Attachment No. 1 to UIPL 1136

DRAFT LEGISLATIVE LANGUAGE FOR STATE USE
IN IMPLEMENTING THE JAVA DECISION

Explanatory Statement

The accompanying text modifies pertinent subsections of sections 5 and 6 of the 1950 Manual of State Employment Security Legislation, copies of which were reissued and mailed to all States and regions with UIPL NO. 1078 on August 17, 1970. These modifications are intended to provide language States may wish to use in amending their laws to satisfy the requirement of section 303 (a)(1), as construed by the United States Supreme Court in its Java case opinion, that, regardless of the pendency of any appeal period or of any appeal, benefits are due and must be paid promptly when an initial determination allowing benefits to a claimant has been issued.

The Court construed section 303 (a)(1) as requiring also that the parties be afforded reasonable notice of the time and place of a predetermination factfinding hearing so that they have an opportunity to present to the claims examiner full information on the issues. As stated in UIPL No. 1126, no State needs to amend its law to apply predetermination procedures that meet this requirement. If a State wishes nonetheless to specifically amend its law to provide for such notice and opportunity to be heard, we shall be glad to provide technical assistance in drafting the amendment.

Procedural guides, now in preparation, will be issued shortly to assist States in making appropriate procedural revisions to fulfill this requirement. Such procedural guidelines, as indicated in UIPL No. 1126, will provide, in ordinary single-claimant, separation-issue cases for a predetermination hearing of the informal interview type and in cases involving complex issues of fact or law and multiple claimants for appropriate referral to the board of review for determination by the board (or if the board so directs, by an appeal tribunal), after a full and fair hearing.

Not all State laws provide the commissioner with authority to make such referrals to the board of review. Section 5 (d)(4), as contained in the 1950 Manual, limits such authority to cases arising under section 4(b)(6), the labor dispute disqualification provision. As revised in the accompanying Text, additional authority is provided to make such transfers in cases involving other sections of the law when such cases present difficult factual or legal questions and multiple claimants. As already indicated, although the Text provides for the transfer to be made to the board of review, the board may refer the case to an appeal tribunal for hearing and decision. Some States may wish to modify section 5 (d)(4) to provide the commissioner with authority to transfer the case to the appeal tribunal. This may be particularly appropriate in States where there is no independent board of review and the commissioner is the second-level administrative appeals authority.

Sections 5(f), 5(g)(6), and 6(i)(1) of the 1950 Manual are reproduced in the Text without change. They are included in the Text merely to aid the reader to see the effect of section 5(h)(1) which has been amended to implement the "payment when due" requirement that is stated in the Java case opinion. Section 6(e) has been modified only slightly from its 1950 Manual version, to clarify that an appeal tribunal decision may affirm, modify, or reverse a redetermination that has been appealed as well as an appealed determination.

The principal revisions made by the Text in the 1950 Manual draft language are in section 5(h).

Section 5(h)(1) contains a simple direction: When benefits are allowed by a determination, redetermination or decision on an appeal (at whatever level), the agency must follow that determination, redetermination or decision from the time it is issued and pay benefits promptly in accordance with it unless or until it is modified or reversed.l/ (The reference is to a later modification or reversal dealing with the issues presented by the first determination, redetermination or decision. Nothing here is intended to preclude a later denial of benefits for a later week by a determination, redetermination or decision that arises out of new facts presenting new issues).2/ When such a modification or reversal occurs, the agency shall apply the modifying or reversing redetermination or decision to weeks of unemployment that occur after its issuance unless and until that modifying or reversing redetermination or decision is itself modified or reversed.

Old paragraph (2) of section 5(h) has been deleted as no longer necessary. It provided that commencement of a proceeding for judicial review operated as a supersedeas or stay only if the board of review ordered it. This is not needed since section 5(h)(1) would now provide for payment of benefits in accordance with a board of review decision that allows benefits until the board's decision is reversed by a court decision.

Former section 5(h)(3) is renumbered to be section 5(h)(2) and is revised to refer to a redetermination as well as a determination allowing benefits that has been affirmed by an appeal tribunal or the board of review. It has been revised also to make clear that the effect of the second "affirmance" of a determination or decision that allows benefits is to require the prompt payment of the benefit award that has been affirmed without regard to whether any further appeal is filed or its outcome, if such further appeal is filed. The final clause, which has been slightly revised for clarification, qualifies this provision, however, and directs that nonetheless, if the final decision modifies or reverses the prior award so as to deny benefits, benefits shall not be paid for weeks of unemployment that are involved in the modification or reversal and begin after such modifying or reversing final decision.

The double affirmance clause is not required by section 303(a)(1). It serves an effective purpose in minimizing interruptions to the prompt payment of benefits. For example, if a determination allowing benefits is reversed by a redetermination and then is reinstated by a referee's decision, benefit payments will have been interrupted by the redetermination but, once the referee's decision has been issued, they will not be interrupted again unless there is a final reversal of the determination. There is some reason to consider omitting the final clause of this paragraph. The effect of such omission would be to make a second award of benefits, whether by an appeal tribunal or a board of review, a final decision with respect to benefit payments so that the only practical effect of any final reversal would be to noncharge the employer's account with any benefits paid that would not have been paid under the final decision.

1/ The Java case did not involve the withholding of benefit payments during the pendency of the period within which reconsideration may be requested nor during the pendency of the reconsideration. Nor did it involve the withholding of benefit payments during the period within which an appeal may be filed from a redetermination, from a decision of an appeal tribunal or from a decision of the board of review, nor during the pendency of any such an appeal. Thus, the court in the Java case did not consider - the withholding of benefit payments, nor did it specify procedural requirements, in any such circumstances. With respect to decisions at the administrative appeal level, notice and opportunity for a fair hearing are prerequisites. With respect to redeterminations it is reasonable to conclude that the court would require, before a redetermination affirming, modifying or reversing the initial determination, the same kind of predetermination factfinding hearing of which the parties had notice that it required before the initial determination. Consistently, it would appear that if a redetermination or the decision of an appeal tribunal or board of review allows benefits, such benefits are then due and must be paid promptly without regard to the pendency of any appeal period or appeal.

2/ Although the Court in the Java case did not consider specifically a denial of benefits for later weeks arising out of new facts presenting new issues, it is reasonable to assume that it would require at the very least the same type of predetermination factfinding hearing that is required by Java before the initial detemination is made.