Employers need to be aware of important new UC legislation that can materially impact their unemployment claims administration compliance and financial impact.

As part of a larger effort by the federal government to address the very large U.S. deficit, the government passed Unemployment Compensation (UC) Program Integrity regulations as part of the October 2011 Trade Adjustment Assistance Extension Act of 2011 (TAAEA). The UC Program Integrity measures have been specifically designed to help prevent the improper payments which have been a long-term problem and drain on the UC system.

The employer impact piece of this legislation is tucked under Sec. 252 of Subtitle C - PROHIBITION ON NONCHARGING DUE TO EMPLOYER FAULT

The federal government is mandating that the states have to apply new strict rules & practices that will place the employer at greater risk to be responsible for overpayments related to Unemployment Claims charges. The effective date of required state statutory changes is October 21, 2013 and states may opt to enact rules prior to this.

One of the key components of the Section 252 Legislation is the concept of "a pattern of failure" for an employer, or its agent, to respond in a timely or adequate manner. Each state has its own legislation defining their interpretation of a "pattern of failure" as well as methods of enforcement and ranges of potential penalties.

For an employer, this raises the bar for compliance and timely & complete reporting. Likewise, depending upon agency interpretation, the employer may be subject to unemployment claim liability related to "non-employer" events such as claimant error, fraud, and/or administrative error by the agency.

AUTO is closely working with advocates and the agencies to help guide them to a fair interpretation of the rules and there practical application. Contact an AUTO member to better understand this important upcoming change and how it may impact your company.

To find out more, please feel free to contact any one of our members