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Changes in Federal and State unemployment insurance legislation in 2004
Loryn Lancaster
During 2004, there was one Federal legislative enactment that affected the Federal-State unemployment insurance program. The SUTA (State unemployment tax acts) Dumping Prevention Act of 2004 (P.L. 108–295) was signed on August 9, 2004, and requires States to enact laws prohibiting SUTA dumping. SUTA dumping is an abusive practice used by some employers to manipulate experience-rating provisions of State law that apply when businesses are bought and sold. Briefly, the law establishes a nationwide minimum standard for curbing SUTA dumping. Under the law, States will be required to (a) prohibit practices that allow employers to pay lower State unemployment compensation taxes than their unemployment experience would otherwise allow; (b) have procedures to detect such practices; and (c) impose penalties on employers and financial advisors for knowingly violating (or attempting to violate) provisions of State law. States must enact these provisions as a condition of receiving administrative grants for operation of the unemployment compensation program. Thus, all States will need to amend their laws.
This act also authorizes States to access the Department of Health and Human Services’ National Directory of New Hires (NDNH) for administration of the Federal or State unemployment compensation program. States’ access to this directory allows for the quick detection of individuals who continue to collect unemployment compensation benefits after returning to work. This approach is a means of combating unemployment insurance fraud and preventing overpayments.
The following is a summary of some significant changes in State unemployment insurance legislation enacted in 2004.
This excerpt is from an article published in the January 2005 issue of the Monthly Labor Review. The full text of the article is available in Adobe Acrobat's Portable Document Format (PDF). See How to view a PDF file for more information.
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