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U.S. DEPARTMENT OF LABOR
Employment and Training Administration
Washington, D. C. 20210

CLASSIFICATION

UI

CORRESPONDENCE SYMBOL

TEUL

ISSUE DATE

January 27, 1998

RESCISSIONS

None

EXPIRATION DATE

Continuing

DIRECTIVE

:

UNEMPLOYMENT INSURANCE PROGRAM LETTER NO.11-98

 

TO

:

ALL STATE EMPLOYMENT SECURITY AGENCIES

 

FROM

:

GRACE A. KILBANE
Director
Unemployment Insurance Service

 

SUBJECT

:

Termination Date of the Self-Employment Assistance Program

 

  1. Purpose. To remind the States of the effective date of the termination of the self-employment assistance (SEA) program.

  2. References. Section 3306(t) of the Federal Unemployment Tax Act (FUTA); North American Free Trade Agreement Implementation Act (NAFTA), P.L. No. 103-182; Unemployment Insurance Program Letter (UIPL) No. 14-94.

  3. Background. The NAFTA, P.L. No. 103-182, among other things, amended Federal law to give States the option of permitting certain individuals to receive a SEA payment from the State's unemployment fund for the purpose of assisting such individuals in establishing businesses and becoming self-employed. These SESA payments are authorized only during the 5 years following NAFTA's date of enactment. Since NAFTA was enacted on December 8, 1993, the SEA program provisions were effective on that date and expire on December 8, 1998. See UIPL 14-94, pages 1 and 14. Since at this time there is no legislation pending before Congress that authorizes States to continue operating a SEA program beyond December 8, 1998, we are issuing this UIPL to remind States that their SEA programs must be terminated.

  4. Phase-out. SEA allowances are payable only for the period for which Federal authorization permits the program to operate, which is prior to December 8, 1998. SEA payments may be issued on and after December 8, 1998, but only with respect to periods of time prior to December 8, 1998. States may phase out the SEA program by establishing a cut-off date prior to December 8, 1998, for enrolling new SEA participants. This would allow the time needed for SEA participants to receive all SEA allowances and participate in all activities and prevent the possibility of some participants not receiving all SEA allowances. Enrolling claimants into a program that will expire before the participants will have the opportunity to receive all allowances or engage in all required activities would likely result in unfavorable reactions from the participants and unwanted publicity. Alternatively, States could provide claimants with the options of either receiving their maximum benefit amount (MBA) under the regular UI program, or participating in the SEA program with the understanding that their MBA will not be payable as SEA allowances.

  5. Action. We encourage States to take appropriate action to assure the smooth phase-out of the SEA program. State Administrators are requested to provide this information to appropriate staff.

  6. Inquiries. Please direct inquiries to the appropriate Regional Office.