[Federal Register Volume 63, Number 183 (Tuesday, September 22, 1998)]
[Notices]
[Pages 50589-50603]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-25257]


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DEPARTMENT OF LABOR

Employment and Training Administration


Federal-State Unemployment Compensation Program: Unemployment 
Insurance Program Letter Interpreting Federal Unemployment Insurance 
Law

    The Employment and Training Administration interprets Federal law 
requirements pertaining to unemployment compensation (UC) as part of 
its role in the administration of the Federal-State UC program. These 
interpretations are issued in Unemployment Insurance Program Letters 
(UIPLs) to the State Employment Security Agencies. The UIPL described 
below is published in the Federal Register in order to inform the 
public.

UIPL No. 41-98

    UIPL No. 41-98 provides guidance on the prevailing conditions of 
work requirement found in Section 3304(a)(5)(B) of the Federal 
Unemployment Tax Act. Since it has been 30 years since the Department's 
last issuance on this provision, the Department is concerned that not 
all States remain aware of or properly apply it. Therefore, UIPL No. 
41-98 is being issued to advise States of the requirements of the 
prevailing conditions of work provision and to provide additional 
guidance. Except for the discussion of the contract of employment, UIPL 
No. 41-98 does not modify the Department's previous issuances on this 
matter, UCPL No. 130 and UIPL No. 984, which are also being published 
as attachments to UIPL No. 41-98.

    Dated: September 11, 1998.
Raymond L. Bramucci,
Assistant Secretary of Labor.

U. S. Department of Labor

Employment and Training Administration, Washington, D.C. 20210

CLASSIFICATION: UI

CORRESPONDENCE SYMBOL: TEUL

    DATE: August 17, 1998.

DIRECTIVE : UNEMPLOYMENT INSURANCE PROGRAM LETTER NO. 41-98
TO: ALL STATE EMPLOYMENT SECURITY AGENCIES
FROM: GRACE A. KILBANE, Director, Unemployment Insurance Service
SUBJECT: Application of the Prevailing Conditions of Work 
Requirement
RECISSIONS: None
EXPIRATION DATE: Continuing

    1. Purpose. To remind States of the requirements of the 
prevailing conditions of work provision of the Federal Unemployment 
Tax Act (FUTA) and to provide additional guidance.
    2. References. Section 3304(a)(5)(B), FUTA; Unemployment 
Compensation Program Letter (UCPL) No. 130; and Unemployment 
Insurance Program Letter (UIPL) No. 984.
    3. Background. Section 3304(a)(5)(B), FUTA, requires, as a 
condition of employers in a State receiving credit against the 
Federal unemployment tax, that unemployment compensation (UC) shall 
not be denied to any otherwise eligible individual for refusing to 
accept new work--
    If the wages, hours, or other conditions of the work offered are 
substantially less favorable to the individual than those prevailing 
for similar work in the locality; \1\

    \1\ Two other requirements exist in Section 3304(b)(5), FUTA: UC 
may not be denied for refusing new work if the position offered is 
vacant due directly to a strike, lockout or other labor dispute or 
if ``as a condition of being employed the individual would be 
required to join a company union or to resign from or refrain from 
joining any bona fide labor organization.''
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    The Department previously issued guidance on the prevailing 
conditions requirement in 1947 in UCPL 130 \2\ and in 1968 in UIPL 
No. 984. Although both issuances remain in effect, the Department is 
concerned that, because they were issued a long time ago, not all 
States remain aware of them or properly apply them. This concern 
arises from several training sessions and conferences where the 
prevailing conditions requirement was discussed. The Department also 
learned of a State-conducted survey on the prevailing conditions 
requirement which indicated that many States were not examining 
fringe benefits. When the Advisory Council on Unemployment 
Compensation queried States on their eligibility provisions, it 
notably did not ask about the prevailing conditions requirement

[[Page 50590]]

and only a few States mentioned that requirement in their responses. 
Also, in the 30 years since the most recent UIPL was issued, the 
labor market has undergone significant changes, notably in the 
increase in temporary workers and the importance of fringe benefits. 
Therefore, this UIPL is being issued.
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    \2\ UCPL 130 was later incorporated in the Department's Benefit 
Series, 1-BP-1, BSSUI, September 1950.
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    Section 4 of this UIPL offers a brief summary of UCPL 130 and 
UIPL 984 (both attached). It also emphasizes that the prevailing 
conditions requirement applies to certain voluntary quits and 
clarifies UIPL 984's discussion of a ``contract of employment.'' 
Section 5 discusses one aspect of adjudicating prevailing conditions 
issues. Section 6 addresses a change in the labor market--the 
increase in temporary work--and its relation to the prevailing 
conditions requirement. Except for the discussion of the contract of 
employment, this UIPL does not modify UCPL 130 or UIPL 984, both of 
which remain in effect.
    This UIPL contains the minimum requirements States must meet to 
conform with the prevailing conditions requirement. Nothing 
prohibits States from interpreting State law provisions implementing 
the prevailing conditions requirement in a manner more favorable to 
the individual worker.
    4. Discussion.
    a. In General. To determine if the offered work is suitable, 
States conduct a two-tiered analysis. First, the work must be 
suitable to the individual considering his or her previous wage and 
skill levels. Whether the work is suitable under this test is 
generally a matter of State law. \3\ Second, the work must meet the 
requirements of Section 3304(a)(5)(B), including the ``prevailing 
conditions of work'' requirement. As discussed below, the prevailing 
conditions requirement applies not only to refusals of work, but 
also to separations from employment involving a refusal of ``new 
work.'' It does not matter why the individual refused new work not 
meeting the prevailing conditions requirement; if the work does not 
meet the prevailing conditions requirement, compensation may not be 
denied.
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    \3\ The exception is for extended benefits where ``suitable 
work'' must meet the requirements of Section 202(a)(3)(C) of the 
Federal-State Extended Unemployment Compensation Act.
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    According to UIPL 984, the prevailing conditions requirement is 
designed to assure that an individual cannot lose rights to 
compensation because of a refusal of substandard work. Also 
according to UIPL 984, the purpose of the requirement is to prevent, 
among other things, depressing wage rates or other working 
conditions to a point substantially below those prevailing for 
similar work in the locality. The provision requires a liberal 
construction to effectuate its purpose.
    b. Definition of New Work. The prevailing conditions of work 
requirement applies whenever an offer of ``new work'' is refused. 
Under UIPL 984, ``new work'' includes:
    (1) An offer of work to an individual by an employer with whom 
the worker has never had a contract of employment,
    (2) An offer of reemployment to an individual by a previous 
employer with whom the individual does not have a contract of 
employment at the time the offer is made, and
    (3) An offer by an individual's present employer of:
    (a) Different duties from those the individual has agreed to 
perform in the existing contract of employment; or
    (b) Different terms or conditions of employment from those in 
the existing contract.\4\
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    \4\ The basis for this position is discussed in UIPL 984.
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    UIPL 984 further provides that ``an attempted change in the 
duties, terms, or conditions of the work, not authorized by the 
existing employment contract, is in effect a termination of the 
existing contract and the offer of a new contract.'' (Emphasis 
added.) UIPL 984 did not, however, recognize that, if an employer 
requires a contract providing for constantly changing conditions, 
then the prevailing conditions requirement would be nullified. A 
common-sense understanding of the term ``new work'' includes 
performing different work, even if the employment contract provides 
for performing such different work. Further, by accepting this as a 
condition of obtaining employment, the individual would, in effect, 
be forced to waive the protections under the prevailing conditions 
requirement as a condition of accepting a job. For these reasons, 
UIPL 984 is supplemented by the following: No contract granting the 
employer the right to change working conditions may act as a bar to 
determining that ``new work'' exists.
    A refusal of new work may occur when the individual is already 
unemployed or it may be the cause of an individual's separation from 
employment. When the refusal is the cause of an individual's 
unemployment, States must assure that issues adjudicated as 
``voluntary quits'' under State law are also adjudicated, when 
appropriate, under the prevailing conditions of work requirement. An 
individual may not be disqualified for voluntarily quitting or for 
refusing an offer of otherwise suitable work when the new work does 
not meet the prevailing conditions of work in the locality.
    c. When States Must Investigate Prevailing Conditions. The State 
has an affirmative duty to assure an offer of new work meets the 
prevailing conditions requirement before denying UC if:
    (1) The individual specifically raises the issue,
    (2) The individual objects on any grounds to the suitability of 
wages, hours, or other offered conditions of new work, or
    (3) Facts appear at any stage of the administrative proceedings 
which put the agency or hearing officer on notice that the 
conditions of the new work might be substantially less favorable to 
the individual than those prevailing for similar work in the 
locality.
    To conduct a prevailing conditions inquiry, States must 
determine what constitutes ``similar work'' and ``prevailing wages, 
hours, or other conditions,'' and whether the offered work is 
``substantially less favorable'' to the particular claimant than the 
prevailing wages, hours, or conditions of similar work in the 
locality.
    d. Similar Work. Under UCPL 130, similarity of work is 
determined by examining the ``operations performed, the skill, 
ability, and knowledge required, and responsibilities involved.'' 
States should not rely on job titles alone, which are sometimes 
misleading. In some occupations the similarity of the work cuts 
across industry lines. (For example, many accounting functions are 
similar regardless of the industry.) The nature of the services 
within an occupation may vary depending on the degree of skill and 
knowledge required. UCPL 130 continues--

    ``[s]imilar work'' is basically a common sense test * * *. On 
the one hand, the comparison should not be so broad as to result, 
for example, in the finding of a prevailing wage which bears no 
relation to those generally paid for some of the kinds of work being 
compared. On the other hand, the distinctions should not be so fine 
as to leave no basis for comparison with other work done in the 
locality * * *.

    The UCPL goes on to say that the question of what is similar 
work should not be determined on the basis of what constitutes 
conditions of work such as the hours of employment, the permanency 
of the work, unionization, or benefits, since such factors beg the 
question at issue: what is ``similar work?'' Rather, the 
determination of what constitutes similar work will be made on the 
basis of the similarity of the operations performed, the skill, 
ability and knowledge required, and the responsibilities involved.
    The determination of similar work applies to work performed in 
the ``locality''. Under UCPL 130, the locality consists of work in 
the competitive labor market area in which the conditions of work 
offered by an employer affect the conditions offered for similar 
work by other employers because they draw upon the same labor 
supply. If no similar work exists in the locality, the State may, 
but is not required to, examine work outside the competitive labor 
market.
    e. Prevailing Wages, Hours and Conditions of Employment. Once 
similar work is identified for the locality, the State must focus on 
what wages or hours are most prevalent and what conditions are most 
common for similar work in the locality.
    Under UCPL 130, the phrase ``conditions of work'' refers to the 
express and implied provisions of the employment agreement and the 
physical conditions under which the work is performed, as well as 
conditions that arise at work as a result of laws and regulations, 
such as coverage for workers' compensation. The phrase ``conditions 
of work'' encompasses fringe benefits such as life and group health 
insurance; paid sick, vacation, and annual leave; provisions for 
leaves of absence and holiday leave; pensions, annuities and 
retirement provisions; and severance pay. It also en-compasses job 
security and reemployment rights; training and promotion policies; 
wage guarantees; unionization; grievance procedures; work rules, 
including health and safety rules; medical and welfare programs; 
physical conditions such as heat, light and ventilation; shifts of 
employment; and permanency of work.
    States may not disregard any of these factors when investigating 
a ``prevailing

[[Page 50591]]

conditions'' issue. An individual may not be denied UC for refusal 
of work if the wages, hours, or any other material condition or 
combination of conditions of the work offered is substantially less 
favorable to the individual than those prevailing in the locality 
for similar work.
    f. Substantially Less Favorable to the Individual. UCPL 130 
describes the language ``substantially less favorable to the 
individual'' as presenting a definite but not inflexible standard 
based on the conditions under which the greatest number of employees 
in an occupation are working in the locality. It does not preclude 
the denial of benefits because of the existence of minor or purely 
technical differences that would not undermine the existing labor 
market conditions or would not have an appreciable adverse effect on 
the individual. In borderline cases where it is not clear whether 
the difference is material or the facts cannot be precisely 
determined, the general rule of liberal interpretation of remedial 
legislation indicates that the claimant should be given the benefit 
of the doubt.
    In the prevailing conditions context, the question is whether 
any material condition or combination of conditions render the work 
substantially less favorable to the worker than similar work in the 
locality. Factors to be considered are the actual conditions in 
question, the extent of difference between the offered work and 
similar work, and the effect such differences have on the worker. 
When conditions can be converted into a monetary value, these can be 
compared as part of the wage package or wage rate. The value to the 
worker of health insurance, pension, paid vacations, and holidays, 
for example, is readily ascertainable and provides an objective 
basis for comparing the conditions of employment and determining the 
prevailing labor standards and thus the suitability of the offered 
work.
    5. Adjudicating a Prevailing Conditions Issue. Before an 
individual is disqualified from the receipt of UC due to a refusal 
of suitable work, the State must determine:
    (1) That there was a bona fide offer of work;
    (2) That, under State law, the work is suitable to the 
individual in terms of the individual's previous wage and skill 
levels;
    (3) That the wages, hours, and other conditions of the work were 
not substantially less favorable to the individual than those 
prevailing in the locality; and,
    (4) That, under State law, there was not good cause for refusing 
the offer.
    The information needed to determine items (1), (2) and (4) is 
usually readily available. As a result, the State may be able to 
decide that an individual is eligible without adjudicating the often 
time-consuming prevailing conditions issue. For example, if the job 
offer was not bona fide, the work was not reasonably suitable to the 
individual, or there was good cause for refusing work, then there is 
no need to adjudicate prevailing conditions issues. Conversely, if 
the State determines the individual would be ineligible under any of 
items (1), (2) or (4), then it must adjudicate any prevailing 
conditions issue before denying the individual.
    Similarly, when the refusal of an offer of new work involves the 
application of a State's voluntary quit provisions, there is no need 
to adjudicate a prevailing conditions issue when the individual is 
determined to be otherwise eligible. However, the State must 
adjudicate any prevailing conditions issue before denying the 
individual.
    6. Temporary Work. Since UCPL 130 and UIPL 984 were issued, the 
use of temporary or contingent workers has greatly expanded. One of 
the incentives for employers to use temporary workers is that these 
workers reduce employer costs since they often do not enjoy the 
wages, hours, and other conditions enjoyed by their permanent 
counterparts. Temporary workers may be ineligible for fringe 
benefits and they may not be trained for higher-skilled jobs. By 
avoiding the costs associated with permanent workers, employers 
could be depressing precisely those factors considered ``prevailing 
conditions'' within the FUTA labor standards: fringe benefits, 
health insurance, promotion policies, etc.
    Just as it applies to other refusals of work, the prevailing 
conditions requirement applies to refusals of offers of temporary 
work. The fact that the work is temporary should generally be 
sufficient to trigger a prevailing conditions inquiry. Also, as 
noted in item 4.b., ``new work'' may not be limited by an employment 
contract which grants the employer the right to change employment 
conditions. Therefore, a refusal of temporary work in the form of a 
new assignment from a temporary help firm is also subject to the 
prevailing conditions requirement.
    As noted in item 4.d., what constitutes similar work is not 
determined on the basis of the conditions of work such as the hours 
of employment, the permanency of the work, or benefits. (These 
factors are considered only after the question of similar work has 
been decided.) Accordingly, temporary work should not be compared 
only to similar temporary work. Instead, it must be compared with 
all work, temporary and permanent, in a similar occupational 
category.
    Temporary work is not per se unsuitable under the prevailing 
conditions requirement. If, for example, the norm for a particular 
occupation in a locality is temporary work, then temporary work is 
the prevailing condition of such work. As another example, when 
temporary help firms are involved, an individual so desiring may 
work continuously. The State must collect the necessary facts to 
determine the specifics in each case.
    Also, the short-term duration of temporary work may be a 
voluntary or favorable condition for some individuals. If the State 
establishes through fact finding that this is the case for an 
individual, than the work offered is ``not less favorable to the 
individual'' than the work prevailing in the locality.
    7. Action. Appropriate staff, including higher and lower 
appellate authorities, should be provided with copies of this UIPL. 
Action should be taken to assure that the prevailing conditions 
requirement is applied as described in this UIPL, UIPL 984 and UCPL 
130.
    8. Inquiries. Please direct inquiries to the appropriate 
Regional Office.

In Reply Refer to File No. 13:AS:I

Federal Security Agency, Social Security Administration, Washington 25, 
D.C.

Bureau of Employment Security

January 6, 1947.

Unemployment Compensation Program Letter No. 130

TO: ALL STATE EMPLOYMENT SECURITY AGENCIES

Principles Underlying the Prevailing Conditions of Work Standard

    The attached statement of ``Principles Underlying the Prevailing 
Conditions of Work Standard'' is an offshoot of the series of 
statements on the principles underlying the major disqualifications 
which the Bureau has issued. The most recent, ``Principles 
Underlying Labor-Dispute Disqualification,'' was sent to you in 
Unemployment Compensation Program Letter No. 124. The others were 
sent with Unemployment Compensation Program Letters Nos. 101, 103, 
and 107.
    In ``Principles Underlying the Suitable-Work Disqualification'' 
there is a concise discussion of the prevailing wage standard, pages 
7-11. The attached statement is a more extended exploration of the 
same field. Throughout the discussion, the interpretations, the 
applications of the law, and the suggested solutions to problems are 
all based on labor-market patterns, common usage of terms by 
employers and labor, and upon the administrative need for short, 
simple methods. Whereas ``Principles Underlying the Suitable-Work 
Disqualification'' stops short of suggesting definite practical 
techniques, the present statement tries to reach solutions which 
will be equally applicable at the local office and at the appeal 
levels.
    The great need in this field is for usable wage information. In 
the attached statement, we have suggested a few sources. We should 
like to pass on to other State agencies helpful techniques which you 
might be able to send us for use in developing sources of data and 
using such data. We are greatly interested in receiving not only 
such devices and methods as you have found valuable, but any 
comments, criticisms, and suggestions you may have concerning the 
attached statement. We are here merely opening up a field that poses 
both technical and administrative difficulties. It is only by 
pooling our mutual thinking that we can hope to overcome those 
difficulties.
    We are sending extra copies of this letter and the attachment 
for distribution to the appeals and claims personnel and to other 
interested personnel. A limited number of additional copies are 
available upon request.

      Sincerely yours,
R. G. Wagenet,
Director.

[[Page 50592]]



                                                                        
                                                                        
                                                                        
Index entries:                                                          
Disqualifications                                                       
    Refusal of suitable work                                            
        Prevailing conditions of work          UC 130 1/6/47            
         standard.                                                      
Eligibility                                                             
    Prevailing conditions of work standard...  UC 130 1/6/47            
Prevailaing conditions of work standard......  UC 130 1/6/47            
                                                                        

Principles Underlying the Prevailing Conditions of Work Standard

Preface

    The following study of the prevailing conditions of work 
provisions in the State unemployment compensation acts was prepared 
by the technical staff of the Bureau of Employment Security. It 
discusses the interpretation of these provisions in the State Acts 
and presents the views which the Interpretation Service Section of 
the Bureau believes most reasonable.
    In the final analysis, the interpretation of the prevailing 
conditions of work provisions in the State Acts, if they are to be 
consistent with the corresponding provisions in the Internal Revenue 
Code, depends on the meaning of the requirement in section 1603 
(a)(5)(B) of the Internal Revenue Code, as amended. The specific 
meaning of the requirement in the Internal Revenue Code is for the 
determination of the Federal Security Agency. This statement is an 
effort by the Bureau of Employment Security to assist the State 
agencies in their administration of the prevailing conditions of 
work provisions, which have always presented many difficult 
problems.

Principles Underlying the Prevailing Conditions of Work Standard

                            Table of Contents                           
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                                                                 Page   
------------------------------------------------------------------------
Introduction                                                           1
    General Benefit Provisions.............................            1
    Mandatory Labor Standards..............................            2
    Relation to General Benefit Provisions.................            2
    Purpose of the Standards...............................            3
    Order of Discussion....................................            3
Similar Work                                                           4
    Industry Relationships.................................            4
    Skill Grade............................................            4
    Basis of Determination.................................            5
    Sources of Information.................................            5
Locality                                                               6
    Arbitrary Definitions..................................            6
    Competitive Labor Market Area..........................            7
    Basic Considerations...................................            7
    Urban Occupations......................................            7
    Interurban and Rural Occupations.......................            8
    Distance to Work.......................................            8
    Determination and Sources of Information...............            9
Prevailing                                                             9
    Meaning................................................            9
    Number of Employers vs. Number of Employees............           10
    Methods of Determination...............................           11
        The Mode...........................................           11
        The Average........................................           12
        The Use of Class Intervals.........................           12
    Sources of Information.................................           13
Substantially Less Favorable                                          14
    Purpose................................................           14
    Effect.................................................           14
    Application............................................           14
    Substandard Employment.................................           15
Wages, Hours, or Other Conditions..........................           16
    Wages..................................................           16
        Wages vs. Wage Rates...............................           16
        Factors Affecting Earnings.........................           16
        Basis of Comparison................................           16
    Basis of Determination.................................           17
    Other Considerations...................................           18
    Customary Industrial Practices.........................           18
    Temporary or Seasonal Fluctuations.....................           19
    Progressive Wage Scales................................           19
    Method of Wage Payment.................................           20
Hours......................................................           21
    Weekly Hours of Work...................................           21
    Temporary or Seasonal Fluctuations.....................           21
    Arrangement of Hours...................................           22
    Other Factors..........................................           23
Other Conditions of Work...................................           23

[[Page 50593]]

                                                                        
    In General.............................................           23
    In Particular Occupations..............................           24
    Varying Importance.....................................           24
    Basis of Determination.................................           25
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Principles Underlying the Prevailing Conditions of Work Standard

Introduction

    All of the State unemployment compensation acts provide that 
benefits shall not be denied an otherwise eligible individual for 
refusing to accept new work ``if the wages, hours, or other 
conditions of the work are substantially less favorable to the 
individual than those prevailing for similar work in the locality.'' 
This provision in the unemployment compensation acts is one of the 
most difficult to administer. Its application can best be understood 
in relation to the other benefit provisions in the State acts.

General Benefit Provisions

    In order to be eligible for benefits under the State acts a 
claimant must meet the requirements of the law. Among other things 
he must be able to work and available for work; that is, he must be 
currently in the labor market. If he does not stand ready, willing, 
and able to accept suitable work during the week for which he has 
filed claim, he is ineligible for benefits.
    In addition, though eligible, the worker may be subject to 
denial of benefits if his unemployment is due to a labor dispute, if 
he was discharged for misconduct connected with the work, or if he 
left his work voluntarily or has refused suitable work without good 
cause. Denial of benefits in such cases follows on the theory that 
the worker's unemployment is not due to a lack of suitable job 
opportunities.
    These disqualifying provisions are in the nature of exceptions 
to the general remedial purpose of the acts. They deny benefits only 
if the claimant's action falls directly within the limits of the 
exception when all the facts and circumstances are considered. Under 
most State laws, for example, the claimant is subject to denial of 
benefits for refusing work only if the work was suitable and he 
refused it without good cause. Moreover, in determining whether the 
work was suitable for the claimant, most of the State acts 
specifically provide for consideration of the degree of risk 
involved to his health, safety, and morals; his physical fitness and 
prior training; his experience and prior earnings; the length of his 
unemployment and prospects of securing local work in his customary 
occupation; and the distance of the work from his residence.
    The law does not specify the exact weight to be given these and 
any other considerations which may be relevant to the determination 
because whether a job is suitable for a particular worker and 
whether he had good cause for refusing it can only be determined on 
the basis of the facts in the case. Thus, the actual determination 
of whether a claimant is subject to disqualification for refusal of 
suitable work without good cause is left to the discretion of those 
charged with the administration of the act. The same is true of the 
availability provision and the other general disqualification 
provisions in the State acts.

Mandatory Labor Standards

    As mandatory minimum standards, however, all of the State 
unemployment compensation laws in conformity with section 1603(a)(5) 
of the Internal Revenue Code, as amended, provide that an otherwise 
eligible individual shall not be denied benefits for refusing new 
work:
    (A) If the position offered is vacant due directly to a strike, 
lockout or other labor dispute;
    (B) If the wages, hours, or other conditions of the work offered 
are substantially less favorable to the individual than those 
prevailing for similar work in the locality; or
    (C) If as a condition of being employed the individual would be 
required to join a company union or to resign or refrain from 
joining any bona fide labor organization.
    These requirements have been extended to all refusals of work in 
most of the State acts by providing that ``notwithstanding any other 
provisions of this Act, no work shall be deemed suitable and 
benefits shall not be denied under this Act to any otherwise 
eligible individual for refusing to accept new work'' unless it 
meets these three conditions. Clearly, ``no work'' is broader than 
``new work'' and claimants are not subject to denial of benefits for 
refusing a job which does not meet any one of the three conditions 
under such a provision. Under some laws, the three labor standards 
requirements and the general criteria for determining whether work 
is suitable also apply to the determination of whether the claimant 
is subject to denial of benefits for voluntarily leaving work 
without good cause.

Relation to General Benefit Provisions

    Inasmuch as the labor standards provisions are mandatory, they 
impose a duty on those administering the State act to assure 
themselves that the work offered meets these minimum standards 
before denying the claimant benefits for refusing work, regardless 
of whether he raises the issue. Inasmuch as they are minimum 
standards, they apply to all denials of benefits for refusal of 
offers of or referrals to new work regardless of his reasons for 
refusing the job.\1\ If the job is vacant as a direct result of a 
labor dispute it does not matter, for example, whether the claimant 
refused it on principle, because he was afraid of bodily harm in 
crossing the picket line, or because the employer wanted him to 
start work on Friday, the 13th. He is not subject to denial of 
benefits under the suitable work disqualification in any case. 
Neither may he be held ineligible for benefits because he is 
unwilling to accept work which does not meet these three minimum 
conditions. For example, a punch press operator who is unwilling to 
accept less than $.80 an hour may not be held ineligible for that 
reason if lower wages would be substantially less favorable than 
those prevailing in the locality for such work.
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    \1\ Similarly, as in most States, where they are not limited to 
new work, the labor standards requirements apply to all denials of 
benefits for refusal of offers or referrals to any work by an 
otherwise eligible individual, regardless of whether he raises the 
issue or of his reasons for refusing the job.
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    The labor standards provisions relate primarily to the 
conditions on the job as compared with conditions in like jobs and 
the manner in which they would affect the claimant. The availability 
and suitable work provisions, on the other hand, turn primarily on 
the nature of the work and the claimant's qualifications, 
circumstances, and prospects. Thus work which meets the labor 
standards provisions may not satisfy the suitable work criteria and 
may not be work which the claimant need stand ready to accept. For 
example, a job as stenographer though it meets the labor standards 
requirements is not suitable for a file clerk who cannot type and 
take shorthand. Similarly, a job as a cook's helper which pays 
prevailing wages for such work is not suitable for an assistant chef 
who has been earning $60 a week and has prospects of earning as much 
again. Unless the work satisfies both the suitable work criteria and 
the labor standards requirements, the claimant is not subject to 
disqualification for refusing it and is not ineligible for benefits 
if he is available for a substantial amount of other work which is 
suitable for him.

Purpose of the Standards

    Of the three labor standards requirements, the first, which 
prevents denial of benefits for refusal of work if the job offered 
is vacant due directly to a labor dispute, was designed to preserve 
the neutrality of the State agency in labor disputes. The third, 
which prevents denial of benefits if the worker as a condition of 
being employed is required to join a company union or resign from or 
refrain from joining a bona fide labor organization, was designed to 
deter any effort to use unemployment compensation to impede or 
destroy labor organizations. The second, which prevents denial of 
benefits if the wages, hours, or other conditions are substantially 
less favorable to the individual than those prevailing for similar 
work in the locality, was designed to prevent the unemployment 
compensation system from

[[Page 50594]]

exerting downward pressure on existing labor standards. It was not 
intended to increase wages or improve the conditions under which 
workers are employed, but to prevent any compulsion upon workers, 
through denial of benefits, to accept work under less favorable 
conditions than those generally to be obtained in the locality for 
such work.

Order of Discussion

    It is with this second labor standard requirement that we are 
concerned in the succeeding discussion. The key words and phrases in 
this requirement are: ``similar work,'' ``locality,'' 
``prevailing,'' ``substantially less favorable to the individual,'' 
and ``wages, hours or other conditions of work.'' The interpretation 
given these phrases and the manner in which they are applied in each 
case determine whether the purpose intended will be achieved. Each 
of these words and phrases will be discussed in turn. Inasmuch as 
the requirement is intended to reflect labor market conditions, 
their interpretation should be based on existing labor market 
patterns and usage and they will be considered in that light.

Similar Work

    Similarity of work can best be judged on the basis customarily 
used by employers and employees as a result of industrial 
experience: by occupation and grade of skill. As used in prior 
legislation, ``similar work'' has in fact been held to mean work in 
the same trade or occupation. Superficially this would seem to mean 
that a job is to be compared with others known by the same title.
    However, job titles are sometimes misleading. Different 
occupation and grade designations are often used in different 
establishments for the same work. Conversely, the same titles are 
sometimes used for different kinds of work. The actual comparison of 
jobs must therefore be made on the basis of the similarity of the 
work done without regard to title: that is, the similarity of the 
operations perforated, the skill, ability and knowledge required, 
and the responsibilities involved.

Industry Relationships

    In some occupations the similarity of work cuts across industry 
lines and the differences in the manner in which the work is done 
are relatively minor. Bookkeepers and boiler operators, for example, 
are likely to do much the same kind of work whether employed by a 
grain elevator company, a manufacturing concern or a retail clothing 
establishment. Either would be hired by establishments in almost any 
industry providing they had the necessary experience with the 
particular bookkeeping system or the heating plant in use and the 
required degree of skill. This essential similarity of work which 
cuts across industrial lines is generally true of most office, 
janitorial and clerical occupations and to some degree of unskilled 
common labor.
    In most occupations, on the other hand, there is likely to be 
considerable variation in the work done in different industries, in 
parts of industries or even in particular types of establishment 
within an industry. There are marked differences, for example, in 
the work of a glazier in the construction industry and one in the 
automobile or the furniture industry; and within the furniture 
industry between the work of a glazier on wooden furniture and one 
who works on metal furniture. Similar differences exist in the 
nature of the work done by a waiter in a ``greasy spoon'' and one in 
a hotel dining room and between the work of a dress saleswoman in a 
bargain basement and a sales person in a dress salon. Thus even 
where there is an essential similarity, differences in the nature of 
the tools used, in the size and quality of the material worked on, 
or in the clientele to be served, may create characteristic 
differences in the work which are important to both employers and 
employees. Such differences are generally to be found in the mass-
production-process and service occupations.

Skill Grade

    The nature of the services rendered may also be differentiated 
within an occupational category by the degree of skill and knowledge 
required. The work of a head bookkeeper in a large concern who sets 
up the bookkeeping system and assumes responsibility for it, is 
clearly different from that of a bookkeeper in charge of ``accounts 
payable'' or a posting clerk in the department. These differences 
are reflected in the wages and other conditions in their respective 
employments. The work of a regular sales person who must have a 
thorough knowledge of the merchandise and who assumes responsibility 
for the stock is likewise to be distinguished from that of a rush-
hour or counter clerk who is not required to have any specialized 
knowledge or who only accepts payment for articles selected by the 
customer.
    The degree of distinction made within an occupation requiring 
the same basic skills depends to some extent on the degree to which 
the occupation is concentrated in the area. Where there is a heavy 
concentration, the workers become highly specialized and employers 
seek such specialization. As a result, minor differences in the work 
done are commonly recognized both on the job and in the hiring 
process.
    On the other hand, the fact that ``similar'' makes allowance for 
some difference though it implies a marked resemblance must also be 
given weight. Too fine a distinction is likely to result in a 
comparison of identical rather than similar work. Generally, 
distinctions should be made within an occupation only when important 
differences in the performance of the job outweigh the essential 
similarity of the work.
    In skilled trades a number of long-established and commonly 
recognized grades such as learners, apprentices, and journeymen will 
usually be found. There may also be special groups such as 
handicapped or superannuated workers which must be taken into 
account where there are actual differences in the tasks performed 
and the speed and skill required. However, the work should not be 
distinguished on the basis of the kind of individual ordinarily 
hired for the job, since it is the work and not the worker which is 
to be compared under the law.

Basis of Determination

    In conclusion, ``similar work'' is basically a common sense 
test. The degree of similarity required in any particular instance 
should be calculated to carry out the general purpose and spirit of 
the proviso. On the one hand the comparison should not be so broad 
as to result, for example, in the finding of a prevailing wage which 
bears no relation to those generally paid for some of the kinds of 
work being compared. On the other hand, the distinctions should not 
be so fine as to leave no basis for comparison with other work done 
in the locality and thus make meaningless the determination of the 
``conditions prevailing'' for comparable work. Neither should the 
question of what is similar work be determined on the basis of other 
factors which are conditions of work within the meaning of the 
provisions, as for example, the hours of employment, the permanency 
of the work, unionization, or vacation, sickness, and retirement 
benefits. These other factors must be considered, but only after the 
question of what is similar work is decided. If they were considered 
in determining what is similar work, such considerations would beg 
the very question at issue: what conditions generally prevail for 
similar work?

Sources of Information

    The determination of what constitutes similar work is not 
difficult in occupations which have long been subject to union 
agreement. As a result of collective bargaining, the occupational 
duties and skill grades covered by agreement are usually well 
defined. Moreover, inasmuch as the definitions are based on 
industrial experience and the customs of the trade, they are 
applicable to nonunion as well as union work in the locality.
    In occupations and localities where the work in question has not 
been defined by mutual agreement between employers and employees, it 
is necessary to look to other sources. Guidance may also be derived 
from the job definitions and classification practices used by State 
and Federal agencies responsible for wage and hour data or the 
enforcement of minimum standards for various occupations, the 
employment service, employer groups, labor organizations and the 
claimant's own experience. In the absence of such guidance a good 
general test of the similarity of the work is whether the duties and 
the skills required are sufficiently the same so that the workers 
employed in each of the jobs being compared could readily perform 
any of the others.

Locality

    ``Locality'' like ``similar work'' is a somewhat indefinite 
term. Apart from any special reference to a particular place it 
means only a relatively limited geographic area. As used in the 
labor standards provisions it is an integral part of the concept of 
``the conditions prevailing for similar work.'' But while it is 
clear from the context that the conditions offered are to be 
compared with the conditions for similar work in the locality where 
the work is to be done, the nature and size of the area are not 
defined.

[[Page 50595]]

Arbitrary Definition

    At first glance the use of arbitrary area limits such as city or 
county lines may appear persuasive because it seems easy to 
administer. Support for such interpretation is to be found in the 
public construction statutes in which the area for comparison of 
wages paid for similar work is generally defined as the State or 
civil division in which the work is to be performed. The phrase 
``immediate vicinity'' in the Congressional Act of 1862 governing 
the wage rates of unclassified navy yard employees has likewise been 
interpreted in terms of a 50-mile radius about the yard.
    These definitions were adopted in large part to meet court 
objections to the use of so indefinite a term as ``locality'' where 
penal provisions are involved. This objection does not apply to the 
unemployment compensation laws nor is the same usage applicable. 
Unlike the public construction acts the unemployment compensation 
laws are not penal statutes. Unlike the Navy Yard Act, they do not 
deal with only one type of industry which is ordinarily concentrated 
in urban districts. Unemployment compensation agencies have occasion 
to deal with almost every kind of industry and with a variety of 
occupations, skilled and unskilled, organized and unorganized, which 
center in areas of varying size.
    Defining ``locality'' by some arbitrary device such as city and 
county lines or a 50-mile radius about the establishment, without 
regard to the labor market pattern of the occupation, will in many 
instances fail to effect the intent of the prevailing conditions 
provisions. In some cases the area will be too large. In others, too 
small. If it is too large, it is likely to include more than one 
area of concentration for the same kind of work. In such cases, 
generalization of the conditions prevailing in several different 
areas of concentration is not likely to reflect the conditions 
actually to be obtained in any one of them. Similarly, if the limits 
are too narrow, the determination will reflect conditions prevailing 
in only part of the area in which those attached to the occupation 
ordinarily seek employment.

Competitive Labor Market Area

    Results in better accord with the purpose of the labor standards 
provisions can be achieved by interpreting ``locality'' in terms of 
the area of immediate labor market competition for similar work. It 
is the variation in wages and other conditions in their customary 
occupation within the competitive labor market area in which they 
normally expect to obtain employment which immediately affects 
workers. Accordingly, ``locality'' as used in the labor standards 
provisions in the Internal Revenue Code and the State unemployment 
compensation acts may be defined as the competitive labor market 
area in which the conditions of work offered by an establishment 
affect the conditions offered for similar work by other 
establishments because they draw upon the same labor supply. The 
term ``area'' as used in section 103.50 of the Wisconsin statutes 
which provides that the hours of work on public highway projects 
shall be no longer than those prevailing for such work in the area 
is similarly defined as the locality from which labor for any 
project within such area would normally be secured. Definition of 
locality in terms of the competitive labor market area is also in 
accord with the practice of most unemployment compensation agencies 
insofar as can be discerned from the administrative decisions.

Basic Considerations

    In establishing the competitive labor market locality for an 
occupation the dominant considerations are the location of the 
establishments employing similar services, the area from which 
(regardless of civil and political boundaries) workers are normally 
drawn to supply the needs of these establishments, the commuting 
practices and ease of transportation in the area, and the customary 
migration pattern of the workers in the occupation.

Urban Occupations

    Because most industries tend to cluster in towns and cities, 
urban and metropolitan districts, including the suburbs and outlying 
area within ordinary commuting distance, generally constitute the 
locality for most industrial occupations. In some places two or 
three nearby communities with similar industrial activities may 
constitute a single locality for many occupations. Mill or mining 
communities in which the companies draw their employees from the 
surrounding territory in competition with each other are a good 
example. Similarly, heavy industrialized urban districts such as the 
San Francisco Bay area in which there are a number of communities 
within easy transportation distance of each other may constitute a 
single locality for occupations common to the entire area.
    An extensive urban or metropolitan district may on the other 
hand encompass several localities for occupations in which the 
workers do not move freely from one community to another. The San 
Francisco Bay area, for example, apparently encompasses several 
different labor markets for domestic work in which different 
conditions may prevail because there is no direct competition for 
labor among employers or between those seeking such work in 
different communities. The same situation probably exists in other 
large urban districts such as the Chicago or New York Metropolitan 
areas and in many other fields of employment. To take an extreme 
example, the competitive labor market for pinboys in neighborhood 
bowling alleys may be no wider than several square city blocks. 
However, whether there is one or several labor market localities in 
an urban district for an occupation will vary from one place to 
another with the size of the district, the location of the 
establishments employing such services, the nature and customs of 
the industry and the commuting practices of the workers in the 
occupation.
    The difference between determining the extent of the competitive 
labor market locality for similar work and determining whether the 
job a claimant was offered is within reasonable travel distance from 
his home is discussed below under the heading ``Distance to Work.''

Interurban and Rural Occupations

    The competitive labor market for some kinds of work is not 
limited to urban districts and may encompass more extensive areas. 
In the logging occupations, for example, the entire lumbering region 
in which an offer of better wages by one of the operating companies 
at the beginning of a season would draw off workers from the other 
camps or cause them to improve their conditions to meet the 
competition--would constitute the competitive labor market area. 
Similarly, the area in which structural steel workers or stone 
cutters ordinarily move from job to job and from the contracting 
companies ordinarily recruit such workers may be regional or even 
Nationwide.
    Like variations are to be found in agricultural occupations. 
Thus, the immediate competitive labor market area for canning 
occupations would usually be more limited than that for field hands, 
while the customary migration pattern for the fruit and vegetable 
pickers involved will usually be more extensive. To follow the 
parallel further, while the competitive labor market area for 
poultry farm hands may be smaller than that for dairy hands in some 
places, the reverse may be true in other parts of the country where 
the poultry industry is more widespread and dairy farms are not 
clustered over large areas but scattered in small groups.

Distance to Work

    The size of the labor market locality should not be confused 
with the distance a claimant can reasonably be expected to travel to 
work. The first turns on the nature of the occupation and the 
economic character of the area. The second depends on where the 
claimant lives, his circumstances and past work history. The two 
have little relation to each other. In large labor market areas, for 
example, the distance from one end to the other may be greater than 
a claimant can reasonably be expected to travel to and from work. 
Where the labor market area for the occupation is very small, on the 
other hand, it may be reasonable in view of transportation 
facilities to expect claimants to travel outside the labor market 
area. Some claimants may live far from the locality in which the job 
is offered. Some may have good cause for refusing jobs beyond the 
immediate vicinity of their homes. Others can reasonably be expected 
to commute a considerable distance in view of their past work 
histories and present circumstances. Regardless of the claimant's 
situation, however, the labor market locality in which offered work 
is compared with similar work to determine the conditions prevailing 
for the occupation remains the same.

Determination and Sources of Information

    There are no hard and fast rules for determining the locality 
for an occupation except that all of the factors which enter into 
the labor market pattern for such work should be considered in 
making the determination. A working knowledge of the nature of the 
occupation and the industries and kinds of establishments which 
employ such workers will usually be sufficient to indicate the 
relative size and general outline of the area. Information available 
from other

[[Page 50596]]

agencies and groups which have occasion to deal with the same 
problems and the means to conduct a more complete study will also 
prove useful. In cases where the inclusion or exclusion of 
borderline districts or establishments would result in a 
substantially different determination, expert opinion and more 
thorough investigation may be necessary. Once the locality for the 
occupation has been determined, however, it can be applied in all 
future cases involving offers of similar work within the area, 
unless substantial changes in the industrial pattern of the area or 
the occupation become apparent.

Prevailing

Meaning

    While the prevailing standard was not applied to all conditions 
of work in earlier legislation, the standard has had long and 
extensive statutory use. As applied to wage rates, its meaning was 
relatively well settled by administrative practice and court 
decisions prior to the enactment of the unemployment compensation 
laws. It may be assumed that those who framed the unemployment 
compensation acts were familiar with the legislative and court 
history of the standard. In the absence of evidence to the contrary, 
or of usage more appropriate to the intent of the provision, the 
standard in the unemployment compensation laws may therefore be 
construed on analogy to generally accepted usage under the 
prevailing wage provisions in prior legislation.
    Under the earlier public construction statutes it has generally 
been accepted that the prevailing rate of wages means one specific 
rate for a given occupation in a given locality and not a number of 
rates all of which are prevailing. The prevailing minimum wage 
requirement in the Walsh-Healey Act of 1936, though it presents a 
somewhat different standard, has likewise been interpreted to mean a 
single monetary figure in accordance with prior usage. It has also 
been generally accepted that ``prevailing'' means the most 
outstanding or commonly-paid rate, and that the prevailing rate of 
wages for a given occupation and locality is a fact and its 
ascertainment a matter of investigation.
    It may therefore be said as to each of different conditions of 
work to which the standard applies under the unemployment 
compensation acts: (1) that a specific condition of work is implied 
in each instance and not, for example, a range of wages or hours; 
(2) that the prevailing condition is that which most commonly 
obtains in the locality for similar work; and (3) that the 
determination of the prevailing condition is a matter of 
investigation.

Number of Employers vs. Number of Employees

    From time to time there has been some question as to whether the 
prevailing standard in the unemployment compensation acts is to be 
applied in terms of the conditions under which the largest number of 
workers are employed or in terms of the conditions offered by the 
greatest number of employers. In some instances the conditions of 
work offered by the greatest number of employers has apparently been 
used because the information could more readily be obtained in that 
form. Where all the establishments involved are about the same size 
so that the greatest number of workers in the occupation are 
necessarily employed by the greatest number of employers, the result 
is much the same whichever test is used, if all the workers in the 
same establishment are employed under the same conditions. However, 
where the establishments are not the same size or the conditions 
within the establishments vary, the results are likely to differ 
widely depending on whether the test used is the conditions under 
which the largest number of workers are employed or the conditions 
offered by the greatest number of employers.
    This issue has not apparently arisen under other laws. Under the 
public construction statutes, for example, the prevailing standard 
has customarily been applied in terms of the rate paid the largest 
number of workers. Justification for this usage under the 
unemployment compensation acts is also to be found in the 
traditional use of the terms ``prevailing wages'' and ``prevailing 
conditions of work'' by economists and other social scientists as 
meaning the wages and other conditions under which the largest 
number of workers are employed. The chief merit of using the largest 
number of workers lies, however, in the fact that it sets up the 
standard most consonant with the purpose of the prevailing 
conditions of work provisions. This can best be illustrated in terms 
of wages since that is generally the most important factor in the 
employment relation.
    The upward or downward pressure which an employer exercises on 
the conditions offered for similar work in the competitive labor 
market locality is directly related to the number of workers he 
employs. An offer of better wages by a large establishment which 
employs several hundred welders will draw such workers from almost 
every establishment in the locality which pays less. Moreover, it 
will force employers who pay less to increase their wages if they 
wish to retain their employees and attract new workers. A similar 
increase in the wages offered by a shop which employs two or three 
welders will have little if any effect on the general level of wages 
in the occupation. Conversely, a cut in wages by a large 
establishment is likely to result in a reduction in the wages paid 
by other employers, while a similar decrease by a single small 
employer will have little effect on existing rates.
    In other words, it is not the number of employers or how many 
different rates are paid but the number of jobs at each rate and 
level of wages which directly affects the individual worker's 
position in the labor market. By establishing the prevailing wage on 
the basis of the amount paid the largest number of workers, existing 
conditions in the labor market are, therefore, more truly reflected. 
Moreover, because each rate is weighted in proportion to the number 
of workers employed at that rate, the cumulative effect of the wages 
paid by numerous small employers is balanced against the wages paid 
by larger establishments.
    As a general rule it may therefore be said that the prevailing 
wages, hours, and other conditions of work are those under which the 
largest number of workers engaged in similar work in the locality 
are employed.

Methods of Determination

    Under the public construction acts, the rate paid a larger 
number of workers than any other--that is the most common or modal 
rate--has generally been recognized as that prevailing where a 
majority of the workers in the occupation are employed at the same 
rate. The mode is also generally used where less than a majority, 
but as much as 30 percent or 40 percent of the workers are paid at 
the same rate.
    In the event that less than 30 percent or 40 percent are paid at 
the same rate, the average of all the rates paid weighted by the 
number of workers at each rate \2\ is generally used rather than the 
mode. The New York Public Construction Act, for example, provides 
that the average shall be used if less than 40 percent of the 
workers in the occupation are paid at the same rate. Under the 
Federal Davis-Bacon Act the average is used if less than 30 percent 
are paid at the same rate.
---------------------------------------------------------------------------

    \2\ i.e., each rate is multiplied by the number of workers 
employed at that rate, and the sum of the totals is then divided by 
the total number employed in the occupation to obtain the average 
rate.
---------------------------------------------------------------------------

    As applied to wages and hours and such other conditions as can 
be measured in numbers, a combination formula of this kind best 
carries out the intent of the prevailing conditions of work 
provisions to prevent denial of benefits for refusal of work if the 
conditions are substantially less favorable than those generally to 
be obtained in the locality for similar work. This follows because 
each of the two methods, the mode and the average, is used under the 
circumstances to which it is most applicable.
    The indented material below provides a more complete explanation 
of the methods of determining the prevailing condition of work. It 
may be skipped by those interested in the broader aspects of the 
subject.
    The mode is used so long as one condition of work clearly 
prevails over all others and is therefore most representative of 
those to be obtained in the locality. This method has the merit of 
utilizing a condition of work which actually exists as the standard. 
It also has the advantage of being relatively easy to use because it 
requires no calculation beyond ascertaining which of the existing 
conditions is most widespread.
    The average, on the other hand, is used where the largest number 
of workers employed at the same wages or hours or other condition of 
work does not constitute a substantial proportion of the total 
number in the occupation. Where this occurs, the condition under 
which the largest number of workers are employed in the occupation 
may not always be representative of those generally to be obtained. 
In such cases results in better accord with the purpose of the 
prevailing conditions of work provisions can usually be achieved by 
using the weighted average. In the case of wages, for example, this 
method, because it reflects the entire range of wages and the number 
of workers employed at each level of earnings, usually

[[Page 50597]]

yields a wage which is more representative of those generally to be 
obtained in the locality than that paid any relatively small 
proportion of the workers in the occupation.
    However, since conditions like seniority rights, which cannot be 
measured in numbers, cannot be averaged, the mode must of necessity 
be used in determining the prevailing condition of work where such 
factors are involved, even though only a small percentage of the 
workers in the occupation are employed under the same condition. The 
mode also should be used in determining the wages or hours 
prevailing for similar work even though there may be relatively few 
employed under the same condition, if the information necessary to 
calculate the average is not available. Conversely, where the 
average is known, but the information necessary to obtain the mode 
cannot be obtained, it may be necessary to use the average wage or 
the average number of hours as the standard for comparison even 
though a substantial number of workers may be employed at the same 
wages or hours.
    Use of Class Intervals.--In determining the mode it is often 
simpler to divide the entire range of wages or hours or other 
conditions existent in the locality into class intervals rather than 
count the number of workers employed under each particular 
condition. For example, the number of workers employed at different 
wage rates may be ascertained on the basis of 2-cent or 5-cent or 
10-cent class intervals depending on how great the amounts involved 
are. That is, the number of workers employed at different rates may 
be reported in terms of the number receiving 60 to 64.9 cents an 
hour, the number receiving 65 to 69.9 cents an hour, and so forth 
rather than the number receiving 60 cents an hour, the number 
receiving 60.5 cents an hour, the number receiving 61 cents an hour 
and so on. If the information is received in this form and the 
actual mode is not known (1) the modal point in the most numerous 
class may be determined through the use of one of the statistical 
formulas designed for that purpose, or (2) the mid-point of the most 
numerous class may be used with due allowance for the fact that it 
is only an approximation.
    The weighted average may also be derived on the basis of class 
intervals (1) by multiplying the mid-point of each class interval by 
the number in the class, adding the totals, and dividing the result 
by the total number of workers involved or (2) by using one of the 
shorter statistical formulas designed for the purpose.

Sources of Information

    Ordinarily the factual information needed to ascertain the 
conditions prevailing in the locality for similar work can be 
obtained from labor and employer organizations, from representative 
employers and employees, from the Employment Service, or from other 
Government agencies which are responsible for the collection of data 
on wages and hours, the enforcement of minimum labor standards in 
various occupations, or the administration of industrial safety 
codes and the like. If conditions in the occupation are fairly 
stable, information once obtained may prove useful over a 
considerable period. This is particularly true in the case of 
occupational wage rates which, in normal times, are likely to remain 
unchanged over long periods. It may therefore prove useful to 
construct tables of occupational rates and keep them on hand for 
ready reference. These should be amended from time to time as better 
or more current information becomes available.
    The determination of the conditions prevailing in the locality 
for similar work is comparatively simple where most of the workers 
in the occupation are employed under uniform collective bargaining 
agreements or where the conditions are governed by custom or law. 
More extensive investigation and more careful examination of the 
data available is usually required where there are relatively few 
workers employed at the same wages or hours or other conditions of 
work. Even in such cases, though, sufficient information can 
generally be obtained to enable a reasonably accurate approximation.
    Thus where only the range of wages or hours is known a point 
nearer the middle than the bottom of the range may be used as a 
rough estimate since there are normally few workers at either 
extreme. If there is reason to believe that a larger number than 
usual are nearer the top or the bottom of the range the estimate may 
be moved up or down accordingly.
    Similarly, where the most complete and accurate information 
available is not entirely current, allowance may need to be made for 
any noticeable upward or downward trend which may have taken place 
in the meantime. In other instances in which accurate information of 
the conditions under which such workers are currently employed in 
the locality is lacking, typical offers made through the Employment 
Service or other channels may provide some guidance. The claimant, 
if he is familiar with the conditions which generally obtain for 
such work in the particular labor market locality, may also be able 
to provide some information.
    In each case, though, it is for the unemployment compensation 
agency or tribunal to sift the data and to make the determination on 
the basis of the best information available.

Substantially Less Favorable

Purpose

    Many of the conditions of work to which the prevailing standard 
is applied under the unemployment compensation acts, like seniority 
and safety provisions, do not lend themselves to exact comparison. 
In considering factors of this kind it cannot always be determined 
whether one condition or combination of conditions is less favorable 
than another. Even in the case of wages and hours which can be more 
exactly compared, the wages or hours which in fact prevail cannot 
always be definitely determined. Nor can the conditions of a job in 
question always be foretold with certainty. The rate of earnings, 
for example, will in many instances depend on the individual's 
ability. Working hours may also be subject to variation under 
different circumstances so that even the employer cannot say exactly 
what they will be. Moreover, a condition which is important in one 
occupation and locality may be relatively unimportant in another. 
For example, the use of ventilators to draw off fumes is important 
in a chemical plant and the height of a chamber to which he is 
assigned may be important to a miner. Both are relatively 
unimportant, however, in office work.
    A certain amount of leeway has therefore been allowed in the 
application of the prevailing standard under the unemployment 
compensation acts by providing that benefits shall not be denied 
otherwise eligible individuals for refusing work if the wages, 
hours, or other conditions are substantially less favorable to the 
individual than those prevailing.

Effect

    The provision thus presents a definite but not an inflexible 
standard. It does not preclude the denial of benefits for refusal of 
work where only minor or purely technical differences are involved 
which would neither undermine existing labor market standards nor 
have any appreciably adverse effect on the worker. It also allows a 
reasonable margin for error where the conditions prevailing in the 
locality for similar work or the corresponding conditions of the 
work offered cannot be exactly ascertained. But the basis of 
comparison in each instance, insofar as they can be determined, is 
still the conditions under which the greatest number of workers in 
the occupation are employed in the locality.

Application

    The meaning of the words ``not substantially less favorable to 
the individual'' cannot be defined in terms of any fixed percentage, 
amount or degree of difference. Both the actual condition in 
question and the extent of the difference, as well as its effect on 
the worker, must be considered in each case.
    If the conditions of the work the claimant refused and those 
prevailing are known, it is usually easy to determine whether the 
difference is of a material or substantial nature or is of no real 
consequence. In borderline cases where it is not clear whether the 
difference is material, the general rule that remedial legislation 
is to be liberally interpreted and applied in favor of those it was 
intended to aid would indicate that the claimant be given the 
benefit of the doubt. Similarly, when the facts cannot be precisely 
determined, the claimant would not be subject to denial of benefits 
for refusing work unless it is reasonably certain that the 
conditions on the job are not substantially less favorable than 
those prevailing.

Substandard Employment

    There are some situations in which the prevailing standard 
provisions are not directly applicable though the work is unsuitable 
because the conditions of employment are substandard. Thus, though 
the conditions prevailing for similar work in the locality will 
ordinarily be better than the minimum standards set by State or 
Federal law, investigation may occasionally reveal that the wages, 
hours or other conditions prevailing in a particular occupation and 
locality are below the applicable legal minimum. In such cases where 
the

[[Page 50598]]

conditions of the work offered are in violation of law, even though 
they are not substantially less favorable than those prevailing, the 
claimant has good cause for refusing the job under the general 
suitable work provisions in the State acts. It is well settled that 
one law should not be so applied as to cause or result in the 
violation of another.\3\
---------------------------------------------------------------------------

    \3\ From another point of view it might also be held (1) that 
the conditions ``prevailing'' for similar work means those legally 
prevailing, (2) that only conditions of work which meet the 
applicable State and Federal statutory standards should be 
considered in deterring the conditions prevailing for similar work, 
and (3) that conditions which violate Statutory standards do not 
meet the requirements of the prevailing conditions of work 
provisions. Under such an interpretation, the prevailing conditions 
of work provisions would also prevent denial of benefits to 
claimants who refused work under conditions which were in violation 
of the law.
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    Similarly, the claimant generally has good cause for refusing a 
job if the wages or other conditions are far less favorable than 
those in most other kinds of work in the locality, for which he is 
qualified, even though the job or the work in question is not 
covered by State or Federal wage and hour legislation. In view of 
the wages and other conditions generally to be obtained in the 
locality in other employments which the claimant is able to perform, 
such work would ordinarily be unsuitable and the claimant would have 
good cause for refusing it under most State acts. Payment of 
benefits in cases of this kind is also in accord with the intent of 
the prevailing conditions of work provisions to prevent operation of 
the unemployment compensation acts to depress the general level of 
working conditions through denial of benefits for refusal of 
substandard employment, though they may not come squarely within the 
letter of the provisions.

Wages, Hours or Other Conditions--Wages

Wages vs. Wage Rates





    In the public construction acts the prevailing standard has 
generally been applied in terms of the prevailing ``rate of wages'' 
or the prevailing ``rate of per diem wages.'' It has been argued 
that the word ``wages'' as used in the prevailing conditions of work 
provisions in the unemployment compensation acts also means the wage 
rate.
    Support for this view is found in the fact that the hours of 
work, which in conjunction with the wage rate largely determine the 
earnings of most workers, are specifically set forth as a separate 
consideration. Accordingly, the provisions that benefits shall not 
be denied for refusal of work if the wages are substantially less 
favorable than those prevailing have at times been taken to mean 
that the hourly wage rate may not be substantially less than that 
prevailing.
    This usage may be appropriate for the purpose of establishing 
the minimum rate which may be paid workers in various occupations 
under government supply and construction contracts. However, it is 
not the purpose of the prevailing conditions of work provisions in 
the unemployment compensation acts to establish a minimum rate which 
may be paid, but to prevent downward pressure on existing conditions 
and to give the claimant the benefit of conditions which are not 
substantially less favorable to him than those prevailing in the 
locality for similar work. Comparison in terms of wage rates alone 
is not always sufficient to accomplish this purpose.

Factors Affecting Earnings

    Earnings are frequently affected not only by the wage rate and 
the hours of work, but also by the method of payment, the overtime 
practices and various extra bonuses and premiums. For this reason, 
workers generally look to both the rate and the total weekly 
earnings in determining whether they will accept a particular job or 
continue to seek other work. Similarly, employers do not merely 
announce the rate of pay but also emphasize total earnings. In 
addition, all methods of payment do not lend themselves to 
comparison in terms of wage rate. Though most workers are now paid 
at hourly or piece rates, some are still paid a flat daily or weekly 
wage regardless of the hours put in or the amount of work done. It 
is only by taking all of the factors which would affect the 
claimant's earnings and those of most workers in similar employment 
in the locality into consideration that it can be determined whether 
the wages offered are less favorable than those prevailing.

Basis of Comparison

    Thus, where most of the workers in a particular occupation and 
locality are not paid on the basis of the amount of production or 
sales completed or the hours of work put in, but are paid a monthly 
or yearly salary, as is frequently true in the case of managerial 
and professional employees as well as farm hands, the wage 
comparison must be made in terms of their total monthly or yearly 
earnings including any remuneration received in addition to the base 
salary. Similarly, if the hours in the occupation are irregular and 
most of the workers are paid at hourly or piece rates or on a 
percentage basis as in the case of longshoremen, home workers and 
many taxicab drivers, the comparison must be made in terms of hourly 
or piece rates or on a percentage basis. In such cases, the fact 
that the hours are irregular and unscheduled prevents any further 
comparison of earnings.
    However, in the great majority of occupations in which the 
workers are paid fixed or variable rates or commissions, so that 
their earnings depend in large part on the actual hours of work, 
both the wage rates and the weekly wages can be compared and both 
need to be taken into consideration to determine whether the wages 
offered are less favorable than those prevailing.
    Where some of the workers are paid at other than time rates or 
receive variable incentive wages in addition to the hourly base 
rate, the various rates may be compared in terms of average straight 
time hourly earnings. In such cases, the average straight time 
hourly earnings may be derived by dividing the weekly wage minus 
overtime earnings by the weekly hours of work less the overtime 
hours. If other nonproduction bonuses or premiums are paid in 
addition to overtime, these would also have to be subtracted from 
the weekly wage before dividing.
    Conversely, where the weekly wages are not directly comparable 
because of differences in the hours of work, the prevailing weekly 
wage may be derived by multiplying the prevailing hourly earnings by 
the prevailing hours of work. If the hours usually include overtime, 
the overtime earnings would also have to be taken into account in 
determining the prevailing weekly wage. For this purpose prevailing 
overtime earnings may be estimated on the basis of the usual 
overtime rates and practices in the occupation and locality. Any 
other nonproduction premiums or bonuses customarily paid workers in 
the occupation would likewise have to be taken into consideration in 
such cases in determining the prevailing weekly wage.

Basis of Determination

    Implicit in the comparison of both the hourly rate and the 
weekly wages is the general rule that the wages offered will 
ordinarily be substantially less favorable to the worker than those 
commonly to be obtained in the locality for similar work if either 
the hourly or weekly earnings are substantially lower than those 
prevailing. If, for example, the work in question is usually done on 
a full-time basis, the wages entailed in an offer of part-time work 
would usually be substantially less than those of most workers in 
similar employment even if the hourly rates were the same. The wages 
he would earn in part-time employment would therefore be 
substantially less favorable than those prevailing in the occupation 
for a worker who is seeking full-time work. Similarly, if the hourly 
rate were substantially less than that prevailing, the wages would 
generally be substantially less favorable than those of most workers 
in similar employment. This would hold true even though the job paid 
higher weekly wages than most such jobs because the hours of work 
were longer.
    In such cases, the conditions of the work offered would be 
substantially less favorable than those prevailing both because the 
hourly rate was lower and the weekly hours were longer than those 
generally to be obtained. The claimant would not therefore be 
subject to denial of benefits whether either or both factors were 
taken into account.

Other Considerations

    In some cases, however, a true comparison may require further 
analysis. Other factors that affect the weekly and hourly wages may 
also have to be taken into consideration. Thus the payment of 
overtime or other nonproduction premiums and bonuses over and above 
those ordinarily paid such workers in the locality may have a 
bearing on whether the hourly rate of earnings is actually less 
favorable than that prevailing. To illustrate: most of the workers 
in the occupation may be paid at straight time rates with nothing 
additional for overtime, and the prevailing hourly rate may be $.70 
an hour, the prevailing weekly hours of work 48, and the prevailing 
weekly wage $33.60. The job in

[[Page 50599]]

question, on the other hand, may pay only $.65 an hour. At straight 
time rates this would amount to only $31.20 for a 48 hour week and 
would be substantially less favorable than the wages prevailing for 
similar work in the locality. However, the wages may not be less 
favorable if other factors enter the picture. If, for example, the 
job paid time and a half after 40 hours, the worker would earn 
$33.80, which is somewhat more than the prevailing wage for the same 
work week. In effect, he would be earning a bit more than the 
prevailing rate of $.70 an hour.
    In other instances, the provision of special benefits over and 
above those received by most workers in similar employment in the 
locality may make the wages as favorable as those prevailing. Thus 
the fact that the worker would be paid for vacation and sick leave 
has been taken into consideration in determining whether the wages 
were substantially less favorable than those of most workers in the 
occupation. It should be remembered, however, that such benefits may 
not outweigh the difference in the money wages the worker would earn 
the year around. In addition, while workers may appreciate benefits 
of this kind if they are afforded in addition to the usual wage, 
they may prefer to receive the difference between the wages paid and 
the usual wages for such work in money rather than in other forms 
because of the greater freedom it gives them to purchase the goods, 
leisure or services they want.

Customary Industrial Practices

    The question of differential payments for evening or night work 
in the form of equal pay for shorter hours or a higher rate or 
additional bonus may also arise. If such differentials are 
ordinarily paid they need to be taken into account. Accordingly, a 
claimant who refuses employment on the night shift at the wages 
which are ordinarily paid for day work but which are substantially 
less favorable than those prevailing for night work, would not be 
subject to denial of benefits under the prevailing conditions of 
work provision. A like result would be reached where there were 
established differentials for jobs involving special risks to health 
or safety beyond those ordinarily incurred in the occupation, as in 
the case of mine operations carried on in water. In cases of this 
kind, there may also be some question as to whether the work is 
similar to the less dangerous or easier operations with which it is 
being compared. But the same result as to payment or denial of 
benefits should be reached whether the jobs are held to be different 
with different wages prevailing for each, or whether the work is 
considered similar and the practice of paying a differential rate is 
taken into account.

Temporary or Seasonal Fluctuations

    In some occupations it may also be necessary to allow for 
temporary differences or seasonal fluctuations in hourly and weekly 
earnings both in determining the prevailing wage and in determining 
whether the wages offered are substantially less favorable than 
those of most workers in similar employment. It is ordinarily 
expected, for example, that the earnings of department store sales 
workers who are paid a commission in addition to their hourly rate, 
will reach a peak during the winter holidays and be relatively low 
during the summer lull. Similar variations are to be found in the 
garment trades and in many other occupations in which the hours of 
work and consequently the weekly earnings are reduced during the off 
season. Since all of the establishments involved will not be 
affected simultaneously or to the same extent it is best to 
determine the prevailing wage in such cases on the basis of a normal 
period whenever possible, and to compare the wages offered with 
those prevailing in terms of the normal earnings of other workers in 
the establishment. If the experience of other workers in similar 
employment offered in the establishment indicates that the earnings 
in the job will average as much as those of most workers in the 
occupation and that the fluctuations will be no more frequent and no 
greater than is ordinarily to be expected in such employment in the 
locality, due allowance may be made for such differences. If, 
however, the wages do not average as much as those of most workers 
or the fluctuations are so extreme as to render the earnings even 
more uncertain than those of most such workers, the conditions of 
the work offered may be substantially less favorable than those 
generally to be obtained for similar work.

Progressive Wage Scales

    A somewhat different problem is presented where most of the 
workers in the occupation are paid on the basis of progressive wage 
scales such as are frequently used by large establishments and 
incorporated in union agreements. In certain industries and plants, 
for example, inexperienced workers are hired at a minimum entrance 
rate and their wages increased during the training period until they 
are receiving as much as other workers in the department. 
Experienced workers may likewise be hired at a minimum job rate and 
their wages gradually increased up to the maximum rate paid by the 
plant for such work. In some cases the increases may be based on 
length of service with the employer; in some cases, on merit (i.e., 
usually skill and experience and speed); in others, on a combination 
of both.
    Where progressive wage scales prevail, workers cannot ordinarily 
expect to be hired at the wages currently being paid the greater 
number currently employed in the occupation because many of those 
employed have received periodic increases based on the length of 
time they have worked in the same establishment. Accordingly, where 
progressive wage scales prevail, the determination of whether the 
wages offered are substandard is generally made not on the basis of 
the prevailing wage, but on the basis of the prevailing wage scale. 
Determination of the prevailing wage scale involves consideration of 
at least three factors: (1) the prevailing entrance rate; (2) the 
basis on which the rates are increased; and (3) the amount and 
frequency of the increases. The need for considering all three of 
these factors when applying the prevailing wage standard where 
progressive scales are involved can readily be illustrated.
    One illustration may be found where the rate increases in a 
particular occupation and locality are based on length of service 
alone, and new employees are almost invariably hired at the entrance 
rate. In such cases an offer of work at the prevailing entrance rate 
for inexperienced workers, or the prevailing minimum job rate for 
experienced workers, would not ordinarily be considered substandard 
inasmuch as most of the workers in the occupation are hired on the 
same basis and at the same rate. Nevertheless the wage scale offered 
may still be substantially less favorable to the worker. For 
example, if the greater number of workers in the occupation are 
hired at $.70 an hour and move up to $1.10 within a year, an offer 
of $.75 with increases up to a maximum of only $.90 after a year on 
the job would be substantially less favorable than the prevailing 
scale of rates.
    On the other hand, where workers are not always hired at the 
entrance rate, and rate increases depend at least in part on skill 
and experience, it may be that a worker with prior experience in the 
occupation can expect to be hired at more than the entrance rate. In 
such cases an offer of work at the minimum rate might well be 
substantially less favorable than that prevailing for a worker who 
has formerly earned a rate above the minimum or the middle of the 
range. Investigation will usually reveal the customary hiring 
practice in regard to workers with varying degrees of prior 
experience and skill and whether the entrance rate and the rate 
scale are as favorable to the claimant as those prevailing.

Method of Wage Payment

    Aside from its effect on the amount the worker earns, the method 
of wage payment is itself an important condition of work. Workers 
frequently have justified objections to employment under a different 
method of payment than that to which they are accustomed and long 
and bitter strikes have been fought over changes from time work to 
piece work and the introduction of incentive wage systems. Even 
though the wages offered equal those of most workers in similar 
employment, it may therefore be necessary to determine whether the 
method of payment is substantially less favorable than that 
prevailing.
    As a condition of work, the method of wage payment may be 
substantially less favorable to the worker than that prevailing: (1) 
if it would yield substantially lower earnings than the prevailing 
method; (2) if the earnings would be more irregular or less certain 
than under the prevailing method; or (3) if it would require the 
worker to work faster or under greater tension than the prevailing 
method of payment. Generally, however, the customary practice of the 
trade in the locality in which the work offered will govern the 
decision as to whether a system of payment found objectionable by 
workers is substantially less favorable than that prevailing.

Hours

    In occupations in which the hours are not scheduled by the 
employer, either directly or indirectly, they are not a condition of 
the work and do not enter into consideration in

[[Page 50600]]

determining whether any of the conditions of the work offered are 
substantially less favorable than those prevailing in the locality 
for similar work. Where the hours are regulated by the employer, 
they are second in importance only to wages. Together with the wage 
rate and the method of payment they largely determine the worker's 
earnings. In themselves, they determine the time the worker must put 
in on the job and the time he has for his own needs and leisure.
    Aside from their effect on the worker's earnings, the hours of 
the work offered may be substantially less favorable than those 
prevailing in the locality for similar work, if they are 
substantially longer, or less convenient. If ``wages'' as used in 
the prevailing conditions of work provisions is deemed to mean only 
wage rates and not weekly wages, it may also be held that 
substantially shorter hours than those prevailing, which would 
result in lower earnings, are substantially less favorable to a 
claimant who is seeking full-time employment.

Weekly Hours of Work

    Inasmuch as most workers are employed at regular hours which are 
limited by industrial practice and custom, it is not usually 
difficult to ascertain the hours prevailing in the locality for 
similar work and to determine whether the hours of the work offered 
are substantially longer than those prevailing. Generally it is not 
necessary to consider the possibility of extra overtime in making 
the determination. If, however, a considerable amount of extra time 
beyond the regular weekly schedule is frequently required of workers 
in the occupation or the evidence indicates that it would be 
required on the job in question, that would also have to be taken 
into account. In such cases the past experience of other workers in 
the establishment may offer some guidance as to whether the hours 
would average more than those of most workers in like employment or 
be so much more irregular as to be substantially less favorable.

Temporary or Seasonal Fluctuations

    As indicated in the discussion of wages, the hours of work in 
some occupations are also subject to seasonal fluctuations. In the 
needle trades, for example, the workers generally put in long hours 
during the rush season, particularly in the fall. During dull 
periods when work is slow, many are laid off and others work only a 
short week; that is, less than the normal weekly schedule. In such 
cases, it is generally best to compare the hours of the work offered 
with those prevailing on the basis of the normal work schedule and 
to make allowance for temporary or seasonal fluctuations. Again, the 
experience of other workers in the establishment may offer some 
guidance as to the extent of the fluctuations in the job offered as 
compared with those ordinarily to be expected and whether the hours 
would on the whole be no longer than those of most workers in 
similar employment.
    Some care may have to be exercised to distinguish between 
temporary changes and fluctuations of this kind and permanent 
increases or reductions in the hours of work. The distinction would 
be especially important if the wage determination is made only in 
terms of wage rates since an offer of work which regularly involves 
shorter hours than those prevailing would ordinarily result in lower 
earnings even if the rates were the same.
    In addition, any general change in the regular hours of a 
substantial number of workers in the occupation may also affect the 
prevailing hours determination. Thus, if the hours of a considerable 
number of workers are increased, reexamination may reveal, for 
example, that a greater number are now employed on a 48-hour 
schedule than any other, whereas a 44-hour week had previously 
prevailed. Similarly, if the hours of most of the workers in the 
occupation are reduced an offer of work at the hours which 
previously prevailed may now be substantially less favorable than 
those currently prevailing.

Arrangement of Hours

    The hours of the work offered may also be substantially less 
favorable if they are less convenient than those prevailing in the 
locality for similar work. Thus, if most workers in the occupation 
work a 40-hour week on the basis of 5 8-hour days with Saturday and 
Sunday off, an arrangement whereby the worker would be required to 
put in 5 7-hour days and 5 hours on Saturday may be substantially 
less favorable to the individual than that prevailing because it 
leaves him only 1 day a week free even though the total number of 
hours is no longer than those of most workers.
    Similarly, second or third shift work would generally be 
substantially less favorable if most of the workers in the 
occupation were employed on the first shift. It is because the 
second and third shifts are recognized as less convenient by both 
employers and employees that differentials are frequently paid for 
such work. Special payments of this kind, like extra pay for evening 
or holiday work, do not generally affect the hours deter-mination. 
However, where the shift differential takes the form of shorter 
hours for equal pay, longer hours than those prevailing for second 
or third shift work might well be held substantially less favorable 
to the claimant.
    There would, of course, be no question under the prevailing 
conditions of work provisions as to whether any shift was 
substantially less favorable than another if a relatively equal 
number of workers were employed on all shifts. In such circumstances 
no one shift could be said to prevail. If, however, a fairly equal 
number are employed on the first and second shift, an offer of work 
on the third shift might well be deemed substantially less favorable 
to the worker than the prevailing hours of work--unless such workers 
are generally hired on the least desirable shift and earn the right 
to move up to an earlier shift only as they acquire seniority. In 
the latter instance, the fact that the right to work on an earlier 
shift depends on the worker's seniority would itself be a condition 
of work. In such cases, determination of the prevailing arrangement 
of hours would be a matter of determining the shift on which the 
workers in the occupation are customarily hired in the locality 
rather than the shift on which the greater number are currently 
employed.
    Subject to the same exception, a split shift which involves 
working at two different times of the day, or a swing shift which 
involves changing over between two different shifts at stipulated 
weekly intervals, would generally be substantially less favorable to 
the worker than the prevailing arrangement of hours if a straight 
shift prevailed; and a rotating three-shift arrangement would 
generally be substantially less favorable if either a straight shift 
or a swing shift prevailed. Other factors such as the hours involved 
and the claimant's circumstances may also enter into the 
determination, however. Thus, if the workers in the occupation are 
generally hired on the third shift, a rotating shift involving 
change over between the third, second and first shifts might not be 
substantially less favorable to the individual provided he was able 
to work on all three shifts and the constant change in hours would 
not affect him adversely.

Other Factors

    Whether lesser differences such as the time a shift begins and 
ends or in the length of the lunch hour, etc., render the hours of 
work substantially less favorable to the individual also depends on 
the nature and extent of the difference and on the claimant's 
circumstances. Thus, if the claimant would be required to report to 
work at 6:30 a.m. whereas most workers in like employment did not 
begin to work until 9:00 a.m., the hours might well be held 
substantially less favorable than those prevailing. But a difference 
of a half hour or three-quarters of an hour in the time the shift 
started might not be material if it would adversely affect the 
claimant. In other cases the omission of rest periods granted most 
workers in like employment and differences in the length of the 
lunch hour or the starting hour may be compensated by other 
circumstances such as the fact that the workers are seated on the 
job or the existence of lunchroom facilities on the premises.
    Generally, though, it will not be necessary to go into questions 
of this kind. The hours characteristic of the occupation in the 
particular locality will usually govern the decision as to whether 
an inconvenient shift or arrangement of hours is substantially less 
favorable to the individual.

Other Conditions of Work

    As ordinarily used, the phrase ``conditions of work'' refers to 
the provisions of the employment agreement, both express and 
implied, and the physical conditions under which the work is done 
pursuant to the agreement. It is also applied at times to conditions 
which arise from actual work on the job as a result of laws and 
regulations which are not within the employer's control. So 
interpreted, the phrase ``conditions of work'' includes such factors 
as coverage by the State workman's compensation and unemployment 
compensation acts and the Federal old-age and survivors insurance 
provisions.

[[Page 50601]]

In General

    Under either interpretation, the phrase encompasses not only 
wages and hours but such other factors as:
    1. Group insurance against industrial accident, sickness or 
death;
    2. Paid sick and annual leave, and paid vacations;
    3. Provisions for unpaid leave of absence and for holiday leave 
or payment;
    4. Pensions, annuities and other retirement provisions;
    5. Severance pay;
    6. Job seniority and reemployment rights;
    7. Training, transfer and promotion policies;
    8. Minimum wage guarantees;
    9. Union membership provisions, representation and coverage;
    10. Grievance procedures and machinery;
    11. Work rules and regulations;
    12. Health and safety rules, devices and precautions;
    13. Medical and welfare programs;
    14. Sanitation; and
    15. Heat and light and ventilation.
    Moreover, while the list set forth above by way of illustration 
of the more common factors which may be important in various 
occupations and localities is extensive, it is by no means all 
inclusive. There are many other factors which may be important in 
certain occupations and localities.

In Particular Occupations

    Thus in outdoor employments, if it appears that the claimant 
would be required to work in all kinds of weather, it may be 
important to ascertain if most workers in like employment in the 
locality are required to be on the job regardless of the weather and 
if some shelter or protection is generally provided. In inspection 
jobs and in the case of stock chasers and many other employments, 
the weight of the parts or materials the worker may have to lift 
without mechanical aid may be important. In longshoreman's work and 
in the case of deliverymen and movers the size of the crew is often 
a matter of negotiation.
    In the needle trades, questions may arise as to the state of 
repair in which machines are kept or whether the worker would be 
required to fix his own machine, since a poorly adjusted machine 
results in spoilage and lower earnings at piece rates and the time 
spent repairing the machine is lost to the worker. In the textile 
industry, the number of machines or bobbins the worker is required 
to tend is frequently an issue. In coal mining the height of the 
chamber in which the work is done, the presence of water or gas, the 
frequency with which the mine is inspected, and the amount of 
timbering or other nonproductive work required may be important.

Varying Importance

    Because of the innumerable variations in the conditions under 
which workers are employed in various occupations and localities, 
and because many of the conditions other than wages and hours are so 
closely interrelated with the nature of the work, it is not possible 
to discuss them without going into the details of particular trades 
and industries. Nor can any generalization be made about the 
relative importance of many of these conditions without considering 
them in relation to each other. Thus the lack of a guaranteed 
minimum weekly wage may be a technical rather than a material 
difference if the worker would in all probability regularly earn as 
much or more than the amount guaranteed to most workers in like 
employment in the locality. Similarly, the importance of a seniority 
provision would depend on whether it only dictated the order in 
which workers in the occupation would be laid off or also determined 
promotions and transfers from one department or shift to another.

Basis of Determination

    In general, however, the question under the prevailing 
conditions or work provisions as to conditions other than wages or 
hours is whether the conditions of the work offered are 
substantially less favorable to the claimant than those prevailing 
in any important respect. The claimant is not subject to denial of 
benefits for refusal of work if the wages, hours, or any other 
material condition or combination of conditions of the work offered 
is substantially less favorable to him than those prevailing in the 
locality for similar work.
    If there is reason to believe that the conditions of the work 
offered are less favorable than those prevailing for similar work in 
the locality in any important respect, it is for the agency to 
investigate. The issue in each case must be decided on the basis of 
all the relevant facts and the best information available.
    In reply refer to UODA.

U.S. DEPARTMENT OF LABOR

Manpower Administration
Bureau of Employment Security

Unemployment Insurance Program Letter No. 984, September 20, 1968

TO: ALL STATE EMPLOYMENT SECURITY AGENCIES
SUBJECT: Benefit Determinations and Appeals Decisions Which Require 
Determination of Prevailing Wages, Hours, or Other Conditions of 
Work
REFERENCES: Section 3304(a)(5)(B) of the Federal Unemployment Tax 
Act; Principles Underlying the Prevailing Conditions of Work 
Standard, September 1950, BSSUI (originally issued January 6, 1947 
as Unemployment Compensation Program Letter No. 130)

Purpose and Scope

    To advise State agencies and appeal authorities of the 
interpretation of the phrase ``new work'' for the purpose of 
applying the prevailing wage and conditions-of-work standard in 
section 3304(a)(5)(B) of the Federal Unemployment Tax Act, 
particularly in relation to an offer of work made by an employer for 
whom the individual is working at the time the offer is made.
    This letter is prompted primarily by a current problem arising 
from a number of recent cases in which findings were not made with 
respect to the prevailing wages, hours, or other conditions of the 
work, because apparently it was not considered that ``new work'' was 
involved.

Federal Statutory Provision Involved

    Section 3304(a)(5) of the Federal Unemployment Tax Act, the so-
called labor standards provision, requires State unemployment 
insurance laws, as a condition of approval for tax credit, to 
provide that:
    ``compensation shall not be denied in such State to any 
otherwise eligible individual for refusing to accept new work under 
any of the following conditions:
* * * * *
    ``(B) If the wages, hours, or other conditions of the work 
offered are substantially less favorable to the individual than 
those prevailing for similar work in the locality;''

Legislative History

    The prevailing wage and conditions-of-work standard, originally 
in section 903(a)(5)(B) of the Social Security Act and since 1939 in 
section 3304(a)(5)(B) of the Federal Unemployment Tax Act applies 
only to offers of ``new work.''\1\ The hearings before Congressional 
committees and the reports of these committees furnish little aid in 
construing the term.\2\ The Congressional debates, however, clearly 
indicate that the labor standards provision was included in the bill 
for the protection of workers.\3\ The objectives of the provision 
are clearly set forth by the Director of the Committee on Economic 
Security, which prepared the legislation:
---------------------------------------------------------------------------

    \1\ Many State laws extend its application by specifying that 
``no work shall be deemed suitable'' which fails to satisfy the 
standard.
    \2\ The Report of the Committee on Ways and Means on the Social 
Security Bill (H.R. 7260), House Report No. 615, 74th Cong., 1st 
Session, page 35, uses the term ``new job'' and this is copied in 
the Report of the Senate Committee on Finance, Senate Report No. 
628, 74th Cong., 1st Session, page 47, but the term ``new job'' is 
itself ambiguous and there is no indication that it was used by 
either committee in a narrow or exclusive sense.
    \3\ See statement of Senator Harrison, Congressional Record, 
Vol. 79, p.9271.
---------------------------------------------------------------------------

    ``* * * compensation cannot be denied if the wages, hours or 
other conditions of work offered are substantially less favorable to 
the employee than those prevailing for similar work in the locality. 
The employee cannot lose his compensation rights because he refuses 
to accept substandard work. That does not mean that he cannot be 
required to accept work other than that in which he has been 
engaged; but if the conditions are such that they are substandard, 
that they are lower than those prevailing for similar work in the 
locality, the employee cannot be denied compensation.''\4\
---------------------------------------------------------------------------

    \4\ HEARINGS BEFORE THE COMMITTEE OF WAYS AND MEANS, HOUSE OF 
REPRESENTATIVES, 74th Cong., 1st Sess., on H.R. 4120, pp. 137-38.
---------------------------------------------------------------------------

    It is plain that the purpose of section 3304(a)(5)(B) is to 
prevent the tax credit from being available in support of State 
unemployment compensation laws which are used, among other things, 
to depress wage rates or other working conditions to a point 
substantially below those prevailing for

[[Page 50602]]

similar work in the locality. The provision, therefore, requires a 
liberal construction in order to carry out the Congressional intent 
and the public policy embodied therein. Interpretation is required, 
for the term ``new work'' is by no means unambiguous. But any 
ambiguity should be resolved in the light of such intent and public 
policy.

Interpretation of ``New Work''

    For the purpose of applying the prevailing conditions-of-work 
standard in section 3304(a)(5)(B) of the Federal Unemployment Tax 
Act, an offer of new work includes (1) an offer of work to an 
unemployed individual by an employer with whom he has never had a 
contract of employment; (2) an offer of re-employment to an 
unemployed individual by his last (or any other) employer with whom 
he does not have a contract of employment at the time the offer is 
made; and (3) an offer by an individual's present employer of (a) 
different duties from those he has agreed to perform in his existing 
contract of employment, or (b) different terms or conditions of 
employment from those in his existing contract.\5\
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    \5\ The ``group attachment'' concept is outside the scope of 
this letter. ``Group attachment'' arises under the provisions of an 
industry-wide collective bargaining agreement between a group of 
workers and a group of employers whereby workers cannot be hired 
directly by individual employers but are referred to employers by a 
hiring hall on a rotational basis and under which each worker has a 
legally enforceable right to his equal share of the available work 
with such employers. See Matson Terminals Inc. v. California 
Employment Commission, 151 P. 2d 202, discussed in the Secretary's 
decision with respect to Washington dated December 28, 1949, and the 
Secretary's decision in the California conformity case. Benefit 
Series, FSLS 315.05.1.
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    This definition makes the determination of whether an offer is 
of ``new work'' depend on whether the offer is of a new contract of 
employment. This we believe is sound.
    All work is performed under a contract of employment between a 
worker and his employer. The contract describes the duties the 
parties have agreed the worker is to perform, and the terms and 
conditions under which the worker is to perform them. If the duties, 
terms, or conditions of the work offered by an employer are covered 
by an existing contract between him and the worker, the offer is not 
of new work. On the other hand, if the duties, terms, or conditions 
of the work offered by an employer are not covered by an existing 
contract between him and the worker, the offer is of a new contract 
of employment and is, therefore, new work.
    It is not difficult to agree that ``new work'' clearly includes 
an offer of work to an unemployed individual by an employer with 
whom he has never had a contract of employment; that is, an employer 
for whom he has never worked before. If the worker has never had a 
contract of employment with the offering employer, the fact-finding 
and the application of the test are simple.
    But if the phrase ``new work'' were limited to work with an 
employer for whom the individual has never worked, it is plain that 
the purpose of section 3304(a)(5)(B) would be largely nullified. It 
can make no difference, insofar as that purpose is concerned, that 
the unemployed worker is offered re-employ ment by his former 
employer rather than employment by one in whose employ he has never 
been. It can make no difference either in the application of the 
test. The question is whether the offer of re-employment is an offer 
of a new contract of employment. If the worker quit his job with the 
employer, or was discharged or laid off indefinitely, the existing 
contract of employment was thereby terminated. An indefinite layoff, 
that is, a layoff for an indefinite period with no fixed or 
determined date of recall, is the equivalent of a discharge. The 
existence of a seniority right to recall does not continue the 
contract of employment beyond the date of layoff. Such a seniority 
right is the worker's right; it does not obligate the worker to 
accept the recall and does not require the employer to recall the 
worker. It only requires the employer to offer work to the holder of 
the right, before offering it to individuals with less seniority.
    Any offer made after the termination is of a new contract of 
employment, whether the duties offered to the worker are the same or 
different from those he had performed under his prior contract, or 
are under the same or different terms or conditions from those which 
governed his last employment. There is not, however, a termination 
of the existing contract when the worker is given a vacation, with 
or without pay, or a short-term layoff for a definite period. When 
the job offer is from an employer for whom the individual had 
previously worked, inquiry must be made as to whether the contract 
with the employer was terminated, and if so, how?
    Although it has been more difficult for some to see, the 
situation is no different when an individual's present employer 
tells him that he must either accept a transfer to other duties or a 
change in the terms and conditions of his employment, or lose his 
job. Applying the test, it is clear that an attempted change in the 
duties, terms, or conditions of the work, not authorized by the 
existing employment contract, is in effect a termination of the 
existing contract and the offer of a new contract. Not only is this 
a sound application of legal principles, but it is thoroughly in 
harmony with the underlying purpose of the prevailing conditions of 
work provision. That purpose would be largely frustrated if benefits 
were denied for unemployment resulting from the worker's refusal to 
submit to a change in working conditions which would cause these 
conditions to be substantially less favorable to a claimant than 
those prevailing for similar work in the locality. The denial of 
benefits in such circumstances would tend to depress wages and 
working conditions just as much as a denial of benefits for a 
refusal by an unemployed worker to accept work under substandard 
conditions. If a proposed change in the duties, terms, or 
conditions-of-work not authorized by the existing employment 
contract were not ``new work,'' prevailing wage and conditions-of-
work standard could be substantially impaired by employers who hired 
workers at prevailing wages and conditions, and thereafter reduced 
the wages or changed the conditions, thereby depriving workers of 
the protection intended to be given them by the prevailing wage and 
conditions-of-work standard. The terms of the existing contract, so 
important in this situation, are questions of fact to be ascertained 
as are other questions of fact.
    The following are examples of offers of new work by the employer 
for whom the individual is working at the time of the offer:
    a. A worker employed as a carpenter is offered work as a 
carpenter's helper as an alternative to a layoff.
    b. A bookkeeper is transferred to a job as a typist.
    c. The hours of work of a factory worker employed for an 8-hour 
day are changed to 10 hours a day.
    d. A worker employed with substantial fringe benefits is 
informed that he will no longer receive such benefits.
    e. A worker employed at a wage of $3 an hour is informed that he 
will thereafter receive only $2 an hour.
    In each of these cases either the offered duties are not those 
which the worker is to perform for the employer under his existing 
contract of employment, or the offered conditions are different from 
those provided in the existing contract.

Applying the Prevailing Conditions-of-Work Standard

    The prevailing wage and conditions-of-work standard does not 
require a claims deputy or a hearing officer to inquire into 
prevailing wages, hours, or working conditions in every case of 
refusal of new work, or to determine in every such case in which he 
denies benefits whether the wages, hours, or other conditions of 
offered work are substandard. This would be unnecessarily 
burdensome. However, a determination must be made as to prevailing 
conditions of work when (1) the claimant specifically raises the 
issue, (2) the claimant objects on any ground to the suitability of 
wages, hours, or other offered conditions, or (3) facts appear at 
any stage of the administrative proceedings which put the agency or 
hearing officer on notice that the wages, hours, or other conditions 
of offered work might be substantially less favorable to the 
claimant than those prevailing for similar work in the locality.
    State agency determinations and decisions at all levels of 
adjudication must reflect the State agency's consideration of 
prevailing conditions of work factors when pertinent. In particular, 
referees' decisions as to benefit claims must contain, in cases 
where issues arise as indicated above, appropriate findings of fact 
and conclusions of law with respect to the prevailing conditions-of-
work standard. This is so whether the State ultimately determines 
the worker's right to benefits under the refusal-of-work provision 
of the State law or some other provision, as, for example, under the 
voluntary quit provision. Since the Federal law requires, for 
conformity, that State laws include a provision prohibiting denial 
of benefits for refusal of new work where the conditions of the 
offered work are substantially less favorable to the individual than 
the conditions prevailing for similar work, there cannot be, under 
the State law, a denial in such circumstances regardless of the 
provision of State law under which the ultimate determination is 
made.

[[Page 50603]]

    In applying the labor standards, the State agency must determine 
first whether the offered work is ``new work.'' If it is ``new 
work'' a determination must be made as to (1) what is similar work 
to the offered work, and (2) what are the prevailing wages, hours, 
or other conditions for similar work in the locality, and (3) 
whether the offered work is substantially less favorable to the 
particular claimant than the prevailing wages, hours, or other 
conditions. The key words and phrases in this standard (``similar 
work,'' ``locality,'' ``substantially less favorable to the 
individual,'' and ``wages, hours, and other conditions of work'') 
are discussed in detail in the Bureau's statement, Principles 
Underlying the Prevailing Conditions of Work Standard, Benefit 
Series, September 1950, 1-BP-1, BSSUI (originally issued January 6, 
1947 as Unemployment Compensation Program Letter No. 130).
    Please bring this letter to the attention of State agency and 
Appeal Board personnel engaged in benefit claim adjudication at all 
levels.
    RESCISSIONS: None.
      Sincerely yours,
Robert C. Goodwin,
Administrator.
[FR Doc. 98-25257 Filed 9-21-98; 8:45 am]
BILLING CODE 4510-30-P