Reps. Leonard and Hamm are authors of HB 1457 concerning unemployment insurance.
It does a few things. Employers have experience accounts with the Department of Workforce Development which charges the employer based on the amount of unemployment insurance paid out to an employee. I don’t know the exact system, but it’s not necessarily a dollar-to-dollar match except for employers who elect to “make payments in lieu of contributions” for whom the accounting is more like a dollar to dollar match. Anyway, sometimes former employees get benefits to which, it turns out, they were not entitled. For example, maybe the employee was terminated for just cause but it took a couple of levels of the claims and appeals process to make that determination. In the meantime, the employee is getting unemployment benefits, and then when the just cause determination is reached, the employee is now required to pay them back. The employer’s experience account is then adjusted to reflect the fact that the money paid out was an “overpayment.” This bill would not permit the account adjustment for employees who received written request for information from the employer but the employer did not initially provide information (so a correct benefits determination could be made at the outset, I presume) and if the employer has a history of failing to respond to such inquiries from the Department of Workforce Development.
The bill also imposes a higher unemployment insurance contribution rate for employers in the construction trade.
The bill also reallocates some of the money collected as a civil penalty from a former employee that knowingly or intentionally provides false information to get benefits. The money collected currently gets deposited in a special employment and training services fund. Under this bill 15% of that amount would instead be deposited in the unemployment insurance benefit fund.
Eligibility for benefits would also be contingent on a former employee participating in reemployment and eligibility assessment activities as directed by the Department of Workforce Development.
These activities:
(1) must include:
(A) orientation to the services available through a one stop center (as defined by IC 22-4.5-2-6);
(B) provision of labor market and career information;
(C) assessment of the individual’s workforce and other job related skills; and
(D) a review of the individual’s work search efforts; and
(2) may include:
(A) comprehensive and specialized assessments;
(B) individual and group career counseling;
(C) training services;
(D) additional services to assist the individual in becoming reemployed;
(E) job search counseling; and
(F) development and review of the individual’s reemployment plan that includes the individual’s participation in job search activities and appropriate workshops.
The Department can also require the individual to provide proof of identity.
This bill is a continued dog and pony show by folks like Representative Dan Leonard who pretend to know unemployment insurance and consistently show they do not (much like the people who run the Department of Workforce Development). Representative Leonard has been associated with UI for a while now and still does not seem to get it. He is on the UI Oversight Committee (that meets a whopping one time a year for an hour apiece) and he comes to one or two UI Board meetings a year (and they meet a now-whopping 4 times a year for an average of an hour) and only knows what the fools who run DWD tell him.
Let me briefly dissect this bill:
1. RE: non-timely response from employers. This has been a huge problem for years, and DWD has done little to combat it. The employer’s account should not be relieved of charges, so this is a good step (finally). Large companies tend to use unemployment consultant companies (Talx is the biggest and darn-near a monopoly) who usually fail to respond until the hearing because they account managers make more money if the claim goes to an appeals hearing). However, nailing-down if an employer is a habitual non-responder (“pattern of failure to respond”) is not something DWD can easily track due to its horrible 5-years-overdue-and-$25-million-more-cost “modernization” system they have (see: WISH-TV’s continuing investigations). Good luck with all that, Indiana Code!
2. RE: Claimants participating in re-employment services. THEY ALREADY ARE REQUIRED TO DO THIS. And if they don’t, they are not entitled to UI. Problem has been that DWD has done an atrocious job of ensuring claimants are a) engaging in these re-employment activities; and b) penalizing the claimant for not doing so. Mitch Daniels privatized the re-employment portion of DWD as soon as he could and the results have been predictably bad. By the way, one of DWD’s ex-Deputy Commissioners, Greg Vollmer, immediately left DWD and took a job heading one of these re-employment agencies and got away with it scot-free.
Also, claimants already have to show identity to engage in these activies. They are required to show licenses (which, correct me if I am wrong, is an identity that has been duly checked by the state’s BMV).
3. RE: Claimants lying, more of their penalty goes into the Trust Fund. Wow. In the past digest indicates, penalties were directed into the Penalty and Interest Fund which was then primarily, theoretically, used for re-employment programs, etc. Now, 15% of that will be going toward the Trust Fund (which is still over $1.5 Billion in debt to the US government). So due to DWD’s errors in the past (see also WISH-TV’s investigations) which added greatly to the debt, DWD will get to direct some money into a fund they have greatly damaged that should be used for training the unemployed. Well done.
4. RE: New Hire Directory. Dan Leonard obviously doesn’t know what DWD’s done with the New Hire Directory over the last 6 or so years. Not only was Indiana one of the last states to go onto the National New Hire Directory (because the UI modernization project took so long), but they also screwed-around even more with the New Hire matches for employers at the state level. Let me explain.
When a business hires someone, they are mandated by law to report the hire. The hire is reported to DWD, and if the claimant is claiming benefits for a week in which the new hire says they were working, the system puts an automatic hold on the claim. The claim is supposed to be investigated by a DWD claims adjudicator who should contact the claimant and the employer and then issue a decision. DWD, though, got so backlogged with claims that they made their system automatically cancel the “new hire” or “employment status” issues, thereby freeing the claim-up for claimants to earn money.
Needless to say, many people were double-dipping. DWD was repeatedly warned not to do this, but kept doing it anyways. Anybody venture to guess how much money was lost (and probably won’t be recovered) because of this? I’d hate to imagine, but it’s in the hundreds of millions of dollars.
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So yes, Representative Leonard, good try here, but you and many of your colleagues really don’t know what’s going on and apparently don’t care to know. And $20 says DWD is in his ear constantly for these improvements as they are always constantly in touch with the Republicans in the House and Senate for these new, fruitless laws they can’t even enforce half the time.
So, when does Indiana pay back that $2 billion for unemployment insurance and ruin our awesomely balanced budget?
Paying back a debt would require fiscal accountability.
The heads of DWD say, barring any unforeseen financial setback, the unemployment debt will be repaid by about 2017. They are paying it back primarily on the backs of businesses (though claimants are feeling it, too) in this state at a rate $63 per employee this year — and possibly $84 per employee next year. Ex-governor Mitch Daniels was always quite lucky the UI debt and the budget were not related, because otherwise the Indiana “miracle” wouldn’t look so hot.
Of course, Indiana wouldn’t have nearly as large a debt if DWD had not allowed over $2 Billion of overpayments to claimants who did not deserve the pay during the Daniels administration. It was a stellar fiscal management performance.
Just wanted to point out that Indiana was required under federal law to adopt the provision that employer accounts are not relieved of benefit charges where there has been a pattern of failing to respond timely and adquately to state UI notices and claim information. If a state doesn’t have this provision in place by October 21, 2013, the state loses its certification with the federal UI program and all employers in the state lose the 5.4% FUTA credit (meaning, the FUTA tax rate would be the full 6%).