DEPARTMENT OF LABOR AND INDUSTRY [34 PA. CODE CH. 65] Reasonable Assurance [31 Pa.B. 1564] The Department of Labor and Industry (Department), Bureau of Unemployment Compensation Benefits and Allowances (Bureau), proposes to add § 65.161 (relating to reasonable assurance). The proposed regulation provides criteria for determining the eligibility of employees of educational institutions for unemployment compensation (UC) benefits.
A. Effective Date
The proposed regulation will be effective immediately upon publication in the Pennsylvania Bulletin.
The proposed regulation will apply to applications for benefits effective on and after the date of publication.
B. Statutory Authority
The regulation is proposed under section 201(a) of the Unemployment Compensation Law (law) (43 P. S. § 761(a)), which authorizes the Department to promulgate and amend rules and regulations necessary to administer the Law.
C. Background and Purpose of Proposed Rulemaking
The purpose of this proposed rulemaking is to bring the Pennsylvania Unemployment Compensation (UC) eligibility criteria into conformity with the United States Department of Labor's (USDOL) requirements under section 3304(a)(6)(A) of the Federal Unemployment Tax Act (FUTA) (26 U.S.C.A. § 3304(a)(6)(A)) with regard to a principle known as ''reasonable assurance.''
FUTA requires the states to deny UC benefits based on services in an instructional, research or principal administrative capacity for an educational institution, for any week between 2 academic years or terms, if the claimant performed services in any of those capacities in the first year or term and there is a contract or reasonable assurance that the claimant will perform services in any of those capacities in the second year or term. FUTA also requires the states to deny benefits based on services in an instructional, research or principal administrative capacity for an educational institution, for any week during a vacation period or holiday recess, if the claimant performed services in any of those capacities before the vacation or holiday and there is a reasonable assurance that the claimant will perform services in any capacity after the vacation or holiday. FUTA permits the states to deny benefits based on services for an educational institution in a capacity other than instructional, research or principal administrative, for any week between 2 academic years or terms, or any week during a vacation period or holiday recess, if the claimant performed these services in the first year or term or before the vacation or holiday, and there is a reasonable assurance that the claimant will perform services in any capacity in the second year or term or after the vacation or holiday, respectively. FUTA also applies these denial provisions to claimants who are employed by an educational service agency. These provisions of FUTA apply to governmental and nonprofit educational institutions and educational service agencies (collectively, educational employers). See 26 U.S.C.A. § 3304(a)(6)(A).
As administrator of these provisions of FUTA, the USDOL imposes requirements on the states regarding the interpretation and application of the statute. Unemployment Insurance Program Letter 4-87, which sets forth USDOL's official interpretation of ''reasonable assurance'' in FUTA, provides that a reasonable assurance of employment in the second academic period exists only if there is a bona fide offer of employment and the economic terms and conditions of the employment in the second academic period are not substantially less than the terms and conditions of the claimant's employment in the first academic period. For example, if a full-time teacher is given an offer to return to work as a part-time substitute teacher in the following academic year, his employment in the second academic period would not be economically equivalent to his employment in the first academic period, as required by the USDOL. Therefore, there is no reasonable assurance and the teacher should be eligible for benefits for the summer.
Pennsylvania's implementation of the FUTA provisions regarding the eligibility of employees of educational employers is found in section 402.1 of the law (43 P. S. § 802.1). Section 402.1(1) and (2) of the law denies benefits based on services for an educational institution, for any week between two academic years or terms. (Paragraph (1) applies to services in an instructional, research or principal administrative capacity, and paragraph (2) applies to services in any other capacity.) Paragraph (3) denies benefits based on services in any capacity for an educational institution, for any week during a vacation period or holiday recess. Paragraph (4) extends the denial provisions of paragraphs (1), (2) and (3) to services performed in the employ of an educational service agency. The denial provisions of section 402.1 of the law require the existence of a contract or reasonable assurance of employment in the second academic period.
Currently, the Commonwealth does not include economic equivalency as a necessary element of reasonable assurance, and its failure to do so was brought to light in a recent case. In Musko v. U.C.B.R., No. 2740 C. D. 1997 (Pa. Cmwlth., filed June 23, 1998 (unreported)), appeal denied, 558 Pa. 624, 737 A.2d 745 (1999), the claimant was a full-time school teacher in the first academic year and received an assurance of returning to work as a per diem or long-term substitute teacher in the second aca-demic year. The Commonwealth Court held that the claimant was ineligible for benefits for the summer, because he worked in an instructional capacity in the first year and had an assurance of returning to work in an instructional capacity for the second year. However, the economic terms and conditions of the position offered to him for the second year were substantially less than the terms and conditions of his job in the first year. If the economic equivalency test had been applied as required by USDOL, the claimant would have been eligible for UC benefits.
To conform to FUTA, the Commonwealth and the other states can deny benefits to employees of educational employers only to the extent authorized by Federal law. In Musko, the Commonwealth went beyond the scope of the Federal law as interpreted by USDOL when it denied benefits to a claimant who was not offered an economically equivalent position for the next school year. As a result, the USDOL informed the Department that it was out of conformity with the Federal law.
To conform to the USDOL's reasonable assurance requirements, the Department proposes this regulation.
D. Summary of Proposed Rulemaking
The proposed regulation clarifies the meaning of the term ''reasonable assurance.'' Under the regulation, reasonable assurance would exist only if the individual receives a bona fide offer of employment for the next academic period, under economic terms and conditions that are not substantially less than the terms and conditions of the individual's employment in the first academic period.
E. Affected Persons
The universe of persons potentially affected by the proposed regulation consists of 3,863 educational employers and 443,073 employees of educational employers in this Commonwealth.
F. Fiscal Impact
For a state to receive Federal administrative funding and tax credits, its UC Law must conform to FUTA. The emergence of a conformity issue could have substantial impact on the Commonwealth. If the Commonwealth does not adopt the regulation and is adjudged to be out of conformity with Federal law, the Secretary of USDOL would withdraw certification from the Commonwealth, which would abrogate administrative funding for both the UC system and the employment service. In addition, employers within this Commonwealth would lose the FUTA tax credits to which they are entitled by virtue of paying state UC taxes.
The fiscal impact of the regulation on the UC Fund, if any, is difficult to ascertain. Employees of educational employers who are not given a reasonable assurance of returning to work, as defined by the regulation, would be eligible for UC benefits. However, eligibility for these employees could prompt affected employers to provide the level of reasonable assurance required by the regulation, thereby causing an eventual decrease in benefit payments.
Any increase in the cost of administering the UC program would be nominal, because no measurable increase in personnel, time or resources will be necessary to administer section 402.1 of the law as impacted by the regulation.
G. Paperwork Requirement
No new paperwork is required.
H. Sunset Date
The regulation will be monitored through practice and application. Thus, no sunset date is designated.
I. Regulatory Review
Under section 5(a) of the Regulatory Review Act (71 P. S. § 745.5(a)), the Department submitted a copy of this proposed regulation on March 8, 2001, to the Independent Regulatory Review Commission (IRRC) and the Chairpersons of the House Labor Relations Committee and the Senate Labor and Industry Committee. In addition to submitting the proposed regulation, the Department has provided IRRC and the Committees with a copy of a detailed Regulatory Analysis Form prepared by the Department in compliance with Executive Order 1996-1, Regulatory Review and Promulgation. A copy of this material is available to the public upon request.
Under section 5(g) of the Regulatory Review Act, if IRRC has objections to any portion of the proposed regulation, it will notify the Department within 10 days after the close of the Committees' review period. The notification shall specify the regulatory review criteria which have not been met by that portion of the proposed regulation to which an objection is made. The Regulatory Review Act specifies detailed procedures for review by the Department, the General Assembly and the Governor of objections raised, prior to final publication of the regulation.
J. Public Comment
Interested parties are invited to submit written comments, objections or suggestions about the proposed regulation to Jeri Morris, Department of Labor and Industry, Bureau of Unemployment Compensation Benefits and Allowances (BUCBA), 6th Floor, Labor and Industry Building, Seventh and Forster Streets, Harrisburg, PA 17121 within 30 days following publication of this proposed rulemaking in the Pennsylvania Bulletin. Written comments received by the Department may be made available to the public.
Comments may also be submitted electronically at ''kwright@dli.state.pa.us.'' A subject heading referencing the proposed regulation, name and return mailing address must be included in each transmission. In addition, all electronic comments shall be contained in the text of the transmission, not in an attachment.
For further information on this proposed rulemaking, contact Jeri Morris at (717) 787-6337.
JOHNNY J. BUTLER,
SecretaryFiscal Note: 12-56. No fiscal impact; (8) recommends adoption.
Annex A TITLE 34. LABOR AND INDUSTRY PART II. EMPLOYMENT SECURITY Subpart A. UNEMPLOYMENT COMPENSATION CHAPTER 65. EMPLOYE PROVISIONS Subchapter I. BENEFITS BASED ON SERVICE FOR EDUCATIONAL INSTITUTIONS Sec.
65.161. Reasonable assurance. § 65.161. Reasonable assurance.
(a) For purposes of section 402.1 of the law (43 P. S. § 802.1), a contract or reasonable assurance that an individual will perform services in the second academic period exists only if both of the following conditions are met:
(1) The educational institution or educational service agency provides a bona fide offer of employment for the second academic period to the individual.
(2) The economic terms and conditions of the employment offered to the individual for the second academic period are not substantially less than the terms and conditions of the individual's employment in the first academic period.
(b) For the purposes of subsection (a), an offer of employment is not bona fide if both of the following conditions exist:
(1) The educational institution or educational service agency does not control the circumstances under which the individual would be employed.
(2) The educational institution or educational service agency cannot provide evidence that the individual or similarly situated individuals normally perform services in the second academic period.
[Pa.B. Doc. No. 01-500. Filed for public inspection March 23, 2001, 9:00 a.m.]
