Legislative Affairs

Via AGC/VT Fastfax,and the monthly Build Board magazine, the members of the Vermont Chapter are notified of pending legislation with recommended action when necessary, actions and policies of federal agencies, and national developments affecting the construction industry.

Legislative News

Changes to the Unemployment Benefits

There are specific changes to the benefit for those who are considered "seasonal workers". Please see information on the "Variable Duration" below....

Upon passage, additional information and resources will be available under UI Reform link under New at www.labor.vermont.gov.

CONTEXT: " Failure to act this year will result in borrowing exceeding $163 million by the end of 2011. " The total cumulative impacts over the next 10 years from doing nothing means: o $81 million in interest payments o $172 million in FUTA tax payments by ALL Vermont employers o Total borrowing exceeding $257 million. " A comprehensive solution needed to include a combination of tax increases and benefit reductions. " This compromise gets the fund back in the black in 5 years.

EMPLOYER IMPACTS: (Effective January 1, 2011) Taxable wage: Increase the taxable wage base (TWB), the basis used for figuring an employers UI taxes, from the current $10,000 to $13,000 on 1/1/2011 and to $16,000 on 1/1/2012. ￘ TWB will index upward annually by overall wage growth after the trust fund balance becomes positive, projected to be 2015. ￘ TWB will drop by $2,000 upon return to tax rate schedule III and another $2,000 at schedule I. Fines and penalties will be increased from $35 to $100 if employer fails to file timely reports. ￘ In addition, a fine of up to $5,000 will be assessed on employers who misclassify employees. (VDOL will be conducting public education.) ￘ An employers account will remain charged for overpaid unemployment benefits if the overpayment resulted from employers failure to respond to requested forms to determine workers eligibility AND benefits are later rescinded for whatever reason.

BENEFIT IMPACTS: (Varying effective dates in 2011 and 2012) Maximum weekly benefit amount remains frozen at $425 while we are borrowing (current law). ￘ Increases will resume when the fund balance is positive, projected to be July 2015. ￘ To help make up for the lost increases, the maximum amount will become 57% of the overall average annual wage once we return to tax rate schedule III. ￘ NOTE: In 2008, only 23% of claimants received maximum amount; average was $312 per week. Variable total benefit amount will be changed for new claims effective after July 1, 2011. ￘ Maximum amount will be 46% of the wages claimant earned in the base period or 26 weeks, which ever is less. ￘ NOTE: A worker who works a full year, every year, will not be affected by this change. Firing for Misconduct: Penalty weeks are expanded from 6-12 to 6-15. These are weeks where UI benefits are delayed but the fired employee can still collect UI after the delay period. ￘ Findings of misconduct will result in a cap of 23 weeks of benefits. ￘ NOTES: Misconduct is currently defined as willful and culpable neglect of an employers interest, which the employer has the burden to demonstrate. It is NOT a single event of showing up late, but rather repeated negative behavior, usually with warning by the employer. There are three levels of appeals for a finding of misconduct. A lawyer is not required. Expanded Definition of gross misconduct: findings will prohibit the use of wages earned from firing employer for calculation of claimants weekly benefit amount. ￘ Examples of gross misconduct include but are not limited to: theft; fraud; intoxication; intentional serious damage to property; intentional infliction of personal injury; any conduct that constitutes a felony; or repeated incidents after written warning of either of the following: unprovoked insubordination or public use of profanity. Severance pay will be disqualifying, meaning a person can not draw unemployment at the same time they have received severance pay. The can still collect the full 26 weeks of UI but only after the severance is used One week waiting period will be reinstated at the start of new claims established on or after July 1, 2012. A person claiming UI benefits will have to wait one week after they are laid off to collect. They will still get the full 26 weeks of benefits, just delayed by 1 week. ￘ The waiting period sunsets in 2017 or when the trust fund returns to a positive balance, whichever is later. ￘ NOTES: In most cases, workers are paid in arrears, meaning they are getting their last pay check the first week of being unemployed. Studies have shown that a one-week waiting period positively impacts return-to-work rates. Vermont is one of only 12 states that did not have a waiting period. Exempted part time earnings while collecting UI benefits will change for new claims established on or after July 1, 2012. ￘ New system will exempt $40.00 or 30% of wages (whichever is greater) of wages earned. ￘ Example: A person who was filing and getting $400 in unemployment benefits and then finds part-time work and earns $200, will receive $260 in unemployment PLUS the $200 earned from working. ￘ Advantages to new system include: smoother transition to full-time employment; removing the existing cliff; and greater incentive for claimant to accept full-time work rather than limiting to part-time.

OTHER PROVISIONS: Implemented January 1, 2011 Reporting: The Commissioner of VDOL will expand annual reporting beyond the Governor to the committees of jurisdiction. ￘ The reports will be specific as to the health of the fund including any recommendations for action to ensure the continued health of the fund. ￘ There will also be a comprehensive review in 2013 on the progress of this legislation. Trust fund projections capability: VDOL will work with the Joint Fiscal Office to utilize USDOL modeling capabilities. Presently, only VDOL has access to this capability. Self employment assistance: Create a committee to study the possibility of implementing a Self Employment Assistance (SEA) program for UI claimants. ￘ Presently, someone receiving UI benefits must be able and available to accept a job. Typically folks starting a new business are working 40+ hours a week getting their business started. Therefore they are not able and available to accept a job offer with an employer making them ineligible to receive UI benefits. There are circumstances where someone may be starting a business in the evenings or weekends so they are able and available for work. In those cases they can collect UI benefits as long as they are willing to accept a reasonable job offer. ￘ Under this program, Federal law allows states to have up to 5% of UI claimants collect UI while starting a business. It essentially waives the able and available requirement for those receiving this assistance. This may be a very good idea for Vermont. However, there are issues with federal law for folks participating in the Self Employment Assistance program and collecting federally extended UI benefits. This needs to be examined as well as requirements to participate in entrepreneurial training and other measures of successful progress in starting a business. Enhanced assistance to UI claimants: These provisions codify in law enhanced efforts by VDOL to help assist unemployment claimants in getting back to work, including making these services a priority in regional offices. ￘ VDOL shall implement re-employment services in regional offices utilizing available grants or other resources. Further, claimants will be required to participate in re-employment services when directed. Technical corrections: Additional technical corrections are needed to bring UI law in to compliance, access additional federal funds and make the statute more understandable. ￘ Fix the training language passed last year to enable draw down of the remaining $9.3 million in ARRA UI funding. ￘ Make changes to the make-up of the State Apprenticeship Council to comply with new Federal regulations. ￘ Change the income tax withholding formula in the UI statute to be 24% of a claimants federal withholding. This is in keeping with the practice of VDOL for the last 8 years. ￘ Rename and re-title sections of the bill to make them clearer to the reader.

Variable duration: Variable duration is a method of calculating the total amount of Unemployment Insurance (UI) benefits an individual can receive during a benefit year.

Under the law, a UI claimant can collect up to 26 weeks of UI benefits. Presently, we calculate a UI claimants maximum benefit amount by calculating their weekly benefit amount, and then multiply by 26 weeks. It is the same for any worker qualified to receive UI benefits, regardless of their total wages.

Under variable duration, the maximum amount an individual can receive during a benefit year will be 26 weeks OR 46% of the base period base, whichever amount is less. Variable duration addresses those that work for only 6 months, and collect 6 months of UI benefits which includes some seasonal workers

In the new system, total weekly benefit amount does not change, but the total number of weeks a person can collect may change. Calculate the weekly benefit amount. Calculate what the total of 46% of the wages they earned during their base period. Divide the weekly benefit amount in to the 46% amount. Determine if result is higher or lower than 26 weeks. If lower than 26, that is the new duration If higher than 26, the total duration remains at 26. ------------------------------------------------------------------------------------------------------------------------------------ Definitions: ￘ Base period= the first four quarters of the last five completed calendar quarters. Example: Claim filed today in May of 2010, we look at all the wages for calendar year 2009. ￘ Benefit year=the 12 month period after a claim is opened. ￘ Weekly benefit amount= calculated by dividing the total of the two highest quarters of wages by 45. ----------------------------------------------------------------------------------------------------------------------------------- Claimant A: No affect to their duration: .

First qrtr Second qrtr Third qrtr Fourth qrtr: 2009 total wages $10,000 $8,000 $7,000 $9,000 $34,000

Step #1: Weekly benefit amount = $422.00 ($10,000 plus $9,000 divided by 45) Step #2: 46% of the base period wages = $15,640.00 Step #3: Calculate the number of weeks: $15,640 divided by $422= 37. The legal limit is 26 weeks so they keep a full 26 weeks of benefits.

Why? Because they worked a full year, or 4 quarters of earnings.

Claimant B: A shortened duration:

First qrtr Second qrtr Third qrtr Fourth qrtr: 2009 total wages $10,000 $0 $1,000 $9,000 $20,000

Step #1: Weekly benefit amount =$422 (no change from above, 2 highest quarters the same). Step #2: 46% of the base period wages = $9,200.00 Step #3: Calculate the number of weeks: $9,200 divided by $422= 22 weeks.

Why? Because they worked only three quarters.

Date Posted: May 06, 2010

Previous Stories

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Misclassification and Electrical Licensing required....

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week eight with a week off...

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Issues in this article include manditory sick leave and closing Vermont Yankee....

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Legislative Breakfast with Rutland, Bennington and Addison County Senators and Representatives

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If so, join us for breakfast on March 22, 2010 in Rutland...

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Date Posted: February 22, 2010

Weeks Five and Six Heating up Under the Dome...

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Week Four of the 2010 Legislative Session

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Week 3 January 22, 2010

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Week one of Legislative Session

January 11, 2010 weekly update for the Associated General Contractors of Vermont...