Unemployment Trust Fund Solvency 

Most states have reached solvency in preparation for the next economic downturn.  The states that continue to have issues:

  • The Virgin Islands continue to borrow from the Federal Government and have an outstanding loan balance.
  • Colorado, Michigan, Pennsylvania, and Texas are not considered solvent as they currently are using state-funded methods to pay back Title XII loans.
  California, Connecticut, Illinois, Massachusetts, and Ohio are also not considered solvent as they have less than one year of benefit reserves in their unemployment state fund.
  Minnesota is not considered solvent due to the past 12 months of Unemployment Benefits exceeding Unemployment Tax Payments received during the same period.

California Governor Signs Bill AB 5

California Governor Gavin Newsom signed Bill AB 5 on September 16, 2019. The bill:

  1.  Codifies the decision of the California Supreme Court in Dynamex Operations West, Inc. v. Superior Court of Los Angeles (2018) that presumes a worker is an employee unless a hiring entity satisfies a three-factor test, and exempts from the test certain professions and business to business relationships;
  2. Clarifies that if a court rules that the three-part Dynamex test cannot be applied to a particular context based on grounds other than an express exception to employment status as provided in this bill, then the determination of employee status shall instead be governed by the California Supreme Court’s decision in S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) (Borello);
  3.  Applies the Borello test, to a number of additional occupations, including, but not limited to, podiatrists, veterinarians, psychologists, repossession agents, and commercial fisherman, as specified
  4. Redefines “professional services” for the purpose of coverage under the Borello test, to include, among other things, marketing, as defined, human resources administration, as defined, graphic design, grant writing, and services by fine artists and enrolled agents;
  5. Clarifies the barbering and cosmetology exemption to Dynamex;
  6. Clarifies the requirements for extending Borello to the relationship between a contracting business and a business service provider;
  7. Clarifies the requirements for the relationship between a contractor and an individual performing work pursuant to a subcontract in the construction industry to be governed by the Borello test, including the requirement of being licensed with the Contractors State License Board (CSLB);
  8. Exempts, until January 1, 2022, a subcontractor providing construction trucking services from the requirement of having a CSLB license if certain criteria are satisfied, including registration with the Department of Industrial Relations as a public works contractor;
  9. Requires, for work performed after January 1, 2020, that any business entity that provides construction trucking services to a licensed contractor utilizing more than one truck is the employer for all drivers of those trucks;
  10. Establishes an exemption from Dynamex for motor club services and referral agencies, provided certain criteria are met;
  11. Clarifies that the bill’s provisions are declaratory of existing law and should apply retroactively to existing claims to the extent permitted by law;
  12. Provides that, beginning on July 1, 2020, any individual who is deemed an employee must be covered by workers’ compensation insurance; and
  13. Adds injunctive relief as a remedy to prevent continued misclassification.

17 States Report Increase in Initial Applications for Unemployment Benefits

Information obtained from UWC, SUCAP report and Department of Labor. For the full SUCAP report please see https://www.uwcstrategy.org/wp-content/uploads/bsk-pdf-manager/2019/08/July-2019-SUCAP-Report.pdf

 


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