RULES AND REGULATIONS
Title 34--LABOR AND INDUSTRY
DEPARTMENT OF LABOR AND INDUSTRY
[34 PA. CODE CH. 65]
Reasonable Assurance
[33 Pa.B. 25] The Department of Labor and Industry (Department) adds § 65.161 (relating to reasonable assurance) to read as set forth in Annex A.
Statutory Authority
The final-form rulemaking is promulgated under section 201(a) of the Unemployment Compensation Law (law) (43 P. S. § 761(a)), which authorizes the Department to adopt and amend rules and regulations necessary to administer the law.
Background and Purpose
The purpose of this final-form rulemaking is to bring the Commonwealth unemployment compensation (UC) eligibility criteria into conformity with the United States Department of Labor's (USDOL) requirements under section 3304(a)(6)(A) of the Federal Unemployment Tax Act (FUTA) (26 U.S.C.A. § 3304(a)(6)(A)) with regard to a principle known as ''reasonable assurance.''
FUTA requires the states to deny UC benefits based on services in an instructional, research or principal administrative capacity for an educational institution, for any week between 2 academic years or terms, if the claimant performed services in any of those capacities in the first year or term and there is a contract or reasonable assurance that the claimant will perform services in any of those capacities in the second year or term. States must also deny benefits based on services in an instructional, research or principal administrative capacity for an educational institution, for any week during a vacation period or holiday recess, if the claimant performed services in any of those capacities before the vacation or holiday and there is a reasonable assurance that the claimant will perform services in any capacity after the vacation or holiday. States may deny benefits based on services for an educational institution in a capacity other than instructional, research or principal administrative, for any week between 2 academic years or terms, or any week during a vacation period or holiday recess, if the claimant performed these services in the first year or term or before the vacation or holiday and there is a reasonable assurance that the claimant will perform services in any capacity in the second year or term or after the vacation or holiday. These denial provisions also apply to claimants who are employed by an educational service agency. These provisions apply to governmental and nonprofit educational institutions and educational service agencies (collectively, educational employers). See section 3304(a)(6)(A) of FUTA.
The USDOL imposes requirements on the states regarding the interpretation and application of the statute. Unemployment Insurance Program Letter 4-87 (52 FR 3889) sets forth the USDOL's official interpretation of ''reasonable assurance'' in FUTA. It provides that a reasonable assurance of employment in the second academic period exists only if there is a bona fide offer of employment and the economic terms and conditions of the employment in the second academic period are not substantially less than the terms and conditions of the claimant's employment in the first academic period. For example, if a full-time teacher is given an offer to return to work as a part-time substitute teacher in the following academic year, employment in the second academic period would not be economically equivalent to employment in the first academic period, as required by the USDOL. Therefore, there is no reasonable assurance and the teacher should be eligible for benefits for the summer.
The Commonwealth's implementation of the FUTA provisions regarding the eligibility of employees of educational employers is found in section 402.1 of the law (43 P. S. § 802.1). Section 402.1(1) and (2) of the law denies benefits based on services for an educational institution, for any week between 2 academic years or terms. Paragraph (1) applies to services in an instructional, research or principal administrative capacity. Paragraph (2) applies to services in any other capacity. Paragraph (3) denies benefits based on services in any capacity for an educational institution, for any week during a vacation period or holiday recess. Paragraph (4) extends the denial provisions of paragraphs (1)--(3) to services performed in the employ of an educational service agency. The denial provisions of section 402.1 of the law require the existence of a contract or reasonable assurance of employment in the second academic period.
Currently, the Commonwealth does not include economic equivalency as a necessary element of reasonable assurance. In Musko v. Unemployment Compensation Bd. of Review, No. 2740 C. D. 1997 (Pa. Cmwlth., filed June 23, 1998) (unreported), appeal denied, 558 Pa. 624, 737 A.2d 745 (1999), the claimant was a full-time school teacher in the first academic year and received an assurance of returning to work as a per diem or long-term substitute teacher in the second academic year. Commonwealth Court held that the claimant was ineligible for benefits for the summer because he worked in an instructional capacity in the first year and had an assurance of returning to work in an instructional capacity for the second year. However, the economic terms and conditions of the position offered to him for the second year were substantially less than the terms and conditions of his job in the first year. If the economic equivalency test had been applied as required by the USDOL, the claimant would have been eligible for UC benefits.
To conform to FUTA, the Commonwealth and other states can deny benefits to employees of educational employers only to the extent authorized by Federal law. In Musko, the Commonwealth went beyond the scope of the Federal law as interpreted by the USDOL when it denied benefits to a claimant who was not offered an economically equivalent position for the next school year. As a result, the USDOL informed the Department that it was out of conformity with the Federal law.
To conform to the USDOL's reasonable assurance requirements, the Department adopts this final-form rulemaking.
Comments
The Department published a notice of the proposed rulemaking at 31 Pa.B. 1564 (March 24, 2001). Under the 30-day public comment period, the Department received comments from the Interstate Tax Service Bureau (ITSB). The Senate Labor and Industry Committee and the House Labor Relations Committee (Committees) did not comment. The Independent Regulatory Review Commission (IRRC) submitted one comment to the Department.
Comment: ITSB stated that the Commonwealth is following the USDOL's interpretation of reasonable assurance and that Musko is an isolated departure from Federal requirements.
Response: The Commonwealth does not include economic equivalency in its analysis of reasonable assurance, as required by the USDOL. Although Musko is the case that precipitated notice from the USDOL that the Commonwealth is out of conformity with Federal law, it is not a unique case. There are other similar cases when a claimant was denied benefits, but likely would have been granted benefits if economic equivalency had been a factor. Neshaminy School District v. Unemployment Compensation Bd. of Review, 426 A. 2d 1245 (Pa. Cmwlth. 1981) (long-term substitute teacher converted to day to day substitute teacher for next school year); Richland School District v. Unemployment Compensation Bd. of Review, 459 A. 2d 1358 (Pa. Cmwlth. 1983) (tenured, contract teacher and tenured, preferred substitute teacher placed on substitute call list for next year); Board of Education, School District of Philadelphia v. Unemployment Compensation Bd. of Review., 609 A. 2d 596 (Pa. Cmwlth. 1992) (long-term substitute teachers converted to per diem substitute teachers for following year).
Comment: ITSB was concerned that the requirements for a ''bona fide offer of employment'' under the final-form rulemaking will be the same as the requirements for an offer of work under section 402(a) of the law (43 P. S. § 802(a)).
Response: Under section 402(a) of the law, a claimant may be ineligible for benefits if the claimant refuses an offer of suitable work. Section 402(a) of the law requires an unconditional offer of work and a guarantee of employment if the offer is accepted. McKeesport Hospital v. Unemployment Compensation Bd. of Review, 619 A.2d 813 (Pa. Cmwlth. 1992). The requirements under section 402(a) of the law will not extend to the final-form rulemaking, as the analysis under section 402(a) of the law is different than the analysis under section 402.1 of the law. Section 402.1 of the law requires only a reasonable assurance of employment. While a possibility or hope of employment does not rise to the level of reasonable assurance, there need not be a guarantee of employment. Reasonable assurance necessitates mutual commitment or assurance between the teacher and the educational employer, so the teacher has a reasonable expectation of employment in the next academic period. McCuen v. Unemployment Compensation Bd. of Review, 486 A. 2d 552 (Pa. Cmwlth. 1985).
Comment: ITSB commented that the rulemaking contradicts section 402.1 of the law.
Response: Section 402.1(1) of the law and the final-form rulemaking are not inconsistent. Under section 402.1(1) of the law, a claimant is ineligible for benefits between academic periods if the claimant worked in an instructional, research or principal administrative capacity during the first academic period and has a reasonable assurance of returning to work in one of those capacities for the second academic period. The final-form rulemaking does not contravene the provision in section 402.1(1) of the law that a claimant is ineligible for benefits if the claimant has a reasonable assurance of reemployment, or the requirement that reasonable assurance relate to employment in specified capacities. Rather, the regulation defines reasonable assurance and sets forth criteria that must be met for reasonable assurance to exist.
Comment: IRRC stated that the final-form rulemaking should include factors that will be used to determine whether the economic terms and conditions of the employment offered to the claimant for the second academic period are, or are not, substantially less than the terms and conditions of the claimant's employment in the first academic period.
Response: The Department agrees with IRRC's comment. The Department added subsection (c) to the final-form rulemaking, which provides that economic terms and conditions of employment include wages, benefits and hours of work. Therefore, these factors will be used to compare the employment offered to the claimant for the second academic period with the claimant's employment in the first academic period.
Effective Date
The final-form rulemaking will be effective immediately upon publication in the Pennsylvania Bulletin.
The final-form rulemaking will apply to applications for benefits effective on or after the date of publication.
Fiscal Impact
The final-form rulemaking is necessary to bring the law into conformity with FUTA and avoid substantial adverse impact to the Commonwealth. If the Commonwealth does not adopt the rulemaking and is adjudged to be out of conformity with Federal law, the Secretary of the USDOL would withdraw FUTA certification from the Commonwealth. This would abrogate administrative funding for both the UC system and the employment service. In addition, Commonwealth employers would lose the FUTA tax credits to which they are entitled by paying State UC taxes. The loss of administrative funding and tax credits would cost the Commonwealth approximately $1.95 billion annually, based on figures for the 1998 calendar year, 1998-1999 program year and 1998-1999 fiscal year.
It is uncertain whether the final-form rulemaking will have a fiscal impact on the UC Fund. Employees of educational employers who are not given a reasonable assurance of returning to work, in accordance with the regulation, would be eligible for UC benefits. However, eligibility for these employees could prompt affected employers to provide the level of reasonable assurance required by the final-form rulemaking, and cause an eventual decrease in benefit payments.
An increase in the cost of administering the UC program would be nominal, because no measurable increase in personnel, time or resources will be necessary to administer section 402.1 of the law as impacted by the final-form rulemaking.
Paperwork Requirement
No new paperwork is required.
Sunset Date
The final-form rulemaking will be monitored through practice and application. Thus, no sunset date is designated.
Regulatory Review
Under section 5(a) of the Regulatory Review Act (71 P. S. § 745.5(a)), on March 8, 2001, the Department submitted a copy of the notice of proposed rulemaking, published at 31 Pa.B. 1564, to IRRC and to the Chairpersons of the House and Senate Committees for review and comment.
Under section 5(c) of the Regulatory Review Act, IRRC and the Committees were provided with copies of the comments received during the public comment period. In preparing this final-form rulemaking, the Department has considered the comments received from IRRC, the public and stakeholders. The Department received no comments from the Committees.
Under section 5.1(d) of the Regulatory Review Act (71 P. S. § 745.5a(d)), on October 17, 2002, this final-form rulemaking was deemed approved by the House and Senate Committees. Under section 5.1(e) of the Regulatory Review Act, IRRC met on October 24, 2002, and approved the final-form rulemaking.
Contact Person
Questions regarding this final-form rulemaking may be directed to Jeri Morris, Department of Labor and Industry, Bureau of Unemployment Compensation Benefits and Allowances (BUCBA), 6th Floor, Labor and Industry Building, Seventh and Forster Streets, Harrisburg, PA 17121, (717) 787-6337, jemorris@state.pa.us.
Findings
The Department finds that:
(1) The Department gave public notice of its intention to promulgate this regulation under sections 201 and 202 of the act of July 31, 1968 (P. L. 769, No. 240) (45 P. S. §§ 1201 and 1202) and the regulations thereunder in 1 Pa. Code §§ 7.1 and 7.2.
(2) A public comment period was provided as required by law, and all comments received were considered.
(3) This final-form regulation does not enlarge the purpose of the proposed regulation published at 31 Pa.B. 1564.
(4) This regulation is necessary and appropriate for the administration of the law.
Order
The Department, acting under the authority of the law, orders that:
(a) The regulations of the Department, 34 Pa. Code Chapter 65, are amended by adding § 65.161 to read as set forth in Annex A.
(b) The Secretary of Department shall submit this order and Annex A to the Office of General Counsel and the Office of Attorney General for approval as required by law.
(c) The Secretary of Department shall certify this order and Annex A and deposit them with the Legislative Reference Bureau as required by law.
(d) The regulation shall take effect immediately upon publication in the Pennsylvania Bulletin, and apply to applications for benefits effective on or after the date of publication.
JOHNNY J. BUTLER,
Secretary(Editor's Note: For the text of the order of the Independent Regulatory Review Commission, relating to this document, see 32 Pa.B. 5582 (November 9, 2002).)
Fiscal Note: Fiscal Note 12-56 remains valid for the final adoption of the subject regulation.
Annex A
TITLE 34. LABOR AND INDUSTRY
PART II. EMPLOYMENT SECURITY
Subpart A. UNEMPLOYMENT COMPENSATION
CHAPTER 65. EMPLOYE PROVISIONS
Subchapter I. BENEFITS BASED ON SERVICE FOR EDUCATIONAL INSTITUTIONS Sec.
65.161. Reasonable assurance. § 65.161. Reasonable assurance.
(a) For purposes of section 402.1 of the law (43 P. S. § 802.1), a contract or reasonable assurance that an individual will perform services in the second academic period exists only if both of the following conditions are met:
(1) The educational institution or educational service agency provides a bona fide offer of employment for the second academic period to the individual.
(2) The economic terms and conditions of the employment offered to the individual for the second academic period are not substantially less than the terms and conditions of the individual's employment in the first academic period.
(b) For the purposes of subsection (a), an offer of employment is not bona fide if both of the following conditions exist:
(1) The educational institution or educational service agency does not control the circumstances under which the individual would be employed.
(2) The educational institution or educational service agency cannot provide evidence that the individual or similarly situated individuals normally perform services in the second academic period.
(c) For the purposes of subsection (a), economic terms and conditions of employment include wages, benefits and hours of work.
[Pa.B. Doc. No. 03-12. Filed for public inspection January 3, 2003, 9:00 a.m.]
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