It is believed the business community will benefit from new unemployment legislation recently enacted by the state legislature. The legislation addresses qualification for benefits, the system for addressing claim notices by employers, and unemployment benefit eligibility for  seasonal workers. While this legislation does not directly immediately effect payroll departments, hopefully it will slow down the steady increase in Unemployment Insurance (UI) rates payroll administrators have had to keep track of. This new legislation goes into effect Jan 1, 2013.

The Unemployment Insurance Accountability Act of 2012 strengthens the definition of employee misconduct to ensure that those who have been fired for cause no longer receive benefits. The act also enacts new work search requirements for unemployment beneficiaries. Those collecting unemployment benefits must provide detailed information regarding contact with at least three employers per week or must access services at a career center. The act also provides for random audits to ensure the integrity of beneficiaries’ job searches.

Specifically, the legislation:

  • Senate Bill 3658/House Bill 3431 enacts the “Unemployment Insurance Accountability Act of 2012,” providing a much stronger misconduct definition to address chronic absenteeism and other disqualifying events.  It requires 1,000 audits of claims weekly and enacts stricter work search requirements for unemployment beneficiaries, among several provisions.
  • Senate Bill 3659/House Bill 3429 requires state government to implement a much needed Internet-based system that will allow employers to receive claim notices and submit separation information electronically.  This will benefit small businesses that often lack the manpower to track and respond to claims.
  • Senate Bill 3657/House Bill 3430 addresses benefits that are being paid to some seasonal workers who have a brief, defined work period. The legislation allows employers (such as certain tourism businesses and farming operations) to request seasonal status annually, which would be subject to state approval. The intent of the legislation requires employers to continue to pay legitimate unemployment claims filed in season, but they should not be required to pay claims filed during a non-seasonal production period.

This is welcome legislation as the demands on the UI trust fund continue and UI rates and taxable wages remain at above previously normal rates, thus increasing the cost of doing business in Tennessee. Many states continue to owe the Federal Government for money borrowed to cover excessive UI expenses. Altogether, states owe $37.6 billion to the Feds that they borrowed when their unemployment insurance trust funds sank below required levels. Most states have dealt with the problem by raising state payroll taxes on employers, making benefits to workers less generous or a combination of the two.  Tennessee is not one of them as they have been able to pay back any short term requirement borrowed from the feds. The Advi$or has just learned that as of June 1, 2012, Virginia has paid back the $250 million owed and thus is no longer a FUTA credit reduction state.