to scope and or time by a State but as discussed in UIPL 43-93 the limitation must be uniformly applied throughout the State. A State may not treat Head Start services quot provided to or on behalf of quot one school district differently from Head Start services "provided to or on behalf of" those performed for another school district. Also a State may not treat the services performed for a governmental entity differently from services performed for a nonprofit organization. Action Required.Administrators are to provide this information to appropriate staff. Inquiries.Inquiries should be directed to the appropriate Regional Office.