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To alert the States to the opportunity for the provision of adjustment assistance under Title III of the Job Training Partnership Act (JTPA) to workers in secondary firms who are adversely affected by NAFTA. References: The NAFTA Implementation Act (Pub. L. 103-182) is referred to as "the Act." The program of trade adjustment assistance for workers established by Chapter 2 of Title II of the Trade Act of 1974 is referred to as the "TAA Program". The Trade Act of 1974 may be referred to as simply the "Trade Act." The NAFTA Implementation Act Title V--NAFTA Transitional Adjustment Assistance and Other Provisions, affecting the TAA program is referred to as Title V or NAFTA-TAA. Background: The Trade Act of 1974 made major changes to the trade adjustment assistance program for workers displaced because of increased imports of articles like or directly competitive with articles produced by the workers' firm. On receiving a petition for trade adjustment assistance from a group of workers or its authorized representative, the Department of Labor conducts a factfinding investigation in response to the petition. If the findings substantiate that the workers of a firm or subdivision of have been adversely affected by import competition, a certification is issued by the Secretary of Labor to the worker group stating that the workers are eligible to apply at a local office of the State employment security agency for TAA benefits. Benefits include up to 104 weeks of training in new occupational skills, and job search assistance and relocation allowances when jobs are not available within the commuting area from the worker's residence. Workers participating in training (unless the training requirement is waived) may also receive up to 52 weeks of trade readjustment allowance (TRA) payments which are generally equivalent to the worker's unemployment insurance payment. Regulations implementing the adjustment assistance program for workers in Chapter 2, Title II, of the Trade Act are published at 20 CFR Part 617. On December 8, 1993, the President signed into law the "North American Free Trade Agreement Implementation Act." These imple- menting instructions relate only to those provisions of Title V affecting the TAA Program. Most of the provisions of Title V are in the form of amendments to Chapter 2 of Title II of the Trade Act of 1974, and while some of the provisions of Title V are not in the form of amendments to the Trade Act, they nonetheless must be given effect in implementing the NAFTA-TAA program. While the NAFTA-TAA is generally similar to the existing TAA Program, it does differ in several ways. Governors have a specific role in the new adjustment assistance program targeted to workers who may be displaced because of trade with Canada or Mexico. State agencies also have new program responsibilities. The NAFTA-TAA program requires workers to be enrolled in training to qualify for trade readjustment allowance (TRA) payments and does not allow the waiver of the training requirement when training is not "feasible or appropriate", which is now available to eligible workers in the regular TAA program. To provide for these differences, Section 502 of the Act adds a new Subchapter D--NAFTA Transitional Adjustment Assistance Program, to Chapter 2 of Title II of the Trade Act. Subchapter D adds one section-- Section 250, Establishment of a Transitional Program--to Chapter 2, Title II of the Trade Act, creating the new NAFTA-TAA program.

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References: Title I of the Emergency Unemployment Compensation Act of 1991, as amended by P.L. 102-318;the Federal-State Extended Unemployment Compensation Act of 1970, as amended by P.L. 102-318; GAL 12-92; UIPL 9-92 and Changes; UIPL 45-92; 20 CFR Part 615; ET Handbook 392; ET Handbook 399. Background: Public Law 102-318 amended several sections of the EUC Act of 1991 and the EUCA. No new claims may be filed under the EUC program after March 6, 1993 and the program is scheduled to end on June 19, 1993 (The dates in Section 102(f)(1) and (2) and 106(a)(2), EUC Act of 1991, are expected to be changed by future legislation). However, the suspension of the eligibility and requalification requirements of Section 202(a)(3) and (4) of EUCA that apply to claims for EUC effective with weeks of unemployment beginning after March 6, 1993, requires the determination and payment of EUC differently during the remaining period of the program. The effect of the suspension of these requirements on the eligibility of previously disqualified claimants makes necessary an additional claimant notification of potential eligibility. The modification to Section 101(e) of the EUC Act of 1991, which terminates the Governor's election of an extended benefit (EB) "off" trigger, also provides that individuals eligible under both the EB and EUC programs shall be paid for weeks beginning after March 6, 1993, under the program where the greater entitlement exists (The dates of this provision are expected to change if the EUC program is extended). This requirement necessitates special handling of such claims to determine the appropriate program for payment. All changes to the EUC Act of 1991 and the EUCA as they affect the determination of claims and payment of benefits for weeks beginning after March 6 are addressed in this directive. Controlling Guidance: The provisions of P.L. 102-318, as interpreted in these EUC and EB operating instructions and prior operating instructions (to the extent that they are not inconsistent with these instructions), issued by this Department constitute the controlling guidance provided by the Department of Labor. A. Phaseout of EUC Program. Section 101(c) of Public Law 102- 318 amended Section 102(f)(2) of the EUC Act of 1991 to provide that no payments of benefits will be made under the EUC program for any week beginning after March 6, 1993, except that, benefits will continue to be payable to individuals, for weeks of unemployment beginning between March 6 and June 19, 1993, that have established an EUC account prior to March 6, 1993 (The dates of this provision will change if the EUC program is extended). Therefore, no new EUC claims can be filed after March 6 and only those claimants with an existing EUC claim (or who were eligible to establish an EUC claim), effective prior to March 6, may file an EUC claim for weeks beginning after March 6 and before June 19, 1993. However, under no circumstances will any payments of EUC be made for weeks ending after June 19, 1993. (1) Applicable Benefit Year for EUC. An individual with an existing EUC claim, based on a prior benefit year, will cease to have rights to EUC based on the prior benefit year, when the current benefit year ends. When the current benefit year ends, the prior benefit year upon which the claimant's EUC was based ceases to be the "applicable benefit year" for EUC purposes. Therefore, when such an individual's benefit year ends on or after March 6, 1993, the claimant will have no further rights to EUC as no new EUC claim may be filed after March 6. Hence, if an EB period is "on" in the State, no determination of the greater entitlement under the requirements of Section 101(e)(2) of the EUC Act of 1991, as discussed in paragraph D of this GAL, is appropriate. B. Extended Benefits Trigger. Section 101(d) of P.L. 102-318 amended Section 101(e) of the EUC Act of 1991 to provide that the Governor's election to trigger "off" EB in a State in order to provide for the payment of EUC is not applicable with respect to weeks of unemployment beginning after March 6, 1993. Additionally, this provision prohibits the previous election of an "off" trigger to prevent the beginning of an extended benefit period for weeks beginning after March 6, 1993 (The dates of this provision is expected to change if the EUC program is extended). Therefore, an EB period may trigger "on" in any State effective March 7, 1993, and thereafter, in accordance with State laws consistent with Sections 203(d), (e) and (f) of EUCA without regard to the Governor's previous election of an "off" trigger. C. Alternative Total Unemployment Rate (TUR) EB Trigger. Section 203 of EUCA, was amended by Section 201 of P.L. 102-318 by adding a new subsection (f) which provides an alternative trigger provision that State law may include for purposes of beginning and ending an EB period. Section 201(b) of P.L. 102-318 amended Section 202(b) by adding a new paragraph (3)(A) to require that effective with weeks of unemployment beginning in a "high unemployment period", hereafter referred to as "HUP", an individual's extended compensation account shall be established at the lesser of 80 percent of the total amount of regular compensation or 20 times the individual's average weekly benefit amount or 46 times the individual's average weekly benefit amount reduced, in accordance with State law, by the amount of regular or additional benefits previously paid or deemed paid. Section 201(b) of P.L. 102- 318 further amended Section 202 by adding Subsection (b)(3)(B), EUCA, which defines an HUP, for purposes of Section 202(b)(3)(A), EUCA, as ". . .any period during which an extended benefit period would be in effect if section 202(f)(1)(A)(i) were applied by substituting '8 percent' for '6.5 percent'." Thus, if a State elects the alternative trigger as provided in Section 203(f), EUCA, State law must also conform to Section 202(b)(3)(A) and (B), EUCA. (See UIPL 45-92.) (1) High Unemployment Period. In accordance with State law, for weeks of unemployment beginning in a HUP, the extended compensation account of each individual shall be established at the higher extended benefit (HEB) level of the lesser of 80 percent of the total amount of regular compensation or 20 times the individual's average weekly benefit amount or 46 times the individual's average weekly benefit amount reduced, in accordance with State law, by the amount of regular, additional benefits and extended compensation previously paid or deemed paid. (2) Period for which HEB is payable. HEB may be paid only for weeks beginning during a HUP. When the HUP ends, the extended compensation account of each individual whose account was established during the HUP shall be redetermined and shall be established at the lesser of 50 percent of the total amount of regular compensation or 13 times the individual's average weekly benefit amount or 39 times the individual's average weekly benefit amount reduced, but not below zero, in accordance with State law, by the amount of regular and additional benefits and all extended compensation (EB or HEB) previously paid or deemed paid. D. Payment of the Greater of EB or EUC Entitlement. Section 101(d) of P.L. 102-318 further amended Section 101(e) of the EUC Act to provide that an individual in a State with an EB "on" trigger after March 6, 1993, and who has a EUC account balance shall receive, for weeks of unemployment beginning after March 6, 1993, payments under the program, EUC or EB, in which the individual's entitlement is greater. This provision requires that EUC shall be paid only to an individual whose EUC account balance is greater than the EB entitlement (maximum benefit amount), as of the week for which an EB determination is legally possible for such an individual, whether a claim for EB has been filed or not. When entitlement under both programs are the same, no benefits are payable under the EUC program. Section 101(b) of the EUC Act of 1991 provided that an individual is not eligible for EUC if such individual is eligible for EB and the individual with equal entitlement does not meet the exception provision of Section 101(e) of the EUC Act of 1991. To determine the program under which the claimant is to be paid, the State must examine each individual's specific situation as follows: (1) Claimant Receiving EUC Based on a Prior Benefit Year Under Section 102(b)(2)(B), P.L. 102-318. A claimant that is receiving EUC based on a prior benefit year, having deferred the receipt of regular benefits on a current benefit year, is not an "exhaustee" of the current benefit year for EB purposes and will, therefore, remain eligible for EUC. However, when the current benefit year ends, the claimant will have no further rights to EUC as the prior benefit year will cease to be the applicable benefit year and no new EUC claims may be filed after March 6 based on the most recent benefit year. Therefore, if the benefit year ends during the EB period, the claimant will only have rights to EB based on the most recent benefit year if he/she is otherwise an exhaustee. (2) Claimant Receiving EUC Based on a Prior Benefit Year Under Section 101(f), EUC Act. A claimant that is receiving EUC based on a prior benefit year, having postponed establishing a new benefit year for regular benefits, is not an "exhaustee" for EB purposes as the prior benefit year is not the "applicable benefit year" for EB purposes. Therefore, the individual will remain eligible for EUC. (3) Claimant Receiving EUC Based on a Current Benefit Year. A claimant that is receiving EUC based on a current benefit year, is an "exhaustee" for EB purposes. Therefore, the State must determine the claimant's greater entitlement in accordance with Section 202(b), EUCA, and shall pay weeks of unemployment beginning after March 6, 1993 under the program under which the claimant's remaining benefit entitlement is greater. The "greater" monetary entitlement is the greater of the balance remaining in the claimant's EUC account or the EUC WBA times the number of weeks for which EUC is potentially payable, as appropriate, and the MBA of the potential EB entitlement. If the EB entitlement and the EUC balance are equal, the claimant shall be paid under the EB program. If the claimant's greater entitlement is under the EUC program, and the current benefit year (upon which the EUC claim is based) ends and the claimant has rights to regular benefits, the claimant has an option to continue to receive EUC or file for regular benefits. If the claimant's greater entitlement is under the EB program, and the current benefit year (upon which the EB claim is based) ends and the claimant has rights to regular benefits, the claimant ceases to be an "exhaustee" for EB purposes and has no further rights to EB. E. Suspension of the Suitable Work and Systematic Work Search and Provisions of Sections 202(a)(3) of EUCA. Section 202(b) of P.L. 102-318 suspended the requirements of Sections 202(a)(3) of the EUCA, as amended, and prohibits the application of State laws in conformity with such provision to weeks of unemployment beginning between March 6, 1993 and January 1, 1995. Therefore, for weeks of unemployment during the period of the suspension of such requirements, State law applicable to claims for regular benefits will apply to claims for EB and EUC. To implement the suspension of the requirements of this provision, States must identify each claimant with an existing disqualification under State law in conformity with the provisions of 202(a)(3) and (4), EUCA, and notify each such claimant of the change in eligibility requirements for weeks of unemployment beginning after March 6. During the period of the suspension of the requirements of Sections 202(a)(3) EUCA, the requirements of paragraph (2) of Section 202(a), EUCA, which reads as follows will apply: "Except where inconsistent with the provisions of this title, the terms and conditions of the State law which apply to claims for regular compensation and to the payment thereof shall apply to claims for extended compensation and to the payment thereof." Therefore, under the requirements of Section 202(a)(2), EUCA, States are required to apply the provisions of State law applicable to claims for regular compensation to claims for EUC and EB in lieu of the State law requirements in conformity with Section 202(a)(3), EUCA. Hence, the continuing eligibility requirements pertaining to work search, suitable work, availability for work and ES registration that apply to claimants for regular compensation, apply to claims for EUC for weeks of unemployment beginning after March 6, 1993 and no later than June 19, 1993, and to claimants of EB for weeks of unemployment beginning after March 6, 1993 and before January 1, 1995. (1) Existing EUC Disqualifications. The suspension of the requirements of Section 202(a)(3), EUCA, means that all outstanding EUC disqualifications under State laws in conformity with such provisions do not apply to weeks of unemployment beginning after March 6. Therefore, all claimants disqualified under such State law provisions may have EUC eligibility for weeks of unemployment beginning after March 6. (a) Existing Work Search Disqualification. In the cases of individuals with disqualifications for failure to satisfy the systematic and sustained work search requirement, these denials do not apply to weeks beginning after March 6. The determination that such denial does not apply and that the claimant is eligible under the State law applicable to claims for regular benefits does not constitute a nonmonetary determination. (2) ES Registration and Work Search Requirements. The suspension of the requirements of Sections 203(a)(3), EUCA, eliminates the Job Prospects Classification and ES registration requirements for EUC and EB claimants. Therefore, for weeks of unemployment beginning after March 6, 1993 the work search, ES registration and suitable work requirements for EB and EUC claimants will be in accordance with the State law provisions applicable to claimants for regular benefits. (3) Optional Language for Claimant Notice. Our records indicate that you were denied Emergency Unemployment Compensation (EUC) under provisions of (State) law, that are applicable to the payment of extended benefits as was required by the Emergency Unemployment Compensation Act of 1991. Effective for weeks of unemployment beginning after March 6, 1993, amendments to Federal law require that (State) suspend the application of the State law provisions that apply to claims for extended benefits, and instead, determine eligibility under the same provisions of State law that are applied to claims under the regular State unemployment benefits program. The EUC disqualifications affected by this law change were issued for: -- Failure to conduct a sustained and systematic work search -- Refusal of a suitable job or referral to suitable work while receiving EUC -- Disqualifying separations from employment for voluntary leaving a job or discharges If you are still unemployed, you may be eligible to receive EUC for weeks beginning after March 6, 1993. To allow us to reassess your eligibility for EUC benefits, report to the office where you filed your claim. Note: In cases involving disqualifying separations from employment and refusals of suitable work or referrals to suitable work, the application of the State law provisions for regular State unemployment benefits may be more severe than the State law for extended benefits. F. Suspension of the Subsequent Work Requalification Requirement of Section 202(a)(4), EUCA. Section 202(b) of P.L. 102-318 suspended the requirements of Section 202(a) (4) of the EUCA, as amended, and prohibits the application of State laws in conformity with such provisions to weeks of unemployment beginning between March 6, 1993 and January 1, 1995. Therefore, for weeks of unemployment during the period of the suspension of such requirements, the requalification requirements of State law applicable to claims for regular benefits will apply to claims for EB and EUC. To implement the suspension of the requirements of this provision, States must identify claimants with existing disqualifications under State laws in conformity with such provisions, notify the claimants of the change in eligibility requirements for weeks of unemployment beginning after March 6. If a claimant previously disqualified under provisions in conformity with Section 202(a)(4), EUCA, requirements initiates a claim for benefits for a week beginning after March 6, the State must review the facts of the disqualifying issue under the State law applicable to claims for regular benefits (and EB or EUC for weeks of unemployment beginning after March 6). If no claim is filed after March 6, no review is necessary or appropriate. If the review results in a disqualification under State law provisions applicable to claims for regular benefits, such determination is a countable nonmonetary determination. (1) EUC Disqualifications Based on Prior Termination of Regular Benefit Disqualifications Without a Subsequent Work Requirement. If State law applicable to claims for regular benefits terminates a disqualification for voluntarily leaving employment, being discharged for misconduct, or refusing suitable employment without a requirement for employment/earnings subsequent to the date of the disqualifying act or determination, such State law applies to claims for EB and EUC for weeks of unemployment beginning after March 6, 1993 and before January 1, 1995. Therefore, if an EUC claimant has been denied benefits due to a prior regular benefit disqualification, the eligibility of such claimant must be redetermined for weeks beginning after March 6. If the claimant has satisfied the State law requirements for requalification, the claimant will be eligible for EUC for weeks beginning after March 6, if all other eligibility requirements are met. The determination that a claimant has satisfied the applicable requalifying requirements and is eligible for EUC or EB, whichever is greater, does not constitute a nonmonetary determination. If the review results in a disqualification under State law applicable to claims for regular benefits, the determination is a countable nonmonetary determination. (2) EUC Disqualifications for a Separation or Job Refusal that Occurred During the EUC Claim. In cases where a review of the facts of the issue under the applicable State law results in a lesser requalification requirement, the State must determine if the requirement has already been satisfied. When the lesser requalification requirement has already been satisfied, the removal of the disqualification does not constitute a nonmonetary determination. When the lesser requalification has not been satisfied, a redetermination under the appropriate State law will be issued and does constitute a nonmonetary determination. In cases where the review of the facts under State law applicable to the issue results in a greater requalification requirement, a redetermination will be issued under the appropriate State law and does constitute a nonmonetary determination. (3) Existing EUC Disqualifications Satisfied Prior to a Claim for a Week Beginning After March 6. Without regard to the date of the determination that the requalification requirements of a prior disqualification has been met, in cases where there is an existing disqualification and the claimant has met the requalification requirements prior to claiming a week of unemployment beginning after March 6, no readjudication of the issue under State law applicable to regular claims will occur. The claimant will be eligible for EUC or EB, whichever is greater, if all other eligibility requirements are met. G. Modification to the EB Base Period Earnings Test Requirement. In determining whether or not a claimant's benefits are "greater" under the EUC or EB program, States are reminded that Section 202(a)(5) of EUCA which was amended by P.L. 102- 318 to provide that, effective for weeks of unemployment beginning after July 3, 1992, a State may use one or more of the base period earnings test specified, i.e. 20 weeks of work, one and one-half times the high quarter wages or forty time the claimant's weekly benefit amount, to establish that the claimant had sufficient base period employment/earning to meet the eligibility requirement was implemented immediately upon enactment for claims under the EUC program. Therefore, if the State elected to use more than one test for EUC but has not amended its law with respect to EB, there are eligible EUC claimants that will be ineligible for EB. Section 202(a)(5) of EUCA requires State law to specify the earnings test(s) applicable to claims for EB. NOTE: It determining whether or not a claimant has sufficient base period employment and wages, base period employment and earnings under other States laws, whether or not used in the determination of regular benefit rights, are base period earnings for purposes of Section 202(a)(5), EUCA, and must be considered. However, States must not used the Request for Transfer of Wages, Form IB-4 (or the TC-IB4) to verify the base period wages. Administrative Funding: State agencies will receive additional administrative funds to notify and reassess the eligibility of individuals whose prior disqualifications are affected by the suspension of the requirements of Sections 202(a)(3) and (4), EUCA. Staffyears earned for reaccessing the eligibility of those claimants that reopen EUC claims as a result of the notice and no nonmonetary determination results from the reassessment will be computed by using an MPU value of no more than 20 minutes. States have the option to use a lesser value MPU if they deem it appropriate. This information should be included on line 5 of the regular UI-3 worksheet, Section B. States should show the calculation at the bottom of the additional costs worksheet. Staffyears used for this activity should be included on line 1, Section A. Staffyears will not be separately reported for the identification and notification process. If a reportable nonmonetary determination under State law applicable to regular claims results from the reassessment, no additional staffyear earnings are to be reported on the UI-3. Reporting Requirements: There are no special reporting requirements concerning claims affected by the law changes. Action Required: State Administrators are requested to make a copy of this letter available to all appropriate staff.

Background: Program letters, or the five letter series, are considered temporary directives containing instructions or information of a short-term nature which complement one of the five parts of the ES Manual. Rather than rewrite and reissue expiring program letters which still contain relevant information or instructions, the expiration date is extended. Attached is a listing of program letters with extended expiration dates for the above period.

Reference: 20 CFR Part 658.410, 29 CFR Parts 31.5 and 31.7, 20 CFR 653.109, and 29 CFR Part 32.45. Background: As a result of a settlement agreement in the case of NAACP v. Brennan (Civil Action No. 2010-72, U.S.D.C.), the U.S. Department of Labor (DOL) published Federal regulations 20 CFR Parts 651, 653, and 658 onJune 10, 1980. These regulations set forth the role and responsibilities of the United States Employment Service (USES) and State Employment Security Agencies (SESAs) regarding compliance of said regulations. In compliance with 20 CFR 653.109, DOL established recordkeeping requirements to allow for the efficient and effective monitoring of SESAs' regulatory compliance. Pursuant to these recordkeeping requirements, Federal regulations at 20 CFR 658.410 established the State Agency Job Service complaint system and its administrative and processing procedures. ETA Form 8429 was developed for recording complaints filed with the State Employment Service Agencies. The completion of this form is required in order for a complaint to be considered and processed by State agency officials. Further, discrimination complaints (except for handicap complaints) alleging violation(s) of Title VI of the Civil Rights Act, Title IX of the Education Amendments, the Age Discrimination Act, and/or Section 167 of the Job Training Partnership Act, are to be filed with the U.S. Department of Labor, Directorate of Civil Rights. OMB Approval: The reporting requirements for Form ETA 8429 are approved by the Office of Management and Budget (OMB) according to the Paperwork Reduction Act of 1980, under OMB approval No. 1205-0039, to expire June 30, 1996. Action Required: State Administrators are required to provide the above information to appropriate staff.

References: Title I of the Emergency Unemployment Compensation Act of 1991, P.L. 102-164, as amended by P.L. 102-182 and P.L. 102-244; the Federal-State Extended Unemployment Compensation Act of 1970, as amended; 20 CFR Part 615; GAL 4-92; GAL 4-92, Change 1; GAL 4-92, Change 2; UIPL 9-92 and Changes; UIPLs 16-85, 10-87 and 21-90; The Trade Act of 1974, as amended (19 U.S.C. 2271 et seq.); 20 CFR Part 617. Background: Title I of the Emergency Unemployment Compensation Act of 1991 created the Emergency Unemployment Compensation (EUC) program. The EUC program, as established by P.L. 102-164 (and amended by P.L. 102-182), provided 13 or 20 weeks of benefits depending on the State's total unemployment rate or a combination of the State's insured unemployment rate and exhaustions. P.L. 102-244 amended the EUC Act to increase the maximum duration to 26 or 33 weeks through the week including June 13, 1992. For weeks of unemployment beginning thereafter, individuals filing new claims and certain individuals who established claims prior to the week including June 13 will revert back to the 13 or 20 week maximum. EUC is payable to individuals who have no rights to regular, extended, or additional benefits under any State or Federal law. Except where inconsistent with the operating instructions in GAL 4-92 (and changes thereto), the terms and conditions of State law which apply to claims for extended benefits and to the payment thereof shall apply to claims for EUC. P.L. 102-164 was enacted November 15, 1991 and the EUC program became effective in all States for weeks of unemployment beginning on and after November 17, 1991. The Employment and Training Administration issued controlling guidance for the States and State agencies in the operating instructions in GAL 4-92, dated November 27, 1991; GAL 4-92, Change 1, dated February 10, 1992 and GAL 4- 92, Change 2, dated February 13, 1992. Since the enactment of P.L. 102-244, which was signed by the President on February 7, 1992, and issuance of GAL 4-92, and Changes thereto, many States and cooperating State agencies have had questions concerning the instructions and guidelines issued in Section III.M., Fraud and Overpayment., in Attachment A to the GAL, which has necessitated many verbal responses and responses to questions in UIPL 9-92 and Changes thereto. Therefore, the Department in this Change 3, is providing a revised Section III.M. to replace the original Section III.M. in Attachment A to GAL 4-92, which includes changes to, and clarifications of, the operating instructions in order to assure uniform application of the provisions among the States. Specifically, the Department is clarifying that States have the option to elect implementing a waiver program for non-fraud overpayments, clarifies procedures that must be followed if such election is made, and clarifies restoration of account balances when overpayments are established. In addition, the language of certain paragraphs is changed to parallel the provisions of 20 CFR Part 617, the Department's regulations implementing the Trade Act of 1974, as amended. The Trade Act of 1974 and the EUC Act contain nearly identical provisions related to waivers and offsets. Since both are Federally funded programs, the Department must follow the regulations established for the Trade Act, as such establish the precedents when the statutes parallel one another. If Congress had intended differently, the EUC statute would have contained other provisions. The operating instructions in GAL 4-92, GAL 4-92, Change 1, GAL 4- 92, Change 2, and this Change 3 are issued to the States and the cooperating State agencies, and constitute the controlling guidance provided by the Department of Labor in its role as the principal in the EUC program. As agents of the United States, the States and the cooperating State agencies may not vary from the operating instructions in GAL 4-92, GAL 4-92, Change 1, GAL 4-92, Change 2, or this Change 3 (or any subsequent or supplemental operating instructions) without the prior approval of the Department of Labor. Attachment A--Changes to Operating Instructions: M. Fraud and Overpayment. The Act contains specific provisions with respect to fraud and overpayments of EUC. Provisions of the State law applied to detection and prevention of fraudulent overpayments of EUC will be, as a minimum, commensurate with those applied by the State with respect to regular compensation and which are consistent with the Secretary's "Standard for Fraud and Overpayment Detection" (Employment Security Manual, Part V, Sections 7510, et seq.) 1. Fraudulent Claiming of EUC. Section 105 of the Act provides that, if an individual knowingly has made, or caused to be made by another, a false statement or representation of a material fact, or knowingly has failed, or caused another to fail, to disclose a material fact, and as a result of such false statement or representation or of such nondisclosure the individual has received an amount of EUC to which the individual was not entitled, the individual: a. shall be ineligible for further EUC in accordance with the provisions of the applicable State unemployment compensation law relating to fraud in connection with a claim for unemployment compensation, and b. shall be subject to prosecution under Section 1001 of Title 18, U.S.C. Provisions of State law relating to disqualification for fraudulently claiming or receiving a payment of compensation shall apply to claims for and payment of EUC. When a SESA has sufficient facts to make a prima facie case under 18 U.S.C. 1001, it will consider referral for criminal prosecution in accordance with the provisions of the Memorandum of Understanding (MOU) between the Department's Office of Inspector General and the Employment and Training Administration, which was transmitted as an attachment to UIPL 10-87 (also see UIPLs 16-85 and 21-90). If Federal prosecution is recommended, the matter will be referred to the appropriate Regional Office of the U.S. Department of Labor, Office of the Inspector General (OIG). For those cases not meeting the criteria of referral to the OIG for investigation and prosecution, as outlined in the MOU, or if the OIG does not accept the case for investigation, or it is accepted, but is later returned because the U.S. Attorney declines prosecution, the SESA should refer the case for prosecution under State law provisions. 2. Recovery of Overpayments. Under Section 105(b) of the Act each State shall require repayment from individuals who have received any payment of EUC to which they are not entitled (whether fraudulent or non-fraudulent), unless the SESA, under the optional language of Section 105(b), elects to have a program under which it will waive recovery of overpayments. A SESA may elect to have an EUC waiver program even if it has no waiver provisions under State law for regular compensation. If the SESA elects to have an EUC waiver program and has a waiver program under State law, no State law waiver provisions for regular compensation apply to EUC, and the SESA shall follow the guidelines outlined in this section III.M.2. Any SESA electing to have a waiver program may waive recovery of a non-fraudulent EUC overpayment if it determines, in accordance with the guidelines which follow, that-- a. the payment of such EUC was without fault on the part of the individual, and b. such repayment would be contrary to equity and good conscience. (1) In determining whether fault exists, for purposes of section III.M.2.a. above, the following factors shall be considered: (a) Whether a material statement or representation was made by the individual in connection with the application for EUC that resulted in the overpayment, and whether the individual knew or should have known that the statement or representation was inaccurate. (b) Whether the individual failed or caused another to fail to disclose a material fact, in connection with an application for EUC that resulted in the overpayment, and whether the individual knew or should have known that the fact was material. (c) Whether the individual knew or could have been expected to know that the individual was not entitled to the EUC payment. (d) Whether, for any other reason, the overpayment resulted directly or indirectly, and partially or totally, from any act or omission of the individual or of which the individual had knowledge, and which was erroneous or inaccurate or otherwise wrong. (e) Whether there has been a determination of fraud under Section 105 of the Act (paragraph 1 of this section III.M.). An affirmative finding on any one of the factors in section III.M.2.b.(1) (a)-(e) above precludes waiver of overpayment recovery. (2) In determining whether equity and good conscience exists, for purposes of section III.M.2.b. above, the following factors shall be considered: (a) whether the overpayment was the result of a decision on appeal, whether the State agency had given notice to the individual that the case has been appealed and that the individual may be required to repay the overpayment in the event of a reversal on appeal, and whether recovery of the overpayment will not cause extraordinary and lasting financial hardship to the individual. (b) whether recovery of the overpayment will not cause extraordinary financial hardship to the individual, and there has been no affirmative finding under the preceding paragraph (2)(a) with respect to such individual and such overpayment. An affirmative finding on either of the foregoing factors, in preceding paragraphs (2)(a) and 2(b), precludes waiver of recovery of the overpayment. For the purpose of this paragraph (2), an extraordinary financial hardship shall exist if recovery of the overpayment would result directly in the individual's loss of or inability to obtain minimal necessities of food, medicine, and shelter for a substantial period of time; and an extraordinary and lasting financial hardship shall be extraordinary as described above and may be expected to endure for the foreseeable future. In applying this test in the case of attempted recovery by repayment, a substantial period of time shall be 30 days, and the foreseeable future shall be at least three months. In applying this test in the case of proposed recoupment from other benefits, a substantial period of time and the foreseeable future shall be the longest potential period of benefit entitlement as seen at the time of the request for a waiver determination. In making these determinations, the State agency shall take into account all potential income of the individual and the individual's family and all cash resources available or potentially available to the individual and the individual's family in the time period being considered. (3) Determinations granting or denying waivers of overpayments shall be made only on request for a waiver determination. Such request shall be made on a form which shall be furnished to the individual by the State agency. Notices of determination of overpayments shall include an accurate description of the waiver provisions of this paragraph (2), if the SESA has elected to allow waivers of EUC overpayments. (4) Unless an EUC overpayment is otherwise recovered, or is waived under paragraph (2) of this section, the SESA shall, during the three-year period after the date the individual received the payment of EUC to which the individual was not entitled, recover the overpayment by deductions from any sums payable to the individual under: (a) the Act and this GAL 4-92 and changes; (b) any Federal unemployment compensation law administered by the SESA; or (c) any other Federal law administered by the SESA which provides for the payment of any unemployment assistance or an allowance with respect to unemployment. (5) No single deduction under this section III.M.2., shall exceed 50 percent of the amount otherwise payable to the individual, and when a deduction is made it shall be 50 percent of the amount otherwise payable. (6) To the extent permitted under State law, an EUC overpayment may be recovered by offset, within the 50 percent and three-year limitations provided in paragraphs (4) and (5) above, from benefits payable under the State unemployment compensation law. (7) At the end of the three-year limitation, the SESA may remove the overpayment from its accounting record. Although no further active collection efforts by the SESA are required, the SESA shall maintain an administrative record during the subsequent three-year period to provide for possible collection through methods other than offset. After the subsequent three-year period, the SESA may dispose of the overpayment record. (8) No repayment may be required, and no deduction may be made, under this section III.M.2. until a determination under paragraph 2. of this section by the State agency has been made, notice of the determination and an opportunity for a fair hearing thereon has been given to the individual concerned, and the determination has become final. (9) EUC overpayment recovery shall be enforced by any action or proceeding which may be brought under State or Federal law, unless recovery of the overpayment is waived in accordance with the Act and the instructions in this section III.M. (10) Overpayments of EUC recovered in any manner shall be deposited into the fund from which payment was made. (11) If a State has an agreement in effect with the Secretary to implement the cross-program offset provisions of Section 303(g)(2) of the SSA, EUC payments shall be used to offset State regular compensation or EB overpayments and State regular compensation or EB payments shall be used to offset EUC overpayments. Determinations under this section III.M.2., shall be subject to the determination and appeal and hearing provisions of sections III.I. and J. (12) An individual who has an overpayment established under paragraph 2. of this section may have the amount of such overpayment restored to the EUC account established for such individual in accordance with the State law for regular compensation. No restoration is permitted nor shall such occur until the determination of overpayment is final in accordance with paragraph (8) of this section. (13) If the SESA elects to implement an EUC waiver program, it may not put such election into effect unless it previously elected to allow waiver of nonfraudulent EUC overpayments and has published agency instructions on such election. Action Required: SESA Administrators shall provide the above controlling guidance to appropriate staff and assure that any changes required in the State's EUC fraud and overpayment procedures are implemented.