UIPL 39-83 Attachment II

Text of Provisions on Short-Time Compensation in Section 194 of P.L. 97-248
Short-Time Compensation

Sec. 194.

(a)  It is the purpose of this section to assist States which provide partial unemployment benefits to individuals whose workweeks are reduced pursuant to an employer plan under which such reductions are made in lieu of temporary layoffs.

(b)(1)  The Secretary of Labor (hereinafter in this section referred to as the "Secretary") shall develop model legislative language which may be used by States in developing and enacting short-time compensation programs, and shall provide technical assistance to States to assist in developing, enacting, and implementing such short-time compensation program.

(b)(2)  The Secretary shall conduct a study or studies for purposes of evaluating the operation, costs, effect on the State insured rate of unemployment, and other effects of State short-time compensation programs developed pursuant to this section.

(b)(3)  This section shall be a three-year experimental provision, and the provisions of this section regarding guidelines shall terminate 3 years following the date of the enactment of this Act.

(b)(4)  States are encouraged to experiment in carrying out the purpose and intent of this section.  However to assure minimum uniformity, States are encouraged to consider requiring the provisions contained in subsections (c) and(d).

(c)  For purposes of this section, the term "short-time compensation program&qout; means a program under which

(1)  individuals whose workweeks have been reduced pursuant to a qualified employer plan by at least 10 per centum will be eligible for unemployment compensation;

(2)  the amount of unemployment compensation payable to any such individual shall be a pro rata portion of the unemployment compensation which would be payable to the individual if the individual were totally unemployed;

(3)  eligible employees may be eligible for short-time compensation or regular unemployment compensation, as needed; except that no employee shall be eligible for more than the maximum entitlement during any benefit year to which he or she would have been entitled for total unemployment, and no employee shall be eligible for short-time compensation for more than twenty-six weeks in any twelve-month period; and

(4)  eligible employees will not be expected to meet the availability for work or work search test requirements while collecting short-time compensation benefits, but shall be available for their normal workweek.

(d)  For purposes of subsection (c), the term "qualified employer plan" means a plan of an employer or of an employers' association which association is party to a collective bargaining agreement (hereinafter referred to as "employers' association") under which there is a reduction in the number of hours worked by employees rather than temporary layoffs if --

(1)  the employer's or employers' association's short-time compensation plan is approved by the State agency;

(2)   the employer or employers' association certifies to the State agency that the aggregate reduction in work hours pursuant to such plan is in lieu of temporary layoffs which would have affected at least 10 per centum of the employees in the unit or units to which the plan would apply and which would have resulted in an equivalent reduction of work hours;

(3)  during the previous four months the work force in the affected unit or units has not been reduced by temporary layoffs of more than 10 per centum;

(4)  the employer continues to provide health benefits, and retirement benefits under defined benefit pension plans (as defined in Section 3(35) of the Employee Retirement Income Security Act of 1974), to employees whose workweek is reduced under such plan as though their workweek had not been reduced; and

(5)  in the case of employees represented by an exclusive bargaining representive, that representative has consented to the plan.

The State agency shall review at least annually any qualified employer plan put into effect to assure that it continues to meet the requirements of this subsection and of any applicable State law.

(e)  Short-time compensation shall be charged in a manner consistent with the State law.

(f)  For purposes of this section, the term "State" includes the District of Columbia, the Commonwealth of Puerto Rico, and the Virgin Islands.

(g)(1)  The Secretary shall conduct a study or studies of State short-time compensation programs consulting with employee and employer representatives in developing criteria and guidelines to measure the following factors:

(A)  the impact of the program upon the unemployment trust fund, and a comparison with the estimated impact on the fund of layoffs which would have occurred but for the existence of the program;

(B)  the extent to which the program has protected and preserved the jobs of workers, with special emphasis on newly hired employees, minorities, and women;

(C)  the extent to which layoffs occur in the unit subsequent to initiation of the program and the impact of the program upon the entitlement to unemployment compensation of the employees;

(D)  where feasible, the effect of varying methods of administration;

(E)  the effect of short-time compensation on employers' State unemployment tax rates, including both users and nonusers of short-time compensation, on a State-by-State basis;

(F)  the effect of various State laws and practices under those laws on the retirement and health benefits of employees who are on short-time compensation programs;

(G)  a comparison of costs and benefits to employees, employers, and communities from use of short-time compensation and layoffs;

(I)  such other factors as may be appropriate.

(2)  Not later than October 1, 1985, the Secretary shall submit to the Congress and to the President a final report on the implementation of this section.  Such report shall contain an evaluation of short-time compensation programs and shall contain such recommendations as the Secretary deems advisable, including recommendations as to necessary changes in the statistical practices of the Department of Labor.