Employment and Training Administration
Washington, D. C. 20210






March 4, 1992




March 31, 1994











for Regional Management




Definition of "Work" for Purposes of Section 3304(a)(7) of the Federal Unemployment Tax Act

  1. Purpose. To advise State agencies of the Department of Labor's interpretation of the term "work" in Section 3304(a)(7) of the Federal Unemployment Tax Act (FUTA).

  2. References. Section 3304(a)(7), FUTA; Draft Legislation to Implement the Employment Security Amendments of 1970 . . . H.R. 14705 ("1970 Draft Legislation"); and 29 CFR Part 785.

  3. Background. Section 3304(a)(7), FUTA, requires, as a condition of employers in a State receiving credit against the Federal unemployment tax, that:

    an individual who has received compensation during his benefit year is required to have had work since the beginning of such year in order to qualify for compensation in his next benefit year . . .

    This provision is commonly referred to as the "double-dip" provision as it prohibits an individual from collecting compensation in two successive benefit years when there has been only one separation from work. Questions continue to arise concerning the definition of "work" in Section 3304(a)(7), especially with several States changing to base periods which required the addition of a double dip provision. This UIPL is issued to restate the Department's position on what constitutes "work" for purposes of Section 3304(a)(7) and to provide additional guidance on "on-call" status as it relates to Section 3304(a)(7). Section 3304(a)(7) was added to the FUTA by P.L. 91-373, the Employment Security Amendments of 1970. The Senate committee report stated that:

    Payment of benefits in 2 successive benefit years following a single separation from work (the so-called "double dip") is a much criticized and illogical aspect of some State benefit formulas. It is made possible by provisions which, for administrative reasons, provide a lag between the end of the period used to measure a worker's past attachment to the labor force and wage credits for monetary entitlement--called the "base period"--and the period during which rights based on such wage credits may be used--called the "benefit year." If the lag is long or the qualifying wages needed for monetary entitlement are low, the wages or employment in the lag period may be enough to establish monetary entitlement in a new benefit year and a new period of benefits without the individual's having had any intervening employment. In such cases, the absence of a provision requiring employment subsequent to the beginning of a worker's first benefit year allows two periods of benefit payments based upon a single separation from employment. [S. Rep. No. 752, 91st Cong. 2d Sess. 21 (1970)]

    Although Section 3304(a)(7), FUTA, does not define "work," the committee report indicates that the intent of the provision is to remedy a situation where there is "the absence of a provision requiring employment" and, therefore, a second benefit year is established based on "a single separation from employment." Although the term "employment" is defined in Section 3306(c), FUTA, the Senate committee report makes it clear that States need not follow this definition of "covered" employment in defining "work" for purposes of Section 3304(a)(7):

    The bill does not specify how much work would be required or whether it need be in covered employment. The committee believes that these matters should be left to the judgment of the individual States. The amount of requalifying work specified in the present requalifying provisions of State laws is sometimes expressed in dollar terms and sometimes as a multiple of the weekly benefit amount. It is not always limited to covered employment, inasmuch as the requalifying requirement serves a different purpose from the basic monetary qualifying requirement. [S. Rep. No. 752, 91st Cong. 2d Sess. 21 (1970)]

    Section 3304(a)(7) was first discussed on pages 45 through 50 of the 1970 Draft Legislation. Although this UIPL does elaborate on positions taken in the 1970 Draft Legislation, it does not change or rescind any position taken in that issuance.

  4. Interpretive Position. 

    1. In General.  In accordance with the language of the law and the legislative history, the Department has interpreted "work" as meaning the performance of services for which remuneration is payable. (See page 47 of the 1970 Draft Legislation. Further, the "work" need not be in covered employment. Although the 1970 Draft Legislation does not specifically address self-employment, "work" need not be limited only to services performed in an employer-employee relationship; individuals in self-employment also may be considered to be performing "work." The "work" performed in self-employment must, however, be bona fide "work;" it does not, for example, include unremunerative work performed as a volunteer. In determining whether "work" is performed by an individual, the actual receipt of remuneration need not be controlling. For example, a door-to-door salesperson may perform services and never be remunerated. Section 3304(a)(7) applies only to an individual who received compensation "during his benefit year." Such an individual must perform services for remuneration after the beginning of the first benefit year as a condition of receiving compensation in a second benefit year. Remuneration received after the beginning of a benefit year for service performed prior to that year may not be used to meet the requalifying requirement. Disability benefit payments, vacation pay, separation pay or back pay may not be used to satisfy the "work" requirement because, although such pay may be considered remuneration, it is not payable for services performed. Because these payments will likely be reported as wages in a wage record state, the agency must take steps to assure that the wages reported represent remuneration for services performed after the beginning of the benefit year. (See pages 47 and 48 of the 1970 Draft Legislation.)

    2. On-call Status.  Individuals who receive remuneration while in "on-call" status have satisfied the requirement that "work" be performed. (On-call status also may be referred to as "stand-by" status. Payments received while in this status by individuals who must actually report to the job site may be referred to as "report-in" pay. See page 47 of the 1970 Draft Legislation.) For purposes of determining whether an individual has performed "work" within the meaning of Section 3304(a)(7), the Department will use guidelines found at 29 CFR Part 785 on the treatment of on-call status as hours worked for purposes of the Fair Labor Standards Act. The issue of "on-call" status has also been addressed by the United States Supreme Court. The judicial construction of on-call status is addressed in a Departmental Interpretive Bulletin at 29 CFR 785.7:

      . . . all hours are hours worked which the employee is required to give his employer, [and] that "an employer, if he chooses, may hire a man to do nothing, or to do nothing but wait for something to happen. Refraining from other activity often is a factor of instant readiness to serve, and idleness plays a part in all employments in a stand-by capacity. Readiness to serve may be hired, quite as much as service itself, and time spent lying in wait for threats to the safety of the employer's property may be treated by the parties as a benefit to the employer." (Armour & Co. v. Wantock, 323 U.S. 126 (1944); Skidmore v. Swift, 323 U.S. 134 (1944)).

      Other provisions of 29 CFR Part 785 contain further guidance. Section 785.14 states that whether waiting time is time worked "depends upon particular circumstances . . . . 'Facts may show that the employee was engaged to wait or they may show that he waited to be engaged.' ( Skidmore v. Swift, 323 U.S. 134 (1944))." The key is whether the employee is unable to use the time effectively for his own purposes, or whether the time belongs to and is controlled by the employer. (See Section 785.15) More specific guidance on on-call time is provided by Section 785.17:

      An employee who is required to remain on call on the employer's premises or so close thereto that he cannot use the time effectively for his own purposes is working while "on call". An employee who is not required to remain on the employer's premises but is merely required to leave word at his home or with company officials where he may be reached is not working while on call. (Armour & Co. v. Wantock, 323 U.S. 126 (1944); Handler v. Thrasher, 191 F.2d 120 (C.A. 10, 1951); Walling v. Bank of Waynesboro, Georgia, 61 F.Supp. 384 (S.D. Ga. 1945)).

      An employee need not necessarily wait on the employer's premises, but his or her freedom must be effectively curtailed in order for waiting time to be considered hours worked. Generally , a person who waits at home qualifies for on-call status only if the employer requires that he/she remain at home while waiting to engage in no other or only limited outside activities. If a worker is only required to leave a number where he/she can be reached, but is free to go shopping, engage in social activities and the like, he/she will not be in an on-call status.

  5. Action Required. State agency administrators are requested to review existing State law provisions and agency practices involving requalifying for compensation in a second benefit year to ensure that Federal law requirements as set forth in this program letter are met. Prompt action, including any necessary corrective legislation, should be taken to assure Federal requirements are met.

  6. Inquiries. Please direct inquiries to the appropriate Regional Office.