Labor and Public Employees Committee

JOINT FAVORABLE REPORT

Bill No.:

HB-6461

Title:

AN ACT CONCERNING UNEMPLOYMENT COMPENSATION.

Vote Date:

3/9/2017

Vote Action:

Joint Favorable Substitute

PH Date:

2/21/2017

File No.:

SPONSORS OF BILL:

Labor and Public Employees Committee

REASONS FOR BILL:

Unemployment compensation statutes have not been updated in over thirty years. Reforms are needed to insure the fund remains solvent.

**Substitute Language (LCO #5142): Specifies that the freeze on annual increases to maximum weekly benefits is tied to the average high cost multiple formula, rather than the fund's “solvency”. The language clarifies the original bill regarding when the maximum weekly benefit can be increased.

RESPONSE FROM ADMINISTRATION/AGENCY:

Scott Jackson, Commissioner, CT Department of Labor

Written testimony stated the proposed changes would adversely affect the vast majority of claimants. By excluding workers from Unemployment Insurance (UI) coverage or reducing benefits, a necessary financial safety net would be removed for individuals who lose work through no fault of their own. These UI benefits are typically returned back to the local economy and therefore it would have a negative impact on businesses. In addition, the changes would require significant automation initiatives and require additional funding to implement the information technology modifications. Existing federal grand funds could also be jeopardized.

NATURE AND SOURCES OF SUPPORT:

Marshall Collins, Attorney, Counsel for Government Relations, Greater Danbury Chamber of Commerce

Presently, benefit rates are calculated using the highest quarter. This bill would calculate them is the average of three quarters and eliminate the unfair advantage of seasonal workers. This bill also prevents the maximum benefit rates from automatically increasing if the unemployment solvency rate is below 70%. These automatic increases should be considered individually.

Bill Ethier, CAE, Chief Executive Officer, Home Builders and Remodelers Association of Connecticut, Inc.

This bill creates positive changes and prevents the collection of Unemployment Compensation benefits while receiving severance pay. By basing benefits on wages earned in three quarters rather than the current two, seasonal workers will not be able to unfairly collect.

Eric W. Gjede, Counsel, Connecticut Business and Industry (CBIA)

Attorney Gjede testified this bill has a zero cost to the state and will result in no reduction in benefits for the average full-time worker who became unemployed through no fault of their own. This is a do-no-harm approach to restoring solvency to the Unemployment Trust Fund because it avoids any benefit reduction for most individuals and does not contain job-killing tax increases on businesses.

Joe Horvath, Assistant Policy Director, Yankee Institute for Public Policy

He stated that as a soon-to-be-released research from a c Quinnipiac professor says that Connecticut's average cost per covered employee is 7th highest in the US and we gave the 13th highest per wage costsfor unemployment insurance. This is more expensive than it needs to be. There are two options: higher tax burdens for employers or benefit realignment. Businesses are already overburdened by fees and mandates. This bill will help make it a little easier to do business in CT.

Andy Markowski, Connecticut Director, National Federation of Independent Business/Connecticut

This bill makes common sense and would help address Unemployment compensation insurance trust fund issues. The reforms would increase the base wage earnings needed to qualify for unemployment. At $600, they have not been adjusted in over thirty years. It would limit the collection of unemployment benefits by people receiving severance pay form a past employer and freeze the maximum benefit rate until the unemployment trust fund has obtained a healthy level of solvency.

Diane M. Ritucci, President & CEO, Workers' Compensation Trust

The changes presented in this bill will help alleviate the rising cost of operating a business in the state of CT. They are reasonable and still provide the intent of the benefits which is to provide temporary, reasonable income to those who find themselves suddenly unemployed.

Gary R. Bergeron, President, Connecticut Trailers, Inc.

He employees 23 people and has found after people voluntarily quit their jobs, a few months later they file for unemployment benefits. If their job is still open or there is a job available for them in the company they should not be eligible for benefits. This drives up rates for employers.

NATURE AND SOURCES OF OPPOSITION:

Susan Garten, Attorney, Greater Hartford Legal Aid, Inc.

She is a member of the Employment Advisory Security Board. In 2015, this board endorsed a balanced solution and updated the obsolete system and benefit payments were adjusted equitably. This bill places the entire burden of restoring the UI Trust Fund on workers without asking anything of employers. It punishes vulnerable workers by cutting their UI benefits. Basing qualifying time on the highest three quarters would fall harshly on seasonal workers and workers whose earnings vary week to week or month to month.

Lori J. Pelletier, President, AFL-CIO

This bill would make it more difficult for workers to collect unemployment and reduces the benefit amount to which they are entitled. There are too many variables that impact the level of the fund, but one of them should NOT be people collecting unemployment insurance.

Reported by: Marie Knudsen

Date: March 23, 2017