Wednesday, September 12, 2012

Questions about Unemployment Insurance reforms in South Carolina

Depending upon who you ask, efforts to crack down on eligibility for unemployment insurance may or may not be paying off. This year, the agency that issues these payments says they're on track to pay out significantly less for unemployment claims, with an expected $300 million paid out, a full third less than the $450 million paid out in 2011.

Why is this important? The state's unemployment insurance fund is supported by payroll taxes from employers. Fewer claims allow the agency to cut back taxes and pay back money borrowed from the federal government to help make payments in past years.

But there are differing opinions on the issue about the potential for rate reductions for employers between staff who oversee the program and State Senator Kevin Bryant, an Anderson County Republican who chairs the State Senate's Labor, Commerce and Industry Committee's subcommittee that oversees unemployment insurance issues.

Laura Robinson, assistant director of the Department of Employment and Workforce, promised legislators in a recent Senate LCI subcommittee hearing that the numbers would come down even more as agency employees were trained to comply with the new law and better scrutinize unemployment claims.

Over ten percent of the $450 million paid out - $50 million - went to those who were fired for cause, which the adoption of legislation disqualifying those fired for cause from receiving unemployment compensation (S 1125, sponsored by Sen. Lee Bright, R-Spartanburg) was supposed to address. However, $12 million was paid out in the first half of this year to those who were fired for cause and another four million was paid in the last quarter, cautioning that the agency was still approving a substantial portion of illegal claims and accounting for very little of the promised $150 million in UI claim payment reductions.

Bryant is one of those most outspoken about the agency's handling of unemployment insurance claims. Earlier today, I talked with Bryant who believed the agency may not deliver the promised savings for employers, warning of a "culture that likes to hand out money and assume an employer guilty until they can prove their innocence."

Bryant shares his concerns in a recent article on his blog in which he detailed findings on an audit of past UI claims, that these findings suggest the potential for "an approximately 20% or higher rate increase for all employers." Some of the concerns include:

  • "(S)taff subsequently determined that DEW frequently fails to follow its policy regarding employee contact. DEW indicated that it would execute its policy and attempt to contact the employers in question. DEW has not responded to staff inquires concerning the follow up."
  • "Review of the cases otherwise deemed “eligible” reveals no discernible set of uniform or consistent standards with which DEW adjudicates claims either under the new law (Act 247) or law that has been in existence for decades."
  • No review has been conducted of the hundreds of claims ruled partially eligible, but it appears unlikely that those claims are adjudicated with any greater consistency or fidelity to the law than the ones ruled “eligible”. 
  • The failure of DEW to provide the requested information leaves no conclusion other than DEW neither is following the law nor has a legitimate or consistent understanding of its meaning. 

There's a lot of serious concerns in Bryant's article and we'd encourage you to see for yourself.

Bryant has been pushing to continue to tighten qualifications for unemployment, with three bills filed in the last session:

  • Ended unemployment for part-time workers (S1026). Those who only worked part-time and were seeking just part-time work would not qualify to receive unemployment
  • Require drug testing for those on unemployment (S1050). Those who failed a drug test would be disqualified for twenty weeks unless they participated in drug counseling.
  • Seasonal worker eligiblity (S1069). This would change how the state Department of Workforce addresses unemployment for seasonal workers to tighten eligibility.

Bryant told us he plans to continue to push hard on these issues when the General Assembly returns next year. Another Senate LCI subcommitee hearing is scheduled for October 4 at 10 am at the Gressette Building at the State House complex. I'll be there - and if you're concerned about the impact of this issue upon employers, you should join me.


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