UI: Shifting the burden of proof

This Policy Highlighter is adapted from a publication of the National Electrical Contractors Association (NECA) discussing the difficulties the organization faced securing accountability for unemployment insurance benefits from the Employment Security Department.

Once upon a time, workers receiving unemployment insurance had to show they were available for and actively seeking employment. That has changed, if the experience of NECA is any indication. Now it is the employer who has the burden of showing whether or not the employee is actively seeking work and accepting jobs for which he or she is eligible.

In 1994, the Puget Sound chapter of NECA challenged an electrician after a review of referral union hall records verified that he could have accepted more than 800 jobs while collecting unemployment insurance (UI) benefits. As a result, the Employment Securities Department (ESD) and the Department of Labor and Management drafted and approved a set of Referral Hall Unemployment Guidelines. The guidelines set the framework for processing UI claims filed by referral union members and required eligible claimants to be a member in good standing, to be available to immediately accept suitable work, and not to refuse dispatch for suitable employment.

In January 1998, NECA began a comprehensive program to control increasing unemployment costs, which had climbed to $3.3 million a year for the 65 member employers and were adversely affecting their ability to compete.

For six months the program was quite successful, resulting in reduced benefit charges. But on June 1, 1998, ESD sent a memo to all of its Job Service Centers (which receive UI claim challenges) to halt the processing of NECA's availability challenges until further notice.

After the June memo, ESD began requiring employers to provide enough information to make a prima facie case against a former employee before ESD would question the claimant's eligibility. As a result, the burden of proof for an employee's job availability and employment search activities was shifted to the employer. In addition, despite efforts on the part of employers to determine what specific information was required, ESD never published succinct, clear guidelines on the information necessary to make a prima facie case.

Around this time, the electrical industry entered a period during which electricians were being dispatched daily and jobs were going unfilled nearly every day. ESD was requiring former employers to prove the claimant was either not immediately available or had refused suitable employment. This was the first time Washington employers were required to supply such detailed information.

NECA decided to try to provide the information ESD requested, and succeeded in reducing the benefit charges from $3.3 million to $1.5 million in the first five quarters the cost control program was in place. But in March 1999, ESD changed the ground rules once again.

ESD adopted the practice of finding NECA employers "not interested parties" in challenges of an employee's UI eligibility pursuant to a notification section in the state's RCWs. That finding, therefore, precluded NECA members from questioning the UI benefits they were paying. Additionally, ESD said that data provided by NECA was insufficient to overcome the assumption that claimants were immediately available for work. This was the same information NECA had provided in hundreds of earlier cases.

In all cases, the NECA representative provided a list of jobs the claimant could have taken and a list of jobs that went unfilled during the weeks in question. In one case, a list in excess of 300 jobs a particular claimant could have accepted was not enough for the administrative law judge to question the claimant's eligibility.

ESD has a fiduciary responsibility to protect the unemployment benefit fund, but unfortunately the measures the Department has established allow many claimants to abuse the system. The steps ESD has taken are in direct conflict with the legislative criteria that referral hall claimants must meet to verify they are making an active job search.

ESD has held NECA members to a standard that seems far above the threshold any employer, including ESD, has been held to previously. Since March 1999, ESD has consistently held that NECA employers are on "fishing expeditions" during hearing proceedings, despite NECA evidence in hundreds of hearings showing that the full union referral system has been abused.

NECA has since taken several ESD cases to superior court and prevailed. However, ESD recently singled out NECA by refusing the organization direct access to the ESD Fraud Unit to report abuse and fraud as other employers have. With Washington state in the top five nationally for highest taxes per capita one wonders why ESD is not trying to aggressively eradicate fraud and abuse from the system.

NECA is attempting to police its own industry to hold down cost for all Washington employers, bring accountability to government, and remain competitive. Unfortunately, ESD is artificially altering the ability of a group of employers to secure accountability of their UI taxes.

For more information please visit:

http://www.wa.gov/esd/ui.htm
http://www.necaseattle.org/mainframe.html

Adapted from National Electrical Contractors Association. Contact 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