Unemployment insurance eligibility
Washington's double standards?

Charged with overseeing the state's Unemployment Insurance (UI) program, the Department of Employment Security (ESD) defines its mission for UI this way:

The mission of the Unemployment Insurance Program is to enhance the well-being of the state workforce and business community through the timely and equitable payment of benefits and the collection of taxes and overpayments. The program promotes economic security for individuals, their families and their communities, and assists employers to maintain a stable workforce.

Unfortunately, one of the mechanisms ESD uses to determine claimant eligibility—full referral union halls—hinders these efforts and fosters a lack of accountability. Full referral unions halls are centers where union members "check in" to see if any work is available in order to be eligible for benefits.

Workers who do not belong to a full referral hall must conduct an active job search to remain eligible for UI. Three job search contacts per week will satisfy ESD's requirement. Members of a full referral hall, however, must simply be in "good standing" with their union and "available for work."

ESD policy UI circular 3-94, Supplemental No. 2 defines work availability for full referral union members by the following criteria. "Available" members:

1. Are in good standing with the union [union dues are current];
2. Meet the established union criteria for dispatch or referral; and
3. Have no unreasonable limitations on availability for work.

To understand the effect of this policy it is beneficial to consider the experiences of the National Electrical Contractors Association (NECA) and the electrical Local Union (LU) 46.

NECA is comprised of 65 electrical employers in the state and has been attempting to police its own industry with regard to UI. Self-policing is especially important to the organization because Washington's UI tax rate is based on the number of former employees claiming and receiving benefits. Through its in-depth investigation, NECA discovered that numerous claimants in LU 46 fraudulently received benefits by turning down jobs for which they were available. NECA has previously been awarded a $189,000 court settlement against the union. NECA is continuing its efforts against both ESD and the union to eliminate fraud.

In a December 7, 2000, NECA oral deposition of Annette Copeland, Assistant Commissioner of ESD, serious concerns regarding ESD's oversight of full referral unions came to light.

Q. (p. 51) ". . . From the ESD's policy and from the ESD's perspective, there is a direct relationship between one's eligibility for purposes of unemployment benefits and that electrician's compliance with the union's rules, correct?"
A. "Yes."

Q. (p.52) "So that's why at least under the current policy and procedure of the ESD, the major check and the verification burden is on not just the claimant but actually on the union, correct?"
A. "Yes."

Q. (p.53) "...what policies or procedures are in place to require the union to show that their verification procedures are adequate and correct?"
A. "We rely on their word."

Q. (p.53) "And if the union isn't good for its word, doesn't that undermine the entire system?"
A. "I would say probably."

Q. (p. 54) "...That's going to leave them [former employers] exposed to paying taxes [for fraudulent claims]?"
A. "Higher taxes, right."

Q. (p. 88) "[referring to ESD policy] ‘The department is the final authority in granting authorization to participate in the Union Referral Program. Once authorized, participation will continue indefinitely, subject to periodic evaluations of both the program and participating unions.' To your knowledge has there ever been any periodic evaluation done of Local 46?"
A. "Just sending an update letter that we do to all of them [referral unions] as I described before."

Q. (p. 89) "So ESD does no evaluation per se, simply sends out a letter?"
A. "Right. They consider that to be an evaluation."

Q. (p. 90) "But these periodic notices that go out to the union officials, how often do these go out?
A. "I can't tell you exactly, but I know it's not yearly." (emphasis added)

Based on the facts contained in this deposition, it would be prudent for ESD to review not only its oversight of full referral unions, but also whether there should continue to be a different set of rules for UI eligibility depending on whether or not one belongs to a union. All recipients of UI benefits should be required to conduct an active job search. UI should not be structured in a way that allows certain individuals to refuse employment and still receive benefits.

Prepared Jason Mercier, Budget Research Analyst, (360) 956-3482 or jmercier@effwa.org

Evergreen Freedom Foundation P.O. Box 552, Olympia, WA 98507 Phone: (360) 956-3482, Fax: (360) 352-1874 Email: effwa@effwa.org