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Welcome to Sweet Home Alabama Road Sign along Interstate 10 in Robertsdale, Alabama USA, near the State Border with Florida

State unemployment agencies first enacted unemployment legislation in 2013 as a result of the passage of the 2011 Trade Adjustment Assistance Extension Act. This was a reaction to the Great Recession and the belief that improper payments were the cause of state unemployment agencies’ excessive borrowing to fund their programs during these difficult times.  Many states at that time chose to pass the most basic legislation to be in compliance with the federal mandates.

The federal legislation required that state agencies implement legislation that prevented the state agency to no longer remove benefit charges from an employer’s unemployment tax account if:

1) the overpayment was caused by the employers’ failure to provide timely or adequate information in response to a request related to benefits, and

2) the employer has established a pattern of failing to respond.

While there were states that took additional steps in determining additional penalties, defining what constituted a pattern and/or acquisition, largely states put the wording into their regulations and with very little other action taken. As a result of the COVID-19 pandemic, many state unemployment agencies are once again faced with a financial crisis and forced to borrow funds from the federal government to cover the dramatic increase in unemployment benefit payments collected.  As a result, CCC is seeing an increase in the amount of legislation at the state level targeting improper payments through their UI Integrity legislation.

Alabama is the first state that we have seen the legislation pass. SB 373 was signed by Governor Kay Ivey on May 13, 2021.  The measure creates the Unemployment Insurance Program Integrity Act of 2021, which will attempt to recover improper overpayments of unemployment benefits.

The purpose of the UI Program Integrity Act is to enhance program integrity for the state’s unemployment records against unemployment insurance rolls on a weekly basis and check federal, state, county, and local prison and jail records. It requires The Department of Labor to adopt and implement internal administrative policies to recover improper overpayments of unemployment benefits. The Department must annually issue a report to the Legislature which includes all of the following:

(1) The efficacy of unemployment fraud detection and prevention measures by the department.

(2) The amount of any improper unemployment benefit payments issued and recovered, and the reasoning for and the extent to which any improper unemployment benefit payments are not corrected or recovered.

This measure will become effective on January 1, 2022.

With state unemployment agencies struggling to fund programs, UI Integrity will continue to be a source of concern. CCC is tracking Integrity legislation throughout the United States and will continue to report changes as they are passed. For additional information please contact your CCC Account Executive.

 


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