HomeMy Public PortalAboutMuni Unemployment Ins Task Force Rpt 11-16-2012_201305161617571314 Municipal
Unemployment Insurance (UI)
Task Force Report
iallovember 15, 2012
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Task Force Members
Secretary Joanne F. Goldstein(EOLWD) (Chair)
Mayor Kim Driscoll (Salem) (President, MA Mayors' Association)
Mayor Setti Warren(Newton)
Senator Dan Wolf
Representative David Torrisi
Michael Widmer(MA Taxpayers Association)
Hon. Raya Dreben, Associate Justice of the Appeals Court (Ret.)
Paul Toner(MA Teachers Association)
Jenn Springer (MA AFL-CIO)
TABLE OF CONTENTS
EXECUTIVE SUMMARY.........................................................................................................2
INTRODUCTION......................................................................................................................7
DUA REVIEW OF SPECIFIC CASES REPORTED BY MUNICIPALITIES...........................12
METHOD OF CONTRIBUTION AS FACTOR IN MUNICIPAL UI COSTS...........................13
PUBLIC SECTOR RETIREMENT ISSUES .............................................................................18
960-Hour Employees ............................................................................................................18
Public Safety Employees who are Mandatorily Retired at Age 65..........................................19
Critical Needs Educators.......................................................................................................19
ProposedSolution.............................................................................................................20
ExpectedOutcome............................................................................................................21
ISSUES INVOLVING SCHOOL DEPARTMENTS AND SCHOOL-BASED EMPLOYEES ..23
Individuals Performing Services for a School Department Who Are Not Employed
bythe School........................................................................................................................23
Legal Framework and Analysis.........................................................................................24
ProposedSolution.............................................................................................................25
ExpectedOutcome............................................................................................................25
Reasonable Assurance over Summer Break...........................................................................25
Legal Framework and Analysis.........................................................................................26
ProposedSolution.............................................................................................................27
ExpectedOutcome............................................................................................................28
ELECTION DAY WORKERS ISSUE......................................................................................30
Legal Framework and Analysis.........................................................................................30
ProposedSolution.............................................................................................................30
ExpectedOutcome............................................................................................................31
ON-CALL EMPLOYEES.........................................................................................................32
On-Call Firefighters and On-Call Emergency Medical Technicians (EMTs)..........................32
ProposedSolution.............................................................................................................33
ExpectedOutcome............................................................................................................33
Substitute Teachers and Other On-Call Workers....................................................................33
Legal Framework and Analysis.........................................................................................34
ProposedSolution.............................................................................................................35
SEASONAL EMPLOYMENT..................................................................................................36
Legal Framework and Analysis.........................................................................................37
ProposedSolution.............................................................................................................37
ExpectedOutcome............................................................................................................39
STEPSTAKEN BY DUA.........................................................................................................40
CONCLUSION.........................................................................................................................43
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EXECUTIVE SUMMARY
The Municipal Unemployment Insurance (UI) Task Force was convened by Governor
Deval Patrick in March 2012 to review UI issues raised by municipalities, determine
which issues were systemic and broad-based, and reach conclusions and legislative,
administrative, and procedural recommendations to address these issues. The Task Force
members are: Secretary Joanne F. Goldstein(EOLWD) (Chair); Mayor Kim Driscoll
(Salem) (President, MA Mayors' Association); Mayor Setti Warren(Newton); Senator
Dan Wolf; Representative David Torrisi; Michael Widmer (MA Taxpayers Association);
Hon. Raya Dreben, Associate Justice of the Appeals Court (Ret.); Paul Toner(MA
Teachers Association), and Jenn Springer (MA AFL-CIO).
The Task Force met 5 times, during which it reviewed the issues presented by
municipalities, materials provided by the Department of Unemployment Assistance
(DUA), comments by municipalities and their associations, such as the Massachusetts
Municipal Association(MMA), and additional data that it requested of DUA.
The issues clustered around several categories of public employees, which represent only
.5% of all UI claims in the Commonwealth. The Task Force focused on those that had
widespread applicability among municipalities and were frequently raised as challenges
that affected the largest number of cities and towns.
After careful consideration of each of these categories, which included a review of
current state and federal law, U.S. Department of Labor mandates, municipal-specific
issues, DUA practice and policy, practices and perceptions of municipalities, and impact
on both public and private employers and employees, the Task Force reached the
following conclusions and recommendations.
RETIREES:
• Issue: payment of UI benefits to public sector retirees who return to work for their
previous employer, from whom they receive a defined benefit pension, and then
stop working when they reach a statutory cap based on either hours or wages
(referred to as 960-hour employees) or to "critical needs" educators, who have
no cap, when their positions end. The other issue involves public employees who
apply for and receive UI benefits on being mandatorily retired at age 65.
• Recommended Solution: a statutory change that would reduce the UI benefits
of all retirees, public and private, who receive a defined benefit pension, when
their post-retirement wages are paid by an employer for whom they worked at
least 75%of the time period covered by the defined benefit pension. The
proposed legislation would reduce the retiree's weekly UI benefits by 65% of
the retiree's weekly pension payment. This 65% deduction recognizes that the
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employee has also substantially contributed his/her own earnings to the pension
plan in the offset as well as the economic concerns regarding retirees with
minimal pensions.
• Kev Outcome: Covered individuals whose annual pension is $53,920 or higher
would not receive any UI benefits, even though technically eligible, because their
pension offset would be the same or greater than their UI benefit amount.
Even below that threshold amount, most retirees would receive zero or minimal
UI benefits, based on the factors that go into the calculation of the offset.
SCHOOL BASED EMPLOYEES:
• Issue: payment of UI benefits to three categories of school-associated employees:
(1) non-tenured educators who do not receive a reasonable assurance of a contract
renewal for the subsequent school year; (2) school-based employees who are paid
by the municipality directly and not by the school department (such as crossing
guards or school bus drivers), and (3) substitute teachers.
• Recommended Solution:
o For school-based employees who are not paid directly by the school
department, a statutory change is recommended to make them ineligible
for UI even if there is no work available (i.e., summer or other school
vacation) by including them in existing "reasonable assurance"
exceptions, the same as school-associated employees who are paid
directly by the school department.
o No state statutory changes are available under federal law to alter
"reasonable assurance" for the summer break. But the Task Force
recommends two policy/administrative changes for DUA and better
management of reasonable assurance policy and practice by municipalities
that will reduce UI benefit payments to educators and school-associated
staff over the summer months and during school year vacation breaks,
thereby assisting cities and towns with managing their UI costs.
o Substitute teachers will be included in the reasonable assurance policy
changes noted above and will also be subject to additional limitations
on UI benefits as on call employees, noted below.
• Kev Outcome: all public employees providing services to a public school who
have a reasonable assurance of continued employment would be ineligible for
UI benefits when there is no work available because school is not in session,
whether over the summer or during breaks throughout the school year. Further,
those employees who, having been initially laid off, later receive reasonable
assurance of re-employment, will thereafter no longer be eligible for UI benefits.
UI eligibility for substitute teachers is significantly restricted.
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SEASONAL EMPLOYEES:
• Issue: How to ensure that the seasonal certification exemption from
UI is properly managed and how to revise seasonal certification regulations
so that municipalities and other employers can transfer seasonally-certified
employees to other positions without transferring seasonal wages towards
UI eligibility.
• Recommended Solution: It is recommended that DUA clarify its rules and
procedures for certification of seasonal employment, especially as it relates to a
certified seasonal employee transfer to non-seasonal employment. It is also
recommended that DUA allow a municipality to amend its seasonal certification
mid-season to request up to the maximum 16 weeks.
• Kev Outcome: Will allow municipalities to better manage their seasonal needs,
ensure that defined seasonal employees are not UI eligible at the end of the
season, that individuals fulfill all statutory requirements if receiving UI benefits,
and that municipalities, and other employers, will be able to transfer certified
seasonal employees to non-seasonal positions without UI implications.
ELECTION DAY WORKERS:
• Issue: Individuals who work intermittently only on election days and are currently
eligible for UI benefits.
• Recommended Solution: Statutory change to exempt the service performed as an
election official or election worker, if the wages received by the individual during
the calendar year serving in this capacity are less than$1,000.
• Kev Outcome: Municipalities would no longer be charged for UI benefits to
election workers who earn less than $1,000 per calendar year.
ON-CALL EMPLOYEES:
• Issue: There are two categories of on-call employees: (1) on-call firefighters and
EMTs, who are currently statutorily exempt from receiving UI benefits and(2) a
more general group of assorted classifications of on-call employees, including
substitute teachers.
• Recommended Solution:
o For on-call firefighters and EMTs, the DUA has issued and disseminated
(on March 20, 2012) a Guidance Letter that explains how municipalities
can avoid UI charges for these groups of employees by properly
identifying them when they file claims.
o For other on-call employees, including substitute teachers, it is
recommended that DUA affirm and uniformly apply the rule that a part-
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time, intermittent employee is disqualified from receiving UI benefits for
any week in which the employer offers at least one hour of work or the
employee actually works for one hour or more.
• Kev Outcome: With additional education and training, municipalities should be
able to completely eliminate UI benefits to appropriately designated on-call
firefighters and EMTs and better control and reduce UI costs to other on-call
employees through increased coordination and reporting of when work is offered
or accepted.
METHOD OF CONTRIBUTION TO UI SYSTEM BY MUNCIPAL EMPLOYERS:
• Issue: Consideration of whether municipal employers are best served, in general,
by self-classifying as reimbursable or contributory employers and the implications
of the classification selection. "Contributory employers" (private companies are
required to be contributory employers) contribute to the UI Trust Fund based on
an insurance model of paying a quarterly UI assessment based on an experience
rating. "Reimbursable employers" (available only to non-profits and public
employers) essentially self-insure their UI costs since each UI claim is paid and
covered, dollar-for-dollar, by the reimbursable employer.
• Recommended Solution: After review and analysis, it was determined that no
changes be recommended at this time. The vast majority of municipalities choose
to be reimbursable employers and the analysis demonstrated that over time
significant savings were achieved by electing and remaining reimbursable
employers.
• Kev Outcome: While it is recognized that the reimbursable model has presented
some financial challenges to municipalities in recent years, largely due to the
recent recession, it is still the economically preferable method for most
municipalities to manage and control their UI costs. Municipalities are,
nevertheless, encouraged to reach out to DUA to discuss the advantages and
disadvantages of selecting between the contributory or reimbursable model.
PROCESS, POLICY. AND PRACTICE:
• Issue: Ensuring best practices at the DUA so that its requirements are uniform
and understood by employers, while providing the appropriate balance between
employers and claimants. Ensuring best practices within municipalities, so that
municipalities can best manage their UI costs.
• Recommended Solutions: The Task Force recommends a number of policy and
procedural changes that DUA either has or will implement to ensure better access
by municipalities, uniform policies and enforcement, and greater responsiveness
to municipalities. It also recommended to municipalities that they better manage
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their UI issues, which would include better coordination within local government,
increased responsiveness to DUA, and ensuring that local officials and third
party agents are coordinating their efforts. Included in these best practices are
continuing collaboration between DUA and municipalities, a DUA unit dedicated
to municipal issues, formal educational seminars, webinars, and regular dialogue.
• Kev Outcome: The ability on all sides to work through issues, recognize
responsibility, and implement changes will lead to better communication,
management, and outcomes and will help control the cost of UI charges to
municipalities.
SUMMARY AND CONCLUSION:
The Task Force is confident that it has addressed the major issues raised by
municipalities and has fulfilled its mandate from the Governor. The combination
of legislatives changes, DUA policy and procedural changes and commitment to
enforcement, and municipalities' recognition of their need to better manage their
UI costs will lead to a better system that is collaborative and fair and that will
provide economic relief to cities and towns. The result of these reforms will be of great
benefit to municipalities and taxpayers by reducing their UI costs.
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INTRODUCTION
Governor Patrick established the Municipal Unemployment Insurance Task Force (Task
Force) in March 2012 to consider several issues involving municipalities'
and the eligibility of their employees, including retired public employees, for
Unemployment Insurance (UI) benefits. The Governor charged the Task Force with
making recommendations that would provide relief to municipalities while maintaining
the integrity of the UI system, respecting the rights of unemployed workers with valid
claims, and ensuring the UI system's continuing conformity with federal requirements.
The Task Force has taken its mandate seriously and issues this report with
recommendations which meet the Governor's stated goals.
Governor Deval Patrick initiated this review after receiving a letter from a town in
March, 2012, requesting his assistance in addressing several concerns regarding the
payment of UI benefits to municipal employees. The letter highlighted a case involving
a retired police officer who was called back to work and, after stopping work, applied for
and was awarded UI benefits based on his post retirement earnings.2 The letter also raised
several additional UI issues. It was signed by officials from 17 additional cities and
towns. (Attachment 1)
Upon receipt of the letter,the Governor's office forwarded it for review and response to
the Executive Office of Labor and Workforce Development (EOLWD), the Secretariat
in which the Department of Unemployment Assistance (DUA)3 is situated. EOLWD
undertook a review of the issues raised and began the process of addressing them.
i. The term municipalities includes all local public employers,cities and towns, school districts,water
districts and all other local public entities that hire employees and are under the UI system.
2. Although identifying information about a particular claimant and this case were published in local
media and discussed publicly,the Task Force is unable to address the particular case. DUA did not
present any individual cases to the Task Force and confidentially handled any that were raised.
Chapter 151A, §46 contains stringent requirements to make"confidential and for the exclusive use
and information of the department [DUA]"all information regarding specific claimants,employers,
and claims.Because §46 prohibits the disclosure of such information,the Task Force did not consider
and is unable to discuss particular cases in this report,regardless of the accuracy or inaccuracy of what
has been publicized.
3. DUA is the state agency which administers the Ul program for all employers and all claimants in the
Commonwealth.
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EOLWD identified the following eight categories:
1. retired public employees who are called back to work by municipalities and then
reach either the statutory cap of 960 hours of work or a formula-based earnings
cap in a calendar year, often referred to as "960 employees";
2. public safety employees who retire upon reaching the statutorily mandated
retirement age of 65;
3. nontenured public school teachers who receive notice that their contracts will not
be renewed for the subsequent school year, but over the summer the teacher is
rehired by that school system or another public school system;4
4. retired public school educators who are rehired or hired by a school system due to
a critical need of that municipality, and are therefore without any earnings
limitation, and then replaced or laid off;
5. school bus drivers, paid by municipalities rather than directly by school
departments, for periods when the schools are closed, including summers, school
vacations, and professional development days;
6. call firefighters, who work for a municipality on a part-time basis and have a full-
time job with a different employer, when they lose their full-time job;
7. part-time municipal employees who were laid off from their other, primary
employers, and for whom the municipality was charged part of the cost of the
employee's UI benefits because the primary employer had reached its maximum
required contribution to the UI benefit; and
8. individuals employed as reserve police officers who are hired as full-time officers
but later returned to reserve status because they fail to obtain a passing grade from
the police academy.5
4. The statutory date for notification to educators of non-renewal is June 15.Any earlier date is
applicable if collectively bargained between the municipality and the teachers'union.
5. This particular concern seems to be situation-specific and did not emerge as a theme or problem to
municipalities more broadly. Therefore, it was not part of the deliberations of the Task Force.
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Once these issues were raised, the Administration quickly and effectively moved to
address them. A comprehensive approach was developed by EOLWD to make sure that
all the issues raised would be reviewed.
Accordingly, the following steps were taken:
1. In March 2012, EOLWD Secretary Joanne Goldstein wrote to all 351 cities
and towns and a number of school districts, recognizing their frustration when
claimants receive UI benefits improperly or due to statutory or regulatory
requirements and acknowledging the financial burden those cases place on
municipalities. She confirmed EOLWD's commitment to address these issues
and invited all municipalities to provide information on individual cases that
they found problematic and their interest in and positions on a number of the
thematic issues that had been brought to the attention of EOLWD.
(Attachment 2)
EOLWD received responses from 109 municipalities. The responses ranged
from no issues with DUA or UI to responses that included concerns or
questions about specific cases or UI policy issues.
2. On March 7, 2012, the Governor filed legislation, entitled "An Act
Disqualifying Certain Persons Subject to G.L. c. 32, Section 91(b) from
Receiving Unemployment Insurance Benefits"which would disqualify the
960 employees from UI eligibility. (Attachment 3)
3. On March 14, 2012, Secretary Goldstein extended an open invitation to all
351 Commonwealth cities and towns to attend a town hall meeting scheduled
for March 20, 2012 to discuss the municipal UI issues that had been
identified, raise any additional concerns, and hear a presentation by DUA
Acting Director Michelle Amante on municipal UI issues. (Attachments 4, 5)
4. The meeting was held on March 20, 2012 at the Boston Public Library.
Twenty-two cities and towns sent representatives. In addition to the discussion
and presentation, DUA provided to all participants a guidance letter, dated
March 20, 2012, on the exemption of UI benefits and charges for On-Call
Firefighters and EMTs. This letter summarized the current legal status of these
employees; namely, when properly reported as such to DUA, cities and towns
are not charged and employees are not eligible for UI benefits based on these
wages. The guidance letter was also posted on DUA's website. (Attachment
6) Those municipal officials who were present were also provided with the
aggregate statistical data on case volume and outcomes and other statistical
and procedural information regarding municipalities. (Attachment 7)
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5. Based on a suggestion of a participant at the meeting, DUA reestablished a
dedicated telephone line for municipalities to utilize for questions or concerns
regarding UI. That number is 617-626-6262. The line remains fully
operational and DUA intends to maintain it, along with a special team for
municipal UI issues.
6. On March 29, 2012, Secretary Goldstein again reached out to all 351 cities
and towns, providing an update on the identified issues, distributing the
materials from the March 20, 2012 meeting and noting that all individual
cases brought to DUA's attention were being reviewed. (Attachment 8)
7. On March 31, 2012 the Governor formed the Municipal UI Task Force and
requested it to fully consider and review the UI issues that had been raised by
municipalities and provide a summary, conclusions and recommended actions
in a final report.
The Task Force is chaired by Secretary Goldstein. Its members are: Mayor
Kim Driscoll(Salem), president of the Massachusetts Mayors' Association;
Mayor Setti Warren(Newton); Hon. Raya Dreben, Associate Justice of the
Appeals Court (ret); Michael Widmer, president of the Massachusetts
Taxpayers Association; Paul Toner, president of the Massachusetts Teachers
Association: Jennifer Springer, Vice President, Massachusetts AFL-CIO;
Senator Daniel Wolf(Harwich); and Representative David Torrisi(North
Andover). Representative Torrisi was appointed by House Speaker Robert
DeLeo. Senate President Therese Murray appointed Senator Wolf. All other
members were appointed by Governor Patrick.
8. On April 18, 2012 the Task Force held its first meeting.
9. On April 19, 2012, the Joint Committee on Public Service held a public
hearing on the Governor's proposed bill (H. 3980). Secretary Goldstein, a
Massachusetts Municipal Association(MMA) panel consisting of four
representatives, and several others testified in support of the proposed
legislation.
10. On May 2, 2012, Secretary Goldstein made a further inquiry of all cities and
towns with respect to the number of retired employees who have received
UI benefits from subsequent public employment. (Attachment 9) Thirty-one
municipalities responded, identifying 21 cases.
11. Subsequent meetings of the Task Force were held on May 8, 2012, June 5,
2012, September 6, 2012 and October 25, 2012.
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12. Since March, EOLWD and DUA have also engaged with interested
stakeholders on these issues. There have been meetings and conversations
with legislators and their staff, the MMA and several of its committees and
subcommittees, other municipal organizations, unions representing public
employees, municipalities, employees, retirees, taxpayers and other interested
parties. DUA has responded to every inquiry, request, or concern presented by
a municipality over the past six months. EOLVWD and DUA have expressed
their continued receptivity to comments, concerns, and suggestions from all
interested parties. Further, DUA has conducted research and analyses of the
issues in order to provide the Task Force with the information necessary to
make informed and meaningful decisions and recommendations. DUA also
had multiple conversations with the U.S. Department of Labor staff to
ensure that the Task Force's recommendations would be acceptable under
federal law.
This report sets forth the findings, conclusions, and recommendations of the Task Force.
It includes proposed changes, both legislative and those that can be accomplished by
regulation or policy. It recognizes the changes in policies and procedures already
implemented by DUA, and recommends some additional ones. It also suggests ways
that municipalities can better manage their UI costs, by more closely monitoring the
claims process, sending timely and accurate responses to DUA, and improving internal
communication within relevant municipal departments.
The Task Force also endorses the proposed collaboration between DUA and
municipalities for continuing partnership, education, dialogue, cooperation,
and attention to unique municipal issues and needs within the UI system.
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DUA REVIEW OF SPECIFIC CASES REPORTED
BY MUNICIPALITIES
As part of its outreach to municipalities, DUA invited them to identify particular cases of
concern. The 109 municipalities identified a total of 473 claimants dating back to 2002.
DUA assigned a team of four staff members to review every case that had sufficient
identifying information. In each of these cases, the team conducted a full review. DUA
has the statutory authority to make adjustments to claims within one year of the original
determination, and therefore, the 401 cases that had been decided within that time frame
were reviewed and, if warranted, adjusted. DUA made 44 case adjustments as a result of
its review. The adjusted cases primarily involved: situations where the municipality had
not received the claim approval notice, firefighter/EMT wages that had to be removed or
cases where the municipality was not properly identified as a subsidiary employer.
For claims where DUA concluded that a correct decision had been made, or where
the applicable statute of limitations for a redetermination had run, DUA provided
explanations directly to the municipality. Additionally, DUA carefully examined all of
the issues raised in these cases, whether procedural or substantive, and incorporated these
results in its findings to the Task Force. DUA continues to invite municipalities to voice
concerns on particular cases.
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METHOD OF CONTRIBUTION AS FACTOR IN
MUNICIPAL UI COSTS
The UI system, which recently observed its 75th anniversary, was established by
Congress through the Social Security Act in 1935 as a safety net of benefits for
individuals who become unemployed through no fault of their own. The system, which
is a federal-state partnership, is funded through assessments on employers directly and
by the federal government. It is an insurance system for the private sector and either an
insurance or self insurance system for nonprofit and public employers, who may elect
either option.
In Massachusetts, private sector employers pay unemployment contributions on the first
$14,000 of wages per employee per year. The contribution rate applied to employees'
wages is calculated through a formula that takes into account:
• the amount of contributions the employer paid into the system for the previous
year, and
• the unemployment benefits that were charged to that employer's account during
the previous year.
These monies are deposited into the UI Trust Fund to pay benefits to claimants. As these
employers contribute monies to the UI Trust Fund, they are referred to as "contributory
employers". They also pay a solvency surcharge into the Solvency Fund to cover excess
charges for dependency allowances, training benefits, charges assessed as subsidiary
employers, and benefits incorrectly paid to claimants.
In addition, each private sector employer pays a FUTA(Federal Unemployment Tax
Act) contribution to the federal government. These funds are distributed by the
U.S. Department of Labor to all states for the operation of the state's UI system.6
Federal UI law allows nonprofit (501(c)(3)) and governmental employers the option of
paying for UI benefits under either the contributory model, somewhat similar to the one
used by private employers, or through the reimbursable method.$ If a governmental
employer elects the contributory model, its calculated contribution rate is applied to its
6 Municipalities do not make FUTA contributions,which fund the operation of DUA.
7 The vast majority of employers in the UI system are in the private sector—97.1%. Only 0.5%is
public sector and 2.4%are nonprofits.
8 The term reimbursable employer is used throughout the report to describe an employer that utilizes
the reimbursable method of payment,not an employer that is reimbursed by DUA.
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full payroll, not just on the first $14,000 of annual wages per employee. Sixty seven cities
and towns have elected the contributory model.9
The other option for municipalities and nonprofits is to pay dollar-for-dollar for
UI benefits, which is known as the reimbursable method of payment since the employer
reimburses the UI Trust Fund for every allowed claim. The vast majority of public
employers and nonprofits choose this option, essentially self-insuring their UI costs.
Historically, the reimbursable method has been financially advantageous for
municipalities to cover their UI costs. Since municipalities have a fairly stable workforce
and are not generally subject to wide fluctuations in staffing levels and have fewer
layoffs, the reimbursable method of UI coverage has over time cost municipalities less
than they would have paid as contributory employers. Although costs are not predictable
from year to year, they have been sufficiently low and manageable.
That changed in 2008 when the recession hit. Cities and towns were not immune to
the economic downturn and when faced with declining revenues, many municipalities
reduced their workforces. As reimbursable employers, most municipalities had to
cover unemployment benefits paid, dollar for dollar. This significantly increased
municipalities' UI costs.
Municipalities also faced UI charges based on"subsidiary employment". When an
individual works two or more jobs, one is treated as primary and additional jobs as
subsidiary. During the recession, some part-time municipal employees were laid off
from their primary jobs, which may have resulted in municipal employers being required
to share in the UI costs for these employees. This occurs when the primary employer
reaches the maximum amount it can be charged. In these situations, the municipality,
as the subsidiary employer, must share in the cost of the UI benefits paid, even if the
individual is still employed by the city or town. At most, the maximum charge to a
municipality as a subsidiary employer is only 36% of the wages it paid to the employee
during the base period of the claim.'0
9 Governmental employers can transfer between contributory and reimbursable methods of payment
by filing with DUA a notice of the election to switch between December 1 —31 st for the following
calendar year. Once changed,the employer is obligated to stay with that system/method for a two-
year period before it can again change its election. If the governmental employer switches its
method of payment from reimbursable to contributory, its first two years are set at a federally
mandated rate. This option is not often exercised.
10 A number of towns expressed frustration that they were responsible for UI benefits for part-time
employees,particularly when they were still employed by the municipalities and on UI because
they had been laid off from their primary employment. The Task Force recognizes the concern but
would note that(1)in over half of these cases the municipality was not actually charged any costs
as a subsidiary employer, (2)even when the municipality was charged,in most cases,only a small
amount was involved since the maximum charged was only 36%of the part-time municipal wages
paid and(3)as reimbursable employers,there is no other source of money available to pay these
benefits.
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Finally, reimbursable employers are liable for certain UI costs not charged directly to
contributory employers. These costs include the weekly dependency allowance ($25 per
dependent),training benefits, and benefits incorrectly paid, irrespective of the reason,
until the claimant pays back the improperly paid benefits." These charges are incurred by
reimbursable employers, because, unlike contributory employers, they do not pay into the
UI Solvency Fund which covers these costs, and there is no other fund or source from
which to pay these mandated benefits.
The Task Force found that the UI statutory system is complex and can be difficult to
navigate. Under the existing, long-standing state benefit structure, UI claimants in
Massachusetts are entitled to up to 30 weeks of benefits12, paid by the employer through
the state system. In 2009, the American Recovery and Reinvestment Act established a
structure for Emergency Unemployment Compensation(EUC), which has been paid in
four separate tiers. These benefits were covered 100% by the federal government for all
UI claimants. In addition, after the state unemployment rate reached a certain percentage,
it triggered Extended Benefits, which was a 13 or 20 week program, depending upon the
state unemployment rate. When an extension is in effect, regular benefits are paid
through week 26; extension benefits begin on week 27 of the claim.
At the depth of the recession(November 2009), up to 99 weeks of unemployment
benefits were available to eligible claimants. Below is a breakdown of the extensions
that allowed for the maximum 99 weeks of benefits:
• Regular UI benefits from the Massachusetts unemployment program 26 weeks
• EUC Tier 1 —20 weeks 13 (still in effect)
• EUC Tier II— 14 weeks (still in effect)
• EUC Tier III— 13 weeks (ended June 2012)
• EUC Tier IV— 6 weeks (ended December 2010)
• Extended Benefits (EB)- 20 week program(ended July 2011), 13 week program
(ended April 2012)
11 DUA already participates in the Department of Revenue Tax Offset Program which allows it to
capture state tax refunds to offset UI benefits improperly paid. One of the proposals,as noted in
section"Steps Taken by DUA"is a legislative proposal that would allow DUA to participate in
the US Treasury Offset Program,thereby intercepting federal tax refunds as well. Once these
monies are recovered from public employees,they are repaid to the municipality.
12 It should be noted that due to federal extensions,no Massachusetts employer,private,public or
non-profit has paid weeks 27 through 30 since November 2008. Those weeks have been paid by
the federal government for all claimants.
13 Tier I has been reduced to 14 weeks for new claimants effective September 2,2012. Both Tier I
and Tier II will expire for the week ending December 29,2012,absent any vote by Congress to
further extend these benefits.
15
November 15, 2012
Under these extensions, contributory private employers were charged for weeks 1-26; all
subsequent benefits were paid by the federal government. Governmental reimbursable
employers were charged for weeks 1-26, the federal government paid for all Tiers of the
EUC program, but municipalities were then responsible for the 13 to 20 weeks of
Extended Benefits, the last weeks to be paid on the claim(weeks 79 through 99). This
responsibility became costly for municipalities.
Many municipalities were unaware that they were responsible for paying Extended
Benefits. Since Extended Benefits are the last to be paid, there could have been a lag as
long as a full year between the time when the municipality's responsibility for regular
benefits of 26 weeks ended and its responsibility for Extended Benefits began. This
unanticipated cost was a source of frustration to many municipalities.
Municipalities also voiced complaints regarding their responsibility when benefits are
initially disbursed but later determined to be incorrectly paid. Reimbursable employers
are only entitled to a refund of these payments, called "overpayments"14, when the
Commonwealth recovers the payment from the claimant. Overpayments can occur for
many reasons: an original determination reversed at a hearing; a claimant's failure to
report earnings in a particular week; or the municipality's failure to present accurate or
thorough information at the time of the initial determination. DUA has advised that it
will continue to aggressively pursue recovery of overpayments. DUA already has the
statutory authority to intercept state tax refunds to recover benefit overpayments. The
Task Force is recommending legislation that would also authorize DUA to participate
in a federal program that allows the interception of federal tax refunds to recover benefit
overpayments.
While the cost of UI was high for municipalities in 2009, 2010 and to a lesser extent in
2011, this cost will unlikely continue to be the same financial drain on municipalities
in 2012 and beyond (Attachment 10). As Massachusetts has successfully come out of
the recession and its unemployment rate continues to hold steady at around 6%, the
maximum number of weeks of UI benefits available to claimants has correspondingly
decreased. The precise declination in number of weeks is noted above and as of this date
the number of weeks is now down to 54. The EB program ended as of April 7, 2012 so
this cost is no longer incurred by municipalities. This is likely to reduce municipal UI
costs further.
It should be noted that cities and towns, as well as all nonprofits, may protect themselves
against future UI spikes by shifting to a contributory model. Analysis by DUA for the
Task Force suggests that such a change is unlikely to be financially beneficial for most
public employers. (Attachment 11) Looking back since 1999, and amortizing UI costs
la An overpayment is a technical term used to describe a weekly payment that was ultimately
determined erroneous or for an amount in excess of what should have
been paid.
16
November 15, 2012
over that period, most reimbursable cities and towns paid less in UI costs than they would
have as contributory employers even with the higher costs incurred during the recession.
The Task Force nevertheless urges all cities and towns to evaluate and determine which
system best meets their particular needs. DUA has offered to assist interested cities and
towns with this analysis.
The Task Force recognizes that the reimbursable model has presented some financial
challenges to municipalities in recent years, largely due to the recent recession, but
concludes that it is still the preferable method for municipalities to manage and control
their UI costs. Although an initial look at the contributory model has appeal for
municipalities, when its requirements, such as a fully taxable wage base, the rate of
contribution, and the two year lock are considered, in light of the municipality's historic
UI costs, most municipalities will likely decide to remain with the reimbursable model.
The Task Force also considered two additional ideas on the reimbursable/contributory
issue for municipalities. The first idea was to redesign the current contributory model for
governmental employers to make it more affordable while still enabling the model to
sustain the costs of municipal UI. The second, either as part of the first, or a stand-alone
possibility, was to create a Reimbursable Employer UI Solvency Fund, which would be
built up to the financial point where it could cover excess municipal UI costs. The Task
Force concluded that neither of these options is currently feasible but should be kept in
mind as ideas for possible future development. The effort and cost necessary to design a
new contributory model is enormous and may not yield sufficient benefits to warrant this
overhaul. It would entail a full financial analysis of the system, a determination of
appropriate wage base rates, legislation and an assurance that the model would be
economically sustainable. The establishment of a solvency fund would require an
assessment on municipalities and other reimbursable employers. The Task Force
unanimously concurs that this is not the time to put an additional financial burden on
municipalities and that there is little interest among municipalities to create such a fund.
However, the Task Force suggests the concept of a municipal employer solvency fund
remain available for possible future consideration.
17
November 15, 2012
PUBLIC SECTOR RETIREMENT ISSUES
The Task Force considered issues of particular concern to municipalities regarding the
eligibility for UI benefits of three groups of retired municipal employees. The first group
consists of retired public employees who return to public employment but then stop
working because of statutory limits on the number of hours public retirees may work
for a municipality-960 hours in any calendar year—and on the amount a retiree may
earn during a year.15 The second group is made up of public employees, principally
firefighters and police officers, whom state law compels to retire when they reach age 65.
The third group consists of retired public school educators who, in the event of a"critical
shortage of certified teachers," may be hired without regard to the otherwise generally
applicable caps on hours and earnings.16 In considering these issues, the Task Force has
been mindful of the federal requirement that, with limited exceptions, private and public
employees must be treated equally regarding UI eligibility and benefits. The Task Force
is proposing a single legislative change that addresses all three issues and would apply to
both public and private sector retirees.
960-Hour Emplovees
Of particular concern to municipalities is an exception that allows public pensioners to be
employed in public service for not more than 960 hours in any calendar year, provided
that the wages paid, when added to the individual's pension, "do not exceed the salary
that is being paid for the position from which [the individual] was retired . . . plus
$15,000[.]"17 These rules apply on a year-by-year basis, so a public pensioner who
reaches a cap in one year may again be employed and paid, subject to these limits, in
a subsequent calendar year.
Some municipalities object to paying UI benefits to these 960-hour employees, because
the separation from work is not the municipality's decision; rather, it is mandated by
§ 91(b). Under federal law, however, this mandate is not a disqualification for UI
eligibility. Generally, employees who are out of work through no fault of their own are
entitled to UI benefits. This principle applies regardless of whether the cessation of work
is due to a statutory mandate, an action of the employer, or some independent reason not
attributable to the employee.
15 G.L. c. 32, § 91(b).
16 G.L. c. 32, § 91(e).
17 G.L. c. 32, § 91(b). During the first year of retirement,the earnings limitation does not include the
additional$15,000.Id.
18
November 15, 2012
Public Safetv Emplovees who are Mandatorilv Retired at Aze 65
Under current law, a public safety employee who is compelled to retire on reaching age
65 is entitled to UI benefits, if otherwise eligible.18 In most cases, public retirees are
subject to a pension offset in their first year after retirement, because the public employer
from whom they retired will have been primarily responsible for their pension19. When
the offset applies, 50% of the employee's weekly pension amount is deducted from
his/her weekly unemployment benefit.20
Critical Needs Educators
Under current law, "in any period during which there is a critical shortage of certified
teachers available for employment in a school district,"the district may employ a retired
educator2l without regard to the 960-hours and earnings limitations.22 When that
post-retirement employment ends, the "critical needs" educator, if otherwise eligible,
is considered entitled to Ul benefits because the separation from work came about
through no fault of the educator.
On March 7, 2012, the Administration filed legislation to address the 960-hour
employees' UI eligibility. At the time of filing, the Administration noted that the
960-hour employee issue was only one of several regarding public employee retirees.
The bill was referred to the Joint Committee on Public Service Committee, which held
a hearing on April 19, 2012. The Administration committed at the time to providing a
more comprehensive resolution of these issues once it had been thoroughly reviewed
and discussed with the Task Force. This report contains a recommendation for a more
comprehensive bill, which addresses multiple issues involving public sector retirees and
would supplant the initial legislation filed in March.
18 G.L. c. 151A, §25(e)(third paragraph).The Supreme Judicial Court enforced this provision in
White v. Director of Div. of Employment Security,382 Mass. 596, 598 (1981),and O'Reilly v.
Director of Div. of Employment Security,377 Mass. 840, 845 n.13 (1979).
19 To the extent that DUA is able to track Ul benefit eligibility to public retirees, it found that the
number of claimants who also had pensions in 2011 was negligible. A review of 2011 claims
indicated that less than 1%of all municipal claims, or just over 100 claimants,could potentially be
claiming Ul benefits while receiving a pension from a city or town.
20 G.L. c. 151A, §29(d).
2' Although the statute uses the term teachers,administrators are also included and this report
references the larger group as educators.
22 G.L. c. 32, §91(e).The earnings limitation does apply during the first two years following a
teacher's retirement.Id.
19
November 15, 2012
Proposed Solution
The issues involving retirees are the most complex presented to the Task Force.
Municipalities argue that it is fundamentally unfair to require the payment of both UI and
pension benefits from the same public employer. Retirees, retiree representatives, and
public employee unions claim that post-retirement employment is a matter of financial
necessity for some workers, because the average annual public employee pension is only
$28,000. They also say that the municipality chooses whom to hire and benefits from
hiring a public sector retiree because that person brings expertise to the position at a
lower cost than someone to whom higher wages and/or additional benefits would also
have to be paid. Finally, they argue that public employee retirees are being singled out
and treated differently than most retirees in the private sector, who often return to work,
albeit usually for a different employer, and may be eligible for UI benefits based on their
post-retirement wages.
In addition to the complexities mentioned above, the Task Force had to consider the
requirement that Massachusetts UI legislation be compliant with federal law as required
by the United States Department of Labor (US DOL). The US DOL staff has consistently
advised DUA that any change in UI eligibility for public sector retirees must also apply
to similarly situated private sector retirees. This required extended deliberation by the
Task Force, knowing that its recommendations would also apply to employers and
claimants in the private sector.
After a thorough review of data, arguments and proposals, the Task Force is
recommending a statutory change that would address the issues raised with respect to
retiree eligibility for UI benefits, consistent with US DOL mandates and provide a fair
and balanced result for retirees as well as for those employers, both public and private,
who contributed to the pension plan. The legislation would reduce or eliminate the
UI benefits of all retirees, public and private, who receive a defined benefit pension,
when their post-retirement wages are paid by an employer who contributed to the
defined benefit pension as long as seventy five percent or greater of their years of service
were for said pension contributing employer. Although such a retiree would continue
to be eligible for UI benefits, the proposed new section(§ 29(d)(7))would reduce the
retiree's weekly UI benefits by an amount equal to 65% of the retiree's weekly pension
payment.23 This 65% deduction takes into account the fact that the employee has also
contributed his/her own earnings to the pension plan and should not have his/her own
contribution offset.
23 The Task Force concluded that the 65-35%ratio provides the appropriate balance and equity to the
calculation of the contribution and risk factors in a defined benefit plan and takes into account the
employee contribution to his/her own pension plan.The amount of the employee contribution may
be higher than 35%,but the employer,through the pension plan,assumes the liability for the full
pension based on actuarially based risk factors. Since it is impossible to calculate each retiree's
exact contribution or foresee the actual interest calculation,it was necessary to do a pre-
determined,universal amount in a balanced manner.
20
November 15, 2012
The Task Force's proposed solution addresses all three of the issues raised with respect to
public sector retirees and it treats private and public sector employees similarly.24 The
proposed statutory language is as follows:
SECTION 1. Section 29 of chapter 151A of the General Laws, as
appearing in the 2010 Official Edition, is amended by inserting after
subsection(d)(6) the following new subsection(d)(7):
(7) Notwithstanding any of the foregoing provisions of this subsection, the
amount of benefits otherwise payable to an individual for any week that
begins in a period with respect to which such individual is receiving
governmental or other pension, retirement or retired pay, annuity, or any
other similar periodic payment from a defined benefit plan that is based on
the previous work of such individual for the separating employer or for a
base period employer shall be reduced by an amount equal to 65% of the
amount of such payment that is reasonably attributable to such week;
provided, however, that such reduction shall apply only when such
separating or base period employer employed the individual for at least
75% of the individual's total length of service on which the defined
benefit plan is based; and provided, further that such reduction shall apply
only if, and to the extent, then consistent with section 3304(a)(15) of the
Internal Revenue Code of 1954. Payments received under the Social
Security Act shall not be subject to this paragraph.
Expected Outcome
After careful consideration, the Task Force has concluded that its recommended statutory
change best addresses the issues raised by municipalities while preserving the integrity of
the UI law and the state's obligation to meet U.S. Department of Labor requirements.
Further, under the proposed offset ratio, only those retirees with smaller pensions are
potentially able to receive UI benefits. Individuals whose annual pension allowance is
$53,920 or higher would not receive any UI benefits, even though technically eligible,
because their pension offset would be the same or greater as their UI benefit amount.25
Further, as noted in Attachment 12, UI eligible retirees, even with smaller pensions, will
24 Like all of the Task Force's proposed legislative changes,the proposals will need to be approved
by U.S. Department of Labor and be compliant with federal unemployment
tax law.
25 This amount is based on the current maximum weekly benefit amount,which is subject
to change on an annual basis. The Task Force concluded that this is an appropriate threshold,
addressing the concerns expressed for public retirees who receive small pensions and those who
are receiving pension benefits of a larger amount.
21
November 15, 2012
not receive UI benefits when the ratio of their earnings to their UI benefits is at a certain
threshold. The Task Force is mindful of the concern that an individual not receive a
double benefit from the same employer; namely a pension and later UI benefits.26 Its
proposed solution addresses this concern. If an employer was the majority contributor to
the defined benefit pension plan, its contribution is offset against the UI benefit. As such,
an individual is only getting a single benefit from a particular employer. Overall, the Task
Force has concluded that this statutory change manages the issue of public and private
sector retirees with a balanced, fair and fiscally responsible approach.
26 Although the public often views all public employees as belonging to one pension system, in fact,
most municipalities have their own municipal pension systems for their employees. This proposal
recognizes that reality and ensures that municipalities who primarily fund the pension are largely
protected from paying UI benefits for their retirees.
22
November 15, 2012
ISSUES INVOLVING SCHOOL DEPARTMENTS AND
SCHOOL-BASED EMPLOYEES
Before 1970, the Federal Unemployment Tax Act (FUTA) did not require states and
municipalities to pay UI benefits to employees of educational institutions. When
Congress amended FUTA to require states to amend their laws to cover these employees,
Congress also provided a "reasonable assurance exception"that prohibits the payment
of benefits in specified circumstances where a school employee, employed directly by
the school department,who is out of work between academic terms (such as the summer)
or during an established vacation period or holiday recess, has a reasonable assurance
of reemployment following the break. In 1972, Massachusetts enacted this reasonable
assurance prohibition in G. L. c. 151A, § 28A. (Attachment 13)
Three issues concerning school-based employees were brought to the attention of
the Task Force. The first involves individuals who perform services for a school
department but who are employed and paid by a non-school municipal agency. Since
these employees are not employed directly by the school department,the reasonable
assurance exception does not apply. The second concerns the entitlement of educators
who have not received reasonable assurance but do draw a paycheck and health care
benefits and receive UI benefits over the summer. The third, involving on-call substitute
teachers and reasonable assurance to that category of teachers, is discussed in the
On-Call Employees Section.
Individuals Performing Services for a School Department Who Are Not
Emploved by the School
Many municipalities noted that the reasonable assurance exception does not extend to
school department employees—particularly bus drivers, crossing guards, food service
workers, and custodians—who work in the schools but are employed and paid directly by
other municipal departments. Hence they are eligible for UI benefits when not working,
regardless of whether school is in session or there is work to be performed, and regardless
of whether they have an expectation of returning to employment. Cities and towns
have expressed particular concerns about school crossing guards employed by police
departments and school bus drivers employed by municipal departments other than the
public schools. This has become an increasing concern as many municipalities have
shifted non-instructional school employees to non-school municipal payrolls.
Public employees working in school related positions should be treated alike for purposes
of UI eligibility, regardless of whether they are paid under a municipal or school
department budget. This provides consistency among and within municipalities
for categories of employees working in the schools regardless of which municipal
department is technically budgeted to pay the employees. The Task Force recommends
23
November 15, 2012
amending Section 28A of Chapter 151A to apply the reasonable assurance exception to
all municipal employees who provide services for the municipality's schools.27
Le,aal Framework and Analvsis
As noted above, § 28A does not cover non-school department employees who perform
services in or for the public schools. This is the view of both the U.S. Department of
Labor and the Supreme Judicial Court.21,29
But FUTA permits, and the Task Force proposes, extending the reasonable assurance
exception to employees of non-educational governmental employers, such as a municipal
government, its police department, or its department of public works, who provide
services "to or on behalf of an educational institution[.]"30
Two members of the Task Force, Senator Wolf and Jenn Springer, noted their dissent on
this proposed solution for non-school based public employees who provide services to
schools. They note that many individuals in these categories of employees are vulnerable
and low wage workers, for whom the UI benefits have become part of their income and
on which they depend to exist. Municipalities are fully aware that these employees
receive UI benefits and consider them in setting wages, and therefore, Senator Wolf and
Ms. Springer are unable to endorse this proposal as a matter of public policy and fairness
and equity to these employees. However, recognizing that the majority of the Task Force
supports it, they would suggest that the enactment or effective date of this legislative
proposal be sufficiently postponed so that collective bargaining can occur that would take
into account this sudden change in total compensation to these employees.
27 The Task Force is aware that many municipalities contract out school bus service to private
companies and,therefore,those school bus drivers are private sector employees. There are
structural differences between public and private bus drivers.Drivers who work for municipalities
or school departments are public employees with both the rights and restrictions of said
employment. The drivers who work for private companies have a different pay and benefit
structure. Issues concerning private sector bus drivers were outside the scope of this report.
28 The U.S. Department of Labor's view is based on communications from the State Conformity and
Compliance Team in the U.S. Department of Labor(citing as an example U.S.Department of
Labor Unemployment Insurance Program Letter No.41-83 (Amendments Made by P.L. 98-21
(Social Security Act Amendments of 1983),Which Affect the Federal-State Unemployment
Compensation Program)(Sept. 13, 1983)).
29 Based on the current language of§28A,the Supreme Judicial Court rejected as"wholly
untenable"the argument that a school bus driver working for a private entity, or even for the
municipality(but not directly for the school department),should be ineligible for unemployment
insurance benefits on the grounds that she had a reasonable assurance of reemployment the
following school year.Milton v.Director of the Division of Employment Security,386 Mass. 831,
833 (1982).
30 26 U.S.C. § 3304(a)(6)(v).
24
November 15, 2012
Proposed Solution
Amend G. L. c. 151A, § 28A, to insert a new subsection(e). As amended, § 28A would
read, in pertinent part:
Benefits based on service in employment as defined in subsections (a) and
(d) of section four A shall be payable in the same amount, on the same
terms and subject to the same conditions as benefits payable on the basis
of other service subject to this chapter, except that:
(e) with respect to any services described in subsections (a) and (b) that
are provided by municipal employees to or on behalf of an educational
institution, benefits shall not be paid to any individual under the same
circumstances as described in subsections (a) through(c).
Expected Outcome
The proposed amendment solves the current problem by extending the reasonable
assurance prohibitions of§ 28A to all public employees who provide services to public
schools, such as crossing guards, cafeteria workers, and bus drivers, regardless of
whether they are on the direct payroll of the school department or on another municipal
payroll. As a result, all public employees providing services to a public school who
have a reasonable assurance of continued employment would be ineligible for
UI benefits when there is no work available because school is not in session, whether
over the summer or during breaks throughout the school year. This ensures consistency
and uniformity for all school employees within and among all municipalities in the
Commonwealth.
Reasonable Assurance over Summer Break
Under the Massachusetts education statute, G. L. c. 71, § 41, an educator is eligible for
UI benefits if the educator is notified by June 15th or an earlier date if collectively
bargained, that he/she will not be renewed for the subsequent school year. Although the
statutory notice is structured so that educators must be notified if they are not going to be
re-employed, it is more commonly talked about in terms of"reasonable assurance."
Under § 41, the failure to give a non-renewal notice constitutes a "reasonable assurance"
that makes the teacher ineligible for UI benefits over the summer break. Educators who
are timely notified that they will not be reemployed do not have a reasonable assurance
and, therefore, are eligible for unemployment benefits.31
3' This is a requirement of federal law. A teacher receiving timely notice of non-reemployment
"would not. . .have a reasonable assurance of employment for the next school year and[,]
accordingly, could not be denied benefits `between terms'."Supplement#1 --Questions and
Answers Supplementing Draft Language and Commentary to Implement the Unemployment
25
November 15, 2012
The Task Force heard many concerns from municipalities about this UI eligibility factor.
An issue frequently mentioned is the UI eligibility of public school educators over the
summer break when school is not in session and therefore no work is available. It was
noted that teachers may choose to have their salary paid in equal installments throughout
the year, including over the summer break, and that they are able to continue on their
group health care insurance over the summer break. Although the Task Force is
mindful of these concerns, it recognizes that these benefits are statutory and that wage
installments or insurance coverage are not factors in UI eligibility. The Massachusetts
education statute mandates that "compensation paid to such [public school] teachers shall
be deemed to be fully earned at the end of the school year, and proportionately earned
during the school year. ,32 Because a public school educator does not actually earn any
compensation from employment as an educator over the summer following the end of the
school year'33 the receipt of previously-earned salary and health insurance benefits during
the summer does not bar eligibility for UI benefits.
The Task Force also notes that UI entitlement for educators over the summer break only
affects a small percentage of employees; namely, those with fewer than three years of
service. All tenured educators have a reasonable assurance of reemployment and are
ineligible for UI benefits over the summer break.
Le,aal Framework and Analvsis
In reviewing its policy and practices for presentation to the Task Force, DUA reports that
in many situations, educators who were denied reasonable assurance at the conclusion of
the school year were paid UI benefits throughout the summer, regardless of whether they
later received reasonable assurance or a new position. The fact that an educator may start
the summer break without a reasonable assurance of reemployment, and, therefore, be
eligible for UI benefits, does not mean that the educator must be entitled to collect
benefits throughout the entire summer. Under § 28A(a) a reasonable assurance becomes
effective from the time it is given. The reason is that the disqualification applies only to
"any week" during which a covered individual has a contract or reasonable assurance.
Hence an educator given a timely lay-off notice who later receives a reasonable assurance
would be entitled to UI benefits, if otherwise eligible, only for the weeks preceding the
Compensation Amendments of 1976-P.L. 94-566,p. 19. The State Conformity and Compliance
Team in the U.S. Department of Labor confirm the continuing vitality of this principle.
32 G.L. c. 71, §40. "Other language in G.L. c. 71, §40,makes it clear that the words `school year'
used in§40 refer to the period during which school is in session."South Hadley v. Director of the
Div. of Employment Security, 389 Mass. 399,401 n.3 (1983).
33 See South Hadley,389 Mass. at 401.
26
November 15, 2012
reasonable assurance. This interpretation of§ 28A(a) is consistent with the U.S.
Department of Labor's understanding of FUTA.34
Also, a condition of eligibility is that one "[b]e capable of, available, and actively seeking
work in his usual occupation or any other occupation for which he is reasonably
fitted[.] ,35 In order to receive UI benefits, therefore, a teacher claiming UI benefits
because of the absence of a reasonable assurance needs to be actively seeking and
available for suitable work during the summer break to receive benefits during that time
period, as well as for the subsequent school year to continue to receive benefits thereafter.
Proposed Solution
While the Task Force is mindful of the deep concern and frustration of municipalities that
educators can receive UI benefits over the summer even though school is not in session
and there is no work, federal law prevents the Commonwealth from statutorily
disqualifying these educators from UI eligibility. After much discussion and efforts to
narrow UI eligibility for educators during the summer months and other school breaks,
DUA has proposed two significant actions, both of which the Task Force endorses. These
two actions by DUA will greatly reduce the number of weeks of benefits for employees
who successfully claim eligibility for UI benefits over the summer break and
correspondingly reduce the charges incurred by the cities and towns.
First, DUA is implementing a system to ensure that, once a school department employee
is provided reasonable assurance, the school wages can no longer be used for establishing
or continuing benefits on an unemployment claim. This addresses the concern regarding
educators who are offered re-employment during the summer. Once that offer is made,
regardless of whether it is accepted, no further UI benefits will be paid on the claim.
Second, if an educator is offered a comparable position in another school system during
the summer months, that offer will be considered under the reasonable assurance
framework and no further UI benefits will be paid on the claim.
In order to implement these two policies, DUA has issued additional guidance and
provided training to its staff to explain when the reasonable assurance exception applies
and to ensure consistency among adjusters and review examiners. Specifically, DUA
will no longer grant unemployment benefits to educators based on the school wages,
once DUA is notified and confirms that a reasonable assurance has been provided.
34 U.S.Department of Labor,Employment and Training Administration, Supplement#1—Questions
and Answers Supplementing Draft Language and Commentary to Implement the Unemployment
Compensation Amendments of 1976—P.L. 94-566(December 7, 1976) 19.This is still the
Department of Labor's policy, according to the State Conformity and Compliance Team in the
U.S. Department of Labor.
35 G.L. c. 151A, §24(b).
27
November 15, 2012
Under this new policy, claimants are entitled to benefits only until the reasonable
assurance is provided.
In addition to affirming these policies with DUA staff, DUA will develop a system to
advise all school department employees who apply for benefits over the summer break as
a result of a non-renewal notification, that they must notify DUA if they are later recalled
to their school department position or are hired for such a position in a different system at
any time during the summer. The notice will also explain that benefits will cease as of
that date.
DUA also intends to advise all school departments36 through an annual letter of the need
to notify DUA when a non-renewed teacher is rehired during the summer for the next
school year or when a school department is hiring a teacher not renewed by another
school department. This is necessary to ensure that the educator will no longer be eligible
for UI benefits based upon the notice of reasonable assurance. These systems will be
developed in the coming months and implemented for the summer of 2013.
DUA is also emphasizing to DUA staff that the reasonable assurance exception in § 28A
applies when a teacher is offered employment for the following school year by a different
educational institution than the one that gave notice of non-renewal. From the time the
offer is given, the teacher has a reasonable assurance of a comparable job and is no
longer entitled to unemployment benefits. This is based on DUA's interpretation of both
the federal and state statutes, which state clearly that the reasonable assurance exception
applies "if there is a contract or a reasonable assurance that [the non-renewed teacher]
will perform services [in an instructional capacity] for any educational institution in the
37
[following school year.]"
Finally, DUA will advise all educators and school department employees that entitlement
to UI benefits during the summer months or other breaks in the school year carries an
obligation to be available for and actively seeking work while receiving UI benefits and
that DUA will carefully monitor compliance with this requirement.
Expected Outcome
The Task Force believes that effective implementation of these initiatives by DUA,
especially when combined with cooperation by affected municipalities, will limit the
extent of payment of UI benefits to educators over the summer break. This will
significantly reduce municipalities' UI liability for school department employees over the
36 Several Task Force members noted concern from outside stakeholders that these proposed
revisions could potentially lead to some municipalities using the reasonable assurance exceptions
improperly to affect UI eligibility. DUA has not seen any evidence of this and will monitor the UI
claims under reasonable assurance to make sure it does not occur.
37 G.L. c. 151A, §28A(a)(emphasis added).
28
November 15, 2012
summer months and more fully maintain the intent and integrity of the reasonable
assurance law and its implementation. Since federal law prohibits restricting all UI
eligibility and benefit payments for educators during the summer months, the DUA
initiatives outlined herein and the increased enforcement and compliance efforts will do
as much as is legally possible to reduce UI costs for this category of claimants.
29
November 15, 2012
ELECTION DAY WORKERS ISSUE
Several municipalities raised concerns that the wages of election workers have been
used to obtain UI eligibility, which has resulted in UI benefit charges to municipalities.
Since these wages alone are rarely sufficient to reach the threshold of Ul eligibility,
they become relevant as subsidiary wages (See Section"Method of Contribution as
Factor in Municipal UI Costs"). Although not significant in terms of the amount of
charges, municipalities object to inclusion of these wages in determining UI eligibility,
because of the nature, duration and infrequency of the work.
Lezal Framework and Analvsis
Although the Federal Unemployment Tax Act (FUTA) generally requires that employees
of state and local government be eligible for unemployment compensation in an equal
manner as employees of private employers,38 there are exceptions, most of which are
already included in chapter 151A.39 Massachusetts has not yet adopted a federally
permitted exception applicable to service performed as an election official or election
worker if the wages received by the individual during the calendar year serving in this
capacity are less than $1,000[.]40
Proposed Solution
Amend G. L. c. 151A, § 6A, to add a new subsection(7). As amended, § 6A would read,
in pertinent part:
The term"employment" shall not include service performed by an
individual in the employ of the commonwealth or any of its
instrumentalities or any political subdivision thereof or any of its
instrumentalities or any instrumentality of any of the foregoing and
one or more states or political subdivisions or Indian tribes if such
individual performed such services as:
(7) an election official or election worker if the amount of
remuneration received by the individual during the calendar year
for services as an election official or election worker is less than
$1,000.
38 26 U.S.C. §3304(a)(6)(A).
39 One exception that Massachusetts has already adopted is to exclude service by elected officials
from UI eligibility. M.G.L. c. 151A§ 6A(l)
40 26 U.S.C. §3309(b)(3)(F).
30
November 15, 2012
Expected Outcome
If adopted,this statutory change would address the concerns expressed by municipalities.
Municipalities would no longer be responsible for UI benefits based upon wages paid to
election workers of less than $1,000 per calendar year.
31
November 15, 2012
ON-CALL EMPLOYEES
A number of municipalities raised concerns that "on-call"workers have been determined
eligible for UI benefits even though the nature of their employment is sporadic and
unscheduled, and the employees have no expectation of regular, consistent employment.
On-call employees actually fall into two distinct groupings that have different statutory
requirements so they will be discussed separately in this report.
On-Call Firefighters and On-Call Emergencv Medical Technicians (EMTs)
Workers "serving on a temporary basis in case of fire, storm, snow, earthquake, flood, or
similar emergency41" are expressly barred from using their pay for such service to qualify
for or calculate UI benefits. 2. When on-call firefighters and on EMTs provide
services on a temporary basis in response to emergencies, their services are excluded
from the statutory definition of"employment. ,43 This exclusion results in their being
barred from receiving UI benefits based on these services because G.L. c. 151A, § 6A(5)
excludes on-call emergency services from the definition of"employment"; therefore,
payment for these services does not count towards establishing eligibility for UI benefits.
It is important to note that this exclusion applies to on-call firefighters and on-call EMTs
who are paid on an "on-call basis", that is, per response to an event, either at a flat rate or
by the hour. The exclusion does not apply to firefighters or EMTs who are paid daily or
weekly, even if it is to be on-call.
To avoid UI benefits and charges, a municipal employer must identify the on-call status
of a firefighter or EMT when filing its response to a claim with DUA.44 It should also be
noted that these wages are excluded from UI coverage even when the claimant works for
the same municipality and has other, UI eligible wages. Otherwise, DUA will be unaware
that the exclusion should apply. To clarify the process for municipalities, on March 20,
2012, DUA issued a guidance letter to cities and towns detailing the necessary
procedures. DUA also posted the guidance letter on its website and discussed the issue at
a number of forums for municipal employers. (Attachment 6)
41 Although the statute has primarily been applied to firefighters and EMTs,as is referenced in the
Guidance Letter,DUA has advised the Task Force that it will also apply it to claims involving the
other listed emergencies,which occur far less frequently.
42 G.L. c. 151A, §6A(5).
43 Id.
44 These on-call wages are excluded regardless of whether the individual has additional employment
with the municipality or another municipality.
32
November 15, 2012
Proposed Solution
DUA has already addressed this concern by issuing the previously-mentioned Guidance
Letter regarding On-Call Firefighters and EMTs. The Guidance Letter, detailing the
necessary procedures for notifying DUA of exempt call firefighter and EMT wages, has
been in circulation. DUA will continue to publicize the Guidance Letter so that cities and
towns are fully aware of how to respond to claims within this category of employees.
This Guidance Letter has been sent via email to all cities and towns, distributed at
multiple meetings, posted on the DUA website, and is available upon request. In addition,
DUA issued an internal memorandum to staff reiterating these wage exemptions and the
processing procedures for these claims and has included "On-Call firefighters and EMTs"
in the municipal curriculum for staff. This will also be a topic in DUA's internal training
module for municipalities starting in 2013.
Expected Outcome
Municipalities will be better informed of the UI status of on-call firefighters and on-call
EMTs and better able to manage any UI claims that are filed. They will have access to all
necessary information to complete the process and ensure that benefits are not paid to
ineligible employees. DUA will continue to provide support, guidance and education to
municipal leaders on this issue and will ensure that its internal procedures are properly
managed. As noted above,these measures have been in place since April 2012, and DUA
has already seen a decline in the number of on-call firefighters and EMTs approved for
UI benefits.
Substitute Teachers and Other On-Call Workers 45
The category of all other on-call or intermittent workers is complex and subject to several
different statutory provisions and policy issues within DUA. This has resulted in
uncertainty and often times confusion on how to manage UI claims for this diverse group
of employees. Most of the cases brought to DUA's attention involve substitute teachers
although other occupations are noted as well.
On-call is defined as having an employment status where an employee works for an
employer on an as-needed basis and has no set schedule of hours. When an individual
files for UI benefits, both the employee and the employer must indicate "on-call" as the
reason for separation. DUA is then charged with reviewing the claimant's status in
deciding eligibility.
45 Employees who hold regular,part time positions with set hours are categorized differently under
Ul law. Therefore,they are not included in this section and in fact,were not raised as a significant
concern by municipalities. Their eligibility and entitlement to benefits is similar to regular full
time employees, albeit generally on less wages.
33
November 15, 2012
If a claim is open and eligibility is established, the claimant can only receive UI benefits
in a given week if he/she did not work at all in the week (even one hour of work is a
disqualifying event) or was not offered any suitable work. Employers must monitor their
employment practices to ensure that employees do not receive UI benefits in weeks when
they are ineligible. In particular, employers must review benefit charge statements to
verify that any week in which work was offered or wages were paid to an on call
employee was reported to DUA and did not result in charges.
Lezal Framework and Analvsis
The Supreme Judicial Court's 1984 decision in Mattapoisett v. Director of the Division of
Employment Security, 392 Mass. 546 (1984), addressed the issue of on-call employees
and established the standard for UI eligibility going forward. The court held that "that the
Legislature did not intend a part-time employee whose hours vary from week to week to
be considered in partial unemployment46 for any week in which he does not work as
many hours as a full-time employee.i47
At a minimum, under Mattapoisett the offer of any amount of work in a week disqualifies
an on-call employee from receiving unemployment insurance benefits for that week.
Further, although Mattapoisett did not address the claimant's eligibility in weeks when
the town did not offer him any work, the opinion does not foreclose the possibility that
the as-needed nature of the employment contract precludes eligibility even in weeks
when no work is offered: "Under the terms of his employment contract he was to work
whenever he was needed. The claimant understood that if no work was available in a
given week he would not work."48 A subsequent Appeals Court opinion is to the same
effect: "In the Mattapoisett case, the Supreme Judicial Court held that a part-time police
officer, hired to work irregular hours on a less than full-time basis as a fill-in for absent
regular officers, was not entitled, while so employed, to unemployment compensation
benefits from his part-time employer."Bourne v. Director of Div. of Employment
Security, 25 Mass. App. Ct. 916, 916 (1987) (rescript).
DUA takes the position, with which the Task Force agrees, that a part-time, intermittent
employee is disqualified from receiving UI benefits for any week in which the employer
offers at least some work, even if only one hour, or the employee actually works.49
46 "partial unemployment"is a term of art under DUA statutes.
47 Id. at 549
48 Id. at 547.
49 Substitute teachers also may be disqualified over the summer break and school vacations under the
reasonable assurance prohibition in G.L. c. 151 A, §28A(discussed in a previous section of this
report).
34
November 15, 2012
An example that surfaced in many communities is the lack of communication between
the school department employee who calls or monitors the calls for substitute teachers
daily with the municipal official who reports to DUA whether the employee has worked
or refused work in a particular week. Without that information from municipalities,
DUA must rely solely on claimants self-reporting this information on their weekly
claim for benefits.
Proposed Solution
The Task Force recommends that municipal employers respond promptly to UI claims of
intermittent, part-time workers, and include information alerting DUA to the part-time,
intermittent nature of the claimant's work. They also should review charge statements to
verify that they have not been charged for any week in which they offered work or paid
wages to an intermittent, part-time worker.
DUA has already issued an internal memorandum clearly defining the on-call policy,
including substitute teachers. Therefore, in all cases for on-call employees where work
was offered or wages paid, the claimant will be ineligible for benefits. DUA will have
uniform guidelines for handling all on-call employees which will result in consistent
determinations and decisions and eliminate confusion among employers. DUA
recognizes that there have been some unintended, inconsistent applications, whether
based on regions, different stages in the process or just individuals' differing
understandings of the application of the law in this area. DUA has also included
information regarding on-call employees as part of the municipal curriculum for staff.
On-call substitute teachers are subject to both on-call rules and the reasonable assurance
statute, G. L. c. 151A, § 28A. This means that if there is implied reasonable assurance
that the substitute will be performing services in the "period" after a school break, the
teacher should be ineligible for benefits. DUA previously interpreted"period"to be one
week. Therefore if a substitute teacher did not work or was not offered work the week
immediately preceding a school break or the week following a break, the teacher was
entitled to benefits for all weeks in which there was no work, including the school break
week. DUA has revised its interpretation of the statute. Going forward, when evaluating
reasonable assurance for substitute teachers over a school break, "period"will be
interpreted as a semester. Therefore, if an on-call substitute works or was offered work in
any day in the semester before or after the school break, reasonable assurance applies and
he/she is not eligible for benefits.
DUA will provide a more consistent and clear reading of the law for on-call employees.
In addition, municipalities will have to provide timely and better information to DUA.
A historic review of municipal cases for on-call employees found that cities and towns
have often been unresponsive to DUA's requests for information, filed erroneous or
incomplete information or failed to identify the claimant as an on-call employee or
35
November 15, 2012
substitute teacher. Without more accurate reporting, it is difficult for DUA to make fully
informed decisions on these claims.
These procedural reforms have been discussed with the MMA, the Massachusetts
Mayors' Association and other municipal groups. As noted below in section "Revised
Protocol and Procedures," DUA, the MMA and other municipal groups as well as all
interested municipal leaders will continue to partner to ensure that this issue is addressed
and only individuals truly in unemployment will be eligible for UI benefits.
SEASONAL EMPLOYMENT
A number of cities and towns expressed reservations about the nature of seasonal work
exemptions, the scope of its exclusion from UI coverage and how seasonal work is
treated. Massachusetts is actually one of only fifteen states50 to have any limitation
on seasonal wages counting towards UI coverage.
In Massachusetts, an employer is allowed to apply for seasonal certification which
exempts employees working during the seasonal period from receiving UI benefits at
the conclusion of the season.
Seasonal status exempts employment in either of the below categories:
• The entire business is in operation for less than 16 weeks in a calendar year.
• The employer has a functionally distinct occupation within the business that is
seasonal, due to the fact that the assigned duties or activities as a whole are
identifiably distinct under the usual and customary practice of the industry. These
duties or activities are performed during a period of less than 16 weeks in a
calendar year due to the climate or nature of the products or services.
There are defined procedures and deadlines for employers who want to obtain seasonal
certification and exempt employees from UI benefits.
Municipalities identified several issues regarding seasonal employees. The first question
raised was whether there is any benefit to municipalities by expanding the statutory
season from 16 to 20 weeks. After careful deliberation, the Task Force concluded that
such an extension in season would not provide sufficient benefit to municipalities and
could impact the private sector significantly, which is beyond the mandate of this Task
Force.
50 U.S. Department of Labor 2011 Comparison of State Unemployment Insurance Laws.
36
November 15, 2012
The second concern was the uncertainty and firmness by DUA around the application
process and deadlines for seasonal certification. Since non-compliance with the proper
procedures could result in seasonal wages being included in UI coverage, municipalities
indicated an interest in a better, more collaborative approach to seasonal certification.
Further, municipalities requested that DUA do a more thorough job of ensuring that
claimants who had worked seasonally, but are not exempt due to the length or nature of
their positions, adhere to the actively seeking and available for work requirements,
especially if they are out of state in the off season.
Finally, municipalities wanted a clearer demarcation between seasonal work and non
seasonal work so that they could hire or retain seasonally certified workers in other
departments and positions, which benefit the municipalities as well as the individual.
Lezal Framework and Analvsis
Under G.L. c. 151A, § 24A(a), a seasonal employee is ineligible to receive UI benefits
based on that service, "unless the claim is filed within the operating period of the
seasonal employment." If a claim is filed outside the seasonal period, "benefits may be
paid on the basis of nonseasonal wages only."
An employer may be certified as a seasonal employer if, "because of climatic conditions
or the nature of the product or service, [it] customarily operates all or a functional distinct
occupation within its business only during a regularly recurring period or periods of less
than sixteen weeks for all seasonal periods during a calendar year[.]"51 An employer
seeking seasonal certification must submit the DUA application at least 60 days prior to
the beginning of the season.52 The employment may be considered to be certified as
seasonal only after the determination is made by the Agency. An application must be
submitted for each distinct seasonal period. An employer who is denied has the right to
appeal the determination within ten days. If a certified employer operates its seasonal
business for sixteen weeks or more during a calendar year, it loses its seasonal status.53
There are also procedural requirements placed on the employer so that employees fully
understand that they are seasonal employees.
Proposed Solution
It has become clear that there is a great deal of confusion and concern about the seasonal
certification process, its requirements, and implications. DUA has not always
51 G.L. c. 151A, § 1(z).
52 id.
s3 G.L. c. 151A, § 24A(e).
37
November 15, 2012
communicated fully or clearly enough with municipalities, and some municipalities have
been lax in submitting the necessary paperwork to obtain seasonal certification.
To address the expressed concerns, the Task Force requests that the following steps be
taken:
• DUA will issue a Guidance Letter clarifying this process for employers and
answering some frequently asked questions.
• DUA will more formally address those situations where municipalities (as well as
all other employers) transfer employees from seasonal to non seasonal work, or
vice versa. The following criteria will apply:
(1) There must be a break in service between the seasonal and
non seasonal work; and
(2) The additional work cannot continue in, be part of or
connected to the seasonal operation; and
(3) There is no intent to improperly avoid UI liability.
These criteria will provide more flexibility for municipalities in their ability to
retain seasonal employees in other employment. Then the seasonal employment
will not be counted as base wages towards UI eligibility.
• Beginning in 2013, DUA will schedule two webinars annually, one for summer
seasonal work to be scheduled in February and one for winter seasonal work to be
scheduled in September. All employers will be notified and invited to participate.
• DUA will allow for modifications of seasonal certification applications if a
municipality is able to extend its season, beyond the time frame originally
requested, still within the 16 week limitation. This could occur, for example, if a
municipality requested a 12 week season for a municipal swimming pool season
but later wanted to keep the pool open for additional weeks because of
community circumstances or increased funding.
• Finally, DUA will more closely monitor those employees who have worked
"seasonally" for a municipality but in a department or position that did not qualify
for seasonal certification. These individuals are not exempt from UI benefits
because their work did not fall within the framework of seasonal certification.
However, DUA will take extra steps to ensure that these claimants fulfill their
obligations to be actively seeking and available for work.
38
November 15, 2012
Expected Outcome
The Task Force is confident that the implementation of all of the steps identified above
will allow municipalities to better manage their seasonal needs, ensure that truly seasonal
employees are not UI eligible and that individuals fulfill all statutory requirements if
receiving UI benefits.
39
November 15, 2012
STEPS TAKEN BY DUA
One of the noteworthy findings of the Task Force is the degree to which municipal UI
costs can be reduced through policy and administrative changes by both DUA and the
municipalities themselves. The Task Force recognizes the changes already implemented
by DUA and recommends that it continue to evaluate its policies and procedures going
forward. The changes either already made or in process by DUA include:
1. The establishment of a dedicated municipal UI unit having oversight of municipal
cases with its own direct phone line available to municipalities. In addition, DUA
will commit to having specialized Review Examiners to hear municipal cases.
2. DUA has proposed legislation, included in Attachment 14, which would allow it
to participate in the U.S. Treasury Offset Program and collect unpaid UI benefits
improperly paid to claimants, as it now does with state tax refunds. This is of
particular importance to municipalities as all monies collected would go directly
into their accounts.
3. The provision of additional training to DUA Adjudicators and Review Examiners
on municipal UI benefits. In particular DUA developed a municipal module for its
comprehensive UI training program, which it included for the first time in the
spring of 2012. This training will continue for staff through the fall of 2012.
DUA will continue to provide on-going training to staff on municipal UI issues
as warranted.
4. The issuance of a DUA guidance letter on"On-Call Firefighters and EMTs".
DUA will continue to issue guidance letters to municipalities, as needed.
5. The revisions of certain policies, particularly regarding on-call employees,
substitute teachers, seasonal employees and reasonable assurance, as noted in the
appropriate sections above. Additionally, DUA is revising its internal case
management manuals to reflect these clarifications and will do outreach to
relevant stakeholders to inform them of these revisions.
6. The continuing review of DUA forms, for both claimants and municipal
employers. Where greater clarity is possible, the agency will revise them
accordingly.
7. Increasing outreach to municipalities to achieve the proper treatment of claims by
educators who, although initially laid off at the end of a school year, obtain a
reasonable assurance of employment during the summer for the upcoming school
year.
40
November 15, 2012
8. Increasing recovery efforts for UI benefits improperly paid to claimants so that
cities and towns can recoup a greater percentage of charges for benefits that are
later rescinded. DUA will be recommending legislation, as noted above that
would authorize DUA to participate in a federal program that allows the
interception of federal tax refunds to recover benefit overpayments.
9. Responding to all 109 municipalities who sent requests for clarification on UI
policies or specific claimants in March 2012. These interactions and dialogues
increased a sense of collaboration and partnership between DUA and
municipalities.
10. The establishment of two annual webinars hosted by DUA to which all
municipalities will be invited so that they can be kept abreast of the requirements
for seasonal certification. One will be held in February for summer seasonal
certification and the other in September in anticipation of winter seasonal
certification. The Task Force encourages all municipalities considering seasonal
certification to participate in these webinars.
11. Engaging municipalities, public sector unions, the MMA, and other organizations
representing varying aspects of municipal finance, personnel, and UI since March
2012. EOLVWD and DUA have led seminars, conducted educational programs,
written for publications, and met with municipal stakeholders, whether on
particular cases or policy and practices generally. These meetings have been very
productive for all parties. The ability to work through issues, recognize
responsibility, and implement changes, on all sides, will lead to better
communication, management, and outcomes.
The Task Force has also had the opportunity to review and analyze the ways in which
municipalities manage their UI claims. The Task Force appreciates the concerns voiced
by many municipalities over the law, its application, the unexpected financial hardships
caused by the recession, and some delays and difficulties at DUA. It also recognizes that
municipalities must remain proactive and responsive to DUA to ensure the most efficient
management of their UI costs.54
54 When this awareness has been raised by DUA with municipalities,the response has often been
that municipalities claim it is fruitless to appeal,because the claimant always wins.An analysis of
municipal UI claims in 2011 does not support this perception. For the calendar year 2011
municipal employers did not respond or responded late on 7,338 out of 21,468 claims filed(34%).
Despite this, claimants only prevailed in about half of all claims filed against municipalities. This
is significant because it demonstrates that even with no or limited information from municipal
employers, claimants were not automatically conferred benefits.However,municipalities are
urged to be responsive to DUA, fully participate in hearings and all DUA proceedings to
maximize their chances of success.
41
November 15, 2012
The Task Force suggests the following recommendations to municipalities:
1. Create a systemic approach for managing UI costs, for example, by designating
one municipal official (including for the school department)to be responsible for
and manage UI claims. Municipalities have been forthcoming that there are often
challenges integrating the school and municipal departments with respect to
managing UI claims and costs. The Task Force suggests that better coordination
between these departments will help manage the UI cases of the municipality.
2. Respond timely to every request made by DUA, particularly when filing Forms
1062/1074, the Requests for Wage and Separation Information.
3. If using a Third Party Administrator (TPA), make sure that the TPA is
accountable to the municipality and that oversight is provided by the town official
responsible for UI costs.
4. Review benefit charge statements monthly. If the charges are inaccurate,
immediately request a review of the charges.
5. Develop an internal system so that all municipal officials who are involved with
UI claims coordinate their efforts and information. One frequent example was the
lack of communication between the school department official who calls in
substitute teachers and the municipal official who needs to report the work or
refusal of work by substitutes to DUA. When that coordination is absent, the work
or refusal to work often goes unreported to DUA, and the claimant is awarded
benefits even when he/she is actually ineligible.
6. Report to DUA all information available to municipalities that will enable DUA
to better respond to their claims. For example, municipalities should notify DUA
when educators are offered positions for subsequent school years, when
individuals are offered additional work hours, or when the municipality has
information that an individual has commenced work elsewhere or declined work.
Having this information will assist DUA is properly determining UI eligibility.
7. Participate in educational workshops, webinars and seminars on municipal UI
issues by DUA or other entities.
8. Be prepared with the proper information and appropriate and knowledgeable
witnesses at all hearings before Review Examiners; remember that all evidence
and arguments must be presented at the hearing, regardless of what may have
previously been presented at the adjudication stage. If there is sufficient interest
among municipalities, DUA will work with the MMA to hold a seminar on how
to present a case at DUA.
42
November 15, 2012
9. Report to DUA all suspected fraud, reemployment and other factors that impact
employee eligibility for UI benefits.
CONCLUSION
The Task Force is confident that implementation of its suggestions, recommendations and
legislative changes55 will result in a significant improvement of the municipal UI system.
This report demonstrates that DUA now has a better understanding of the issues and
challenges faced by municipalities and that the agency has developed procedures,
employee educational modules, policy changes and clarifications, external educational
opportunities for municipalities, and a greater willingness and capacity to interface with
cities and towns.
The Task Force also believes that one of the positive aspects of the spotlight on
municipal UI costs and issues has been that municipalities are more aware of the tools
available to them to better manage their approach to UI issues and more fully engage in
the process to better control their UI costs.
The Task Force believes that the combination of these approaches and their successful
implementation will result in better outcomes for municipalities, better management of
municipal UI costs, and a better UI system for claimants and their public employers.
The Task Force urges that a review of its recommendations be undertaken in January of
2014 at which time it is anticipated that its recommendations will have been fully
integrated and operational. The Task Force would welcome the opportunity to undertake
that review.
Further, the Task Force wants to applaud all parties involved for their hard work,
willingness to engage in this complex and comprehensive review, openness in
recognizing their roles in the issues, and willingness to be part of the solution.
Finally, the Task Force wants to thank Governor Deval Patrick, Senate President Therese
Murray, Speaker Robert DeLeo and Secretary Joanne Goldstein for entrusting this
important task to us. We took our role on this Task Force very seriously and understood
its significance to the Commonwealth, its cities and towns, and public employees. We
have endeavored to discharge our duty fairly and impartially, with consideration and
deliberation over all of the issues. To the best of our ability, we have provided
conclusions and recommendations that, in our judgment, provide balanced solutions to
the issues presented. We appreciate and value the opportunity we had to serve.
ss The draft bill which includes all of the proposed statutory changes by the Task Force is attached as
Attachment 14.
43
November 15, 2012
Attachment 1
Attachment I
ARTHUR J. BOURQUE III, Chairman
ROBERT P. Mar-KENDRICK,Selectman
"® 9 AL MERRITT,Selectman
MEETNG HOUSE
' WILLIAM J, GUSTUS
Town Administrator
BOARD OF SELECTMEN
February 27, 2012
His Excellency Deval L. Patrick
Governor of Massachusetts
Room 280
State House
Boston., Massachusetts 02133
RE. Municipal Unemployment Compensation Expense
Dear Governor Patrick,
We are writing to ask your assistance in addressing some unfinished business with respect to
your efforts at municipal finance reform. We are all grateful for your recent efforts in providing
municipalities with additional tools to raise revenue and the recently passed health insurance and
pension reforms that will save cities and towns tens of millions of dollars this year alone and
stabilize our benefit costs well into the future. However, some remaining municipal liabilities in
the area of unemployment compensation seem unjust to us. We believe that, in general,
unemployment compensation was set up to provide people with "temporary financial assistance
after having lost a job through no fault of their own."
We regularly have to review unemployment claims made against our cities and towns. Recently,
one of us was presented with a case that just seems to defy the laws of sanity. To our great
surprise, we have come to learn through communication with each other that, this case is just the
tip of a vary large iceberg of unintended consequences leading to, in our view, the unjust
enrichment of many individuals at the expense of their former and current municipal employers.
Unemployment compensation payments are a direct expense to municipalities. Given the
relatively stable nature of public employment and the strong due process policies found in most
municipalities, layoffs and wrongful terminations are unusual. Therefore, most communities
choose to self-fund unemployment and, consequently, these types of cases are billing us
financially. Herein-below are outlined a number of specific cases which highlight the types of
situations we have faced in the recent past and continue to face on a regular basis.
In one connnnunity, a retired police officer is collecting unemployment under what we would
consider to be an unfair application of the unemployment compensation law. This individual
enjoys a healthy town-funded pension, and he is allowed to work details for the town to
supplement his public pension by about S25K. Due to state law, he is restricted to this amount of
TOWN HALL 781-334-3180 781-334-7660 FAX, 781-334-0014
55 SUMMER ST., LYNNFIFLD, MA 0 1 940-1 823 e-mail: william-gustus@town.lynnfield,ma.us
extra income without having his pension reduced by eanhings beyond this statutory limit. The
retirement system requires that we notify him when he has reached his outside-income limit and
that thereafter, for the remainder of the calendar year, he will be subject to a dollar-for-dollar
reduction to his pension if he continues to work. So, what does he do? He stops working and
files an unemployment claim and surprisingly, his claim is approved. The town asked for a
hearing to dispute his claim and after this hearing, the hearing officer found that, because the law
says he can't keep working for the town, that this is a loss of a job through no :fault of his own
and affirmed that he is entitled to unemployment compensation at the town's expense. Then to
make matters even worse, the retired officer starts taking details again in January, since the new
year has begun and he can earn another $25k in details beyond his $37klyr pension, but his
unemployment claim remains open and for every weep in which his detail earnings are less than
his weekly unemployment benefit, the town has to pay hire the difference as well.
Upon posting this on a list-serve we subscribe to made up of municipal finance officers across
the state, we learned of many other questionable cases. We have heard that in many
communities, when public safety employees reach the mandatory retirement age of 65 and retire
on healthy pensions, many apply for unemployment and collect not only their full pension but
also 99 weeks of at least partial unemployment benefits at the expense of the municipality. Once
again the law caused the loss of their job. This places communities in an impossible situation,
On the one hand, state retirement officials tell us we can't continue to employ these individuals
but, since they are now unemployed, we have to pay them unemployment compensation. As you
know, most public safety officers who must retire at age 65, retire with pensions equal to 80% of
what they were earning when they were actually working. In short, for this group, it is more
lucrative to be retired. is this really the "temporary financial assistance" contemplated by the
authors of our unemployment compensation laws?
These inequities are not limited to public safety workers. We also learned that many school
teachers avail themselves of unemployment compensation in ways we believe were not intended.
As we understand it, teachers are given one-year contracts each September which run through
the end of the following August. According to virtually every collective bargaining agreement
and state law, if an individual teacher's contract is not going to be renewed, they must be notified
on or before May 15 of any given year. Given the financial uncertainty over the past few years
and the fact that municipal budgets are often not settled by May 15, many school districts must
send out these notices to a number of teachers, just to protect themselves against the effects of
budget cutbacks. However, once a teacher gets one of these notices, and despite the fact that the
municipality must continue to pay them through the end of August and continue to provide
health coverage, some of these teachers file a claim for unemployment. They then collect all
summer and, after the budget is set, most of them are rehired for the next school year. They can
do this because they have the option to take a lump-sum salary payment in June, for the whole
summer. They then go down to the unemployment office and truthfully say that they received a
notice that then- contract will not be renewed and that they won't be seeing any more checks. So,
for the entire summer, the town will have paid their salary and paid them unemployment as well.
There is another little-known way that some retired teachers are able to collect unemployment.
It is possible, and it actually occurs pretty regularly, where a teacher can retire and, if they teach
in an area of critical need, may return to teach after they retire at full pay without airy income
2
limitations or pension offsets. While this may be necessary in some instances, what seems to us
to be unnecessary is that, after the school district finally finds someone to till the position,
someone who is not retired and collecting a full pension and a full salary, the retiree is now
eligible to collect unemployment for losing their job as a critical employee.
There is also a class of school bus drivers that regularly collect unemployment for the whole
summer, all school vacations, professional development days when the schools are closed, and
even the day after Thanksgiving. These school bus drivers are paid out of the town side of the
budget instead of the school budget. If they were paid by the school department, they would be
ineligible for unemployment but, since they work for the town, they may collect and, do collect
unemployment compensation. In our view, a school bus driver is a school bus driver and their
ability to collect unemployment should not be based on whether they are paid out of the school
budget or the town budget.
Many communities have been charged for unemployment compensation paid to call firefighters
who have lost their full-time jobs. This is a considerable expense to the cities and towns that
have call or combination fire departments. Call firefighters work :for the town on an as-needed
basis. They usually have full-time jobs as well. Due to a quirk in the unemployment law, when
call firefighters lose their full-time jobs and file for unemployment, the municipality gets billed
for a portion of their unemployment compensation, even though they continue to perform and get
paid for their call firefighter work. In a similar case, we have heard of a community that hired a
number of unemployed people for part-tinge jobs in an effort to Delp some local residents ride out
the recession. When their prior employers failed, the town ended up paying their unemployment
as well, even as they continued to work part-time for the community.
The frustration of local finance officials regarding all of this is real, and we respectfully request
your assistance in addressing these concerns. In one last example, we offer the case of a
community that decided to hire a reserve police officer as a full-time patrolman. After he was
hired, they paid him as a full-tinge officer and then paid for his training and his full salary as a
recruit at the police academy for probably close to six months. Unfortunately for the town, their
investment was wasted, since the officer did not receive a passing grade from the academy. This
individual was then returned to reserve officer status. He then applied for, and was granted,
unemployment benefits because he was deemed to be "underemployed."
We stand ready to assist you in any way possible to provide documentation of these cases and to
work with you to Find sensible solutions to these issues. Thank you for your consideration in this
matter.
Sincerer r
Bill ustus
Lynn reld down Administrator
3
Listed below are a number of local officials who have indicated support for these reforms and
have authorized me to add their names to this letter.
Kathleen Benevento Thomas Moses Carl Valente
Director of Finance Finance Director Town Manager
Town of Boxford City of Lowell Town of Lexington
Linda D. Carr, CGA Mariellen. Murphy David Withrow
Town Accountant Finance Director Finance Director
Town of Southwick Town of Dedham. Town of Orleans
Robin Neal Craver Kevin Paicos Susan Wright
Town Administrator Town Manager Finance Director
Town of Charlton Town of Foxborough City of Northampton
Mary C. Day Melanie Phillips, CMMT
Treasurer/Collector Finance Director
Town of Lincoln Town of.Medway
Joanne DeGray Sandy Pooler
Town Accountant Finance:Director
Town of Wilbraham Town of Amherst
Jaynes Del Signore Patricia Schaffer
Director of Finance Director of Finance
City of Worcester City of Peabody
William Keegan Randy Scollins
Town Administrator Finance Director
Town of Dedham Town of Foxborough
Suzanne Kennedy Dennis P. Sheehan
Town Administrator Asst. Treasurer-Collector
Town of Medway Town of Andover
Elaine Markham Sheryl Strother
Town Accountant Finance Director
Town of Sturbridge Town of Wellesley
Susan Milne Brian Turbitt
Director of Finance Finance Director
Town of Yarn-iouth Town of Millbury
4
Attachment 2
Attachment 2
HOUSE . . . . . . . . . . . . . . . No. 3980
Message from His Excellency the Governor recommending legislation relative to
Disqualifying Certain Persons Subject to G.L. c. 32, § 91(b) from Receiving Unemployment
Insurance Benefits. March 7,2012.
The Commontealtb of Aag6acbm5ettg
EXECUTIVE DEPARTMENT
STATE HOUSE • BOSTON 02133
m
(617)725-4000
� 6
F.
DEVAL L.PATRICK
GOVERNOR
TIMOTHY P.MURRAY
LIEUTENANT GOVERNOR
March 7, 2012.
To the Honorable Senate and House of Representatives:
I am filing for your consideration a bill entitled"An Act Disqualifying Certain
Persons Subject to G.L. c. 32, § 91(b) from Receiving Unemployment Insurance
Benefits."
This legislation addresses certain individuals who,while collecting a public
pension, return to work for a public employer and then apply for and collect
unemployment benefits when that employment ends. Public pensioners who return to
work for a public employer are permitted by statute to work up to 960 hours per calendar
year. They cannot, however, earn more than the difference between the current salary for
the position they retired from and the amount of their pension.
This legislation disqualifies those individuals from receiving unemployment
benefits once they reach either the hourly or earnings limits. By doing so, it strengthens
our unemployment system and strikes the right balance between the interests involved:
allowing public employers to utilize retired employees without incurring UI liability—so
long as the employee works the full 960 hours or reaches the earnings cap -- and allowing
employees to continue to serve the public.
1
I share your commitment to ensuring that the unemployment system helps the
people it was intended to, and rooting out all fraud and abuse. This legislation, coupled
with other actions the administration is taking, is an important first step to achieving our
collective goals. I urge your prompt and favorable consideration of this bill.
Rest:
DEVAL L. PATRICK,
Governor.
2
The CommonWeattb of 41aggarYjngettg
In the Year Two Thousand Twelve.
AN ACT DISQUALIFYING CERTAIN PERSONS SUBJECT TO G.L. C. 32, § 91(B)FROM
RECEIVING UNEMPLOYMENT INSURANCE BENEFITS.
Be it enacted by the Senate and House of Representatives in General Court assembled, and by the
authority of the same, as follows:
1 SECTION 1. Section 25 of chapter 151A of the General Laws, as appearing in the 2010 Official
2 Edition, is amended by inserting after subsection 0)the following new subsection(k):
3 (k) Any week in which the individual is barred from working for, or being paid by, the employing unit
4 by reason of the provisions of section 91(b) of chapter 32.
3
Attachment 3
Attachment 3
-� THE COMMONWEALTH OF MASSACHUSETTS
EXECUTIVE OFFICE OF LABOR AND WORKFORCE DEVELOPMENT
e'
DEVAL L. PATRICK JOANNE F. GOLDSTEIN
GOVERNOR SECRETARY
TIMOTHY P. MURRAY
LT.GOVERNOR
Dear City/Town Official:
As you may know, a number of cities and towns wrote to Governor Patrick last week
expressing frustration about Unemployment Insurance (UI) payments to certain categories
of public employees under varying circumstances.
The Patrick-Murray Administration shares your concern when claimants improperly
receive UI benefits and recognizes the burden this places on municipalities and the
taxpayers.
My office is committed to addressing these issues. We are reaching out to all 351
municipalities in the Commonwealth inviting you to send all cases on these issues directly
to my office. If possible, I would request that this information be provided by March 16C1'.
We will, of course, review any materials regardless of when they are forwarded, however,
by establishing a target date we will be better able to broadly assess the situation sooner. I
am scheduling a follow-up meeting with municipalities for Tuesday, March 20'h (time and
location TBD).
The Department of Unemployment Assistance is conducting an analysis of cases on the
following topics:
• School department employees (i.e. teachers, cafeteria workers and bus drivers);
• Employees who received UI benefits from a municipal account while on a pension
from that municipality;
• Call fire fighters who received UI benefits;
• Members appointed to a board or commission appointees who received UI benefits
as a result.of having a term expire or not being re-appointed;
In your response please provide us with information related to these topics so we can
coordinate our analysis with yours.
ONE ASHBURTON PLACE • SUITE 2112 • BOSTON, MA 02108
TEL! 617-626-7100 • TTY: 617-727-4404 • FAX: 617-727-1090
www.mass.gov/eolwd
This information can either be mailed e-mailed or faxed to:
Municipal Feedback
Executive Office of Labor and Workforce Development
One Ashburton Place, Suite 2112
Boston, MA 02108
E-mail: municipalfeedback@state.ma.us
Fax: 617-727-1090
Although we cannot publicly discuss particular cases except with the parties to the actual
case, we can discuss issues in the aggregate.
If you have any questions or would like to discuss these matters with me, please call me at
617-626-7100. EOLWD looks forward to a meaningful and strategic partnership with
concerned municipalities and the MMA on these very important issues.
Sincerely,
Joanne F. Goldstein
cc: Governor Deval Patrick
Mass Municipal Association
2
Attachment 4
Attachment 4
THE COMMONWEALTH OF MASSACHUSETTS
EXECUTIVE OFFICE OF LABOR AND WORKFORCE DEVELOPMENT
❑EVAL L. PATRICK JOANNE F. GOLDSTEIN
GOVERNOR SECRETARY
TIMOTHY P. MURRAY
LT. GOVERNOR
Dear City/Town Official:
I am writing to share additional information on the meeting I mentioned in my recent
letter to you. The meeting will take place on:
March 20th from 2:30PM to 4PM
at the Rabb Lecture Hall in the Boston Public Library.
We will discuss the following topics:
• Recent and proposed actions taken by the Administration, including filing
legislation;
■ Department of Unemployment Assistance°s (DUA) analysis of trends and
practices dealing with the topics originally highlighted in the Ietter municipalities
sent to Governor Patrick;
• DUA Employer Best Practices;
• Unemployment Insurance integrity efforts and activities at DUA;
• Your concerns and suggestions for improving the Unemployment Insurance
system.
The meeting will be open to city and town representatives. Following the meeting, which
is closed to press, Secretary of Labor& Workforce Development,Joanne F. Goldstein
and Acting Director of the Department of Unemployment Assistance,Michelle Amante
will be available to the media. Any city or town representative that would like to stay and
participate is encouraged to do so.
If you plan to attend,kindly R.S.V.P to this email or by calling, Christina Wescott at 617-
626-7114.
I hope that you will consider joining us on the 20th as your meaningful and constructive
participation is valuable for improving the UI system.
Sincerely,
Joanne F. Goldstein
ONE ASHBURTON PLACE • SUITE 2112 • BOSTON, MA 02108
TEL: 617-626-7100 • TTY: 617-727-4404 • FAX: 617-727-1090
www.mass.gov/eoIwd
Attachment 5
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Attachment 6
Attachment 6
THE COMMONWEALTH OF MASSACHUSETTS
EXECUTIVE OFFICE OF LABOR AND WORKFORCE DEVELOPMENT
DEPARTMENT OF UNEMPLOYMENT ASSISTANCE
DEVAL L. PATRICK JOANNE F. GOLDSTEIN
GOVERNOR SECRETARY
TIMOTHY P. MURRAY MICHELLE R. AMANTE
LT GOVERNOR ACTING DIRECTOR
March 20, 2012
ON-CALL FIREFIGHTERS AND EMERGENCY MEDICAL TECHNICIANS
Cities and towns are exempt from charges and paying Unemployment Insurance(Ul)benefits for
individuals working for them as on-call firefighters or on-call emergency medical technicians
(EMTs),provided they properly and timely complete the required forms.
"On-call"means there is an agreement between the employee and employer that the employee
will work on an as-needed basis with no set schedule of hours. Pertaining to on-call firefighters
and on-call EMTs, in accordance with Chapter 151A, § 6A(5),wages earned by those working in
this capacity on a temporary basis in case of fire, storm, snow, earthquake, flood, or similar
emergency, and who are paid solely on a per incident basis, are exempt and cannot be included in
determining an employee's unemployment insurance benefit rate.
There are three critical actions a municipality must take to receive the exemption and to
preserve its appeal rights on this claim as required by G.L. c. 151A,§38(a).
0 Indicate the employee's employment status as "still employed" and provide wage
information on the Wage and Separation Information form(Form 1062) as
requested.
N Write in the comments section on the form that the employee is an on-call fire
fighter or an on-call EMT paid per call or event(whether on a flat rate or hourly
basis).
N Return the form within the ten days as prescribed by law to the Department of
Unemployment Assistance(DUA).
DUA will process the returned Wage and Separation Information form. Checking the box next to
"Still employed"will prompt a review of the claim and, once verified, these wages will not be
included in determining the wage base of the claimant. If benefits are awarded and the
municipality believes the determination was erroneous,the municipality must appeal the
determination within the mandated time-frame.
During the benefit year, a claimant may need to"reopen"his/her claim due to a benefit year
separation. In this circumstance the municipality will need to recertify that the claimant is still
working as an on-call firefighter or EMT. It is important that you again return the wage and
separation form sent to you to ensure that these wages will not be included and so you can
preserve your appeal rights.
CHARLES F. HURLEY BUILDING • 19 STANIFORD STREET • BOSTON, MA 02114
www.mass.gov/lwd
Attachment 7
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Attachment 8
Attachment 8
THE COMMONWEALTH OF MASSACHUSETTS
EXECUTIVE OFFICE OF LABOR AND WORKFORCE DEVELOPMENT
❑EVAL L. PATRICK JOANNE F. GOLDSTEIN
GOVERNOR SECRETARY
TIMOTHY P. MURRAY
LT GOVERNOR
March 29,2012
Dear City/Town Official:
Thank you for continuing to participate in the dialogue over municipal unemployment issues.
In addition to requesting materials from you on cases, concerns and suggestions, we held a
meeting with all interested municipalities on March 20"', have filed legislation to address the post
retirement "960 employees", and established a Task Force to consider and make
recommendations of other issues you brought to our attention.
We have established a dedicated phone line for municipalities at the Department of
Unemployment Assistance. That number is 617-626-6262. For your convenience, we have also
attached a telephone directory which lists other important telephone numbers you may need to
access in the future.
We were also able to clarify the situations under which cities and towns are exempt from
responsibility for UI benefits for call firefighters and EMTs. The attached guidance letter
provides the details.
I have attached the PowerPoint presentation which Michelle Amante, DUA Acting Director,
delivered at the March 20i°'meeting. I think you will find this useful.
As we approach the spring and summer when seasonal employees are often hired, I urge you to
review the section on seasonal employment in the PowerPoint which describes how to exempt
these employees from UI eligibility.
We are continuing to review all cases you have brought to our attention and will get back to you
as we complete the reviews. I would note, however, that the review is separate from the UI
process and it is critical that you continue to respond timely to all requests for wage and
separation information via the proper forms and existing Ul processes in order to maintain your
rights.
Thank you again for partnering with EOLWD and DUA to dialogue and address the outstanding
concerns about the system.
Sincerely,
Joan e IF Goldstein
ONE ASHBURTON PLACE • SUITE 2112 - BOSTON, MA 02108
TEL. 617-626-7100 - TTY: 617-727-4404 - FAx: 617-727-1090
www.mass.gov/eolwd
Attachment 9
Attachment 9
THE COMMONWEALTH OF MASSACHUSETTS
EXECUTIVE OFFICE OF LABOR AND WORKFORCE DEVELOPMENT
r
DEVAL L. PATRICK JOANNE F. GOLDSTEIN
GOVERNOR SECRETARY
TIMOTHY P. MURRAY
LT.GOVERNOR
May 2, 2012
Dear City/Town Official:
I write to update you on recent developments regarding Unemployment Insurance (UD
and municipalities and to request your assistance in compiling data that will better help us
address some of the issues that you have raised.
Since l last communicated with you, the following has occurred:
+ The Department of Unemployment Assistance (DUA) established a dedicated
telephone line for municipal officials with U1 questions. That number is (617)
626-6262. Please feel free to use it as questions arise.
Governor Patrick established a Task Force to look at many of the U1 issues raised
by municipalities. We held the first meeting on April 186 and had a productive
discussion on many of the outstanding Ul issues.
+ On April 19'h, the Massachusetts Joint Committee on Public Service held a public
hearing on Governor Patrick's proposed legislation to restrict so-called "960-
hour" employees from UI eligibility. (House Bill 3980, An Act Disqualifying
Certain Persons Subject to G.L. c. 32, § 91(h) from Receiving Unemployment
Insurance Benefits)
1 also want to note that we are continuing to review all of the specific cases that were
mentioned in your submissions and will respond to each municipality as soon as possible.
Over 100 municipalities provided information, on approximately 450 cases, DUA has
assigned a team of subject matter experts to review these cases and determine the
appropriate response. We appreciate your patience as we conduct that review.
One of the requests made at the Public Service Committee hearing was for concrete data
on the number of public employee retirees who are actually collecting unemployment
benefits.
DUA would like to be responsive to the Committee and is compiling data to respond to
its requests. To he as definitive as possible, we are asking you to provide us with your
ONE ASHBURTON PLACE • SUITE 2112 BOSTON, MA 02108
TEL: 617-626-7100 - TTY: 617-727-4404 FAX: 617-727-1090
www.rnass.gov/eolwd
data, to cross-reference our numbers. We will, of course, provide you with the aggregate
results.
Specifically, at this time, we are looking at the following categories for the calendar years
2010 and 2011:
The number of retirees receiving public pensions who have filed a claim and
received UI benefits (from a municipality) after serving as a so-called 960-hour
employee and reaching the hours or earning cap.
• The number of retirees who have filed a claim and received UI benefits (from a
municipality) because they retired at a mandatory retirement age (primarily pubic
safety employees).
• The number of teachers/administrators, receiving public pensions, who have filed
a claim and received UI benefits (from a municipality) after returning to work as
"critical needs" teachers. Please include information that would indicate whether
the teacher/administrator completed a school year or was replaced during a school
year.
It would be most helpful if you could return the enclosed questionnaire by Monday, May
14, 2012 so we can compile alI of this information in a timely manner. In order to
facilitate the collection of this data, we have enclosed a form to fill out and return to us.
Thank you for your continued participation and cooperation in our combined efforts to
address the UI issues raised by and affecting municipalities.
Sincerely,
dau'r-4 -(.- xxeota*,�
Joanne F. Goldstein
cc: Massachusetts Municipal Association
Municipal UI Task Force Members
Attachment 9A
Attachment 9A
QUESTIONNAIRE
Please return form by fax(617-727-8796) or electronically
(municinalfeedback(acr),state.ma.us)
Name of Municipality:
Contact Info (name of person filling out questionnaire and how to reach):
1. 960-hour employees who received UI benefits after reaching 960 hours or the
earnings cap in a calendar year. Please also include each employee's name,
last four digits of their Social Security Number (SSN) and effective date of
their claim
2010
Name Last 4 SSN Contested? Denied If awarded Any other
(Y/N) benefits? benefits and information?
municipality
appealed,
results of
appeal
2011
Name Last 4 SSN Contested? Denied If awarded Any other
(Y/N) benefits? benefits and information?
municipality
appealed,
results of
appeal
1
2. Employees who retired at age 65 (or another age, if mandatory) and then
received UI benefits
2010
Name Last 4 SSN Contested? Denied If awarded Any other
(Y/N) benefits? benefits and information?
municipality
appealed,
results of
appeal
2011
Name Last 4 SSN Contested? Denied If awarded Any other
(Y/N) benefits? benefits and information?
municipality
appealed,
results of
appeal
3. Teachers/school administrators who retired and received a public pension;
were rehired due to critical need; and then collected UI benefits:
2010
Name Last 4 Contested? Denied If awarded How long Any other
SSN (Y/N) benefits? and did the information?
appealed, critical
results of need
appeal employee
work until
they were
replaced?
2
2011
Name Last 4 Contested? Denied If awarded How long Any other
SSN (Y/N) benefits? and did the information?
appealed, critical
results of need
appeal employee
work until
they were
replaced?
Please return form by fax(617-727-8796) or electronically
(municiaalfeedback(a-),state.ma.us)
3
Attachment 10
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Attachment 11
Attachment 11
Sample Governmental Tax Analysis
City A (population 28,000)
Contributions Owed Contributions Owed If Paid at
Reimbursable If Rate Was Contributions Owed If Paid at 5.4% (Newly Rated Private
benefits paid Calculated 1% New Gov. Employer Rate Employer Rate)
2010 $ 187,615.34 $ 108,990.25 $ 272,475.62 $ 367,842.06
(.4% rate)
2011 $ 173,745.40 $ 120,207.62 $ 300,519.04 $ 405,700.70
(.4% rate)
TOTA $ 361,360.74 $ 229,197.87 $ 572,994.66 $ 773,542,76
*Reimbursable benefits paid in 1999: $29,546 /2000: $30,308 12001: $62,98312002: $183,02712003, $193,136
/2004: $87,779 /2005: $65,306
City B (population 23,000)
Contributions Owed Contributions Owed If Paid at
Reimbursable If Rate Was Contributions Owed If Paid at 5.4% (Newly Rated Private
benefits paid Calculated 1% New Gov. Employer Rate Employer Rate)
2010 $ 102,147.94 $ 136,695.02 $ 455,650.06 $ 565,833.28
(.3% rate)
2011 $ 134,491.91 $ 92,835.07 $ 464,175.37 $ 626,636.74
(.2% rate)
TOTA $ 236,639.85 $ 229,530.09 $ 919,825.42 $ 1,192,470.01
*Reimbursable benefits paid in 1999: $9,66612000: $12,77012001: 10,41412002: $34,03812003: $66,3671
2004: $131,693 /2005: $47,608
City C (population 11,500)
Contributions Owed Contributions Owed If Paid at
Reimbursable If Rate Was Contributions Owed If Paid at 5.4% (Newly Rated Private
benefits paid Calculated 1% New Gov. Employer Rate Employer Rate)
2010 $ ' 58393.80 $ 72,310.36 $ 241,034.53 $ 325,396.48
(.3% rate)
2011 $ 141,585.89 $ 50,379.97 $ 251,899.87 $ 340,064.81
(.2% rate)
TOTA $ 199,979.69 $ 122,690.33 $ 492,934.41 $ 665,461.29
'Reimbursable benefits paid in 1999: $21,10912000: $34,634/2001: $15,54712002: $36,64212003: $68,8481
2004: 29,29212005: $43,682
Attachment 12
Attachment 12
Pension Deduction Examples
1. Police officer retires at 65, with an annual salary of $65,000. She retires after 30 years and
receives 80% of her salary in pension. She returns to work part-time (20 hours per week) in a
desk job at the station at $25 per hour. Within her 44th week, she reaches her earnings cap and
must stop working. She files for UI.
• Weekly Benefit Amount (WBA) = $437
• Weekly Pension Amount = $1000
• Pension Deduction = $650 (1000 X 65%)
• Benefit Payment = $0 ($437 - $650 = -$213)
In this scenario, the claimant would not receive any UI benefits, because the amount of the
deduction is greater than the claimant's WBA. Because there are no benefits paid, the employer
would not be charged.
2. A firefighter is forced to retire at 65, with an annual salary of $71,000. He receives 76% of his
salary in pension. He files for UI.
• Weekly Benefit Amount (WBA) = $674
• Weekly Pension Amount = $1037.69
• Pension Deduction = $674.49 ($1036.92 X 65%)
• Benefit Payment = $0 ($674 - $674 = $0)
In this scenario, the claimant would not receive any UI benefits, because the amount of the
deduction is the same as the claimant's WBA. Because there are no benefits paid, the employer
would not be charged.
3. Teacher's Aide retires. At the time of his retirement, he is making $35,000. He retires after 30
years and receives 80% of his salary in pension. The school district asks him to come back to
work on a part-time basis (30 hours per week). He will be brought back at $15 per hour. After 32
weeks, the Aide reaches the 960 hour cap.
• Weekly Benefit Amount (WBA) = $280
• Weekly Pension Amount = $538.46 (average amount in state)
• Pension Deduction = $350 (538.46 X 65%)
• Benefit Payment = $0 ($294 - $350 = -$56)
1
In this scenario, the claimant would not receive any UI benefits, because the amount of the
deduction is greater than the claimant's WBA. Because there are no benefits paid, the employer
would not be charged.
4. An elevator constructor retires after working for 40 years at Company X. His salary was $70,000 a
year, and he will receive 80% of that amount in pension. Company X asks the constructor to come
back to assist with proposal work for 20 hours a week at $30 an hour. After 6 months, Company X
is forced to lay off the employee due to a budget shortfall.
• Weekly Benefit Amount (WBA) = $673
• Weekly Pension Amount = $1076.92
• Pension Deduction = $700 (1076.92 X 65%)
• Benefit Payment = $0 ($673-$700 = -$27)
In this scenario, the claimant would not receive any UI benefits, because the amount of the
deduction is greater than the claimant's WBA. Because there are no benefits paid, the employer
would not be charged.
5. An Administrative Assistant worked her last 2 years for City B. Her previous 25 years were with
City A. When she retires, her salary is $25,000. City B asks her back for 20 hours a week at $10
per hour. She reaches the earnings cap after 42 weeks.
• Weekly Benefit Amount (WBA) = $170
• Weekly Pension Amount = $384.62
• Pension Deduction = $0
• Benefit Payment = $170
In this scenario, City B did not contribute 75% or greater of the pension amount, therefore there is
no deduction.
6. A teacher retires, but he is asked to return to the same school district in a critical needs capacity
as the school is facing a teacher shortage. He will be paid a salary of$60,000 per year (the same
salary that he received before retiring). After 1 year his assignment is over, and he files for
UI benefits.
• Weekly Benefit Amount (WBA) = $576
• Weekly Pension Amount = $923.08
• Pension Deduction = $600 (923.08 X 65%)
• Benefit Payment = $0 ($576-$600 = -$24)
2
In this scenario, the claimant would not receive any UI benefits, because the amount of the
deduction is greater than the claimant's WBA. Because there are no benefits paid, the employer
would not be charged.
7. A CFO retires from Company Y at a salary of$150,000 per year. She receives 50% of her salary
in pension. Company Y asks the employee to come back as an Advisor, full time at a rate of$100
per hour. This work ends after 18 months, and the employees files for unemployment.
• Weekly Benefit Amount (WBA) _ $674
• Weekly Pension Amount = $1442.31
• Pension Deduction = $937.50 (1442.31 X 65%)
• Benefit Payment = $0 ($674 - $937.50 = -$263.50)
In this scenario, the claimant would not receive any UI benefits, because the amount of the
deduction is greater than the claimant's WBA. Because there are no benefits paid, the employer
would not be charged.
3
Attachment 13
Attachment 13
General Laws: CHAPTER 151A, Section 28A Page 1 of 2
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Section 28A Employees of commonwealth, political subdivisions, or religious,
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Section 28A. Benefits based on service in employment as defined in subsections(a)and (d)of
section four A shall be payable in the same amount, on the same terms and subject to the
same conditions as benefits payable on the basis of other service subject to this chapter,
except that:
(a)with respect to service performed in an instructional, research, or principal administrative
capacity for an educational institution, benefits shall not be paid on the basis of such services
for any week commencing during the period between two successive academic years or terms,
or when an agreement provides instead for a simi4ar period between two regular but not
successive terms, or during a period of paid sabbatical leave provided for in the individual's
contract,to any individual if such individual performs such services in the first of such
academic years or terms and If there is a contract or a reasonable assurance that such
individual will perform services in any such capacity for any educational institution in the
second of such academic years or terms;
(b)with respect to services performed in any other capacity for an educational institution,
benefits shall not be paid on the basis of such services to any individual for any week
commencing during a period between two successive academic years or terms if such
individual performs such services in the first of such academic years or terms and there is a
reasonable assurance that such individual will perform such services in the second of such
academic years or terms; provided that, if such individual was not offered an opportunity to
perform such services for the educational institution for the second of such academic years or
terms,such individual shall be entitled to a retroactive payment of benefits for each week for
which the Individual filed a timely claim for benefits and for which benefits were denied solely
because of a finding that such Individual had reasonable assurance of performing services in
the second of such academic years or terms;
(c)with respect to services described in subsections(a)and (b), benefits shall not be paid to
any individual on the basis of such services for any week commencing during an established
http://www.malegislature.gov/Laws/GeneralLaws/Partl/TitteXXI/Chapterl5lA/Section28A 8/20/2012
General Laws: CHAPTER 151 A, Section 28A Page 2 of 2
and C015fgm ry vat-ation period or holiday recess if such individual performs such services in
the period immediately before such vacation period or holiday recess,and there is a
reasonable assurance that such individual will perform such services in the period immediately
following such vacation period or holiday recess;
(d)with respect to any services described in subsections(a)and(b)benefits shall not be paid
as specified in subsections(a), (b),and(c)to any individual who performed such services in
an educational institution while in the employ of an educational service agency,and for the
purpose of this clause the term"educational service agency"means a governmental agency or
governmental entity, including an educational collaborative board established by section four
E of chapter forty,which is established and operated exclusively for the purpose of providing
such services to one or more educational institutions.
Mass.aov I Site Ma I Terms oBMaW t4WA d4 Wicv I Accessibility Statement Copyright®2012 The General Court,All Rights
Reserved
http://www.malegislature.gov/Laws/GeneralLaws/Partl/TitleXXI/Chapterl5lA/Section28A 8/20/2012
Attachment 14
Attachment 14
An Act relative to municipal unemployment insurance.
Be it enacted by the Senate and House of Representatives in General Court assembled, and by
the authority of the same, as follows:
SECTION 1. Section 29 of chapter 151A of the General Laws, as appearing in
the 2010 Official Edition, is amended by inserting after subsection (d)(6) the
following new subsection (d)(7):-
(7) Notwithstanding any of the foregoing provisions of this subsection, the
amount of benefits otherwise payable to an individual for any week that
begins in a period with respect to which such individual is receiving
governmental or other pension, retirement or retired pay, annuity, or any
other similar periodic payment from a defined benefit plan that is based on
the previous work of such individual for the separating employer or for a base
period employer shall be reduced by an amount equal to 65% of the amount of
such payment that is reasonably attributable to such week; provided,
however, that such reduction shall apply only when such separating or base
period employer employed the individual for at least 75% of the individual's
total length of service on which the defined benefit plan is based; and
provided, further that such reduction shall apply only if, and to the extent,
then consistent with section 3304(a)(15) of the Internal Revenue Code of
1954. Payments received under the Social Security Act shall not be subject to
this paragraph.
SECTION 2. Section 28A of chapter 151A of the General Laws, as appearing in the
2010 Official Edition, is amended by inserting after subsection (d) the following new
subsection (e):-
(e) with respect to any services described in subsections (a) and (b) that are
provided to or on behalf of an educational institution, benefits shall not be
paid to any individual under the same circumstances as described in
subsections (a) through W.
SECTION 3. Section 6A of chapter 151A of the General Laws, as appearing in the
2010 Official Edition, is amended by inserting after subsection (6) the following new
subsection (7):-
(7) an election official or election worker if the amount of remuneration
received by the individual during the calendar year for services as an election
official or election worker is less than $1,000.
SECTION 4. Section 1 of chapter 62D of the General Laws, as appearing in the
2010 Official Edition, is hereby amended by inserting, after line 55, the following
definition:-
"Federal tax refund payment", any overpayment of Federal taxes to be refunded to
the person making the overpayment after the Internal Revenue Service makes the
appropriate credits as provided in 26 U.S.C.§ 6402(a) and 26 CFR § 6402-3(a)(6)(i)
for any liabilities for any Federal tax on the part of the person who made the
overpayment."
SECTION 5. Section 1 of chapter 151A of the General Laws, as appearing in the
2010 Official Edition, is hereby amended by striking out, between lines 313 and 314,
the words "[There is no subsection (v).]", and inserting in place thereof, the
following subsection:-
(v) "Unemployment compensation debt", an amount owed to the Department as a
result of (1) an erroneous payment of benefits as described in section 69 of this
chapter, also referred to as an overpayment; (2) an uncollected contribution to the
Unemployment Compensation Fund, for which the Director has determined an
individual to be liable, along with any penalties and interest on such debt as
determined under section 15 of this chapter; and (3) fees authorized under the
Treasury Offset Program described in 26 U.S.C. § 6402(f)(5)(B), and 31 CFR
§ 285.8(h).
SECTION 6. Chapter 151A of the General Laws, as so appearing in the 2010
Official Edition, is hereby amended by inserting after Section 14P the following
section:-
Section 14Q. Treasury Offset Program. The Director may enter into an agreement
with the Secretary of the Department of Treasury, under the provisions of 26 U.S.C.
§ 6402(f) and 31 CFR § 285.8, to transmit valid, unpaid, and overdue unemployment
compensation debts to the Financial Management Service, a bureau of the U.S.
Department of the Treasury, for collection by offset of Federal tax refund payments
through the Treasury Offset Program. If the Director chooses to participate in the
Treasury Offset Program to recover unemployment compensation debt, the Director
shall adhere to all rules, policies, and guidance as required by the U.S. Department
of the Treasury and the U.S. Department of Labor in implementing and
administering the program. The Director may promulgate such regulations as
needed to implement this section.
SECTION 7. Section 15 of chapter 151A of the General Laws, as so appearing in the
2010 Official Edition, is hereby amended by inserting, at the end, the following new
subsection (f):-
(f) If an assessment, or any administrative decision upon review thereof has become
final and the contributions, payments in lieu of contributions, interest, or penalties
thereby assessed remain unpaid, the Director may refer the unpaid and overdue
amount to the Secretary of the Department of Treasury for collection under the
provisions of 26 U.S.C. § 6402(f), the Treasury Offset Program, provided that all
procedures for notice and opportunity to present evidence as required by 31 CFR §
285.8 have been followed.
SECTION 8. Section 53A of chapter 151A of the General Laws, as so appearing in
the 2010 Official Edition, is hereby amended by striking "and" at the end of
subsection (1), line 4, and inserting in place thereof the following subsection:-
(2) withdrawn for payment of fees authorized under the Treasury Offset Program
described in section 14Q of this chapter and paid to the Financial Management
Service, a bureau of the U.S. Department of the Treasury, and
SECTION 9. Said section 53A of chapter 151A of the General Laws, as so appearing
in the 2010 Official Edition, is hereby further amended by renumbering the former
subsection (2), beginning with the word "requisitioned" as:- (3)
SECTION 10. Section 69B of chapter 151A of the General Laws, as so appearing in
the 2010 Official Edition, is hereby amended by inserting, before the first sentence
in line 1, the following subsection heading- (a)
SECTION 11. Said section 69B of chapter 151A of the General Laws, as so
appearing in the 2010 Official Edition, is hereby further amended by inserting, at
the end, the following subsection:-
(b) In addition to any other remedy provided by this chapter, the Director may
request that the amount payable to the department by an individual resulting from
an overpayment of unemployment benefits which has become final as specified in
430 CMR 6.12 be set off against any Federal tax refund payment owed such
individual by the U.S. Department of Treasury, in accordance with the
requirements of the Treasury Offset Program described in section 14Q of this
chapter.