[Federal Register Volume 65, Number 144 (Wednesday, July 26, 2000)]
[Notices]
[Pages 46000-46003]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-18867]


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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 41-98, Change 1

    UIPL 41-98, Change 1, provides further information and guidance 
concerning the requirements of the prevailing conditions of work 
provisions of Section 3304(a)(5)(B) of the Federal Unemployment Tax 
Act. It also provides answers to questions raised by State Employment 
Security Agencies and other interested parties.

    Dated: July 20, 2000.
Raymond Bramucci,
Assistant Secretary of Labor.

U.S. Department of Labor

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

Classification: UI
Correspondence Symbol: TEUL
Date: July 19, 2000

    Directive: Unemployment Insurance Program Letter No. 41-98 Change 
1.
    To: All State Employment Security Agencies.
    From: Grace A. Kilbane, Administrator, Office of Workforce 
Security.
    Subject: Application of the Prevailing Conditions of Work 
Requirement--Questions and Answers.
    1. Purpose. To provide further information and guidance concerning 
the requirements of the prevailing conditions of work provisions of the 
Federal Unemployment Tax Act (FUTA) and to provide answers to questions 
raised by State Employment Security Agencies (SESAs) and other 
interested parties.
    2. References. Section 3304(a)(5)(B), FUTA; Unemployment 
Compensation Program Letter (UCPL) No. 130; Unemployment Insurance 
Program Letter (UIPL) No. 984; UIPL No. 41-98;

[[Page 46001]]

Sections 6010-6015, Part V, of the Employment Security Manual.
    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 the State shall not deny unemployment 
compensation (UC) 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;

    On August 17, 1998, the Department of Labor issued UIPL No. 41-98 
to remind States of the requirements of the prevailing conditions of 
work provision of Section 3304(a)(5)(B), FUTA, and to provide 
additional guidance to States when adjudicating prevailing conditions 
issues. UIPL No. 41-98 reiterated the guidance previously issued in 
UCPL No. 130 and UIPL No. 984 and addressed a change in the labor 
market (since the issuance of those two program letters)--the increase 
in temporary work--and its relation to the prevailing conditions 
requirement. It also expanded on the guidance found in UIPL No. 984 
that a change in the duties, terms, or conditions of the work is, in 
effect, an offer of ``new work.''
    The Department has received several comments and questions 
requesting further information and guidance concerning the prevailing 
conditions of work requirement. Therefore, this Change 1, incorporating 
answers to common questions regarding this requirement, is issued to 
assist States in applying the provision.
    4. Inquiries. Please direct inquiries to the appropriate Regional 
Office.
    Attachment--Questions and Answers.

Questions and Answers

I. New Work

    Q1. What constitutes new work?
    A. New work is defined in both UIPL No. 41-98 and UIPL No. 984. On 
page 4, Section 4.b., of UIPL No. 41-98, new work is defined to 
include:
    (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. [Emphasis in original.]
    This restates the definition of new work contained on page 3 of 
UIPL No. 984.
    Q2. How does the definition of new work apply to changes in the 
employment conditions for an individual by the current employer? Is any 
change in conditions an offer of new work?
    A. States are not required to treat any minor change in a job 
situation as an offer of new work. For a change in job situation to be 
considered new work, the change must be material. For example, if an 
individual is reassigned from one general secretarial position to 
another general secretarial position, and the only change is a 
different supervisor, an offer of new work does not exist under the 
prevailing conditions requirements. On the other hand, if the new 
assignment is as an accounting clerk, when the previous assignment was 
as a secretary, the change is material and the prevailing conditions 
requirements apply. (Note that the actual duties, and not simply job 
titles, must be examined. See Q & A #10.) This test for new work with a 
current employer applies to new assignments from either permanent 
employers or temporary help firms. In applying this test to either 
situation, States must determine on a case-by-case basis whether a 
change is material.\1\
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    \1\ Some changes in working conditions, such as a change in the 
physical location of the work, while not raising an issue under the 
Federal prevailing conditions requirements, may create an inquiry as 
to whether the work meets the suitability requirements of State law.
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    Q3. When an individual works for a temporary help firm, and an 
assignment ends, is the offer of another assignment new work?
    A. Not always. For the new assignment to be new work, the change 
between the assignments must be material. For example, if the first 
assignment was as a secretary at a rate of pay of $10 per hour at ABC 
Company, and the second assignment is as a secretary at a rate of pay 
of $10 per hour for XYZ Company (and there are no other changes), the 
second assignment is not an offer of new work, because the change in 
conditions is not material. On the other hand, if the second assignment 
is as an accounting clerk, even at the same rate of pay, the change is 
material, because the duties are substantially different; therefore, 
the offer is an offer of new work. (As discussed in Q and A #10, the 
actual duties, and not simply job titles, must be examined.) 
Alternatively, if the second assignment is as a secretary, but at a 
rate of pay of $8 an hour, a material change in conditions exists.
    Q4. Does a new assignment from a temporary help firm constitute new 
work when there is no break in employment between assignments? For 
example, if the individual's first assignment ends on Tuesday and the 
new assignment starts on Wednesday, there is no break in employment.
    A. Provided the new assignment meets all other criteria for new 
work, the new assignment is new work. Whether there is a break in the 
employment relationship is not relevant. As stated in UIPL 41-98, new 
work includes an offer by an individual's ``present employer.''

II. Determining Prevailing Conditions

    Q5. May temporary work be compared only with temporary work for 
purposes of determining what constitutes similar work?
    A. No. UIPL No. 41-98 states (on page 10) that new temporary work 
must be compared not just with similar temporary work, but with ``all 
work, temporary and permanent, in a similar occupational category.'' 
This statement continued the Department's precedent established in UCPL 
No. 130, dating from 1947, that the work offered is compared with 
similar work in the occupation. UCPL No. 130 also states on page 5 of 
its attachment that--

Neither should the question of what is similar work be determined on 
the basis of other factors [such as] * * * the permanency of the work. 
* * * 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? [Emphasis in original.]

    The Department believes that the use of occupation is the proper 
starting point for determining what is and is not similar work. 
However, as discussed in Question and Answer 9 below, it is not 
sufficient in itself. If the basic type of work offered (for example, 
secretarial) for temporary employment is the same basic type of work 
offered for permanent employment, then the difference is in one of the 
conditions of the employment--permanent or temporary. Since the 
prevailing conditions requirement applies to ``wages, hours or other 
conditions of work,'' the temporary nature of the work must be taken 
into account in applying the prevailing conditions of work requirement 
and in determining

[[Page 46002]]

whether the work offered is substantially less favorable to the 
individual.
    Q6. Must fringe benefits be considered in every case involving a 
prevailing conditions issue?
    A. No. When a prevailing conditions issue is raised, the State need 
only examine those prevailing conditions such as hours, wages, physical 
conditions of the work, or fringe benefits that the State has reason to 
believe may be less than prevailing. However, if the individual raises 
a prevailing conditions of work issue concerning fringe benefits, the 
fringe benefits must be examined.
    Q7. May wage and fringe benefit packages be combined when 
determining what is prevailing? May they be combined even if one 
element is not prevailing? For example, a building trades job offers 
higher than prevailing wages but no health insurance or retirement plan 
where those benefits are a prevailing condition in the locality. Must a 
value be placed on the fringe benefits to make a comparison?
    A. FUTA is silent on this matter. Therefore, States may either 
consider fringe benefits as part of wages or treat them separately for 
purposes of the prevailing conditions requirement. If a State combines 
fringe benefits with wages, fringe benefits must be given a cash value 
and included in the calculation of wages.
    Q8. May the State presume that a negotiated union wage and benefit 
package is not substantially less favorable than the conditions 
prevailing in the locality?
    A. No. Determinations must not be made based on presumptions. 
States always must obtain as much information as necessary in each 
individual case to support a decision that conditions of a job offer 
meet the prevailing conditions requirement.
    Q9. May the existence of a contract, collectively bargained or 
otherwise, that grants the employer the right to change employment 
conditions obviate the requirement to analyze whether a change in 
employment is new work? For example, a contract may provide for bumping 
rights as a result of a reduction-in-force or give management the right 
to transfer the worker to a new job.
    A. No. As stated in Section 4.b. of UIPL No. 41-98, a finding that 
a change in employment is new work may not be limited by an employment 
contract which grants the employer the right to change employment 
conditions. This applies even if the employer is forced to change the 
employment conditions as a result of a collective bargaining agreement.
    Q10. May the inquiry of what constitutes ``similar work'' be 
limited to occupation?
    A. No. Occupation by itself is not sufficient. As stated on page 4 
of the attachment to UCPL No. 130, ``job titles are sometimes 
misleading.'' This UCPL also states that:

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 
performed, the skill, ability and knowledge required, and the 
responsibilities involved. [Emphasis in original.]

    In sum, the State must consider the knowledge, skills, abilities, 
and duties involved in the work.
    Q11. Must States determine a separate prevailing criterion for 
entry level versus all other steps within a given occupation?
    A. Yes. If the issue is skill grade within an occupation, the State 
must break down the given occupation accordingly. States also must 
distinguish other steps within the occupation from each other, when 
important differences exist between those steps. See also the answer to 
the previous question. In addition, as stated on pages 4 and 5 of the 
attachment to UCPL No. 130:

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.

    The UCPL goes on to state:

[T]he 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.

    Q12. Is asking the parties the only feasible way of obtaining labor 
market information as to prevailing fringe benefits?
    A. Not necessarily. However, alternatives are sometimes not 
available. States should, however, first use whatever resources are 
available to determine prevailing fringe benefits. Some sources are 
unions, Job Service records, or the Bureau of Labor Statistics.

III. Substantially Less Favorable to the Individual

    Q13. Are assignments offered by a temporary help agency always 
substantially less favorable to the individual than permanent 
employment?
    A. No. There are several considerations that must be addressed to 
determine if the offer is substantially less favorable to the 
individual.
    States must first determine whether the temporary nature of the 
work offered is prevailing in the locality. As noted on page 10 of UIPL 
No. 41-98, if ``the norm for a particular occupation in a locality is 
temporary work, then temporary work is the prevailing condition of such 
work.'' There then exists no issue whether the temporary nature of new 
work is substantially less favorable to the individual. (However, 
fringe benefits, wages, hours, and other conditions also may be 
relevant in determining if the offer is substantially less favorable to 
the individual.)
    Another consideration is whether the temporary employer 
demonstrates that the ``temporary'' worker will continue to be employed 
at the end of each individual assignment, but merely on different 
assignments with the same duties and pay. If this occurs, then the 
duration of the work is indefinite.
    Another consideration is whether a particular condition (such as 
the temporary nature of the work refused) is actually less favorable to 
the individual than that prevailing for similar work in the locality. 
The next question and answer addresses this issue.
    As is the case for all determinations, determinations regarding 
whether the work is substantially less favorable to the individual must 
be made by the State in accordance with the requirements of the 
Standard for Claims Determination, Sections 6010-6015, Part V, of the 
Employment Security Manual.
    Q14. May the language ``to the individual'' be applied so as to 
interpret a short-term offer from a temporary help agency as being not 
substantially less favorable to an individual who has sought out and 
desires work in the temporary (as opposed to the permanent) market 
because of personal circumstances, such as a need to be flexibly in and 
out of the labor market?

[[Page 46003]]

    A. Yes. If the temporary nature of the work is a voluntary or 
favorable condition of work for the individual, then UC may be denied 
if work is refused. As stated in the last full paragraph on page 10 of 
UIPL No. 41-98, ``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, then the work offered is `not less favorable to the 
individual' than the work prevailing in the locality.''
    Q15. May a State deny UC if an individual refuses an offer of work 
on a non-prevailing shift? Does the answer change if the individual has 
a preference for the non-prevailing shift?
    A. A State may not deny UC in this instance unless the individual 
has a preference for the non-prevailing shift. Shifts are addressed on 
page 22 of UCPL No. 130: ``* * * 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.''
    The State must, however, determine whether working on a certain 
shift actually is a non-prevailing condition. For example, suppose that 
the prevailing condition for a particular type of work in a given 
locality is that almost all employers operate three shifts a day. 
Therefore, the State could determine that any of the three shifts meets 
the prevailing conditions requirement. Conversely, if the prevailing 
condition in the locality is to operate only two shifts, a day shift 
and an evening shift, an offer of work on a third shift, the night 
shift, would fail to meet the prevailing conditions test. However, if 
the individual has a preference for the non-prevailing shift, then that 
shift is not a condition of work that is less favorable to the 
individual and UC may be denied. (Also see the footnote to Question 2 
above.)

[FR Doc. 00-18867 Filed 7-25-00; 8:45 am]
BILLING CODE 4510-30-P