Employment and Training Administration
Washington, D. C. 20210






April 26, 1990




April 30, 1991











for Regional Management




Requirement that Unemployment Insurance (UI) Appeals Hearings be Simple, Speedy, and Inexpensive

  1. Purpose. To advise State Employment Security Agencies (SESAs) of the Department of Labor's (DOL) concerns regarding the increasing technicality and complexity of UI Appeals hearings and to provide draft legislation which may assist the SESAs in resolving this problem.

  2. References. Sections 302(a), 303(a)(1), and 303(a)(3) of the Social Security Act (SSA), and A Guide to Unemployment Insurance Benefit Appeals.

  3. Background. A number of courts and administrative bodies have issued decisions precluding an individual in a non-UI case from relitigating an issue previously decided in a UI case.  These decisions have been based on the doctrine of collateral estoppel, also called issue preclusion.  Also, some courts and administrative bodies have permitted findings of fact or decisions in a UI case to be used as evidence of a finding in subsequent non-UI proceedings.  Because the parties are concerned that the results of the UI hearing will either affect or be binding in subsequent non-UI proceedings, the UI hearing becomes more technical and complex, and therefore more costly and time consuming, than is needed for purposes of determining UI issues.  Because UI hearings are intended to be simple, speedy and inexpensive, such technical and complex proceedings could create issues under Federal law requirements.  This UIPL addresses this problem and provides draft language should a State determine that legislation is necessary to preclude conflicts with Federal law requirements.

  4. Definitions. The doctrine of collateral estoppel prevents a party from relitigating an issue which has already been decided in a prior action, generally between the same parties.  For example, an individual is dismissed from employment and files a claim for UI benefits.  The State agency denies benefits based on its determination that the individual was discharged for misconduct.  The individual appeals the denial of UI benefits, a hearing is held and the denial is affirmed.  The individual also files a civil rights action under Title VII of the United States Civil Rights Act of 1964.  The court hearing the civil rights action then rules that the issue of the reason for the individual's discharge has already been decided in another forum and therefore cannot be relitigated.

  5. Federal Law Requirements. Section 303(a)(1), SSA, requires that the UI law of a State provide for "[s]uch methods of administration . . . as are found by the Secretary of Labor to be reasonably calculated to insure full payment of unemployment compensation when due."  Section 303(a)(3), SSA, requires that a State law provide for "[o]ppotunity for a fair hearing before an impartial tribunal for individuals whose claims for unemployment compensation are denied."  These provisions have been interpreted to require that appeals hearings are to be simple and that a claimant should be able to understand the appeals procedures without the need of securing legal representation to protect his or her rights.  (See page 5 of A Guide to Unemployment Insurance Benefit Appeals.)  Because of the relatively small amount of money involved, it would place a financial burden on most claimants if a State's appeals hearings became so complex that claimants would have to secure legal representation to protect their rights to benefits.

    Therefore, to comply with the requirements of Sections 303(a)(1) and 303(a)(3), appeals hearings must be simple, speedy, and inexpensive.

    Finally, under Section 302(a), SSA, the Secretary of Labor is required to provide to States only such amounts as are necessary for the proper and efficient administration of the State's UI law.  In this regard, the funding formulas utilized for appeals functions contemplate only the informal hearings required by Section 303(a)(1) and (3).

  6. Effect on the UI Program. The UI appeals hearing will likely occur prior to other hearings concerning employer-employee disputes.  Therefore, participants in the UI hearing may be concerned about the effects of the UI hearing on subsequent non-UI litigation since collateral estoppel may be applied in a non-UI forum or findings of fact made by the hearing officer or the officer's decision may be introduced as evidence.  In anticipation of this, parties to a UI claim may feel obligated to assure that issues are addressed in far greater depth than is normally required for a UI hearing.  This results in complex and lengthy hearings in which both claimants and employers may require legal representation and which slow down the appeals process.  Consequently, formal and technical hearings may occur inconsistent with Sections 303(a)(1) and 303(a)(3), SSA.

    SESAs which find that appeal hearings have become more complex and technical than is required to determine a UI claim should take action to assure that UI hearings remain simple, speedy, and inexpensive.  One approach the SESAs may take is to seek legislation prohibiting the application of collateral estoppel to subsequent non-UI proceedings, or to prohibit the introduction as evidence of any appellate decision or finding of fact made by the UI agency.  Several States have already taken this approach.  To this end, the following draft language is provided:

      No finding of fact or law, judgement, conclusion, or final order made with respect to a claim for unemployment compensation under this Act may be conclusive or binding or used as evidence in any separate or subsequent action or proceeding in another forum, except proceedings under this Act, regardless of whether the prior action was between the same or related parties or involved the same facts.

  7. Action Required. SESAs are requested to examine their appeals process to determine whether UI hearings are speedy, inexpensive and informal.  If they are not, the State should take appropriate action.

  8. Inquiries. Questions should be directed to the appropriate Regional Office.