"resulting from a failure of industry to provide stable employment." After explaining the purpose and effect of the experience-rating provision in the State unemployment insurance statute, the judge said: "The primary purpose of this provision would be greatly impaired, if not completely defeated, if benefits were paid to persons who became unemployed not because the employer could no longer provide them with work but solely because of some change in their personal circumstances." Experience-rating provisions give employer organizations a reason to press for more statutory disqualification provisions, for long periods of denial of benefits, and for cancellation of benefit rights. Some States have approached this problem by developing "noncharging provisions." A few State laws provide that when a worker becomes unemployed for some good personal cause, he shall be eligible for benefits if he is available for work, but these benefits paid shall not be charged against the experience-rating record of his employer. Such provisions tend to reduce the pressure for imposing disqualifications. Certain other laws provide that no charges shall be made against an employer's experience-rating record on account of any worker who was separated from that employer for a reason which resulted or could have resulted in a disqualification. Such a worker might receive benefits because he got another job from which he was subsequently laid off for lack of work, or he might have been disqualified, served the disqualification period, and become eligible. This latter type of noncharging provision, which occurs more frequently than the former, has been urged on the ground that it reduces the employer's interest in advocating the denial of benefits for long periods or the cancellation of wage credits. Changes in Disqualification Provisions Since 1940, there has been a general tendency to make disqualification provisions more explicit, to apply them to more circumstances and to more people, and to increase the consequences of disqualifications to the workers. The voluntary quit disqualification has been most often affected by these changes, but the availability requirement and the disqualifications for refusing suitable work and for discharge for misconduct have been amended also. The kind and degree of change has varied widely from State to State, and the desirability of these changes is still a controversial issue. Changes in Availability Provisions Before World War II, claimants could meet the statutory requirement that they be "available for From temporary quarters (if 11 years can be termed temporary) on the bank of the seasonally flooding Kentucky River at Frankfort, the State Department of Economic Security moved in 1951 to this $7 million edifice just back of the State Capitol Building. The DES, which includes UI, ES, Public Assistance, Dependent Children Services, and the Employee Security Division (OASI), shares its building with numerous other State departments. work" by satisfying the appropriate local office that they were genuinely in the labor market. They could be directed to do anything which was reasonably calculated to obtain employment, such as registering for work with their union as well as with the Employment Service, but such actions, like their whole work history, were merely evidence that they were ready, willing, and able to take a job. In practically every State the availability requirement has been made more specific. By 1955, 25 State statutes required that claimants must be "actively seeking work." Many other laws have been interpreted to require the same thing. While this phrase has been interpreted in different ways, it means at least that certain claimants must apply directly to employers of their choice, in addition to registering with the Employment Service. Some States require that, in order to prove their availability, claimants must not only accept any formal referral of the employment service but must also make a specified number of applications per week to employers, regardless of their prospects for obtaining work through such efforts. The "able-and-available" provision has also been extended by amendments which deny benefits to pregnant women for a specific number of weeks before and after childbirth, regardless of their individual ability to work. A few States have provisions that women whose unemployment is due to their "marital obligations" shall also be deemed to be unavailable for work. Many such claimants would probably have been denied benefits under the general availability requirement, but these special statutory provisions remove the claims examiners' discretion to allow them benefits, even if they are, in fact, able and anxious to work. Unemployed workers sometimes move into other States to find better living or working conditions. State agencies have arranged to allow such individuals to file "interstate claims" for unemployment insurance in the State of their new residence, to be transmitted to the State in which they earned their wage credits. In all such cases, claimants cannot qualify for benefits unless they are available for work in the locality of their current residence, under the law of the paying State. Under a few State laws, however, such claimants may be disqualified if they refuse to return to the State where they earned wage credits to take a job there. Expansion of Denials for Voluntary Quit The voluntary quit disqualification has been expanded so that in some States it amounts to a new and more sweeping disqualification. Early laws allowed benefits to a worker who quit for a "good cause," provided that he was available for work. In contrast, by 1955, 21 State laws disqualify such a claimant unless his reason for leaving work was not only "good" but also "attributable to the employer" A member of the Social Security Board told the Chamber of Commerce of the United States, January 1944: ALL unemployment compensation laws disqualify for various acts, such as voluntary leaving, refusal of suitable work, misconduct, going on strike, etc. Such disqualifications are essential if payments are to be made only for involuntary unemployment. But it is clear, too, that if otherwise eligible workers are disqualified for extended periods, or worse still, if benefit rights are canceled entirely so that a worker who leaves a job voluntarily or refuses another job, regardless of his reasons for doing so, can never get benefits on the basis of past employment, then workers are being deprived of protection just as effectively as if benefits were slashed, or duration reduced, or conditions of eligibility made more stringent. -GEORGE E. BIGGE or "connected with the work," or "involving fault on the part of the employer." Under some of these laws, a claimant may be disqualified if he is obliged to leave a particular job because of some physical disability which is not caused by his work, even though he is available for work and able to do other work. Of course, some people who leave work for personal causes, such as illness of a member of the family, are not immediately available for work and would not be entitled to benefits under any State law while the unavailability continues. A denial of benefits during the claimant's unavailability seems more appropriate than a disqualification based on the grounds that the employer did not cause the unemployment. A disqualification would extend the denial for a specified period after the claimant returns to the labor market. Voluntary quit disqualifications have also been extended by special statutory provisions which disqualify claimants who quit work to marry or to fulfill family obligations or whose unemployment is due to pregnancy. Such provisions differ from the provisions on availability noted above in that under these disqualifications the claimant is denied benefits for a specific period (or for the duration of the unemployment) instead of being presumed to be unavailable for the weeks concerned. Early disqualifications were applied only for quits or discharges involving the claimant's most recent employer. Now, however, in a number of States benefits are denied to available claimants who have currently been laid off for lack of work because they quit work with some previous employer. For instance, in one State a claimant was disqualified for leaving a part-time job in order to take a full-time job. She was not unemployed between the two jobs but claimed benefits after she had been separated from the full-time job for lack of work. Accepting claims January 3, 1938. "Temporary quarters, temporary equipment, temporary clerks-how did we ever accomplish the job?" says the Massachusetts agency. Changes in the Disqualification Imposed Besides applying disqualifications to more situations, many States have increased the length of the period for which benefits are denied after a disqualification. Early laws tended to limit the period of disqualification for voluntary leaving and refusal of suitable work to 6 weeks or less. If a claimant was unable to find a job within that period, his subsequent unemployment was considered to be due to the lack of suitable work and not to his own action. In contrast, in 1955, only 14 statutes prescribe so short a disqualification period for quits or refusals. The other laws provide a longer period for at least one of these disqualifications, ranging up to the maximum duration of benefits (20 to 24 weeks) in 3 States. The early laws on discharge for misconduct usually provided a disqualification for a variable number of weeks "according to the seriousness of the misconduct." The range was from 1 to 5 weeks to 1 to 10 weeks in addition to the week of the act but most frequently, 1 to 9 weeks. Variable duration of disqualification is still the prevailing pattern in misconduct cases, but the periods have been lengthened and 10 States have changed to disqualification for the duration of the unemployment. In addition, 16 States have added more severe disqualifications for what may be called "aggravated misconduct," for example, for dishonest or criminal acts. These disqualifications usually involve a complete denial of benefits through disqualification for the duration of the unemployment or cancellation of all wage credits. Twenty-one laws deny benefits for the duration of the claimant's unemployment for one or more of the three major causes. Disqualifications for the duration of the unemployment may have a very serious effect on claimants, depending on the current opportunities for reemployment, but are, of course, more serious in recessions than in periods of high employment. In some cases disqualification for the duration of the unemployment results in as complete a denial of benefits as does cancellation of wage credits. Statutory provisions for cancellation of wage credits and reductions in the claimant's total maximum benefits also increased during the last 10 years. Reductions in potential benefits for the benefit year are usually correlated with the length of the disqualification period. Thus, a claimant disqualified for a 10-week period may have a deduction from his maximum benefits equal to 10 times his weekly benefit amount. Twenty-two statutes provide for a mandatory reduction, and 3 for optional reduction in the claimant's maximum benefits for at least one of the three major reasons for disqualification; in some cases reductions may equal the maximum weeks of benefits. Reductions have their most serious effect on claimants who are long unemployed or who suffer a second period of unemployment during a benefit year. Cancellation of benefit rights arose in States with an employer-reserve type of experience rating. When an employer "denied liability" for benefits in such States (and the State agency imposed a disqualification), all the wage credits earned in his employ were canceled; if he was the only base-period employer, the denial of benefits was complete. Later, a few States with pooled-fund experience rating provided for the cancellation of the wage credits earned prior to certain disqualifying acts. By 1955, 6 States canceled wage credits for either a quit, a work refusal, or misconduct. Accepting claims May 1955. Modern well-organized office staffed with trained permanent Labor Dispute Disqualifications Labor dispute disqualifications differ from other disqualifications in that they apply to groups of claimants. The number of workers denied benefits because of a labor dipute may run from tens to thousands. Over the years, the statutory provisions relating to labor disputes have been changed less than the other disqualifications. The labor dispute disqualification is an attempt to place the unemployment insurance system in a position of neutrality in labor disputes. The typical provision disqualifies workers involved in a labor dispute at the place of their employment. It attempts to confine the operation of the disqualification to the workers actually concerned in the dispute, and to protect other workers from loss of benefits due to a strike which affects their work indirectly. "Escape clauses" are generally provided to protect workers in the same company who are not taking part in the dispute, and are not directly interested in it. Unlike the disqualifications for the three major issues, which apply for a fixed time, most State laws establish the period of disqualification for a labor dispute in relation to the dispute. Under 34 laws, the disqualification applies while there is a stoppage of work due to the dispute, and under 13, while the dispute is in active progress. A few State laws and the number is decreasinghave put a maximum limit on the duration of a labor dispute disqualification. In 1939, 6 State laws had a fixed time limit on the period of disqualification, ranging from 3 to 10 weeks. In 1955, only 2 States have a specified period-6 or 7 weeks plus the waiting period, or (in one of these States) until the controversy is terminated if that is earlier. In operation, few labor disputes in the States with fixed periods have lasted long enough for the workers involved to receive benefits. Volume of Disqualifications The number of disqualifications imposed each year is considerable. During each of the 9 postwar years, disqualifications have exceeded 1 million, while the number of insured claimants (new claims with enough wage credits to qualify) has varied from 5 to 9 million. The number of disqualifications tends to increase or decrease as the volume of unemployment increases or decreases, but not in the same proportion. As a result (see table 7), the ratio of total disqualifications (for all issues except labor disputes) to the annual number of "claimant contacts" (roughly equivalent to initial claims plus weeks of insured unemployment) tends to be lowest when unemployment is high, and to increase when unemployment is low. Thus, the lowest ratio of 12 disqualifications per 1,000 claimant contacts occurred in 1949 when those contacts were at their peak of 109 million. The highest ratio of 21 disqualifications per 1,000 claimant contacts occurred in 1953, when the number of those contacts was only 57 million. In 1954, the total number of disqualifications reached its postwar peak of 1,616,000, but the number of claimant contacts was also high, so that the ratio of disqualifications to claimant contacts was lower than in the 3 previous years. Appeals Because claimants may be disqualified from receiving benefits, provision is needed for an impartial TABLE 7.-Total number of disqualifications and ratio to claimant contacts and new spells of insured unemployment New intrastate claims, except transitional claims, eligible on monetary determinations, plus additional intrastate claims and initial interstate claims received as liable State. 2 New spells of unemployment, plus intrastate continued claims, and interstate continued claims received as liable State. 3 Excludes disqualifications based on labor disputes but includes denials for various minor issues as well as the 4 issues shown separately. review, at the claimant's request, of a State agency's actions in denying benefits. The Social Security Act requires that, as a condition of certification for administrative grants, a State law must provide for “an opportunity for a fair hearing, before an impartial tribunal, for all individuals whose claims for unemployment compensation are denied." State agencies implemented this requirement by establishing an administrative appeals system. Under the State laws, employers as well as claimants have a right of appeal. In almost all States, an individual protesting a determination of the State agency may appeal first to an appeals authority, usually designated as a referee, and then to a higher board of review. The objective of the Federal Congress and the State legislatures was to provide, through an administrative appeals system, all the assurances of a fair hearing that citizens of this country expect in our judicial system, but to avoid the delays, expense and formalities involved if claimants and employers had to take their appeals directly to the courts. The appeals system in the employment security program has been more widely used than that in any other social security program. From the very beginning, claimants and employers exercised their appeal rights. During the calendar year 1954, the lower and higher appeals authorities together disposed of cases involving the rights of nearly 245,000 claimants. Approximately 14 out of every 100 disqualified claimants filed appeals. Most of the appeals have been taken by claimants from denials of benefits under the disqualification and "available for work" provisions discussed earlier in this chapter. For example, some claimants appeal determinations disqualifying them for refusing, without good cause, work which the agency believes is "suitable," but which they believe is not suitable because it yields less wages than they earned. Similarly, some employers appeal when they object to a determination that allows benefits; for example, they may disagree with the agency's conclusion that a claimant had "good cause" for leaving work. Appeals by employers have been far less numerous than those by claimants-recently, only one out of eight of the lower authority decisions. The administrative appeals process itself is generally informal in nature. The referee, in questioning the parties, tries to make sure that each one has an opportunity to make a complete statement of the facts in his case. This procedure is based upon the assumption that unemployed individuals should not be compelled to hire an attorney or other representative to obtain what may be due them as a matter of right. The unemployment insurance benefit appeals system has worked well. Over 2 million administrative appeal decisions have been issued since the program began, and relatively few of these decisions have been taken to the courts. State agencies have used their appeal decisions in developing principles of interpretation governing entitlement to benefits, and in preparing precedent manuals, which furnish guidance to their claims examiners in making determinations in similar cases. They have been assisted in this effort by the BENEFIT SERIES, published by the Bureau of Employment Security since 1937, which has made available to all referees and boards some of the significant decisions of all the States. |