[Congressional Record Volume 142, Number 106 (Thursday, July 18, 1996)]
[Extensions of Remarks]
[Page E1317]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




       AN ADDITIONAL TOOL FOR TRYING TO REFORM CRIMINAL BEHAVIOR

                                 ______
                                 

                         HON. WILLIAM M. THOMAS

                             of california

                    in the house of representatives

                        Thursday, July 18, 1996

  Mr. THOMAS. Mr. Speaker, recent communications between the Department 
of Labor and California show we have another problem to correct in 
restoring power to the States. Bluntly, the Department is saying 
California has to pay unemployment benefits to certain criminals being 
released from prison.
  Current Federal law requires employers to pay Federal employment 
[FUTA] taxes on work performed by their employees. This includes prison 
inmates who work for private companies through innovative work programs 
established in several States, including California. Today, some 200 
people in California prisons are employed in jobs provided under 
agreements between the State and private businesses. However, FUTA 
taxes do not have to be paid for work by prisoners employed in prison 
operations such as the laundry or cabinet shop.
  Since FUTA taxes are paid on behalf of some prisoners, the U.S. 
Department of Labor ruled that these prisoners must be paid 
unemployment benefits upon their release from their job--essentially, 
when they are released from prison. Failure to comply is serious: 
California employers, for example, would lose tax credits worth $1.7 
billion for FUTA taxes they pay on other workers if the California 
program is disqualified.
  Why does Labor take this position? The Federal unemployment insurance 
program only permits denial of employment benefits in three cases: if 
the worker's income exceeds certain limits; the claim is fraudulent; or 
the employee was fired for misconduct. Since prisoners lose their jobs 
when paroled or released from prison, they do not fit the exceptions.
  California voters established the Joint Venture Program in 1990, 
creating a private work program for prison inmates. Criminals' wages 
are used to compensate victims, offset incarceration costs, and set-
aside funds--20 percent--for the inmate's support upon his or her 
release from prison. In 1996, California voters overwhelmingly passed 
an initiative (Proposition 194) that denies unemployment benefits to 
criminals participating in the Joint Venture Program.
  The Department of Labor decision would force California either to pay 
out unemployment benefits to released prisoners or to eliminate a 
program that has been successful in helping criminals transition back 
into the work force. Allowing employees to lose $1.7 billion in credits 
for taxes they pay on the services of ordinary working people is not an 
option, needless to say.
  Legislation I am introducing today would change the law to treat all 
prison inmates who participate in work programs the same: Their 
services would be exempt from the FUTA tax. This would effectively deny 
unemployment benefits to released prisoners and prohibit the Department 
of Labor from placing such a ridiculous requirement on the States. The 
bill's enactment would give States an additional tool to use in trying 
to reform criminal behavior and I hope my colleagues will agree to its 
adoption in the near future.

                          ____________________