Attachment No. 4 to UIPL No. 15-82



OCSE-AT-82- 2
March 4, 1982



SUBJECT : Withholding of Unemployment Benefits - Section 2335 of Public Law 97-35

ATTACHMENTS : Unemployment Insurance Program Letter and sample agreement issued by the Department of Labor

PURPOSES : This action transmittal provides States with information on the withholding of unemployment benefits as a method of collecting unmet support obligations and prescribes procedures to be used by State agencies in accomplishing the withholding of these benefits. The content of this action transmittal is based on the provisions of Section 2335 of P.L. 97-35, the Omnibus Budget Reconciliation Act of 1981. Regulations on the withholding of unemployment benefits for purposes of satisfying an unmet support obligation are currently being prepared by OCSE in coordination with the U.S. Department of Labor.

BACKGROUND : The Omnibus Budget Reconciliation Act of 1981 was enacted on August 13, 1981 as Public Law 97-35. Section 2335 of this law revises the Social Security Act by amending sections 303 and 454 to authorize the collection of unmet support obligations through the withholding of unemployment benefits under specific procedures set forth in the statute. States may implement the withholding process as of August 13, 1981; however, States should note that the process is mandatory as of October 1, 1982.

Under the provisions of the statute, the child support enforcement (IV-D) agency is required to collect unmet support obligations owed by an individual by having all or part of the individual's unemployment benefits withheld by the State employment security agency (SESA) and forwarded to the IV-D agency. The amount withheld is to be determined by the IV-D agency through an agreement with the individual or, if an agreement cannot be obtained, through legal process as defined in section 462(c) of the Social Security Act. This process is explained more fully below. The SESA is required to withhold and forward to the IV-D agency the amount of the individual's unemployment benefits as specified by agreement or as required as a result of legal process. An arrangement to withhold less than the amount of the support obligation does not excuse the individual's legal obligation to paythe remaining amount. Section 2335 also specifies that the IV-D agency must reimburse the SESA for the administrative costs of carrying out its withholding activities.

Under Section 2335 of P.L. 97-35, the withholding of unemployment cornpensation is required for unmet child support obligations owed both in AFDC and non-AFDC cases. Since section 303 of the Social Security Act (the SESA provisions) defines the term "child support obligations" as including any obligations whichare being enforced pursuant to a plan described in section 454 of the Social Security Act, and section 454 of the Act is amended to authorize collection of certain spousal support at the option of the State, States that choose to collect spousal support may do so via withholding of unemployment compensation.

DEFINITIONS : For purposes of this action transmittal, the following definitions apply: (1) "unemployment compensation" means any compensation payable under State unemployment compensation law (including amounts payable in accordance with agreements under any Federal unemployment compensation law); it includes extended benefits, unemployment compensation for Federal employees, unemployment compensation for ex-servicemen, trade readjustment allowances, disaster unemployment assistance, and payments under the Redwood National Park Expansion Act. (2) "State employment security agency" or "SESA" means the agency charged with the administration of State unemployment compensation laws in accordance With title III of the Social Security Act.



    1. State Plan Amendment

      Withholding of unemployment compensation for purposes of meeting support obligations was authorized beginning August 13, 1981. It becomes a requirement on October 1, 1982. States that desire to implement the new section 454(20) of the Social Security Act before October 1, 1982 must amend their IV-D State plans during the quarter in which they implement the section in order to receive FFP for associated costs for that quarter beginning with the date of implementation. A preprinted State plan amendment will be issued upon publication of final regulations. In the interim, a State that desires to implement withholding of unemployment compensation should consult the Regional Office for instructions on amending their State plans to include this process.

    2. Interagency Agreement between IV-D Agency and SESA

      Section 2335 of P.L. 97-35 imposes requirements for withholding of unemployment compensation both on the IV-D agency and the SESA. In order for the required withholding to take place, these agencies must make arrangements for information exchanges, for payments of amounts withheld and for reimbursement of SESA costs. To ensure that the requirements of each program are covered adequately and to prevent costly misunderstandings about procedures, time frames and financial matters, the State IV-D agency and the SESA in a State must negotiate a written interagency agreement. For guidance in doing so, States may wish to refer to OCSE-IM-81-8 dated June 22, 1981. Although this Information Memorandum provides guidance in developing agreements between State agencies for the purpose of medical support enforcement, the suggested steps to be followed and the elements of a well-written agreement are applicable to any agreement. In addition, the Department of Labor has prepared the attached sample agreement dealing specifically with the withholding of unemployment compensation for payment of support. The sample agreement language and provisions are not required; they are intended to provide guidance only.

      To simplify and expedite negotiations between the two programs the State IV-D agency must enter into the agreement on behalf of any local IV-D agencies that administer the State's Child Support Enforcement program. Since both the State and local IV-D agencies will be bound by the agreement, the State IV-D agency must ensure that the needs and concerns of the local agencies are addressed. This requirement is not meant to limit in any way the transmittal of information or monies directly to local agencies, as permitted by the statute. The purpose of this requirement is to facilitate negotiations with the SESA and promote coordinated, cost-effective planning on the part of the IV-D program in the State.

    3. Periodic Determination of Whether an Individual Receiving Unemployment Compensation Owes Support

      The IV-D agency must determine periodically whether individuals receiving any State or Federal unemployment benefits owe support obligations which are being enforced by the IV-D agency. The interval at which these determinations will be made is left to the discretion of the IV-D agency. The determination is to be made based on information provided by the SESA in accordance with Section 508 of the Unemployment Compensation Act of 1976. Under this act, information required to be supplied to IV-D agencies upon request includes: (a) whether an individual is receiving, has received, or has applied for unemployment compensation and the amount of any compensation being received by the individual; (b) the most recent address of an individual; and (c) whether an individual has refused an offer of employment and, if so, a description of: the employment offered including terms, conditions and pay.

      It is not necessary for the IV-D agency to request information from the SESA on all IV-D eases at any given time. Depending upon the size of the caseload, case prioritization policies, and so forth, the IV-D agency may wish to limit the cases referred to the SESA for matching against the SESA's records. Since the statute refers specifically to withholding of unemployment compensation to enforce "obligations which are owed . . . but are not being met", it may be more practical for a IV-D agency to request SESA information only for delinquent cases, although the information is available under Section 508 for any IV-D case and for any IV-D related activity.

    4. Enforcement of Support Obligations Owed by Individuals Receiving Unemployment Compensation

      The IV-D agency is required to enforce support obligations owed by individuals receiving unemployment compensation based on enforcement criteria established bythe State. First, however, the IV-D agency must attempt to secure en agreement with the obligor to have an amount withheld from his or her unemployment benefits. The terms of the agreement should be based on the individual's ability to pay. If the individual signs an agreement, the SESA is entitled to receive a copy of it. If the SESA does not need a copy of each agreement, it will probably be more useful and less expensive to notify the SESA by manual or automated report. The agreement or report may include, but need not be limited to, the following information:

      • name of obligor

      • social security number of obligor

      • amount of arrearage owed

      • amount to be withheld from each check until arrearage is satisfied

      If the IV-D agency and the individual receiving unemployment compensation cannot reach an agreement which satisfies both parties, the IV-D agency may use a legal process to require the withholding of unemployment compensation. The applicable legal process is defined in section 462(e) of the Act as a writ, order, summons, or other result of a legal process in the nature of a garnishment and includes both court and administrative orders. We belive this definition is broad enough to encompass the pertinent legal processes in all States, since it does not require garnishment action per se, but permits legal action by "similar process". The decision to pursue the case via legal process should depend upon sufficient time being available for legal process to result in a withholding and the agency's determination of whether or not the individual possesses sufficient resources to warrant the additional action on the part of the IV-D agency. If, under legal process, an order for withholding is obtained, the SESA may be provided a copy of the order or may be provided with thesame type of information in report form as would be provided if agreement had been reached with the individual. In order to provide maximum flexibility to States with respect to information exchange, OCSE does not plan to impose specific requirements in this area.

      The statute at section 454 (20)(B) provides that the IV-D agency "shall enforce any . . . child support obligations which are owed by.. an individual but are not being met" through the withholding of unemployment compensation.

      OCSE interprets this language as permitting withholding to satisfy either current unmet obligations or arrearages that are owed. For AFDC cases, amounts collected must be treated first as payment on the current support obligation (as per 45 CFR 302.51(a)), if it is unmet, and any remainder must be applied to an arrearage. Incentive payments are also available on AFDC collections made via the withholding process.

    5. Reimbursement of the SESA's Incremental Administrative Costs

      The IV-D agency must reimburse the SESA for the administrative costs associated with the withholding of unemployment benefits for payment of support. Thefrequency and the amount of the reimbursement must be agreed to in writing by the State IV-D agency and the SESA. The amount of the reimbursement may not exceed the SESA's actual costs of providing services to the IV-D agency. This means that the SESA is to charge the IV-D agency only those actual incremental costs incurred withrespect to IV-D related activities and that the SESA's normal costs of doing business" are not to be absorbed by the IV-D agency.

      It is important that the IV-D agency ensure that costs are kept to a minimum by considering whether high cost items are necessary to the withholding process. The IV-D agency should not agree to pay for those items that it considers unnecessary. For example, the IV-D agency may find it unnecessary for the SESA to question each new applicant to determine whether he or she owes a support obligation that is being enforced by the IV-D agency. If this is the case, the IV-D agency should not agree to pay the SESA for such questioning. As a final measure, we urge the IV-D agency to periodically review the withholding process to identify high cost procedures that could be modified or eliminated by the IV-D agency directly or through renegotiation of the agreement with the SESA.

    6. Receipts to the Obligator

      The Department of Labor and OCSE believe that it is important to ensure that individuals whose unemployment compensation is withheld receive receipts on a periodic basis so that they are able to prove payment of support in the amount withheld. Providing receipts may be handled in various ways through the SESA or the IV-D agency, depending upon the arrangements already in place for providing receipts and the working procedures preferred by the two agencies.

      In some States, SESAs provide-check stubs to the claimants which show the amount of unemployment compensation paid and deductions taken from it. This process constitutes one acceptable method for giving receipts for payment of support. In some States, the IV-D agency bills absent parents for the support they owe. Often these bills contain statements of the individual's account indicating amounts paid for a given period. This type of billing statement provides a second acceptable method for providing receipts. If these or other routine methods of providing receipts are not used in a State, the IV-D agency must provide receipts to individuals upon request. If requested, receipts must be provided at least annually:


    1. Disclosure of Support Obligations by New Applicants for Unemployment Compensation

      Under Section 2335 of P.L. 97-35, the SESA must ask each new applicant for unemployment compensation to disclose whether he or she owes support obligations that are being enforced by the IV-D agency.

      The SESA and the IV-D agency in the same State may decide that it is more efficient and cost-effective to substitute a frequent cross-match of their respective case records for the SESA questioning of the applicant. This might be accomplished by forwarding a IV-D computer tape to the SESA which could be used in checking whether a new applicant for unemployment compensation owes support to the IV-D agency. This is permissible as long as it results in all applicants for unemployment compensation being quickly scecened to determine their status with respect to the IV-D program. Secondly, the agencies may decide that the SESA should take no withholding action based solely on the word of the applicant, without prior consultation with the IV-D agency. This would eliminate the potential problem of withholding from individuals who are not IV-D cases. If withholding is initiated on theword of the applicant, it does not preclude the IV-D agency from attempting to increase the amount withheld or from pursuing other means to collect the support owed. These modifications to the basic screening and withholding process are discretionary within a State and may be implemented if the agencies find them to be more appropriate and more Effective than the SESA's questioning of each applicant.

      A special situation arises when an individual applies for unemployment compensation in one State, but worked in another State. In these cases, the State where application is made is referred to as the "agent" State. The State where the person worked is known as the "liable" State. The latter is responsible for determining the applicant's eligibility for benefits and making benefit payments. In these SESA interstate cases, the agent SESA takes the application on the standard form IB-1. This form is being modified to include the following questions: "Are you required to make or do you owe child support payments? If yes, where? (City) (County), (State)." Upon completion of the 1B-1, the agent SESA forwards the form and any supporting documentation to the liable SESA. All subsequent dealings with the applicant, including eligibility determination and payment of unemployment compensation, are handled by the liable SESA. The liable SESA will communicate with the IV-D agency in its own State concerning applicants who have responded positively to the questions on support included on the IB-1. Similarly, any withholding of unemployment compensation will be paid to the IV-D agency in the liable SESA's own State.

    2. Withholding of Unemployment Compensation for Support Purposes upon Notification from the IV-D Agency

      Upon receipt of notification from the State or local IV-D agency in its State that an amount must be withheld from an individual's unemployment compensation, the SESA will initiate the withholding as quickly as possible. The SESA will pay any amounts withheld to the State or local IV-D agency in its State on an agreed-upon schedule and notify that IV-D agency of the amountwithheld from compensation for each individual, the total amount forwarded to the IV- D agency for the period, and any other information mutually determined to be necessary to the process. This information will enable the IV-D agency to apply the appropriate amount to each individual's account and to reconcile any discrepancies with respect to the total amount sent and received.

      Communication with the SESA concerning withholdings should come from the State or local IV-D agency in the SESA's own State. Similarly, if unemployment compensation has been withheld by a SESA in one State and that support payment belongs to a IV-D agency in another State, the SESA will forward the amount withheld to the IV-D agency in its own State. That IV-D agency is responsible for transmitting the payment to the IV-D agency in the State where it appropriately belongs.

    3. Agency

      The SESA shall receive reimbursement from the IV-D agency for the administrative costs attributable to the withholding of unemployment compensation for payment of support. Reimbursement shall be on a periodic basis and in an amount agreed to in writing by the two State agencies. The IV-D agency will be reimbursed 75 percent of its costs by OCSE under routine reimbursement procedures. As noted above, it is vitally important that the IV-D agency take steps to ensure that the procedures for withholding unemployment compensation are the most cost-effective possible.


REFERENCES: Section 2335 of P.L. 97-35, enacted on August 13, 1981 (see OCSE-IM-81-13, dated August 19, 1981).

INQUIRIES TO: OCSE Regional Representatives Deputy Director Office of Child Support Enforcement.