(Text of H.R. 15119 follows:)

[H.R. 15119, 89th Cong., 2d sess.]

AN ACT To extend and improve the Federal-State unemployment compensation program Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That this Act may be cited as the "Unemployment Insurance Amendments of 1966".

TITLE I-IN GENERAL

PART A-COVERAGE

DEFINITION OF EMPLOYER

SEC. 101. (a) Subsection (a) of section 3306 of the Internal Revenue Code of 1954 is amended to read as follows:

"(a) EMPLOYER.-For the purposes of this chapter, the term 'employer' means, with respect to any calendar year, any person who

"(1) during any calendar quarter in the calendar year paid wages of $1,500 or more, or

"(2) on each of some 20 days during the calendar year, each day being in a different calendar week, employed at least one individual in employment for some portion of the day.”

(b) The amendment made by subsection (a) shall apply with respect to remuneration paid after December 31, 1968.

DEFINITION OF EMPLOYEE

SEC. 102. (a) Subsection (i) of section 3306 of the Internal Revenue Code of 1954 is amended to read as follows:

"(i) EMPLOYEE.-For purposes of this chapter, the term 'employee' has the meaning assigned to such term by section 3121(d), except that subparagraphs (B) and (C) of paragraph (3) shall not apply."

(b) Section 1563 (f) (1) of such Code (relating to surtax exemption in case of certain controlled corporations) is amended by striking out "in section 3306 (i)” and inserting in lieu thereof "by paragraphs (1) and (2) of section 3121 (d)”.

(c) The amendment made by subsection (a) shall apply with respect to renumeration paid after December 31, 1968, for services performed after such date.

DEFINITION OF AGRICULTURAL LABOR

SEC. 103. (a) Subection (k) of section 3306 of the Internal Revenue Code of 1954 is amended to read as follows:

"(k) AGRICULTURAL LABOR. For purposes of this chapter, the term 'agricultural labor' has the meaning assigned to such term by subsection (g) of section 3121, except that for purposes of this chapter subparagraph (B) of paragraph (4) of such subsection (g) shall be treated as reading:

"(B) in the employ of a group of operators of farms (or a cooperative organization of which such operators are members) in the performance of service described in subparagraph (A), but only is such operators produced more than one-half of the commodity with respect to which such service is performed;'".

(b) The amendment made by subsection (a) shall apply with respect to remuneration paid after December 31, 1968, for services performed after such

date.

STATE LAW COVERAGE OF CERTAIN EMPLOYEES OF NONPROFIT ORGANIZATIONS AND OF STATE HOSPITALS AND INSTITUTIONS OF HIGHER EDUCATION

SEC. 104. (a) Section 3304 (a) of the Internal Revenue Code of 1954 is amended by redesignating paragraph (6) as paragraph (12) and by inserting after paragraph (5) the following new paragraph:

"(6) (A) compensation is payable on the basis of service to which section 3310(a) (1) applies, in the same amount, on the same terms, and subject to the same conditions as compensation payable on the basis of other service subject to such law, and

"(B) payments (in lieu of contribution's) with respect to service to which section 3310 (a)(1)(A) applies may be made into the State unemployment fund on the basis set forth in section 3310(a) (2) ;”

(b) (1) Chapter 23 of the Internal Revenue Code of 1954 is amended by adding at the end thereof the following new section:

"SEC. 3310. STATE LAW COVERAGE OF CERTAIN SERVICE PERFORMED FOR NONPROFIT ORGANIZATIONS AND FOR STATE HOSPITALS AND INSTITUTIONS OF HIGHER EDUCATION.

“(a) STATE LAW REQUIREMENTS.-For purposes of section 3304 (a) (6) — "(1) except as otherwise provided in subsections (b) and (c), the service to which this paragraph applies is—

"(A) service excluded from the term 'employment' solely by reason of paragraph (8) of section 3306 (c), and

"(B) service performed in the employ of a State, or any instrumentality of one or more States, for a hospital or institution of higher education, if such service is excluded from the term 'employment' solely by reason of paragraph (7) of section 3306 (c); and

"(2) the State law 'shall provide that an organization or group of organizations) which, but for the requirements of this paragraph, would be liable for contributions with respect to service to which paragraph (1)(A) applies may elect, for such minimum period and at such time as may be provided by State law, to pay (in lieu of such contributions) into the State unemployment fund amounts equal to the amounts of compensation attributable under the State law to such service. The State law may provide safeguards to ensure that organizations so electing will make the payments required under such elections.

"(b) SECTION NOT TO APPLY TO CERTAIN SERVICE. This section shall not apply to service performed—

"(1) in the employ of (A) a church or convention or association of churches, or (B) an organization which is operated primarily for religious purposes and which is operated, supervised, controlled, or principally supported by a church or convention or association of churches;

"(2) by a duly ordained, commissioned, or licensed minister of a church in the exercise of his ministry or by a member of a religious order in the exercise of duties required by such order;

"(3) in the employ of an educational institution which is not an institution of higher education;

"(4) in the case of an institution of higher education, by an individual employed in an instructional, research, or principal administrative capacity; "(5) in the case of a hospital (or in the case of a medical research organization directly engaged in the continuous active conduct of medical research in conjuntion with a hospital), by an individual as a physician, dentist, osteopath, chiropractor, naturopath, or Christian Science practioner, or by an individual employed in an instructional or research capacity; "(6) in a facility conducted for the purpose of carrying out a program of

"(A) rehabilitation for individuals whose earning capacity is impaired by age or physical or mental deficiency or injury; or

"(B) providing remunerative work for individuals who because of their impaired physical or mental capacity cannot be readily absorbed in the competitive labor market,

by an individual receiving such rehabilitation or remunerative work; and "(7) as part of an unemployment work-relief or work-training program assisted or financed in whole or in part by any Federal agency or an agency of a State or political subdivision thereof, by an individual receiving such work relief or work training.

"(c) NONPROFITS MUST BE EMPLOYERS OF 4 OR MORE.-This section shall not apply to service performed during any calendar year in the employ of any organization unless on each of some 20 days during such calendar year, each day being in a different calendar week, the total number of individuals who were employed by such organization in employment (determined without regard to section 3306 (c) (8) and by excluding service to which this section does not apply by reason of subsection (b)) for some portion of the day (whether or not at the same moment of time) was 4 or more."

(2) The table of sections for such chapter 23 is amended by inserting at the end thereof the folowing:

"Sec. 3310. State law coverage of certain service performed for nonprofit organizations and for State hospitals and institutions of higher education."

(c) Section 3303 of the Internal Revenue Code of 1954 is amended by adding at the end thereof the following new subsection:

"(e) PAYMENTS BY CERTAIN NONPROFIT ORGANIZATIONS.-A State may, without being deemed to violate the standards set forth in subsection (a), permit an organization (or group of organizations) described in section 501(c) (3) which is exempt from income tax under section 591(a) to elect (in lieu of paying contributions) to pay into the State unemployment fund amounts equal to the amounts of compensation attributable under the State law to service performed in the employ of such organization (or group)."

(d) The amendments made by subsections (a) and (b) shall apply with respect to certifications of State laws for 1939 and subsequent years, but only with respect to service performed after December 31, 1968. The amendment made by subsection (c) shall take effect January 1, 1967.

STUDENTS ENGAGED IN WORK-STUDY PROGRAMS

SEC. 105. (a) Paragraph (10) of section 3306 (c) of the Internal Revenue Code of 1954 is amended by striking out the semicolon at the end of subparagraph (B) and inserting in lieu thereof “, or” and by adding at the end thereof the following new subparagraph:

"(C) servce performed by an individual who is enrolled at an educational institution (within the meaning of section 151 (e) (4)) as a student in a fulltime program, taken for credit at such insitution, which combines academic instruction with work experience, if such institution has certified to the employer that such service is an integral part of such program;”.

(b) The amendment made by subsection (a) shall apply with respect to remuneration paid after December 31, 1966.

PART B-PROVISIONS OF STATE LAWS

PROVISIONS REQUIRED TO BE INCLUDED IN STATE LAWS

SEC. 121. (a) Section 3304 (a) of the Internal Revenue Code of 1951 is amended by inserting after paragraph (6) (added by section 101(a) of this Act) the following new paragraphs:

“(7) an individual who has received compensation during his benefit year is required to have had work since the beginning of such year in order to qualify for compensation in his next benefit year;

"(8) compensation shall not be denied to any individual by reason of cancellation of wage credits or total reduction of his benefit rights for any cause other than discharge for misconduct connected with his work, fraud in connection with a claim for compensation, or receipt of disqualifying income;

“(9) compensation shall not be denied to an individual for any week because he is in training with the approval of the State agency (or because of the application, to any such week in training, of State law provisions relating to availability for work, active search for work, or refusal to accept work):

"(10) compensation shall not be denied or reduced to an individual solely because he files a claim in another State or because he resides in another State at the time he files a claim for unemployment compensation;". (b) The amendment made by subsection (a) shall take effect January 1, 1969, and shall apply to the taxable year 1969 and taxable years thereafter.

ADDITIONAL CREDIT BASED ON REDUCED RATE FOR NEW EMPLOYERS

SEC. 122. (a) Subsection (a) of section 3303 of the Internal Revenue Code of 1954 is amended by striking out “on a 3-year basis." in the sentence following paragraph (3) and inserting in lieu thereof “on a 3-year basis (i)”, and by striking out the period at the end of such sentence and inserting in lieu thereof ", or (ii) a reduced rate (not less than 1 percent) may be permitted by the State law on a basis other than as permitted by paragraphs (1), (2), and (3).” (b) The amendments made by subsection (a) shall apply with respect to taxable years beginning after December 31, 1966.

CREDITS ALLOWABLE TO CERTAIN EMPLOYERS

SEC. 123. Section 3305 of the Internal Revenue Code of 1954 is amended by adding at the end thereof the following new subsection:

(j) DENIAL OF CREDITS IN CERTAIN CASES.-Any person required, pursuant to a permission granted by this section, to make contributions to an unemployment fund under a State unemployment compensation law approved by the Secretary of Labor under section 3304 shall not be entitled to the credits permitted, with respect to the unemployment compensation law of a State, by subsections (a) and (b) of section 3302 against the tax imposed by section 3301 for any taxable year after December 31, 1967, if, on October 31 of such taxable year, the Secretary of Labor certifies to the Secretary his finding, after reasonable notice and opportunity for hearing to the State agency, that the unemployment compensation law of such State is inconsistent with any one or more of the conditions on the basis of which such permission is granted or that, in the application of the State law with respect to the 12-month period ending on such October 31, there has been a substantial failure to comply with any one or more of such conditions. For purposes of section 3311, a finding of the Secretary of Labor under this subsection shall be treated as a finding under section 3301 (c)."

PART C-JUDICIAL REVIEW

JUDICIAL REVIEW

SEC. 131. (a) Title III of the Social Security Act is amended by adding at the end thereof the following new section:

"Judicial Review

"SEC. 304. (a) Whenever the Secretary of Labor

"(1) finds that a State law does not include provisions meeting the requirements of section 303 (a), or

**(2) makes a finding with respect to a State under subsection (b) or (c) of section 303,

such State may, within 60 days after the Governor of the State has been notified of such action, file with the United States court of appeals for the circuit in which such State is located or with the United States Court of Appeals for the District of Columbia a petition for review of such action. A copy of the petition shall be forthwith transmitted by the clerk of the court to the Secretary of Labor. The Secretary of Labor thereupon shall file in the court the record of the proceedings on which he based his action as provided in section 2112 of title 28, United States Code.

"(b) The findings of fact by the Secretary of Labor, unless contrary to the weight of the evidence, shall be conclusive; but the court, for good cause shown, may remand the case to the Secretary of Labor to take further evidence, and the Secretary of Labor may thereupon make new or modified findings of fact and may modify his previous action, and shall certify to the court the record of the further proceedings. Such new or modified findings of fact shall likewise be conclusive unless contrary to the weight of the evidence.

(c) The court shall have jurisdiction to affirm the action of the Secretary of Labor or to set it aside, in whole or in part. The judgment of the court shall be subject to review by the Supreme Court of the United States upon certiorari or certification as provided in section 1254 of title 28, United States Code.

“(d) (1) The Secretary of Labor shall not withhold any certification for payment to any State under section 302 until the expiration of 60 days after the Governor of the State has been notified of the action referred to in paragraph (1) or (2) of subsection (a) or until the State has filed a petition for review of such action, whichever is earlier.

"(2) The commencement of judicial proceedings under this section shall not stay the Secretary's action, but the court may grant interim relief if warranted, including stay of the Secretary's action and including such relief as may be necessary to preserve status or rights.

(e) Any judicial proceedings under this section shall be entitled to, and, upon request of the Secretary or the State, shall receive a preference and shall be heard and determined as expeditiously as possible."

(b) (1) Chapter 23 of the Internal Revenue Code of 1954 is amended by adding at the end thereof the following new section:

"SEC. 3311. JUDICIAL REVIEW.

"(a) IN GENERAL.-Whenever under section 3303(b) or section 3304 (c) the Secretary of Labor makes a finding pursuant to which he is required to withhold a certification under such section, such State may, within 60 days after the Governor of the State has been notified of such action, file with the United States court of appeals for the circuit in which such State is located or with the United States Court of Appeals for the District of Columbia a petition for review of such action. A copy of the petition shall be forthwith transmitted by the clerk of the court to the Secretary of Labor. The Secretary of Labor thereupon shall file in the court the record of the proceedings on which he based his action as provided in section 2112 of title 28, United States Code.

"(b) FINDINGS OF FACT.-The findings of fact by the Secretary of Labor, unless contrary to the weight of the evidence, shall be conclusive; but the court, for good cause shown, may remand the case to the Secretary of Labor to take further evidence, and the Secretary of Labor may thereupon make new or modified findings of fact and may modify his previous action, and shall certify to the court the record of the further proceedings. Such new or modified findings of fact shall likewise be conclusive unless contrary to the weight of the evidence.

"(c) JURISDICTION OF COURT; REVIEW.-The court shall have jurisdiction to affirm the action of the Secretary of Labor or to set it aside, in whole or in part. The judgment of the court shall be subject to review by the Supreme Court of the United States upon certiorari or certification as provided in section 1254 of title 28, United States Code.

"(d) STAY OF SECRETARY OF LABOR'S ACTION.

"(1) The Secretary of Labor shall not withhold any certification under section 3303(b) or section 3304 (c) until the expiration of 60 days after the Governor of the State has been notified of the action referred to in subsection (a) or until the State has filed a petition for review of such action, whichever is earlier.

"(2) The commencement of judicial proceedings under this section shall not stay the Secretary's action, but the court may grant interim relief if warranted, including stay of the Secretary's action and including such relief as may be necessary to preserve status or rights.

"(e) PREFERENCE.-Any judicial proceedings under this section shall be entitled to, and, upon request of the Secretary or the State, shall receive a preference and shall be heard and determined as expeditiously as possible."

(2) Subsection (c) of section 3304 of the Internal Revenue Code of 1954 is amended to read as follows:

"(c) CERTIFICATION.-On October 31 of each taxable year the Secretary of Labor shall certify to the Secretary each State whose law he has previously approved, except that he shall not certify any State which, after reasonable notice and opportunity for hearing to the State agency, the Secretary of Labor finds has amended its law so that it no longer contains the provisions specified in subsection (a) or has with respect to the 12-month period ending on such October 31 failed to comply substantially with any such provision. No finding of a failure to comply substantially with the provision in State law specified in paragraph (5) of subsection (a) shall be based on an application or interpretation of State law with respect to which further administrative or judicial review is provided for under the laws of the State. On October 31 of 1969 or of any taxable year thereafter, the Secretary shall not certify any State which, after reasonable notice and opportunity for hearing to the State agency, the Secretary of Labor finds has failed to amend its law so that it contains the provisions specified in subsection (a) added by the Unemployment Insurance Amendments of 1966, or has with respect to the 12-month period (10-month period in the case of October 31, 1969) ending on such October 31 failed to comply substantially with any such provision."

(3) The table of sections for such chapter 23 is amended by adding at the end thereof the following:

"Sec. 3311. Judicial review."

(c) The amendments made by this section shall take effect on the date of the enactment of this Act. In applying section 3304 (c) of the Internal Revenue Code of 1954 (as amended by subsection (b)) with respect to the taxable year 1966, certifications shall be made on December 31, 1966, in lieu of October 31, 1966.