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Work-Search Waivers for Jobless Aid May End as States Reopen

May 12, 2020, 10:03 AM

Laid-off workers in some states that are allowing businesses to reopen may soon have to prove that they’re actually looking for jobs again in order to continue receiving unemployment benefits.

States typically require unemployment insurance applicants to show they’re actively searching for work. That meant providing proof of five job applications or contacts made per week in Florida, for example, or three in California. In the pandemic’s early stages, all 50 states dropped or limited job-search requirements in exchange for temporary, emergency federal funding needed to process a wave of new unemployment claims.

Now, some states that are gradually reopening are already looking to limit unemployment insurance payouts or re-implement job-search requirements. The crushing financial burden the pandemic has placed on states makes it more likely others will search for ways to reduce costs, especially with federal regulators gearing up to probe how unemployment benefits are being spent. On the flip side, adding job-search requirements to unemployment eligibility could enhance public-health concerns.

Officials in Texas, Florida, and Georgia are already discussing when to reinstate job-search requirements. And Texas may do so soon, state officials said last week.

“In normal times, workers would be required to search for new employment, and failure to do so generally would result in losing benefits,” said James Bernsen, a spokesman for the Texas Workforce Commission, the state agency that administers unemployment benefits. “At some point in the future, that requirement will go back into effect,” he said, adding that a “decision has not yet been made, and it will be conditions-dependent.”

At least a half-dozen states are encouraging companies to report employees who refuse to return to work, so that officials can root out improper claims for jobless benefits. Two of those states, Ohio and Missouri, plan to hold off on re-implementing job searches as part of unemployment eligibility, state representatives said.

U.S. Labor Secretary Eugene Scalia said Monday that officials have been talking with the Labor Department’s Office of Inspector General about tailoring investigations to ensure states aren’t paying people who have had the opportunity to return to work.

“Now we’re looking at reopening in the great majority of states, which means we should have people come off unemployment insurance,” Scalia said during a webinar.

Strings Attached

Work-search requirements, which traditionally differ from state to state, are designed to keep people connected to the workforce even if they can’t find consistent work, said Michele Evermore, a senior policy analyst for the National Employment Law Project.

“They have to be able, available, and actively looking for work. How every state has defined that has been up to those states,” she said.

Each state handled work-search requirements differently in response to the coronavirus crisis, but congressional lawmakers attached strings to federal funding. The Families First Coronavirus Response Act, signed into law March 18, allowed states to disregard federal work-search requirements “on an emergency temporary basis,” a Labor Department spokeswoman said. However, states were obligated to drop the requirements in order to receive some of an additional $1 billion in unemployment aid the legislation set aside.

The DOL hasn’t specified a “stop date” for when states can reinstate job-search requirements, the spokeswoman said. States will instead make that decision.

Many state leaders are likely not keen on maintaining work-search waivers for long, said Gary Burtless, senior economist for the Brookings Institution. They’re already cash-strapped and faced with paying benefits for a longer period after Congress added 13 weeks of unemployment-insurance eligibility to the CARES Act relief package in late March.

State leaders will have to weigh on-the-ground economic realities against a series of other factors, such as the potential severity and duration of the economic downturn and the likelihood of additional federal assistance. That includes, in particular, whether congressional lawmakers decide to extend the $600 unemployment supplement provided in the CARES Act, which expires July 31.

Tough Decisions

Past recessions have caused state unemployment trust funds to run dry, pushing lawmakers to turn to the federal government for loans. Last week California became the first state to receive a federal loan, totaling about $348 million, to enable it to continue paying out unemployment benefits.

In the past, some states responded to depleted trust funds by tightening income and other eligibility requirements for unemployment insurance, reducing weekly benefits payouts, or limiting the number of weeks for which jobless workers can receive benefits.

“That is a very predictable part of every recession,” Burtless said. “When states have to pay loans back to the federal government, state legislatures make changes.”

Some states aren’t immediately planning to reinstate job-search requirements when they gradually reopen—at least, for now. Florida was set to re-impose its waiver on May 9, but Gov. Ron DeSantis (R) extended it through May 30.

Florida and New Jersey still require benefits-seekers to respond to a mandatory question on their applications: “Have you applied for work this week?” or “Were you actively seeking work?”

In online instructions, the states explain that jobless workers can obtain benefits regardless of their response to that question. Officials in those states didn’t respond to requests for comment.

In Georgia, hair salons, tattoo parlors, and other businesses reopened two weeks ago, but the state is still waiving job-search requirements, said Kershia Cartwright, the spokeswoman for the state’s labor department.

“I am sure we will revisit this requirement soon,” she said.

Confusion and Safety Questions

States have many job openings in essential services like nursing homes, grocery stores, or in public transportation. Given those needs, it makes sense for them to encourage workers to return to work as soon as possible, Burtless said.

“It’s not unreasonable,” he said. “I can see why some states believe they should insist on that requirement, and try to enforce it going forward.”

But if states require workers to hit the concrete to apply for jobs, which can involve face-to-face meetings and interviews, officials must consider the health risks, Burtless and Evermore said.

At the same time, some states have already warned workers that fear of infection generally isn’t enough to allow them to continue getting unemployment benefits if they refuse to go back to work. Alabama’s labor department has warned that applying for benefits after declining an opportunity to return to work will be treated as fraud.

Officials in some states may also feel pressure to provide continuity for benefits-seekers. Confusion surrounding current requirements in many states has caused problems for unemployment applicants as they try to navigate long waits for benefits and antiquated state processing systems ill-equipped to handle off-the-charts demand, economists said.

Many states haven’t sufficiently communicated those requirements to applicants, which could lead jobless workers to incorrectly conclude that they’re not eligible for benefits.

“It’s been hard to sort out. Even if a state may have waived search requirements, it may not be clear on the website,” Evermore said. “On top of that, not every state waived search requirements in the same way, and the way they have done it may be really unique on their part.”

—With assistance from Paul Stinson and Ben Penn.

To contact the reporter on this story: Jaclyn Diaz in Washington at jdiaz@bloomberglaw.com

To contact the editors responsible for this story: Chris Opfer at copfer@bloomberglaw.com; John Lauinger at jlauinger@bloomberglaw.com

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