DIRECTIVE	:	UNEMPLOYMENT INSURANCE PROGRAM LETTER NO. 41-83
TO	:	ALL STATE EMPLOYMENT SECURITY AGENCIES
FROM	:	ROYAL S. DELLINGER Deputy Assistant Secretary
SUBJECT	:	Amendments Made by P.L. 98-21 (Social Security Act Amendments of 1983), Which Affect the Federal-State Unemployment Compensation Program

1. Purpose. To advise State agencies of certain amendments made by the subject act to Title III of the Social Security Act (SSA); the Federal-State Extended Unemployment Compensation Act of 1970 (EUCA); Sections 3303(f), 3304(a) and 3306(b) of the Federal Unemployment Tax Act (FUTA).

2. References. Sections 324 through 329, 515, and 521 through 524 of P.L. 98-21.

3. Background. The amendments in P.L. 98-21, approved on April 20, 1983, made numerous changes in provisions of the Federal law which impact on State unemployment compensation programs.  Several of the changes made to the Federal law by P.L. 98-21 are being handled in separate unemployment insurance program letters and will not be addressed in this letter.  The changes being treated separately include: 1) the provisions in Sections 501 through 505 of P.L. 98-21 which extended the Federal Supplemental Compensation Act (See General Administration Letter No. 2-83, Change 2), and 2) the provisions in Sections 511 through 514 which relate to the cap on FUTA tax credit reductions, the definition of average employer rates as used for purposes of those provisions, and the provision establishing the due dates for State payment of interest on Title XII loans (See UIPL No. 31-83, issued June 29, 1983).

   4. Amendments Made by Sections 515 and 521-524 of P.L. 98-21 The matters to be addressed herein include those changes made by Sections 515, and 521 through 524 respectively, which provide for:

   (a)   withholding certification of a State law for tax credits under Section 3304 (c) , FUTA, and administrative grants under Section 303(c), SSA, if a State fails to pay the interest required on advances under Title XII by the date such interest is required to be paid;

   (b)  revision of the optional between terms denial applicable to nonprofessional employees, the vacation or holiday recess denials and the denial allowed to be made applicable to educational service agencies by clauses (ii), (iii) and (iv) of Section 3304(a) (6) (A) so that as of April 1, 1984 each of those optional, provisions will be mandatory requirements for certification purposes;

   (c)  an optional denial pursuant to new clause (v) of Section 3304(a) (6) (A) , FUTA, that may be applied in the same circumstances as described in clauses (i) through (iv) to employees of a nonprofit organization or governmental entity who provide services to or on behalf of an educational institution;

   (d)  revision of the actively seeking work requirement applicable to extended benefit claimants under Section 202(a)(3)(A)(ii) , EUCA, in a manner which provides States with the option of applying the week by week availability requirement to such claimants rather than the 4 x 4 disqualification, if their failure to seek work is because they 1) are serving on jury duty, or 2) are hospitalized for treatment of an emergency or life-threatening condition;

   (e)  amendment of the withdrawal standard applicable to monies in a State UI trust fund under Section 3304 (a) (4) , FUTA, and Section 303(a)(5), SSA, to permit a State to deduct an amount from unemployment compensation otherwise payable to an individual and use that amount for health insurance premiums if the individual elected to have such deduction made under a health insurance program approved by the Secretary of Labor; and

   (f)  extension of the authorization permitting States to allow use of prior positive balances as a contributing employer for reimbursing benefit costs in the case of employers whose tax status is changed retroactively from that of an organization described under Section 501(c)(4) of the Internal Revenue Code of 1954 (IRC), to a 501(c)(3) organization if the organization elects the reimbursing method before the earlier of January 1, 1984 or the date 18 months after such election was first available to it under the State law.

4. Explanation of Changes Made by P.L. 98-21.  Attachment I provides explanations and interpretative guidelines for each of the above described amendments made by Sections 515 and 521 through 524 on a section by section basis as well as their effective dates.  Draft language for changes needed in State laws to satisfy the new requirements by reason of the amendments made by sections 521, 522 and 523 of P.L. 98-21 are provided in Attachment III.  (Note: Suggested language is not provided for the amendments in Section 515.)

   In addition to all of the above described provisions, Section 324 through 329 of P.L. 98-21 also amended the definition of "wages" in FUTA.  The applicability of those changes and the manner in which they will be interpreted are the responsibility of the Secretary of Treasury.  However, for the convenience of the States, we are providing the text of the changes made by those sections and a brief explanation in Attachment II to this UIPL.

5. Action Required. SESAs are requested to take the necessary action to assure consistency of State law with the Federal law requirements as amended by P.L. 98-21.

6. Inquiries. Inquiries should be directed to your regional offices.

7. Attachments. 

   1. Explanation and Interpretation of Amendments

   2. Explanation and Text of Amendments Made to Definition of Wages Under FUTA

   3. Suggested Draft Language for Implementation of Sections 521, 522 and 523 of P.L. 98-21