[Federal Register Volume 72, Number 9 (Tuesday, January 16, 2007)]
[Rules and Regulations]
[Pages 1890-1895]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-155]



[[Page 1889]]

-----------------------------------------------------------------------

Part III





Department of Labor





-----------------------------------------------------------------------



Employment and Training Administration



-----------------------------------------------------------------------



20 CFR Part 604



Unemployment Compensation--Eligibility; Final Rule

  Federal Register / Vol. 72, No. 9 / Tuesday, January 16, 2007 / Rules 
and Regulations  

[[Page 1890]]


-----------------------------------------------------------------------

DEPARTMENT OF LABOR

Employment and Training Administration

20 CFR Part 604

RIN 1205-AB41


Unemployment Compensation--Eligibility

AGENCY: Employment and Training Administration, Labor.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: The Department of Labor (Department) is issuing this Final 
Rule to implement the requirements of the Social Security Act (SSA) and 
the Federal Unemployment Tax Act (FUTA) that limit a State's payment of 
unemployment compensation (UC) only to individuals who are able and 
available (A&A) for work. This rule applies to all State UC laws and 
programs.

DATES: Effective Date: This Final Rule is effective February 15, 2007.

FOR FURTHER INFORMATION CONTACT: Gerard Hildebrand, Office of Workforce 
Security, ETA, U.S. Department of Labor, 200 Constitution Avenue, NW., 
Room C-4518, Washington, DC 20210. Telephone: (202) 693-3038 (voice) 
(this is not a toll-free number); 1-800-326-2577 (TDD); facsimile: 
(202) 693-2874; e-mail: [email protected].

SUPPLEMENTARY INFORMATION:

I. Background

    On July 22, 2005, the Department published a Notice of Proposed 
Rulemaking (NPRM) concerning the A&A requirement at 70 FR 42474. The 
Department invited comments through September 20, 2005.

II. General Discussion of the Final Rule

    The Department and its predecessors (the Social Security Board and 
the Federal Security Agency) have consistently interpreted provisions 
of Federal UC law, contained in the SSA and the FUTA, to require that 
States, as a condition of participation in the Federal-State UC 
program, limit the payment of UC to individuals who are A&A. As 
explained in the NPRM, the UC program is designed to provide temporary 
wage insurance for individuals who are unemployed due to a lack of 
suitable work. The Federal A&A rules implement this design by testing 
whether the fact that an individual did not work for any week was 
involuntary due to the unavailability of suitable work. Although this 
interpretation is longstanding, it has never been comprehensively 
addressed in a rule in the Code of Federal Regulations (CFR).
    The A&A requirement is implicit in the structure and purpose of the 
SSA and the FUTA, and Congress has repeatedly adopted, acquiesced in, 
and relied on the Department's interpretation that Federal UC law 
includes an A&A requirement. Nevertheless, because the A&A requirement 
is not explicitly stated in Federal law or the CFR, some confusion 
exists regarding the validity of the A&A requirement as well as its 
scope and application.
    This confusion became especially clear in rulemakings that created 
and then removed the Birth and Adoption UC (BAA-UC) regulation, which 
permitted States to pay UC to new parents who stopped work following 
the birth or adoption of a child. See 65 FR 37210 (June 13, 2000) for 
the BAA-UC Final Rule, and 68 FR 58540 (Oct. 9, 2003) for the final 
rule removing the BAA-UC rule. In both rulemakings, commenters argued 
that there are no specific A&A requirements set out in Federal law and 
that Congress expressly rejected A&A requirements. In the course of 
these rulemakings, it also became clear that misconceptions existed 
about the application and scope of the Federal A&A requirement. For 
example, misconceptions existed about why the Department permitted 
individuals to be treated as A&A in certain situations. The Department 
discussed these situations in detail at 68 FR 58540, 58543-58545 (Oct. 
9, 2003). As another example, some commenters viewed an active work 
search as a necessary component of the A&A requirement. However, this 
is not the Department's position.
    As a result of this confusion, the Department issued an NPRM 
clearly setting forth its interpretation of the A&A requirement and is 
now issuing this Final Rule. This Final Rule does not regulate other 
areas of the UC program, such as monetary entitlement or 
disqualifications for such actions as voluntarily quitting employment. 
This Final Rule also does not address Federal labor laws (such as 
minimum wage or overtime laws) or disability nondiscrimination laws 
(such as the Section 504 of the Rehabilitation Act of 1973), which 
might affect the administration of the A&A requirement.

III. Summary of the Comments and Regulatory Changes

Comments Received on the Proposed Rule

    The Department received 25 pieces of correspondence commenting on 
the NPRM by the close of the comment period. Thirteen comments were 
from State UC agencies. Five comments were from business or employer 
interest groups, and seven comments were from worker advocacy groups. 
The Department considered all timely comments and included them in the 
rulemaking record. One late comment was not considered.
    These comments are discussed below in the Discussion of Comments. 
Also discussed below are all substantive changes made to the rule that 
stem from the comments received. Non-substantive changes are not 
discussed.

Discussion of Comments

    Need for Rule. Several commenters supported the rule. One of these 
supporters noted that ``Although the `A&A' test has always been a 
Federal requirement, the absence of any clear, readily available and 
legally binding statement articulating this policy has encouraged many 
inappropriate'' legislative proposals. Another supporter stated that 
``In recent years, we have seen legislation introduced in a number of 
States, which we believe to be in violation of the longstanding 
interpretation of the eligibility rules under FUTA. This proposed rule 
will greatly clarify the situation for the States * * *.''
    Conversely, several commenters stated that the rule was either not 
necessary, or that the Department failed to specify any controversy or 
confusion over the validity of the A&A requirement, aside from issues 
related to the BAA-UC regulation. Nonetheless, one of these commenters 
did acknowledge that there is a ``difference of opinion between the 
Department and some commentators'' concerning the existence and nature 
of the A&A requirement.
    The Department believes that the commenters' divergence of opinion 
on this matter serve to reinforce its view that rulemaking is necessary 
to put any doubt about its position to rest and to avoid controversies 
regarding the existence and nature of a Federal A&A requirement.
    Individuals with Disabilities. Several commenters suggested the 
rule address the making of a ``reasonable accommodation'' under the 
Americans with Disabilities Act for individuals with disabilities. The 
principal reason

[[Page 1891]]

the Department undertook the creation of the rule was to eliminate 
confusion about the existence and nature of the A&A requirement in 
Federal UC law. This limited purpose was noted in the NPRM at 70 FR 
42474: ``This rule also does not address federal labor laws * * * or 
disability nondiscrimination laws * * *'' In addition, the Department's 
regulations at 29 CFR part 32 already place obligations on States 
regarding nondiscrimination on the basis of disability. Determining 
whether an individual with a disability is A&A under the rule is a 
case-by-case determination. The Department believes that program 
letters rather than a regulation are better vehicles for applying 
general nondiscrimination obligations to case-by-case State 
determinations on whether an individual with a disability is A&A. 
Therefore, no change is made to the rule as a result of these comments.
    Minimum Requirement and State Flexibility. Several commenters 
viewed the rule as restricting State flexibility in ways that would 
adversely affect eligibility. For example, one commenter stated that, 
``As currently written, the standards actively restrict or discourage 
States from taking steps to make the UI system accessible to the 
changing workforce, including individuals who are domestic violence 
survivors, who must seek work on a part-time basis * * * '' This 
commenter went on to state ``that the proposed regulations * * * may 
serve to restrict UI coverage and deal a serious blow to State laws 
currently in effect that have expanded coverage to previously 
underserved categories of workers.'' Conversely, one commenter 
suggested that the rule be clarified to more clearly state that it 
creates only minimum requirements.
    Although the Department agrees that States should retain wide 
latitude in crafting their UC laws, it also believes that State laws 
must assure that an individual's unemployment for any week is 
involuntary due to the unavailability of suitable work. This 
requirement protects the integrity of the UC program and the State's 
unemployment fund. The Department believes that the rule provides 
States with considerable flexibility because it merely provides that 
States must require an individual to meet a minimum test of A&A.
    More specifically, nothing in the rule requires that a State apply 
a single A&A test to all individuals. As a result, States continue to 
have the flexibility to apply a more liberal A&A test to victims of 
domestic violence than to other individuals. All that is required is 
that the individual meet the rule's minimum A&A test.
    Concerning part-time work, the proposed rule established a very 
broad test of availability: an individual may be considered available 
if the ``individual is available for any work for all or a portion of 
the week claimed,'' as long as the individual is not withdrawing from 
the labor market. 70 FR 42474, 42481 (emphasis added); Sec.  
604.5(a)(1). Similar language exists for the ``able'' requirement. See 
70 FR 42474, 42481; Sec.  604.4(a). The language referring to ``a 
portion of the week'' recognizes that an individual may be eligible if 
``A&A'' only for part-time work. Accordingly, the Department has not 
changed the proposed rule as a result of these comments regarding State 
flexibility.
    Concerning the comment that the rule should more clearly state that 
it creates only a minimum requirement, the Department believes the 
proposed rule was clear in its statement that it ``does not limit the 
States' ability to impose additional able and available requirements 
that are consistent with applicable Federal laws.'' 70 FR 42474, 42481; 
Sec.  604.3(c). Accordingly, the Department has not changed the 
proposed rule as a result of this comment.
    Work Search. Several commenters stated that conducting an active 
search for work is a necessary component of availability and should be 
addressed in future rulemakings. The Department agrees that, as a 
policy matter, States should require an active search for work, but 
does not agree that the suggested rulemaking is appropriate. The 
Department's contemporaneous interpretation of the original SSA in 1935 
was that Federal law does not require a work search for the regular UC 
program.
    Thereafter, in the early 1980's, Congress examined the issue of 
work search in the UC program. This examination did not result in a 
search for work requirement for the regular UC program. Instead, it 
resulted in the creation of a ``sustained and systematic'' search for 
work requirement only for the Federal-State extended benefits program. 
Pub. L. 96-499, Sec.  1024(a) (1980) (amending the Federal-State 
Extended Unemployment Compensation Act of 1970 Sec.  202(a)(3), tit. II 
at Sec.  202(a)(3)(E)). Therefore, the Department believes that 
Congress is well aware of the Department's longstanding interpretation 
that there is no Federal work search requirement and has not chosen to 
add a work search requirement. Any work search requirement would need 
to be legislated by Congress.
    Labor Market Attachment. Several commenters objected to the 
requirement that A&A be tested in terms of whether the individual has 
withdrawn from the labor market as discussed in Sec. Sec.  604.4(a) and 
604.5(a)(1)-(2) . Specifically, these commenters averred that this 
``withdrawal'' test imposed a new and more rigid standard for A&A and 
suitable work cases than had previously existed. Commenters also 
expressed concerns that application of the ``withdrawal'' test would 
result in States denying UC to an individual even though no 
``suitable'' work is available in the labor market, which would be 
inconsistent with one of the Department's stated rationales for this 
rulemaking in that UC should be paid for a lack of ``suitable'' work.
    The Department does not believe that this test is new, rigid, or 
would require a denial of UC where no ``suitable'' work is available. 
Several commenters claiming the test was new stated that it was a 
departure from a Departmental issuance from 1962. However, as noted in 
the preamble to the proposed rule, that issuance actually provided for 
the labor market test described in the proposed rule:

    ``The availability requirement means that the claimant must be 
available for suitable work which is ordinarily performed in his 
chosen locality in sufficient amount to constitute a substantial 
labor market for his services. A claimant does not satisfy the 
requirement by being available for an insignificant amount of work. 
Ordinarily, for example, a concert pianist in a rural area who 
limits his availability to concert work in that area is not 
available for enough suitable work to meet the requirement.''

    70 FR 42474, 42476 (July 22, 2005) (quoting U.S. Department of 
Labor, Bureau of Employment Security, Unemployment Insurance 
Legislative Policy--Recommendations for State Legislation 1962 (October 
1962)).
    The Department believes the ``withdrawal'' test balances the need 
to assure genuine attachment by the individual to the labor market--
which is what the A&A requirement is testing--with the need to 
recognize that, due to labor market fluctuations, work in the 
individual's usual and customary occupation may not be available at any 
given time. In fact, contrary to the commenters' assertions, the 
``withdrawal'' test provides the States with greater flexibility as it 
permits States to pay UC to individuals who have A&A restrictions, such 
as limiting availability to part-time work, as long as the restrictions 
do not amount to a withdrawal from the labor market. Without this 
``withdrawal'' test, individuals with any restrictions would

[[Page 1892]]

be denied and the regulation would be rigid, as the commenters assert.
    The proposed and final rule at Sec.  604.3(b) emphasizes the 
minimal nature of the ``withdrawal'' test by stating that:

    Whether an individual is able to work and available for work * * 
* will be tested by determining whether the individual is offering 
services for which a labor market exists. This does not mean that 
job vacancies must exist, only that, at a minimum, the type of 
services the individual is able and available to perform is 
generally performed in the labor market.

    Under this test, if the services offered by an individual are 
restricted to the point that the services are not generally performed 
in the labor market (that is, the individual has withdrawn from the 
labor market), then the individual is unemployed as a result of those 
restrictions and is not eligible for UC. Those restrictions on services 
could be for any number of reasons, such as hours of availability, the 
distance the individual is willing to commute, or what types of jobs 
the individual is willing or able to accept. Holding an individual 
unavailable due to such restrictions is neither novel nor inconsistent 
with the notion that UC is for individuals who are involuntarily 
unemployed due to lack of suitable work. At the same time, as noted, 
the ``withdrawal'' test provides flexibility as it permits payment of 
benefits to individuals who place some restrictions on their 
availability, but who have not withdrawn from the labor market.
    The Department also notes that the rule does not require a denial 
of UC simply because no ``suitable'' work was available at a particular 
time. As noted, the rule balances the need to assure genuine attachment 
to the labor force with labor market conditions that cause a lack of 
work in the individual's usual and customary occupation. Thus, on the 
one hand, jobs of the type that the individual is making him or herself 
available for must be performed in the labor market, even if no new job 
openings currently exist. On the other hand, if the individual 
restricts his or her availability to jobs for which there is no labor 
market, the individual is not available.
    The proposed and final rule at Sec.  604.5(a)(2) affords further 
flexibility by providing that what is ``suitable'' is determined under 
State law. This provision allows the State to take into consideration 
the education and training of the individual, among other factors.
    What a State law may not do, however, is to define ``suitable'' 
work in such a way that it permits the individual to limit his or her 
availability in a way that constitutes a withdrawal from the labor 
market. To emphasize this point, Sec.  604.5(a)(2) of the proposed rule 
has been changed from ``The individual limits his or her availability 
to work which is suitable for such individual as determined under the 
State UC law, provided such limitation does not constitute a withdrawal 
from the labor market'' to ``The individual limits his or her 
availability to work which is suitable for such individual as 
determined under the State UC law, provided the State law definition of 
suitable work does not permit the individual to limit his or her 
availability in such a way that the individual has withdrawn from the 
labor market.''
    Availability and Illness. A State comment addressed the proposed 
rule's provision at Sec.  604.4(b), which permits an individual to be 
considered ``able'' to work if the ``individual has previously 
demonstrated his or her ability to work and availability for work 
following the most recent separation from employment,'' unless the 
individual has refused an offer of suitable work due to such illness or 
injury. This commenter noted the lack of a parallel provision in the 
``available for work'' section of the rule and questioned whether this 
meant the individual, although considered ``able to work,'' must be 
denied for not being available for work. The Department did not intend 
this individual to be denied for not being available for work. As a 
result of this comment, Sec.  604.5(g) of the Final Rule allows a State 
to find an individual available for work if it finds that the 
individual is able to work under Sec.  604.4(b), despite the 
individual's illness or injury. Further, as a result of this change, 
Sec.  604.5(g) of the proposed rule was re-designated to Sec.  604.5(h) 
in this Final Rule.
    Aliens. Section 604.5(f) of the proposed rule provided that to be 
considered available for work for a week (and thus potentially eligible 
for UC for that week), an ``alien must be legally authorized to work 
that week in the United States by the appropriate agency of the United 
States government.'' Several commenters requested that specific 
situations involving alien eligibility be addressed in the Final Rule, 
notably regarding aliens with H-1B visas. Since legislation and Federal 
regulations governing alien status and work authorization frequently 
change, the Department believes it unwise to specify in Part 604 which 
classes of aliens have work authorization and may therefore be found 
legally available for work. Rather, the Department will issue program 
letters relaying information on alien work authorization from the 
United States Citizenship and Immigration Service. Accordingly, no 
change is made to the rule as a result of this comment. The Department 
did delete unnecessary language, however.
    Finally, the Department put a number of the provisions of the 
regulatory text into the active voice and substituted ``must'' for 
``shall'' in several places. These changes are purely stylistic; the 
Department intends no substantive change in meaning of the amended 
provisions.

IV. Administrative Information

Executive Order 12866

    The Department has determined that this Final Rule is a 
``significant regulatory action'' within the meaning of Executive Order 
12866 because it raises novel legal or policy issues arising out of 
legal mandates, the President's priorities, or the principles set forth 
in the Executive Order at section 3(f)(4). Accordingly, the Final Rule 
has been submitted to, and reviewed by, the Office of Management and 
Budget (OMB).
    However, the Department has determined that this Final Rule is not 
``economically significant'' because it does not have an annual effect 
on the economy of $100 million or more. The Department has also 
determined that the Final Rule has no adverse material impact upon the 
economy and that it does not materially alter the budgeting impact of 
entitlements, grants, user fees or loan programs, or the rights and 
obligations of recipients. This Final Rule implements the A&A 
requirements of the program consistent with the authorizing legislation 
and serves to codify longstanding program interpretations.
    Further, the Department has evaluated the rule and found it 
consistent with the regulatory philosophy and principles set forth in 
Executive Order 12866, which governs agency rulemaking. Although it 
impacts States and State UC agencies, it does not adversely affect them 
in a material way. The rule limits a State's payment of UC only to 
individuals who are A&A for work, and all State laws currently contain 
A&A requirements.

Executive Order 13132

    The Department reviewed this rule in accordance with Executive 
Order 13132, and determined that the rule may have Federalism 
implications. To this end, organizations representing State elected 
officials were contacted. These organizations expressed no concerns. 
About one-half of the comments received were from individual State

[[Page 1893]]

agencies. The Department believes this Final Rule adequately addresses 
the concerns expressed in those comments.

Executive Order 12988

    The Department drafted and reviewed this regulation according to 
Executive Order 12988 on Civil Justice Reform, and it does not unduly 
burden the Federal court system. The Department drafted the rule to 
minimize litigation and provide a clear legal standard for affected 
conduct. The Department has reviewed this Final Rule carefully to 
eliminate drafting errors and ambiguities.

Unfunded Mandates Reform Act of 1995 and Executive Order 12875

    The Department reviewed this rule under the Unfunded Mandates 
Reform Act of 1995 (UMRA) (2 U.S.C. 1501 et seq.) and Executive Order 
12875. The Department has determined that this Final Rule does not 
include any Federal mandate that may result in increased expenditures 
by State, local, or tribal governments, in the aggregate, or by the 
private sector, of $100 million or more in any one year. Accordingly, 
the Department has not prepared a budgetary impact statement.

Paperwork Reduction Act

    This regulatory action contains no information collection 
requirements.

Regulatory Flexibility Act/SBREFA

    We have notified the Chief Counsel for Advocacy, Small Business 
Administration, and made the certification under the Regulatory 
Flexibility Act (RFA) at 5 U.S.C. 605(b), that this proposed rule will 
not have a significant economic impact on a substantial number of small 
entities. Under the RFA, no regulatory flexibility analysis is required 
when the rule ``will not * * * have a significant economic impact on a 
substantial number of small entities.'' 5 U.S.C. 605(b). A small entity 
is defined as a small business, small not-for-profit organization, or 
small governmental jurisdiction. 5 U.S.C. 601(3)-(5). Therefore, the 
definition of the term ``small entity'' does not include States, State 
UC agencies, or individuals.
    This Final Rule codifies a longstanding interpretation for 
determining eligibility for unemployed individuals. This Final Rule, 
therefore, governs an entitlement program administered by the States 
and not by small governmental jurisdictions. In addition, the 
entitlement program offers benefits to unemployed individuals and does 
not directly affect the small entities as defined by the RFA. 
Therefore, the Department certifies that this Final Rule will not have 
a significant impact on a substantial number of small entities and, as 
a result, no regulatory flexibility analysis is required.
    In addition, the Department certifies that this Final Rule is not a 
major rule as defined by section 804 of the Small Business Regulatory 
Enforcement Act of 1996 (SBREFA). Under section 804 of SBREFA, a major 
rule is one that is an ``economically significant regulatory action'' 
within the meaning of Executive Order 12866. The Department certifies 
that, because this Final Rule is not an economically significant rule 
under Executive Order 12866, it also is not a major rule under SBREFA.

Effect on Family Life

    The Department certifies that this rule was assessed in accordance 
with Pub. L. 105-277, 112 Stat. 2681, and that the rule does not 
adversely affect the well-being of the nation's families.

List of Subjects in 20 CFR Part 604

    Employment and Training Administration, Labor, and Unemployment 
Compensation.

Catalogue of Federal Domestic Assistance Number

    This program is listed in the Catalogue of Federal Domestic 
Assistance at 17.225, Unemployment Insurance.

Emily Stover DeRocco,
Assistant Secretary of Labor, Employment and Training Administration.

0
For the reasons set forth in this preamble, Chapter V of Title 20, Code 
of Federal Regulations, is amended by adding a new Part 604 to read as 
follows:

PART 604--REGULATIONS FOR ELIGIBILITY FOR UNEMPLOYMENT COMPENSATION

Sec.
604.1 Purpose and scope.
604.2 Definitions.
604.3 Able and available requirement--general principles.
604.4 Application--ability to work.
604.5 Application--availability for work.
604.6 Conformity and substantial compliance.

    Authority: 42 U.S.C. 1302(a); 42 U.S.C. 503(a)(2) and (5); 26 
U.S.C. 3304(a)(1) and (4); 26 U.S.C. 3306(h); 42 U.S.C. 1320b-7(d); 
Secretary's Order No. 4-75 (40 FR 18515); and Secretary's Order No. 
14-75 (November 12, 1975).


Sec.  604.1  Purpose and Scope.

    The purpose of this Part is to implement the requirements of 
Federal UC law that limit a State's payment of UC to individuals who 
are able to work and available for work. This regulation applies to all 
State UC laws and programs.


Sec.  604.2  Definitions.

    (a) Department means the United States Department of Labor.
    (b) FUTA means the Federal Unemployment Tax Act, 26 U.S.C. 3301 et 
seq.
    (c) Social Security Act means the Social Security Act, 42 U.S.C. 
501 et seq.
    (d) State means a State of the United States of America, the 
District of Columbia, the Commonwealth of Puerto Rico, and the United 
States Virgin Islands.
    (e) State UC agency means the agency of the State charged with the 
administration of the State's UC law.
    (f) State UC law means the law of a State approved under Section 
3304(a), FUTA (26 U.S.C. 3304(a)).
    (g) Unemployment Compensation (UC) means cash benefits payable to 
individuals with respect to their unemployment.
    (h) Week of unemployment means a week of total, part-total or 
partial unemployment as defined in the State's UC law.


Sec.  604.3  Able and available requirement--general principles.

    (a) A State may pay UC only to an individual who is able to work 
and available for work for the week for which UC is claimed.
    (b) Whether an individual is able to work and available for work 
under paragraph (a) of this section must be tested by determining 
whether the individual is offering services for which a labor market 
exists. This requirement does not mean that job vacancies must exist, 
only that, at a minimum, the type of services the individual is able 
and available to perform is generally performed in the labor market. 
The State must determine the geographical scope of the labor market for 
an individual under its UC law.
    (c) The requirement that an individual be able to work and 
available for work applies only to the week of unemployment for which 
UC is claimed. It does not apply to the reasons for the individual's 
separation from employment, although the separation may indicate the 
individual was not able to work or available for work during the week 
the separation occurred. This Part does not address the authority of 
States to impose disqualifications with respect to separations. This 
Part does not limit the States' ability to impose additional able

[[Page 1894]]

and available requirements that are consistent with applicable Federal 
laws.


Sec.  604.4  Application--ability to work.

    (a) A State may consider an individual to be able to work during 
the week of unemployment claimed if the individual is able to work for 
all or a portion of the week claimed, provided any limitation on his or 
her ability to work does not constitute a withdrawal from the labor 
market.
    (b) If an individual has previously demonstrated his or her ability 
to work and availability for work following the most recent separation 
from employment, the State may consider the individual able to work 
during the week of unemployment claimed despite the individual's 
illness or injury, unless the individual has refused an offer of 
suitable work due to such illness or injury.


Sec.  604.5  Application--availability for work.

    (a) General application. A State may consider an individual to be 
available for work during the week of unemployment claimed under any of 
the following circumstances:
    (1) The individual is available for any work for all or a portion 
of the week claimed, provided that any limitation placed by the 
individual on his or her availability does not constitute a withdrawal 
from the labor market.
    (2) The individual limits his or her availability to work which is 
suitable for such individual as determined under the State UC law, 
provided the State law definition of suitable work does not permit the 
individual to limit his or her availability in such a way that the 
individual has withdrawn from the labor market. In determining whether 
the work is suitable, States may, among other factors, take into 
consideration the education and training of the individual, the 
commuting distance from the individual's home to the job, the previous 
work history of the individual (including salary and fringe benefits), 
and how long the individual has been unemployed.
    (3) The individual is on temporary lay-off and is available to work 
only for the employer that has temporarily laid-off the individual.
    (b) Jury service. If an individual has previously demonstrated his 
or her availability for work following the most recent separation from 
employment and is appearing for duty before any court under a lawfully 
issued summons during the week of unemployment claimed, a State may 
consider the individual to be available for work. For such an 
individual, attendance at jury duty may be taken as evidence of 
continued availability for work. However, if the individual does not 
appear as required by the summons, the State must determine if the 
reason for non-attendance indicates that the individual is not able to 
work or is not available for work.
    (c) Approved training. A State must not deny UC to an individual 
for failure to be available for work during a week if, during such 
week, the individual is in training with the approval of the State 
agency. However, if the individual fails to attend or otherwise 
participate in such training, the State must determine if the reason 
for non-attendance or non-participation indicates that the individual 
is not able to work or is not available for work.
    (d) Self-Employment Assistance. A State must not deny UC to an 
individual for failure to be available for work during a week if, 
during such week, the individual is participating in a self-employment 
assistance program and meets all the eligibility requirements of such 
self-employment assistance program.
    (e) Short-time compensation. A State must not deny UC to an 
individual participating in a short-time compensation (also known as 
worksharing) program under State UC law for failure to be available for 
work during a week, but such individual will be required to be 
available for his or her normal workweek.
    (f) Alien status. To be considered available for work in the United 
States for a week, the alien must be legally authorized to work that 
week in the United States by the appropriate agency of the United 
States government. In determining whether an alien is legally 
authorized to work in the United States, the State must follow the 
requirements of section 1137(d) of the SSA (42 U.S.C. 1320b-7(d)), 
which relate to verification of and determination of an alien's status.
    (g) Relation to ability to work requirement. A State may consider 
an individual available for work if the State finds the individual able 
to work under Sec.  604.4(b) despite illness or injury.
    (h) Work search. The requirement that an individual be available 
for work does not require an active work search on the part of the 
individual. States may, however, require an individual to be actively 
seeking work to be considered available for work, or States may impose 
a separate requirement that the individual must actively seek work.


Sec.  604.6  Conformity and substantial compliance.

    (a) In general. A State's UC law must conform with, and the 
administration of its law must substantially comply with, the 
requirements of this regulation for purposes of certification under:
    (1) Section 3304(c) of the FUTA (26 U.S.C. 3304(c)), with respect 
to whether employers are eligible to receive credit against the Federal 
unemployment tax established by section 3301 of the FUTA (26 U.S.C. 
3301), and
    (2) Section 302 of the SSA (42 U.S.C. 502), with respect to whether 
a State is eligible to receive Federal grants for the administration of 
its UC program.
    (b) Resolving Issues of Conformity and Substantial Compliance. For 
the purposes of resolving issues of conformity and substantial 
compliance with the requirements of this regulation, the following 
provisions of 20 CFR 601.5 apply:
    (1) Paragraph (b) of this section, pertaining to informal 
discussions with the Department of Labor to resolve conformity and 
substantial compliance issues, and
    (2) Paragraph (d) of this section, pertaining to the Secretary of 
Labor's hearing and decision on conformity and substantial compliance.
    (c) Result of Failure to Conform or Substantially Comply.
    (1) FUTA Requirements. Whenever the Secretary of Labor, after 
reasonable notice and opportunity for a hearing to the State UC agency, 
finds that the State UC law fails to conform, or that the State or 
State UC agency fails to comply substantially, with the requirements of 
the FUTA, as implemented in this regulation, then the Secretary of 
Labor shall make no certification under such act to the Secretary of 
the Treasury for such State as of October 31 of the 12-month period for 
which such finding is made. Further, the Secretary of Labor must notify 
the Governor of the State and such State UC agency that further 
payments for the administration of the State UC law will not be made to 
the State.
    (2) SSA Requirements. Whenever the Secretary of Labor, after 
reasonable notice and opportunity for a hearing to the State UC agency, 
finds that the State UC law fails to conform, or that the State or 
State UC agency fails to comply substantially, with the requirements of 
title III, SSA (42 U.S.C. 501-504), as implemented in this regulation, 
then the Secretary of Labor must notify the Governor of the State and 
such State UC agency that further payments for the administration of 
the State UC law will not be made to the State until the Secretary of 
Labor is satisfied that there is no longer any such failure. Until the 
Secretary of Labor is so satisfied, the

[[Page 1895]]

Department of Labor will not make further payments to such State.

 [FR Doc. E7-155 Filed 1-12-07; 8:45 am]
BILLING CODE 4510-30-P