[Material in brackets to be deleted; material in italics to be added] PART A-COVERAGE

Amendment.-Section 101, page 1, line 11 through page 2, line 11, should be amended to read as follows:

"DEFINITION OF EMPLOYER

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

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(a) EMPLOYER.- For 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] $300 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.'"]

Explanation. The proposed change is designed to extend coverage to employers who have at least a $300 payroll in a quarter, as recommended by the Interstate Conference of Employment Security Agencies. Such a provision has several significant advantages over the provision of H.R. 15119 which contains alternative provisions of at least 20 weeks of work in a year or a quarterly payroll of $1,500. It would increase coverage by 1.55 million workers, 350,000 more than provided by the House bill, and would be easier to administer. The limitation of $300 in a quarter is high enough to avoid coverage of those only casually in employer status. It is the highest quarterly payroll limit now used by States which determine coverage solely by size of quarterly payroll.

DEFINITION OF WAGES

Amendment. (b) Subsection (b) of section 3306 of the Internal Revenue Code of 1954 is amended by adding at the end thereof a new paragraph (10) as follows:

"(10) Any remuneration for employment as defined in section 3306(c)(1) unless the remuneration constitutes wages under section 3121 (a) (8) (B) and was paid by an employer to an employee but only if such employee was paid by such employer such wages in the amount of at least $300 in any calendar quarter in a calendar year or in the immediately preceding calendar year."

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DEFINITION OF EMPLOYMENT

Amendment. (c) Paragraph (1) of subsection (c) of section 3306 of the Internal Revenue Code of 1954 is amended to read as follows:

"(1) agricultural labor (as defined in section 3306(k) unless performed for an employer who, in a calendar year or in the immediately preceding calendar year, paid wages under section 3121(a)(8) (B) for such labor to each of 50 employees."

Explanation. The proposed additions in subsections (b) and (c) are designed to cover for Federal unemployment tax purposes farm employers who employ 50 or more workers reportable under FICA. Only the wages of those workers who were paid $300 in any calendar quarter, however, would be taxed and only such workers would be covered for unemployment insurance. The 50 or more workers requirement is designed to describe the large farm. The $300 quarterly payroll requirement is designed to eliminate migrant, casual, or intermittent workers.

EFFECTIVE DATES

[(b)] Amendment.-(d) The amendment made by subsection (a) shall apply with respect to remuneration paid after December 31, [1968] 1967. The amendments made by subsections (b) and (c) shall apply after December 31, 1968.

Explanation. Subsection (a) changes the size of firm limitation in the definition of "employer." An earlier effective date of January 1, 1968 (instead of January 1, 1969, as in H.R. 15119), will present no problems, because the 13 States which would need to amend their laws to provide broader coverage have legislative sessions in 1967.

The extension to large farms, however, would not be automatic in 20 States, several of which do not have a regular legislative session until 1968. Therefore, the effective date for this change is January 1, 1969.

SECTION 105. STUDENTS ENGAGED IN WORK-STUDY PROGRAMS

Amendment. Section 105, page 9, lines 2 through 16, should be amended to read as follows:

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) service performed by an individual who is enrolled at [an] a nonprofit or public educational institution [within the meaning of section 151 (e) (4)] which normally maintains a regular faculty and curriculum and normally has a regularly organized body of students in attendance at the place where its educational activities are carried on, as a student in a full-time program, taken for credit at such institutions, 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, and such institution has so certified to the employer, except that this paragraph shall not apply to service performed in a program established for or on behalf of an employer or group of employers.' Explanation. The proposed changes are designed to clarify the language used in H.R. 15119 to assure that it carries out the intent of

the House Ways and Means Committee as evidenced in its report: "This new exclusion does not apply to employee educational or training programs run by or for an employer or group of employers."

PART B.-PROVISIONS OF STATE LAWS

PROVISIONS REQUIRED TO BE INCLUDED IN STATE LAWS

Amendment.-Section 121 of the bill, page 9, line 19 through page 10, line 22, is amended to read as follows:

"SEC. 121. (a) Section 3304 (a) of the Internal Revenue Code of 1954 is amended by inserting after paragraph (6) (added by section 104(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];

(8) (a) compensation may not be denied in such State to any otherwise eligible individual

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(i) by reason of a State disqualification for a period in excess of 13 weeks following the week in which a disqualifying act occurred; or

(ii) for any week of unemployment during his benefit year by reason of a cancellation of his wage credits or reduction of his benefit rights (other than a reduction because of earnings or disqualifying income) except that

compensation may be denied in accordance with disqualification provisions of applicable State law for unemployment due to a labor dispute or for fraud in connection with his claim, without regard to the limitation of this subsection.

"(b) Compensation paid to any individual (or a derivative of compensation) after he has been disqualified because he left work without good cause or was discharged for misconduct in connection with his work shall not be (1) charged against the experience rating account of the employer from whose employment he left or was discharged, or (2) otherwise reflected in such employer's experience on the basis of which his rate is determined as required by section 3303(a)(1).' ”

Explanation. The proposal would change the Federal standard with respect to disqualifications from that provided in H.R. 15119 by (1) providing a limitation on the period of disqualification, (2) prohibiting any reduction (instead of only total reduction) of benefits, and (3) prohibiting the charging to the separating employer's experience rating account of benefits paid following certain disqualifications. With certain specified exceptions, disqualifications must not exceed a denial of compensation for 13 weeks following the week in which the disqualifying act occurred. The language retains the prohibition in H.R. 15119 against cancellation of wage credits, and prohibits any reduction of the worker's earned monetary entitlement, as well as disqualifications which last for the duration of a period of unemployment.

The limitation to a 13-week denial does not apply to disqualifications imposed in cases of labor dispute or of fraud in connection with a claim. A State remains free to impose whatever disqualification it deems appropriate in such cases.

The proposal does not preclude a State from reducing an individual's weekly benefit amount because of his receipt of disqualifying income, such as earnings or pensions during a week claimed as a week of unemployment.

The proposal also prohibits a State from charging to the experience rating account of the separating employer any compensation paid after a worker has been disqualified because he left work without good cause or was discharged for misconduct in connection with this work. The proposal provides for the handling of the experience-rating problem in States which have experience-rating systems that do not charge compensation.

Amendment.-"(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 in Canada or because he resides in another State or in Canada 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.

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Explanation. The proposed change would include Canada in the requirement that State unemployment insurance systems refrain from discriminating against workers who earned benefit rights in the State but who file their claims from outside the State.

In 1942, the United States and Canada entered into an executive agreement authorizing the inclusion of Canada in the Interstate Benefit Payment Plan as if it were a State. All but four States (Alabama, Iowa, Maine, and New Hampshire) and Puerto Rico have subscribed to the reciprocal agreement with Canada. Failure of the two border States to do so puts a premium on the hiring of Canadian workers in preference to American workers; because separation of American workers could result in charges to the employers' experience-rating account whereas the separation of Canadian workers would not.

PART C-JUDICIAL REVIEW

Amendment.-Section 131(a) of the bill, page 12, line 19 through page 15, line 22 should be amended to read as follows:

"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 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] if supported by substantial 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] if supported by substantial evidence.

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(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] if supported by sub