IN REPLY REFER TO
FILE NO. 13:AS:L
FEDERAL SECURITY AGENCY
SOCIAL SECURITY BOARD
Unemployment Compensation Program Letter No. 85
TO: ALL STATE EMPLOYMENT SECURITY AGENCIES
Noncharging of a Portion of Benefits
Unemployment Compensation Program Letter No. 78 attempted to clarify the position of the Social Security Board with respect to circumstances in which the noncharging of an employer's account is consistent with section 1602 (a) (1) of the Internal Revenue Code. That letter ended: "If, after considering this statement, you believe there are any further problems, will you please notify us promptly."
No State agencies have notified us of any problems. I learn, however, from the Chairman of the Legislative Committee of the Interstate Conference of Employment Security Agencies that a few States raised questions with him concerning the meaning of "immediately" in item 2, "When benefits are paid for unemployment immediately after the expiration of a period of disqualification for (a) voluntary leaving without good cause, (b) discharge for misconduct, or (c) refusal of suitable work without good cause" and concerning the significance of the note following. I am glad to issue this clarifying statement.
The drafting of item 2 and the note following it was influenced by the variety of charging methods provided for in the State laws, as well as by provisions for noncharging already included in many State laws.
The word "immediately" was inserted in item 2 to place some time limitation on noncharging. If charges under all State laws were made, as in the majority of the laws, in terms of the wage credits earned with base-period employers, the clause might have been worded somthing as follows:
"When benefits based on wage credits earned with an employer prior to a period of disqualification are paid for unemployment after the expiration of a period of disqualification . . ."
The point is that one disqualification should not be used to exempt an employer from all future charges for benefits paid tth disqualified worker. Without the word "immediately," the clause could have been interpreted as gring the employer immunity for charges for benefits paid to the worker regardless of when he received the benefits. Assume, for example, that an employer discharges a worker who, as a result, is disqualified. Following the period of disqualification, he draws benefits for a few weeks. Then the same employer reemploys him, lays him off, and the worker is eligible for benefits. Tne benefits for the first period of unemployment need not be charged. If, under the State law, charging is in term of base-period employers, the benefits for the second period of unemployment need not be charged if they are based on wage credits earned prior to the disqualifying act. However, these benefits should be charged if they are based on wages earned during the period of employment which was subsequent to the disqualifying act.
To make this clear, the note was added in item 2. Under the note, charges may be omitted to all employers (including the separating employer) preceding a worker's discharge for misconduct or voluntary leaving without either good personal cause or good cause attributable to the employer.
/s/ Ewan Clague
Noncharging of Benefits to Employers Account. . . . . . .UC 85 4/16/45
Noncharging of benefits under. . . . . . . . . . . . UC 85 4/16/45