OLR Bill Analysis

sHB 6461

AN ACT CONCERNING UNEMPLOYMENT COMPENSATION.

SUMMARY

This bill makes several changes to unemployment benefits and how they are calculated. It:

1. requires benefits to be based on a claimant's average quarterly wages over their three highest earning quarters (which potentially decreases benefits for some claimants);

2. increases the minimum weekly benefit from $15 to $50;

3. increases the minimum base period earnings required to qualify for the minimum benefit from $600 to $2,000; and

4. prohibits annual increases in the maximum weekly benefit if the unemployment trust fund holds less than 70% of the amount needed to provide one year of benefits at a recession level payout rate.

Current law generally prohibits claimants from receiving benefits during any week for which they received severance pay but makes an exception if, as a condition for receiving the severance pay, a claimant was required to forfeit a right or claim against an employer. The bill eliminates this exception.

EFFECTIVE DATE: October 1, 2017

BENEFIT CALCULATIONS

Under current law, a non-construction worker's weekly unemployment benefit is calculated as one-twenty-sixth of his or her average quarterly wages during the two highest earning quarters of his or her base period. For construction workers, only the single highest earning quarter is used in the calculation. The bill instead requires benefits for all workers to be calculated as one-twenty-sixth of a claimant's average wages during the three highest earning quarters of his or her base period. Table 1 shows examples of how the bill could affect workers with various quarterly earnings.

Table 1: Examples of Benefits under Current Law and the Bill

Claimant

Quarterly wages

Benefit under Current Law

Benefit under the bill

A

(non-construction)

$10,000; $10,000; $10,000; $0

$384

$384

B

(non-construction)

$10,000; $10,000;

$5,000; $5,000

$384

$320

C

(construction)

$10,000; $8,000;

$8,000; $4,000

$384

$333

MINIMUM BENEFITS AND EARNINGS

The bill increases the minimum weekly unemployment benefit from $15 to $50. Because the law requires claimants to have earned at least 40 times their weekly benefit during their base period to qualify for benefits, increasing the minimum benefit also increases what claimants must earn over the course of their base period to qualify for the minimum benefit (CGS 31-235). Thus, to qualify for the bill's $50 minimum weekly benefit, claimants must have earned at least $2,000 ($50 x 40) over their base period, instead of the $600 required by current law.

MAXIMUM BENEFIT CAP FREEZE

Current law caps the maximum benefit allowed for any unemployment claimant at 60% of the average wage paid to the state's production (i.e., manufacturing) workers. The labor commissioner must adjust the cap on the first Sunday of each October but cannot increase it more than $18 each year.

The bill further prohibits the commissioner from increasing the cap in any benefit year starting on or after the first Sunday in October 2017 if the balance in the unemployment trust fund results in an average high cost multiple (AHCM) less than 0.7, as calculated by law. The AHCM is a formula that expresses how many years the unemployment trust fund can pay out benefits at a recession-level payout rate. If the AHCM is 1.0, the fund should be able to cover one year of benefits in a recession that is the average magnitude of the last three recessions.

COMMITTEE ACTION

Labor and Public Employees Committee

Joint Favorable Substitute

Yea

12

Nay

0

(03/09/2017)