own act: they deny benefits for extended periods and in some States reduce or cancel the right to future benefits. Finally, in some States disqualifications may be imposed for acts which bear no relationship to the unemployment for which benefits are claimed.

Many examples could be given of disqualification provisions which require the denial of benefits to claimants who should receive them within the original purposes of the program. Seventeen States disqualify claimants who leave their work without good cause attributable to the employer or connected with their work. Thus, a man who leaves his work to take his sick wife to a new locality upon the advice of her doctor may be denied benefits during his unemployment in the new locality even though he is able to work, available for work, and diligently seeking work. No one would contend seriously that he did not have good cause for leaving his former job-in fact, he would be subject to social censure if he refused to do whatever was necessary to protect his wife's health. But his reason for leaving his job would not be attributable to his employer or connected with his work.

Claimants whose unemployment is due to a labor dispute are denied benefits under all State laws. In all but 11 States, however, this disqualification is applied to those whose unemployment is due to a lock-out. If unemployment insurance is designed to compensate involuntary unemployment, it is inconsistent to disqualify workers who have been locked out by their employer as the result of a labor. dispute.

In addition to these variations in what may be called the "standard" disqualifications, many States have adopted additional disqualifications for special types of claimants. Outstanding among these are the special disqualifications imposed on women who leave work because of marital or other domestic responsibilities. A woman may leave her job because a sick child needs her care at home and may, therefore, not be available for work. In this case she would, of course, not be eligible for benefits, but a separation for such a reason does not warrant canceling for future benefit purposes wage credits earned with the employer whom she left. Much less does it justify canceling all prior wage credits.

Periods of disqualification have also been drastically increased in many States. Although a disqualification should postpone benefit payments for that period during which the unemployment reasonably may be attributed to the disqualifying circumstance, the disqualifications contained in many State laws go beyond this. In 14 States, for example, a claimant discharged for misconduct, voluntary separation, or refusal of work, will be disqualified for the ensuing period of unemployment, however prolonged. In other States the claimant will be disqualified until he has earned a specified amount which may be as high as 20 times his benefit amount. In 22 States a disqualification for some one of these causes also results in reduction of benefit rights. In these States such disqualifications may thus wipe out all of a claimant's benefit rights for the entire year following his claim. In other States, all wage credits earned with an employer are canceled if a claimant's work terminated under disqualifying circumstances. Since the purpose of the disqualifications is to confine the payment of benefits to unemployment due to the insured risk, disqualification periods should be limited to periods when the claimant's unemployment is due to his own disqualifying act. In some States, however,

a claimant who is not unemployed following such an act because he obtains other work immediately is nevertheless subject to disqualification for any unemployment occurring within a specified period after the act, such as the applicable benefit year. Thus, a claimant who leaves his work for good personal cause which is not attributable to his employer obtains another job and works at it for several months until he is laid off for lack of work, may be disqualified for unemployment following the lay-off. Yet that unemployment is clearly due to lack of work. In other States, disqualifications may be imposed only after a claim is filed, regardless of the lapse of time between the disqualifying act and the claim for benefits.

What is the effect of these drastic disqualification provisions? Take the case of the man who knew his employment-out-of-doors workwould terminate on the first of December. A week earlier he was offered a 3-month job by another employer. He accepted the offer, worked the 3 months, was laid off for lack of work, and filed a claim for benefits. The first employer immediately protested the payment of benefits on the ground that the claimant had left his employ without good cause 'connected with that work. As a result, all the claimant's wage credits were canceled so that he could not draw any benefits until he could find work and again earn enough to requalify for benefits. As the claimant wrote to the Bureau, he could have worked for the extra week and then drawn benefits. Because he preferred to work as long as possible and accepted the 3-month job, however, he lost all his accumulated benefit rights.

Or take the case of the claimant who was laid off from a job where he had seniority rights. He accepted other work and was working on his new job when he was recalled to work by his former employer. He did not return because he was working. Later he was laid off from his second job for lack of work and filed a claim for benefits. Benefits were denied, however, on the theory that he quit his first. job without good cause attributable to his employer when he did not return to work when recalled. Yet if he had left the second employer to return to the first employer, in case of subsequent unemployment he would probably have been disqualified for voluntarily leaving the second employer and if he had refused to accept the job with the second employer while unemployed due to the lay-off by the first employer, he might have been disqualified for a refusal of suitable work without good cause.

Innumerable examples of the effects of these provisions could be given. The two cited above are enough to show some of their dangers. They can operate to penalize the individual enterprise the pride of our American system-which leads a claimant to prefer work to benefits. They can seriously limit the mobility of labor; mobility between jobs as well as geographical mobility. Yet our industrial system depends on a mobile labor force. It depends on mobility between jobs for the development and protection of needed skills. Moreover, as industries shift to new localities and new industries arise in old localities, mobility of labor is essential to provide the labor needed to operate them. Such mobility is important at all times. It may be crucial to meet the requirements of a period of mobilization of manpower for defense needs.

Another unfortunate effect of some of the disqualification provisions should be considered. Penalties imposed for acts which are generally

recognized as reasonable breed resentment and confusion. Thus, a claimant who leaves a less-skilled job to accept work at his highest skill does what any reasonable man will do. The claimant who leaves his work in one State to take his wife to another State where she may have a chance to live and perhaps to regain her lost health merely fulfills a recognized moral obligation. Yet in some States these acts lead to disqualification. The Bureau has received many letters from claimants who are puzzled, confused, or indignant when benefits are denied on these grounds. Claimants are also puzzled by the different treatment accorded them in the various States.

These drastic disqualification provisions have caused grave concern to many who have had an opportunity to examine them. The staff report of the House Ways and Means Committee of the Seventyninth Congress drew the following conclusions:

If unemployment compensation is conceived of as a device for compensating involuntary unemployment, it would seem to follow that disqualifications should not be so designed as to deny compensation to individuals who are able to work, who are available for work, and who genuinely want work, but who cannot find work because suitable jobs are not available. This statement would argue against the complete cancellation of benefit rights.

More recently, the Advisory Council on Social Security to the Senate Committee on Finance of the Eightieth Congress drew the following conclusions:

In 22 States employees who are disqualified not only are denied benefits for unemployment immediately following * * ** but also lose accumulated benefit rights which would otherwise be available to them if they are subsequently employed and suffer a second spell of unemployment. The Council can see no justification for these punitive provisions in a social-insurance program and recommends that they be prohibited. Federal action is apparently needed to correct this situation, since the number of States with such provisions has been increasing.

When the State laws were originally enacted, neither the Bureau nor the States had had actual experience in the administration of such a program. Now over 14 years have elapsed since benefits first became payable in the first State and 11 years since benefits have been payable in all the States. The disqualification standards included in section 7 (a), paragraphs 8-10, H. R. 8059 are based on that experience. They are not new, but, in the opinion of the Bureau, represent the best experience in the States to date. They have three objectives. The first is to limit the reasons for which a disqualification may be imposed. The second is to prohibit the reduction or cancellation of benefit rights for any cause. The third is to establish a maximum period during which benefits may be postponed for unemployment which is due initially to a disqualifying cause.

All of the proposed standards are amendments of section 1603 (a) of the Internal Revenue Code. Under that section, no State law can be certified for tax offset purposes unless the law contains the required provisions.

Under paragraph 8 of section 7 (a) of the bill, a State law may disqualify an unemployed insured individual only under the following conditions: if he is unable to work or is unavailable for work; if he left suitable work without good cause; if he was suspended or dis charged for misconduct connected with his last work; if he refused suitable work without good cause; if he left or lost his last work due to a stoppage of work due to a labor dispute, other than a lock-out; and, finally, if he has knowingly made a false claim for benefits.

The grounds for imposing a disqualification under this proposed standard are narrower than the corresponding provisions contained in some State laws. For example, a claimant could be disqualified only if he left suitable work without good cause, including good personal cause. The standard thus prohibits those provisions which disqualify workers if they leave without good cause attributable to the employer. Moreover, it makes the disqualification applicable only to those who leave "suitable" work, because claimants should have the same right to leave an unsuitable job without incurring a disqualification as they have to refuse unsuitable work. The limitation of the misconduct standard to a disqualification for a discharge or suspension for misconduct connected with the last work will make it impossible for States to disqualify claimants who have been discharged because of their inability to do the job, or for any other act which falls short of misconduct.

The standard for the labor-dispute disqualification introduces more far-reaching changes. The most important of these is that the disqualification applies to labor disputes. By contrast, all but 11 State laws apply the disqualification to any labor dispute. Under this provision, benefits will be denied to claimants whose unemployment is due to a labor dispute unless the employer is directly responsible for the dispute. In addition, the language of the standard differs somewhat from the disqualification found in most of the State laws, in order to remove some of the ambiguity which has confronted State agencies and the courts when applying the disqualification to concrete situations.

Mr. BYRNES. Mr. Chairman?

Mr. FORAND. Mr. Byrnes.

Mr. BYRNES. Just briefly there: How are you going to determine who is definitely responsible in a dispute? I do not want to develop this in detail at this point, but you say: "unless the employer is directly responsible for the dispute." How can you really establish who is primarily responsible in many disputes?

Mr. GOODWIN. Well, first I would like to say that there are a number of States, I believe 11 States, where they have essentially this provision now or have interpreted their law in this way and have to make that very determination. It is a rather detailed consideration that has to be given to some cases.

Mr. BYRNES. Is it not in many cases almost an impossible thing to determine with any reasonable degree of accuracy?

Mr. GOODWIN. Our experience is that these States that have had such a provision have not had great difficulty in administering it.

Mr. BYRNES. In other words, you think you could sit down and tell, in each individual dispute, just who was responsible for the dispute?

Mr. GOODWIN. Well, I think that the way would be set out if the employer were clearly responsible. It would be based on that kind of a determination, and I think it could be made. The fact is that it is made now in a number of States; eight States, Mr. Murray tells me, having this kind of provision now and three States interpreting their laws in this manner. And they have had no great difficulty in administration. The principle that is involved in it is so right that it leads us to the conclusion that even though there might be some

administrative difficulty, it is highly desirable to apply the principle along these lines.

Mr. BYRNES. I concede there is some reason for saying that if the employer is responsible for the dispute that should not disqualify the employee from unemployment compensation, but I think the problem that arises is making that determination as to who is responsible and when.

As I said, Mr. Chairman, I did not want to belabor the point. I thought maybe there might be some established rules that you had for determining that.

Mr. GOODWIN. I might point out that this is a determination that is made on a regular basis in courts. When various types of litigation are brought into the courts they have to make this kind of determination; and have developed a set of criteria which can be applied. I am frank to say that I am not familiar with that criterion in all its details, and I am relying principally on those two things: First, that it has been successfully administered in those nine States, and secondly, principle and a type of determination that is regularly being made in court proceedings.

Mr. BYRNES. I bring it out at this time only to sort of flag it for more amplification at some later time.

Mr. GOODWIN. And I would say to emphasize the importance of it; because it is an important point.

Mr. FORAND. Would it be possible for you to list the States that have this particular provision? And if possible add to it whatever other information you believe would clarify the situation for the record.

Mr. GOODWIN. I would be very glad to, Mr. Chairman, yes. (The information was supplied as follows:)

DETERMINATION WHETHER UNEMPLOYMENT IS DUE TO A STRIKE OR TO A

LOCK-OUT

H. R. 8059 provides that claimants shall be disqualified if they go out on strike, but not if they are unemployed because of a lock-out by the employer.

The basic difference between a strike and a lock-out is that a strike is a concerted withholding of services by employees from their employer in order to gain a concession from him and a lock-out is the withholding of work by an employer from his employees in order to gain a concession from them. Restatement of Torts, sections 797a and 787a; Iron Moulders' Union v. Allis-Chalmers Co. (166 Fed. 45 (7th Cir., 1908)). While it may be difficult in some cases to distinguish between a strike and a lock-out, such distinctions are presently being made in several States the laws of which except from disqualification claimants whose unemployment is due to a lock-out. (Attached as exhibit I is a list of these States, together with excerpts from several benefit decisions which show how the problem is being handled.) Appeal tribunals in these States report no greater difficulty in determining whether unemployment is caused by a strike or a lockout than in applying the other phrases of their labor dispute disqualification provisions. The questions involved do not in fact appear to be any more difficult of determination than those presented to administrators and the courts in the ordinary course of construing and applying State unemployment compensation laws. Of comparable difficulty, for example, are questions of availability for work or of suitability of a work offer, which arise with great frequency under State unemployment compensation laws.

In determining whether employees are striking or whether an employer has locked the employees out, a State agency investigates all the facts surrounding the stoppage of work. This investigation is usually made at a hearing, before an impartial referee or tribunal of several members, at which both the employees and representatives of the employer testify. Relevant questions, for example, would be whether the employer has issued an ultimatum that he would close down on a