[Congressional Record Volume 143, Number 12 (Tuesday, February 4, 1997)]
[Extensions of Remarks]
[Page E157]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




[[Page E157]]



                ANOTHER STEP TO RESTORE POWER TO STATES

                                 ______
                                 

                         HON. WILLIAM M. THOMAS

                             of california

                    in the house of representatives

                       Tuesday, February 4, 1997

  Mr. THOMAS. Mr. Speaker, we need to take another step to restore 
power to States. The Department of Labor is saying California has to 
pay unemployment benefits to certain criminals being released from 
prison. That should be a matter States decide for themselves in 
choosing methods for reforming prisoners.
  The Department wants States like California to pay unemployment 
benefits to some prisoners because 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. Several hundred prisoners in California 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 has 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.
  Californian 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. Last year, 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 Californians either to 
pay out unemployment benefits to released prisoners or to eliminate a 
program that has been successful in helping criminals change their 
lives. 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.

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