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U.S. DEPARTMENT OF LABOR
Employment and Training Administration
Washington, D. C. 20213

CLASSIFICATION

UI

CORRESPONDENCE SYMBOL

TURL

ISSUE DATE

September 8, 1981

RESCISSIONS

None

EXPIRATION DATE

January 31, 1982

DIRECTIVE

:

UNEMPLOYMENT INSURANCE PROGRAM LETTER NO. 14-81, Change 2

 

TO

:

ALL STATE EMPLOYMENT SECURITY AGENCIES

 

FROM

:

T. JAMES WALKER
Administrator
Administration and Management

 

SUBJECT

:

Amendments Made by P.L. 96-499 (Omnibus Reconciliation Act of 1980) Which Affect the Unemployment Compensation Program

 

  1. Purpose. To advise State agencies of changes made in the interpretation of certain provisions in section 202(a)(3) of the Federal State Extended Unemployment Compensation Act of 1970 (EUCA), to provide further clarification of other provisions in that section as explained in Unemployment Insurance Program Letter No. 14-81, and to inform States of the effective date for implementation of the provisions in section 202(a)(4), EUCA.

  2. References. UIPL No. 14-81; section 1024 of P.L.96-499, section 202(a)(3) and (4), (EUCA), GAL No. 21-81.

  3. Background. Several issues arose following the release of Unemployment Insurance Program Letter No. 14-81, as to certain positions taken on interpretations of the special "work test" provisions included in section 202(a)(3) and (4) of EUCA. Those issues have now been resolved and as a consequence it is necessary to change the commentary in UIPL No. 14-81 to reflect the results of our reevaluations of those interpretations. The changes that have occurred in our interpretations involve (1) the 4-by-4 disqualification specified in the new work test for extended benefits, (2) the definition of "suitable work" in section 202(a)(3)(C), (3) the requirement in subparagraph (D)(ii) of section 202(a)(3) requiring that a position must be offered in writing and be listed with the State employment service before a disqualification can be imposed, and (4) the effective date for the provisions in section 202(a)(4) regarding the ineligibility for extended benefits of claimants who have been disqualified for any of the specified causes and the disqualification has ended by other than employment, (5) clarification of the inapplicability of suitable work criteria in State law where the special EB. criteria apply, and (6) confirmation that the requirements in sections 3304 (a)(5) and (8), FUTA, override the special EB work test.

  4. Explanation of Changes in Previous Interpretations.

    1. Purging a disqualification.  Section 202(a)(3)(B), EUCA, provides that the special disqualification for failing to accept any offer of suitable work or failing to actively engage in seeking work shall not end until the individual has been "employed" during "at least 4 weeks" and earned "not less" than 4 times the individual's weekly benefit amount. It is clear from this language that a State may impose a disqualification greater than 4-by-4, but since there was no legislative history requiring that to "be employed" there must be covered employment or that the weeks be consecutive, the position was taken, as stated in the third paragraph on page 9 of UIPL No. 14-81, that the State has no option to impose any restrictions as to those considerations. Upon reconsideration of this position, it has been concluded that the previous restrictions on the State's discretion in applying section 202(a)(3)(B), EUCA, were inappropriate. Accordingly, that section is construed as permitting a State to designate in its law both the type of employment it will accept to purge the disqualification, that is, whether or not it must be covered employment and wages, and the order of satisfying the required weeks of employment, i.e. whether the weeks must be consecutive or may be any 4 weeks. However since the Federal law requires that the individual must have been "employed" and have earnings it is apparent that only employment in an employee-employer relationship will be sufficient to satisfy the Federal requirements in this provision. Consequently, a State law may not provide for the acceptance of any weeks of or earnings in self-employment as a basis for purging the disqualification.

    2. Word "and" in subparagraph (D)(ii) of section 202 (a)(3).  Section 202(a)(3)(D)(ii), EUCA, provides that extended compensation shall not be denied for any week by reason of a failure to accept an offer of, or apply for, suitable work:

      "(ii) if the position was not offered to such individual in writing and was not listed with the State employment service." (Emphasis added.)

      The word "and" in this provision has previously been construed in the conjunctive as requiring that both conditions be satisfied before imposing the discualification, i.e., there must be both a written offer and an employment service listing. That position was announced in UIPL No. 14-81,. and emphasized at the earlier meetings held by representatives of UIS in Philadelphia and Denver explaining the amendments made by P.L. 96-499. That view was taken because it was believed the statutory language required that it be read as written.

      However, the solicitor has since concluded that "and" must be construed as "or" in this instance. This view is supported by the explanation in Conference Report No. 96-1479 and Senate Finance Committee Print 96-36. Further, congressional staff have maintained that the word "and" was an error in drafting and should be read as "or", so that either an offer in writing or the listing with the employment service would suffice to meet this condition.

      It is apparent that the word so construed provides for a more reasonable and rational requirement. In practice an offer of a job is rarely made in writing and it is unheard of to make an offer of a job prior to a referral. Therefore, it is unreasonable to expect or require an advance offer in writing, especially in the case of a referral. It is also obvious that requiring that the offer be in writing and listed with the employment service makes it more difficult to impose the disqualification under the EB "work test" than is the case under the State law. Congressional intent was to impose a more stringent requirement than provided under current State law disqualifications. Clearly that intent is not realized by construing the word "and" in the conjunctive and thereby requiring that both of the conditions contained in subparagraph (D) be satisfied to justify imposition of the special disqualification.

      In light of these considerations, we reevaluated the statute and the legislative history of this provision, and examined pertinent court decisions to determine what action could be taken legally to achieve congressional intent. As a result it has been established through the decisions of the courts that the word "and" in a statute may indeed be construed as "or" (and vice versa) where that is necessary to carry out the legislative intent. Accordingly, on the basis of the holdings in those decisions and the expressed legislative intent, it is concluded that the word "and" as used in section 202(a)(3)(D)(ii), EUCA, must be construed as "or."

      Therefore, a State law will be considered consistent with the requirements of subparagraph (D)(ii) if it specifies that a disqualification for refusing an offer of suitable work will be imposed if the job is either offered in writing or is listed with the State employment service. In the case of a disqualification for a failure to apply for any suitable work to which the individual is referred by the State agency, all that is required by the Federal law is that the job to which the individual is referred be listed with the State employment service. Requiring an offer in writing and an employment service listing in either case would not be consistent with section 202(a)(3).

      Information provided on pages 12 and 13 of UIPL No. 14-81, that is inconsistent with the interpretation explained above is superseded. Additionally, draft language provided on page 2 of the Attachment to UIPL No. 14-81, in the section designated as clause (i) of subparagraph (D) is revised by substituting the word "or" for the word "and" where it appears on the second line of that clause.

      For a review of the cases and material relied upon for the interpretation set forth above see the following: U.S. vs. Fisk, 70 U.S. 445, 447;Volume 1A, Sutherland, Statutory Construction Section 21.14 (4th Edition, 1972), and 3 Word and Phrases 569 through 603 (1953).

    3. Definition of "suitable work" in. Section 202(a)(3)(C). The term "suitable work" as defined in. section 202(a)(3)(C) applies to the provisions in sections 202(a)(3)(A)(i) and (F), which provide, respectively, for the ineligibility of any individual who fails to accept an offer of or apply for suitable work, and requires that extended benefit claimants be referred to any suitable work which meets the requirements in section 202(a)(3). Specifically subparagraph (C) provides:

      "For purposes of this paragraph, the term 'suitable work' means, with respect to any individual, any work which is within such individual's capabilities; except that, if the individual furnishes evidence satisfactory to the State agency that such individual's prospects for obtaining work in his customary occupation within a reasonably short period are good, the determination of whether any work is suitable work with respect to such individual shall be made in accordance with the applicable State law." (Emphasis added.)

      As reflected in the commentary contained in UIPL No. 14-81 and GAL No. 21-81, the interpretation and application of certain aspects of this provision has by the terms of the statute been left to the discretion of the State agency. UIPL No. 14-81 states specifically that "The determination of whether an individual's prospects are good or not is up to each State." A comment was also made on page 10 of that letter indicating that "we recommend requiring that any evidence of the individual's prospects for obtaining such work show that he or she can expect to find work within a period not to exceed four weeks beginning with the first week for which extended benefits are claimed, except when the individual has a definite offer of employment with a specific starting date." That same recommendation was made in GAL No. 21-81. The purpose of this explanation is to modify the statement on page 10 of UIPL 14-81 and to correct the characterization of those comments in the UIPL and GAL as a recommendation and establish that what constitutes a "reasonably short period" within the purview of section 202(a)(3)(C), must be a period as determined by Federal law.

      The Congress did not provide any specific guidance as to what constitutes a "reasonably short period" for purposes of the exception contained in section 202(a)(3)(C). However, it is apparent that the period in which an individual would be expected to obtain work in his or her customary occupation would indeed be short. The term "short" is expressive of that by itself.

      The conditions that are now imposed on EB claimants indicate a serious intent to assure that extended benefits are directed to those individuals who are clearly making all reasonable efforts to return to work, meaning any work within their capabilities. In view of the limited duration for paying extended benefits, if that purpose is to be realistically achieved, we believe that a period not to exceed four weeks is reasonable for purposes of applying the exception to the EB work test in section 202(a)(3)(C).  Since the four weeks prescribed represents the limits on what is a reasonably short period, the State may provide for a shorter period consistent with the requirements of section 202(a)(3)(C) as so interpreted, but not a longer period than 4 weeks.

    As indicated previously, the provisions of section 202(a)(3)(C) apply both to the disqualification for refusing an offer of or referral to suitable work, as well as the requirement for referring claimants to suitable work which meets the specified conditions. Accordingly, for purposes of sections 202(a)(3)(A)(i) and (F) the phrase "reasonably short period" means a period not to exceed four calendar weeks beginning with the first week for which extended benefits (or shareable regular benefits) are claimed. Contrary to what was stated on page 10 of UIPL No. 14-81 there is no exception to this requirement where the individual has a definite offer of work with a starting date that is beyond the four week period designated above.

    Under the new interpretation a State must classify an individual's prospects for obtaining work. in his or her customary occupation within the four-week period as either good or not good. If the prospects are classified as good but they do not materialize at the end of the four weeks, then the individual's prospects are automatically reclassified as not good. For any week with respect to which a claimant's prospects are classified as not good, the disqualification in section 202(a)(3)(A) and (B), and the referral requirements in (F) are applicable. Contrary to the procedures indicated on page 5 of GAL No. 21-81, the State agency will not be required to reassess a claimant's job prospects after the initial job prospect failed to materialize; the reassessment is automatic as stated above. If the individual refuses an offer of or referral to suitable work within the first four weeks, the agency must determine whether the classification of the individual's prospects as good was correct. If the individual's prospects are determined to be not good then the determination of whether a disqualification applies must be made pursuant to the applicable provisions of sections 202(a)(3)(A) and (B). But if the individual's prospects are determined to be good, then the provisions of the State law for regular benefits as well as the disqualification period contained therein, will apply to any failure to accept an offer of or referral to suitable work.

    If the initial classification of the individual's prospects was not good, then in connection with any issue which arises within the first four weeks beginning with the week for which extended benefits (or shareable regular benefits) are claimed, there must be a determination of the correctness of that initial classification. This is necessary for the purpose of determining whether a disqualification is applicable pursuant to section 202(a)(3)(A) and (B) or the State law provisions applicable to claimants for regular benefits.

    The determination of the classification of the individual's prospects made in connection with the issue raised must be subject to the right of appeal and review in connection with the right of appeal and review of the determination of the claimant's entitlement to benefits. However, after the first four weeks all claimants must be made subject to the disqualification in section 202(a)(3)(A) and (B) for failure to accept an offer of or apply for suitable work. In addition such claimants must also be made subject to the referral requirements in section 202(a)(3)(F).

    Although the above discussion points out how the classification made pursuant to section 202(a)(3)(C) affects application of the disqualification in section 202(a)(3)(A)(i) for refusing an offer of or referral to suitable work as well as the referral requirements in section 202(a)(3)(F), it must be recognized that the classification will also have an impact on the disqualification for failing to "actively engage in seeking work" in section 202(a)(3)(A)(ii). The requirements of this latter section are, of course, applicable to all claimants for extended benefits regardless of this classification.  However, in order to avoid the anomalous results of having individuals who are classified as having good prospects seek work that they would not have to accept if offered, it is necessary that appropriate recognition be given to that classification in applying the actively seeking work requirement in section 202(a)(3)(A)(ii). Therefore, for the short period of time (4 weeks or less) an individual's prospects are classified as or determined to be good, the work which such a claimant must actively seek is work which meets the standard work test in the State law instead of the special "suitable work" test. However if, during such a period an individual fail to actively seek work of the nature prescribed, he/she will be subject to the period of disqualification required by section 202(a)(3)(A) and (B) (the same as a claimant whose prospects are classified as not good) instead of the State law unavailability provision applicable to claimants for regular benefits.

    This limited application of the good prospects classification to the disqualification for failing to actively engage in seeking work has no effect on the manner in which such individuals must satisfy the search for work requirement. They must actively seek work with the same systematic and sustained effort as the claimant whose prospects are classified as not good. Application of the standard work test in the State law in these cases may not operate so as to preclude application of the requirement in section 202(a)(3)(A)(ii) that the individual "actively engage in seeking work" as that phrase is defined in section 202(a)(3)(E). For further discussion on the active search for work requirements as it is to be applied to claimants for extended benefits regardless of the classification of the individuals prospects for obtaining work in his/her customary occupation, see GAL 21-81.

    States will be expected to interpret and apply the phrase "reasonably short period" for purposes of implementing section 207(a)(3)(C) in a manner that accords with the above outlined interpretation. That interpretation is now required for consistency with the requirements of section 3304(a)(11), FUTA.

    However, we wish to reaffirm our view that the determination of "whether the evidence is satisfactory" to establish that the "individual's prospects of obtaining work in his or her customary occupation are good," and the interpretation to be made of those phrases, are matters that are within the discretion of the State agency as provided under the statute.  In the interest of uniform interpretation and application of section 202(a)(3)(C) we strongly urge adoption of the guidelines provided in GAL No. 21-81 for implementing those aspects of section 202(a)(3)(C) committed to the discretion of the States.

  5. Clarification and Explanation of the Basis for the Inapplicability of Suitable Work Criteria in State Law When Special EB Criteria Apply. As pointed out on page 10 of UIPL No. 14-81, the question of the suitability of work arising under an issue involving a refusal to accept an offer of or referral to suitable work on an extended benefit claim must, for consistency with Federal law requirements, be decided on the basis of the special definition of suitable work in section 202(a)(3)(C), if pursuant to that section, the State agency determines that the individual's prospects for securing work in his or her customary occupation are not good. A determination to the contrary, by the State agency, i.e., that the individual's prospect are good, necessitates that the standard definition of suitable work in the State law, which applies to claimants for regular benefits, be applied rather than the special definition. In other words, the two tests are mutually exclusive. One or the other must be applied depending on the agency's determination of the individual's prospects for obtaining work in his customary occupation.

    It is expected that cases will arise in which the disqualification under the special work test in the Federal law can not be applied because one of the minimum conditions of subparagraph (D) of section 202(a)(3) is not met, but under the same facts the claimant would be subject to a disqualification under the State's standard suitable work provisions for failing to apply for or to accept an offer of such work. For instance the offered work may not be listed with the State employment service, which is not a condition of. the State's standard suitable work test. Nevertheless, because the two work tests are mutually exclusive under the Federal law requirements, the State may not revert to its standard suitable work test when the special work test (made applicable by the State's determination that the individual's prospects for obtaining work. in his customary occupation are not good) does not require a disqualification.

    Some States have asked for further explanation of the basis for this interpretation of section 202(a)(3)(C). We offer the following additional comments in response to those requests.

    Under section 202(a)(2) of the Federal/State Extended Unemployment Compensation Act of 1970 (EUCA), the terms and conditions applicable to regular claims are to be applied to extended benefit claims, "Except where inconsistent with the provisions of this title." Thus, where the Federal provisions establish specific terms and conditions of entitlement to EB, any provisions of State law that are inconsistent with the Federal law provisions cannot be applied to EB claimants. As a consequence, there are provisions in EUCA such as the weekly benefit amount and duration, the definition of exhaustee and the beginning and ending of Extended Benefit Periods, which override any State law provisions on the subject.

    Section 202(a)(3)(A) specifically provides that "Notwithstanding the provisions of paragraph (2)" extended compensation shall not be paid to any individual for any week during which "he fails to accept any offer of suitable work (as defined in subparagraph (c) (sic)) or fails to apply for any suitable work ...." We believe that the "notwithstanding clause" renders application of the disqualification for these same causes under the State law for regular benefits inapplicable to extended benefit claims except as specifically provided in the definition of suitable work in subparagraph (C) of section 202(a)(3). Under that definition any work which is within the individual's capabilities is suitable, except that if the individual's prospects for obtaining work in his customary occupation within a reasonably short period are determined by the State agency to be "good" then the State's standard work test for determining suitability of the work rather than the special work test shall apply to the claimant. This is. the sole exception to the application of the special work test to extended benefits claimants. Subparagraph (D)(iii) of section 202(a)(3) provides for utilizing elements of the State's standard work test only to the extent that such elements are not inconsistent with the requirements of the special work test. That provision is applicable only when applying the special work test in the Federal law.

    As will be noted from the statutory language of the Federal law, the elements of the special test and the conditions under which they are to be applied or not applied, are set forth in explicit detail. The exclusiveness of the special work test is evident in this detail. If State laws were construed as overriding the special work test except in the express circumstances prescribed, it is apparent that the Federal law would be rendered meaningless, since States could then apply their own work test irrespective of whether prospects are or are not "good" for obtaining work in the individual's customary occupation.

    Such results would not only conflict with sections 202(a)(2) and (3) but are also contrary to congressional intent. The explanation of the special work test in Conference Report No. 96-1479 and Senate Finance Committee Print 96-36 provides a clear expression of congressional intent regarding the exclusiveness of the special work test that it established. Both documents express what is obvious on the face of the law, that only in the case where the claimant's prospects are determined to be good will the State's standard test apply "rather than" the special work test.

  6. Effective date of section 202(a)(4), EUCA. Paragraph (4) of section 202(a), EUCA, provides:

    "(4)  No provision of the State law which terminates a disqualification for voluntarily leaving employment, being discharged for misconduct, or refusing suitable employment shall apply for purposes of determining eligibility for extended compensation unless such termination is based upon employment subsequent to the date of such disqualification." (Emphasis added.)

    Section 1024(b) of P.L. 96-499 provides that the amendments in sections 202(a)(3), (4) and (5) , EUCA, "shall apply with respect to weeks of unemployment beginning after March 31, 1981." The question has been raised as to whether paragraph (4) applies to all claimants for extended benefits after March 31, 1981, or only those who first become eligible for extended benefits in weeks beginning after March 31, 1981. Paragraph (4) specifically states that the provisions terminating the disqualification shall not apply "for purposes of determining eligibility for extended compensation" unless such termination is based on subsequent employment. The quoted phrase has acquired a specific meaning in the program over the years; it means a determination made on an initial (first) claim for benefits. As used here it means an initial claim for extended benefits. Accordingly, the provisions in paragraph (4) are applicable only to initial claims for extended benefits filed for weeks beginning after March 31, 1981, and would not apply to those claimants whose initial claims were filed in prior weeks. Application of the provision to claimants whose initial claims for extended benefits were effective for weeks beginning before April 1, 1981, would, therefore, not be consistent with section 202(a)(4). Conversely, the other provisions, i.e. sections 202(a)(3) and (5), must be applied effective the first week beginning after March 31, 1981, to all claimants. However, since the provisions of section 202(a)(4) also apply to claims for shareable regular compensation by reason of the provisions in section 202(a)(5), EUCA, any claims for such compensation first filed for any week beginning after March 31, 1981, must be subject to the conditions of section 202(a)(4) if the State is to continue to received the Federal share for the cost of shareable regular compensation.

  7. Application of Labor Standard Requirements of Sections 3304(a)(5) and 3304(a)(8), FUTA, to EB Claimants Subject to New EB Work Test. A question arose with the enactment of the provisions in section 1024 of P.L. 96-499, as to whether it was intended that such provisions override the labor standards requirements of section 3304(a)(5) of the Federal Unemployment Tax Act (FUTA) or the requirement of section 3304(a)(8) concerning workers in State approved training. This confirms and explains the basis for the position taken earlier in UIPL 14-81 that sections 3304(a)(5) and (8) must continue to be given effect.

    There are no provisions in P.L. 96-499 which specifically address the applicability of sections 3304(a)(5) and (8), FUTA. Under other laws enacted by the Congress where a conflict existed between the newly enacted provisions and existing laws involving the program, Congress recognized and resolved the conflict by providing expressly that the provisions of the existing law would not apply to the new provisions. See for example, section 416 of P.L. 96-364, relating to extended benefits and section 3304(a)(9)(A), FUTA. As stated previously, the Congress did not take such action in this case.

    There is legislative history to support the view that there was no intention to negate the provisions of sections 3304(a)(5) and (8) as shown by the absence of any express language to that effect. Senate Finance Committee Print 96-36, dated June 25, 1980, in describing the new EB work test, stated that any work would be considered suitable if it, among other things, "met the conditions of present Federal law." We believe that this must be taken as a reference to sections 3304(a)(5) and (8), since they are the only Federal law requirements that are pertinent. Further, being requirements of the FUTA along with section 3304(a)(11) through which section 1024 of P.L. 96-499 is made a requirement for State laws, the three sections must be construed in pari materia. Accordingly, it was concluded that the provisions of section 3304(a)(5) and (8), FUTA, stand on an equal footing with the new requirements for EB established by section 1024 of P.L. 96-499.

    Consequently, irrespective of the new conditions under which claimants for extended benefits must be denied benefits for failing to accept offers of or apply for suitable work, or for failing to actively engage in seeking work, pursuant to the provisions of section 202(a)(A)(i) and (ii), they shall not be denied extended benefits for failing to meet such conditions, if such benefits would not be deniable by reason of the requirements of sections 3304(a)(5) or (8), FUTA. The comments on pages 14 and 15 of UIPL No. 14-81 concerning these requirements, as supplemented by the above views, remain in effect.

  8. Effect of changes provided herein. The modifications made herein to positions taken previously, override and replace these positions as announced in UIPL No. 14-81 and GAL No. 21-81 or any other documents, as they pertain to the specific provisions discussed in this letter. Such changes are effective as of the same date that applies to the provisions in sections 202(a)(3), (4) and (5), namely, for weeks of unemployment beginning after March 31, 1981.

  9. Action Required. SESAs are requested to take necessary action to assure application of their laws consistent with the interpretations contained in this letter.

  10. Inquiries. Questions should be directed to the appropriate regional office.