by April 30th, 2014 Posted in
Some Oklahomans who work full-time and lose their job unexpectedly are eligible to apply for unemployment insurance (UI). Created in 1935, the program provides workers with limited replacement income to help them survive while they look for another job. A bill just passed by the state legislature will likely exclude many newly jobless workers who would otherwise have been eligible for UI benefits. This post explains how the state’s unemployment program operates now, and how the new law could leave too many workers out in the cold.
Most workers in Oklahoma today are not eligible to file for unemployment benefits, even if they’re laid off or lose their job through no fault of their own. In fact, even among workers who are eligible for unemployment, most claimants who file for benefits (54.8 percent) are denied. As a result, fewer than 1 in 5 jobless workers in Oklahoma received weekly compensation between 2010 and 2012.
For the small share of newly jobless Oklahomans who are eligible and do receive compensation, unemployment is not a bonanza. Weekly compensation checks are small, replacing just over a third of jobless workers’ income on average ($250-275 a week). Perhaps unsurprisingly, the average worker leaves the program two months before their benefits expire. The program was designed to be a stop-gap measure that keeps a temporary crisis from becoming a devastating financial blow.
Despite how few unemployed participate in the program today, the legislature decided to make their numbers fewer. Originally, it was SB 1808 (by Rep. Mulready and Sen. Newberry) that sought more latitude for the state to deny workers unemployment benefits. But in early April, the same language was added to a different and larger omnibus bill HB 2505 (Rep. McDaniel and Sen. Newberry). The new eligibility restrictions center around the distinction between ‘voluntary’ and ‘involuntary’ unemployment.
Along with most other states, Oklahoma disqualifies those who are considered voluntarily unemployed because they were fired for what is termed “misconduct.” HB 2505 expands misconduct to include virtually any termination of employment by eliminating the requirement of a willful or intentional action as the grounds for discharge from the law’s definition of misconduct.
As a result, many workers will be disqualified when the cause for the firing does not justify treating the individual’s resulting unemployment as voluntary. Here are three examples to illustrate the difference. Only one of these workers has engaged in willful or intentional misconduct:
If Worker C applied for unemployment insurance in Oklahoma today, the claim would be denied because of the employee’s misconduct. Worker A and B can now be denied unemployment benefits on the same misconduct grounds as the employee who stopped showing up.
While UI programs are run by the states, the U.S. Department of Labor (USDOL) has broad authority to ensure compliance with federal law. It’s clear that the USDOL will see Oklahoma’s changes as out-of-bounds, advising the state that unemployment eligibility “must be determined based on whether the individual is at fault for being unemployed.” Yet it’s unclear how exactly they will be able to respond.
HB 2505 is now on its way to the governor for her signature to become law. It’s important to note that the press release announcing its passage does not even mention that the bill enacts fundamental changes to unemployment eligibility.
This move by the legislature relies upon the misapprehension that anyone who is validly discharged by an employer is undeserving of unemployment benefits. This is simply misguided. Unemployment benefits are not a penalty imposed upon employers for terminating workers. But employers power to discharge workers “at will” must be balanced by a reasonable safety net.
Denying benefits to workers who are not at fault for their unemployment is unwise. In addition to supporting individual families, the temporary benefits also support continued purchasing of goods and services by jobless workers from other businesses. Denying benefits to those who do not commit misconduct as traditionally defined will only punish those workers who are not at fault while shifting the costs of their unemployment to their families, social service agencies, charities, and faith-based organizations and other public assistance programs.