[Federal Register: September 27, 2006 (Volume 71, Number 187)]
[Rules and Regulations]
[Page 56829-56848]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr27se06-27]
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Part VIII
Department of Labor
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Employment and Training Administration
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20 CFR Part 603
Federal-State Unemployment Compensation Program (UC); Confidentiality
and Disclosure of State UC Information; Final Rule
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DEPARTMENT OF LABOR
Employment and Training Administration
20 CFR Part 603
RIN 1205-AB18
Federal-State Unemployment Compensation Program (UC);
Confidentiality and Disclosure of State UC Information
AGENCY: Employment and Training Administration, Labor.
ACTION: Final rule.
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SUMMARY: The U.S. Department of Labor (Department) is issuing this
final rule to set forth the statutory confidentiality and disclosure
requirements of Title III of the Social Security Act (SSA) and the
Federal Unemployment Tax Act (FUTA) concerning unemployment
compensation (UC) information. The final rule also amends the Income
and Eligibility Verification System (IEVS) regulations, a system of
required information sharing primarily among State and local agencies
administering several federally assisted programs.
DATES: Effective Date: This final rule is effective October 27, 2006.
Applicability Date: States that need to amend their laws, rules,
procedures, or existing agreements in order to conform and comply with
the requirements of this rule have two years from the effective date of
the final rule to do so.
FOR FURTHER INFORMATION CONTACT: Gerard Hildebrand, Chief, Division of
Legislation, Office of Workforce Security, Employment and Training
Administration, (202) 693-3038 (this is not a toll-free number) or 1-
877-889-5627 (TTY), or by e-mail at hildebrand.gerard@dol.gov.
SUPPLEMENTARY INFORMATION:
Background
The first Notice of Proposed Rulemaking concerning confidentiality
and disclosure of State UC information was issued in 1992. (57 FR 10063
(March 23, 1992).) Given the time that elapsed following this 1992
NPRM, the Department published a new NPRM on August 12, 2004. (69 FR
50022.) Comments were invited through October 12, 2004.
General Discussion of Final Rule
This final rule implements Federal UC laws concerning
confidentiality and disclosure of UC information and establishes
uniform minimum requirements for the payment of costs, safeguards, and
data-sharing agreements to ensure responsible use when UC information
is disclosed. The confidentiality requirement implemented by this rule
is derived from the ``methods of administration'' requirement of
Section 303(a)(1), SSA. The disclosure requirements are from Sections
303(a)(7), (c)(1), (d), (e), (f), (h), and (i), SSA, and Section
3304(a)(16), FUTA. This rule revises the regulations at 20 CFR Part
603, to implement all of these statutory provisions. (The present rule
at Part 603, which this final rule replaces, addresses only Section
303(f), SSA (concerning IEVS)). These statutory provisions each address
disclosure to governmental entities, but they vary with respect to the
specific information to be disclosed and the terms and conditions of
disclosure.
The confidentiality and disclosure requirements in Title III of the
SSA relating to UC information are conditions for receipt of grants by
the States for UC administration. The disclosure requirements in the
FUTA are conditions required of a State in order for employers in that
State to receive credit against the Federal unemployment tax under 26
U.S.C. 3302.
Other Federal laws may require use or disclosure of confidential UC
information. For example, the Workforce Investment Act (WIA) of 1998,
Public Law 105-220, requires States to measure their progress in
providing services funded under Title I of the WIA against State and
local performance measures using ``quarterly wage records, consistent
with State law.'' 29 U.S.C. 2871(f)(2); 20 CFR 666.150(a). Because
these laws do not condition receipt of UC grants under the SSA or
certification for employer tax credits under the FUTA on such use or
disclosure, the rule does not implement these laws. However, the
disclosure of confidential UC information in compliance with the WIA
and other Federal laws is permitted under the general exceptions to
confidentiality in Sec. 603.5 of this final rule. (For more
information on the requirement to use wage records under the WIA, see
20 CFR 666.150.) The Department stated previously and repeats here that
it strongly encourages States to amend their laws to permit disclosure
for WIA purposes if their State laws do not already provide for such
disclosure.
Comments Received on the NPRM
The Department received 38 pieces of correspondence commenting on
the NPRM by the close of the comment period. The majority of the
comments--24--were from State UC agencies. Eight commenters--all State
UC agencies--objected to the rule. The remaining 16 State UC agencies
appeared neutral, or even supported the objectives of the rule, while
offering technical comments. Other commenters included employer
interest groups, researchers, the U.S. Census Bureau, and the National
Association of State Workforce Agencies. All timely comments were
considered and are included in the rulemaking record. Several comments
were not germane to this rulemaking and, therefore, are not addressed.
Discussion of Comments--General
Rule not necessary. Several commenters stated that the rule was not
necessary because the UC program has functioned for 60 years without
such a rule and there was no evidence of a problem that would be
rectified by a Federal rule, which one commenter said was an
``overreaction'' to any abuses that may have occurred.
While the Department appreciates that States have long protected
certain UC information, the rule is necessary to comply with statutory
mandates in the SSA. The SSA provides that the Department establish
safeguards ``in regulations'' to insure that information required to be
disclosed to certain governmental entities is used only for the
purposes for which it is disclosed. Sections 303(d)(1)(B), (e)(1)(B),
and (i)(1)(B), SSA. Section 303(h)(1)(C), SSA, also provides that the
Department establish ``safeguards'' although it does not explicitly
refer to regulations. Applying the regulation to all disclosed UC
information will result in more uniform treatment among entities and,
thereby, a certain degree of simplicity.
Moreover, absent this regulation, information that is highly
protected when collected for other Federal purposes (for example,
Social Security and Federal income tax) would lack explicit protection
under Federal laws and regulations when it is collected for purposes of
the Federal-State UC program. Indeed, much of the demand for use of UC
information for non-UC purposes exists because information collected
for the UC program is currently subject to less stringent legal
protections, although it is no less sensitive. That demand has been
increasing as technology makes data sharing easier and as UC
information is used for program evaluations. Thus, while the Department
believes that a considerable degree of State flexibility should exist
with regard to confidentiality and that data should be shared under
certain circumstances, we do not believe it is appropriate to be
passive in this matter, particularly in a
[[Page 56831]]
climate of heightened concern regarding identity theft.
Requirements of the Rule. Several comments indicated confusion
concerning the requirements of the rule. For example, some commenters
viewed the rule as requiring that certain records must be open to the
public or requiring certain disclosures that are merely optional on the
part of the States.
In response, we note that the rule has two distinct aspects. First,
it sets minimum requirements concerning what UC information must be
kept confidential and for the payment of costs, safeguards, and data-
sharing agreements. Nothing prohibits States from having more stringent
confidentiality provisions than those imposed by the rule, except for
certain required disclosures (discussed in the next paragraph). For
example, States may keep appellate records confidential even though the
rule does not require it.
Second, the rule implements certain provisions of Federal law
requiring that certain UC information must be disclosed to certain
governmental entities. For example, Section 303(e)(1), SSA, requires
States to disclose information to State child support agencies for
purposes of establishing certain child support obligations. These
required disclosure provisions address what information must be
disclosed to the relevant governmental entities. However, we note that
the rule also permits, at State option, disclosure to public officials
in the performance of their duties. As a result, the rule does not
prohibit the State from disclosing more information to a governmental
entity than is required under Federal UC law, provided such disclosures
otherwise meet the conditions of the rule (such as payment of costs).
Also, several State UC agencies requested more specificity
regarding the regulation's application in certain areas or the meaning
of certain words. While these comments have resulted in certain
clarifications (discussed in the Summary of Comments), in other cases
no change to the rule resulted. In keeping with the principle that the
rule establishes minimum requirements, the Department has chosen to
leave many specific details of implementation to the States. For
example, although the rule requires that penalties be assessed under
State law for unlawful disclosure of confidential UC information, it
does not specify what these penalties must be. Similarly, although the
rule addresses disposition of confidential UC information when it is
disclosed to governmental agencies or private entities, the Department,
consistent with its long-established practice, has chosen not to
regulate State court practices involving the UC program. States are,
therefore, free to address disposition by their courts as they see fit.
In addition, the Department does not believe it is necessary to define
certain commonly used terms (such as ``audit''), as one commenter
requested.
Finally, several commenters expressed concerns about the limited
scope of the mandatory disclosure provisions. For example, one
commenter noted that the disclosure provision in Sec. 603.6(b)(3)
required disclosure of certain information to ``officers and employees
of any State food stamp agency,'' but not to ``county social service
agencies [that] carry out Food Stamp eligibility determinations under
the policy direction of the State Food Stamp agency.'' In this case,
the rule reflects Federal law, which requires disclosure only to ``any
State food stamp agency.'' (See Section 303(d)(1)(A), SSA.) However,
nothing prohibits disclosure to public officials employed by a county
when such disclosure is for use in the performance of a public
official's duties and is otherwise consistent with the rule. (See Sec.
603.5(e))
Effect of Rule. One commenter expressed concern that any rule
should ``(1) encourage uniform procedures among the States, preferably
by including a model State law in the rulemaking, and (2) avoid
unnecessary State legislation.'' That commenter was also concerned
about why a ``State law'' needed to specifically address disclosure of
``an individual's information to that individual, or an employer's
information to that employer.'' In a similar vein, another commenter
stated that the definition of ``State law'' should be expanded to
include ``an administrative rule, written policy or administrative
interpretation,'' thereby avoiding State legislation.
The Department does not believe model legislation is necessary or
desirable. All State UC laws currently contain confidentiality
provisions, which have been interpreted over the years through
regulations, court cases, and administrative rulings. State UC agencies
are aware of these interpretations, which will influence their
implementation of the regulation's requirements, including their
determination of whether amendments to the State code, rules, or
procedures are necessary to specifically address the requirements of
the regulation.
The Department considers regulations and administrative rulings to
be part of the ``State UC law'' for purposes of conformity with Federal
law. Since these regulations and rulings are treated as law, the
Department does not believe there is need to change the definition of
``State law.''
One commenter expressed the concern that the rule would lead to a
``lack of uniformity'' among States. Other commenters believed that the
rule would undermine State laws that are currently more restrictive
than the rule. The Department believes that the rule will result in
greater, rather than less, uniformity among States because it requires
some States to raise their confidentiality requirements to meet the
minimum requirements of this rule. The Department appreciates that
States have valid reasons for maintaining UC confidentiality laws that
are stricter than those required by the rule. On balance, we believe
that the rule will serve to enhance confidentiality requirements by
making disclosure subject to the minimum requirements of the rule,
while permitting States to provide additional protections.
Rule would increase costs and burdens. Several State UC agencies
objected to the rule on the grounds that it would result in substantial
new costs, would be excessively burdensome, or would be a distraction
to program administration.
The rule is, to the extent possible, written to minimize the burden
on the States, recognize existing State practices, and permit
implementation within existing resource levels. Our analysis of the
objections regarding costs and burdens indicate that most were based on
misunderstanding of the requirements of the rule. Notably, some
commenters read the rule to require formal agreements before disclosure
may be made to an individual's agent, and some commenters objected to
the requirement that States ``periodically audit'' every entity
receiving UC information, including the individual's agent. (See
Sec. Sec. 603.10(b)(2) and 603.9(b)(2), respectively.) However, both
of these requirements pertained only to ongoing disclosures made to a
third party (other than an agent), who typically requests many
individuals to authorize the disclosure of information to them. (For
example, mortgage lenders once routinely asked applicants to authorize
disclosure of their confidential UC information.) Also, these types of
ongoing disclosures are entirely optional on the part of the State.
Similarly, some commenters read the rule to require States to
charge for the costs associated with disclosing an individual's
information to that individual or an agent, and stated that the
administrative costs of establishing such a collection system would be
burdensome. However, such a collection system would only be necessary
where
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the disclosure of information is for non-UC purposes and where the
associated costs for the disclosure are not nominal (as determined on a
case-by-case basis) and which, therefore, must be reimbursed. (See
Sec. 603.8(b).) While nominal costs need not be reimbursed under this
final rule, the State or State UC agency is not precluded from charging
for the costs of such disclosures.
Another notable area concerning burden was that some commenters
read the notification provisions of Sec. 603.11 (pertaining to
claimants and employers) to require far greater effort than they
actually require. The content of the notice to claimants and employers
need not be complex or lengthy, and need not specify all potential uses
of confidential UC information. The notice may simply state that
confidential UC information will be used for other governmental
purposes, including verifying an individual's eligibility for other
governmental programs. Because the current rule at Sec. 603.4 already
requires notice to claimants that information will be used for IEVS
purposes, the Department does not believe that the new notification
requirements materially increase the burden on States.
As a result of these comments, the final rule has been edited for
clarity. Specific clarifications are discussed in the Summary of
Comments. Also discussed in the Summary of Comments are revisions to
the provisions requiring a motion to quash subpoenas to recognize that
States may have more informal, less costly means of prevailing against
subpoenas without actually filing a motion to quash. (See discussion of
Sec. 603.7(a).)
Some commenters were concerned that the rule would be ``an unfunded
mandate'' on State UC agencies or on requesting entities. One commenter
disagreed with our determination that the rule was not ``economically
significant'' because of the costs that recipients of UC data would
incur under the rule. In response, the Department notes that the final
rule--like the proposed rule--requires that costs of providing UC
information for non-UC purposes must be paid by the requesting entity.
The final rule further provides that such costs may be paid, if
applicable, by another source paying on behalf of the recipient. Thus,
with regard to UC agencies, which this rule regulates, it will not
create an unfunded mandate.
The sharing of UC information for non-UC purposes has never been a
permissible cost of administering the State's UC law. (Specifically,
Section 302(a), SSA, permits the Secretary to certify as payable to
States only amounts ``necessary for the proper and efficient
administration of'' the State's UC law. Further, Section 303(a)(8),
SSA, limits the use of the State's UC grant to the ``proper and
efficient administration of'' the State's UC law.) State UC agencies
should already be charging for all costs associated with disclosures
that incur more than incidental costs. Thus, on this point, the rule
merely reflects current law. For this reason, we do not believe the
rule is ``economically significant'' because, based on the information
available to the Department, almost all States already charge
recipients for the costs of disclosure.
Confidentiality Principles. Two commenters raised questions
concerning the confidentiality principles that were contained in the
preamble of the proposed rule.
One commenter noted that, although one fair information principle
provided that subjects of an information collection ``should have the
right to access and amend information about them,'' the rule itself did
not specifically address the right to amend. The commenter expressed
concern that, if amendment of the wage record were required, this would
create new costs and questioned whether these costs would be payable
through UC grant funds.
This commenter is correct that the right to amend is not explicitly
addressed in the rule. As a result, States are left to decide when
allegations of erroneous wage records would be investigated and when
amendment would occur. Because most wage records are purged without
ever being used for UC purposes, it is unnecessary to attempt to
correct every alleged erroneous wage record. Further, correcting wage
records might impose a substantial, but unnecessary, burden on the
State. For example, prior to correcting a wage record, an audit may be
needed to resolve an individual's allegation that an employer failed to
report wages, or whether the individual was properly classified as an
independent contractor, in which case no wages would be reportable.
States may use such assertions in targeting employers for UC audits,
which may be paid from UC grants. However, if such corrections do not
in any way serve the administration of the UC program (such as
correcting a wage record that is no longer in the State's base period
and that does not affect taxes owed by the employer), the costs of
these corrections may not be paid from grant funds because they are not
necessary for the proper and efficient administration of the UC
program. Therefore, under the rule, the State is not required to make
such corrections.
The Department's expectation is that wage records will be corrected
as necessary in the course of the routine administration of the State's
UC law. This usually occurs during the claims determination process or
in the process of determining if the worker's services were performed
in covered employment.
Another commenter stated it would be helpful to ``provide further
illumination of these fair information principles because it would be
helpful for State agencies in explaining the rationale behind the
federal rule.'' The Department believes sufficient explanation of these
principles in terms of the UC program and the rationale for
promulgating this rule were provided in the preamble to the proposed
rule.
Timeframe for Compliance with Rule. Several commenters asked
questions concerning the effective date of the rule. The rule is
effective 30 days after publication and States should make reasonable
efforts to implement its requirements by that date, especially in cases
where the rule involves only minor changes to State procedures.
However, the Department recognizes that States may need additional time
to changes laws, rules, procedures, or existing agreements. As such,
States will be given two years from the effective date of this rule to
conform and comply with its requirements, as provided in the
``Applicability Date'' section of this preamble.
Use of Social Security Account Numbers for UC Purposes. One
commenter, representing employer interests, encouraged the Department
``to require all State UC agencies to use the [social security account
number] as the sole UC claim record identifier'' or, alternatively, to
create a ``uniform record identifier, which attaches to an existing
[social security account number] after the filing of a claim.''
Essentially, this comment reflected concerns that employers may not be
able to identify claimants, and therefore participate in the UC
eligibility process, if the social security account number is not used.
The Department appreciates this concern. However, the Department
believes this comment is beyond the scope of this rulemaking, which
sets minimum requirements for States in preserving the confidentiality
of UC information. Instead, the Department is addressing this
commenter's concern by working with the States to assure that employer
participation in the UC program is not impinged. The
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Department issued Unemployment Insurance Program Letter (UIPL) 21-05 to
raise awareness of this concern.
Comments that are not addressed in the above general discussion are
discussed below in the Summary of Comments. Also discussed below are
any substantive changes made to the rule, stemming primarily from the
comments received. Non-substantive changes are not discussed. The
following Summary is organized sequentially by section heading.
Summary of Comments
To efficiently respond to public comments and explain changes to
the rule resulting, in large part, from those comments, only the
pertinent portions of the rule are discussed below. The basic format of
the below summary of comments begins with a review of the proposed rule
provision, followed by a discussion of the public comments, and
concludes with what, if any, resulting changes are reflected in the
final rule.
Section 603.2 What definitions apply to this part?
(c) Public Domain Information
The proposed rule included appeals records and decisions, and
precedential determinations on coverage or employers, employment, and
wages within the definition of public domain. The inclusion of these
records within this definition was intended to afford States discretion
in choosing whether to permit the disclosure of such information, since
the proposed rule would not have required that information in the
public domain be kept confidential.
However, several commenters expressed concern about treating
appeals records and decisions as public domain information. They
apparently interpreted the treatment of appeals records and decisions
as being in the ``public domain'' to imply that the public had a right
to such decisions. To establish that this is not the case, and to
insure that some appeals information such as social security account
numbers remain confidential, appeals records and decisions have been
removed from the definition of public domain information in the final
rule.
Appeals records and decisions, as well as precedential
determinations on coverage of employers, employment, and wages (which
often are appellate decisions), are now treated in the final rule under
Sec. 603.5(b) as exceptions to the confidentiality requirement. This
means that a State may, but need not, disclose this information. These
matters are addressed more fully in the discussion relating to Sec.
603.5(b).
(d) Public Official
The proposed rule limited disclosures for legislators (elected
officials) to those who need confidential UC information for
``oversight'' purposes. Commenters expressed concern that this
standard, as it related to elected officials, was vague and that, as a
result, it would be difficult to implement and difficult to determine
whether a particular elected official was performing ``oversight''
functions. In response to these comments, the Department has omitted
the reference to ``oversight'' in the definition of ``public official''
in the final rule.
Some commenters also expressed concern that the proposed rule would
impinge upon an elected official's need and ability to address
constituent inquiries concerning a UC matter. However, the proposed
rule would have permitted an elected official performing constituent
services to obtain confidential UC information because the elected
official is acting as the agent of the constituent who requested the
elected official's assistance. The final rule clarifies this treatment
of elected officials and this clarification is further discussed in
Sec. 603.5(d)(1) (pertaining to agents).
Section 603.4 What is the confidentiality requirement of Section
303(a)(1) of the SSA?
(b) Interpretation
The proposed rule set forth the Department's interpretation of
Section 303(a)(1), SSA, as including a basic requirement of
confidentiality. It explained that States are required to maintain the
confidentiality of any UC information which reveals the name or any
identifying particular about any individual or any past or present
employer or employing unit, or which could foreseeably be combined with
other publicly available information to reveal any such particulars,
and to bar the disclosure of such information, except as provided in
the rule.
Moreover, the proposed rule explained that the confidentiality
requirement has its origin in the beginning of the program and is
derived from Section 303(a)(1), SSA. Section 303(a)(1), SSA, requires
States to provide in their laws, as a condition of administrative
grants, for such ``methods of administration'' as the Secretary
determines are ``reasonably calculated to insure full payment of
unemployment compensation when due.'' From the early years of the
program this provision has been interpreted to require the
confidentiality of information collected from individuals and employers
for UC program administration. Confidentiality is necessary to avoid
deterring individuals from claiming benefits or exercising their
rights, to encourage employers to provide information necessary for
program operations, to avoid interference with the administration of
the UC program, and to avoid notoriety for the program if program
information were misused.
Two commenters, while generally agreeing that UC information should
be kept confidential, objected to using the ``methods of
administration'' requirement of Section 303(a)(1), SSA, as a statutory
basis for the rule. One noted that this section's language does not
``lead to the conclusion that confidentiality is required by federal
law.'' While the Department agrees that this section of the law
contains no explicit reference to confidentiality, it does give the
Secretary the authority to determine what ``methods of administration''
are necessary. For the reasons explained above, the Department has long
interpreted Section 303(a)(1), SSA, to require confidentiality of
certain UC information as a ``method of administration * * * reasonably
calculated to insure full payment of unemployment compensation when
due.'' Also, Congress has several times directed the Department to
establish safeguards ``in regulations'' to insure that certain
information is used only for the purposes for which it is disclosed.
Since it makes no sense to require States to assure the continued
confidentiality of disclosed information if that information is not, in
the first place, considered confidential, the Department believes
Congress recognized a longstanding Federal requirement that UC
information be confidential. Section 303(a)(1), SSA, is the source of
that requirement. No change to the final rule resulted from the above
comments.
Two other commenters asserted that Section 906, SSA, which relates
to the Secretary establishing a program of research for the UC system,
should be used as a statutory basis for the rule. While some research
conducted under Section 906 may result in the Secretary (or her agents)
obtaining confidential UC information from the States, it does not in
any way place any requirements on the States. Therefore, the Department
has not added Section 906 to the statutory authority.
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Section 603.5 What are the exceptions to the confidentiality
requirement?
This section of the proposed rule sets forth the permissible
exceptions to the confidentiality requirement. Only those paragraphs
for which comments were received are discussed below.
(a) Public Domain Information
The confidentiality requirement does not apply to information in
the public domain, as defined in Sec. 603.2(c). This means the
determination of whether and how much information is open to the public
or is kept confidential is left to the State.
Some UC information, such as employer names and addresses, is
public in the sense that it is available from other public sources like
telephone directories, but it is not public domain information for the
purposes of this final rule and, therefore, must be kept confidential
by the State or State UC agency because it is collected from employers
expressly for purposes of administering the UC program. Since the scope
of this final rule applies to State and State UC agencies, it does not
attempt to restrict access to information that may be available from
other public resources.
As noted previously and detailed below, the final rule differs from
the proposed rule in that ``appeals records and decisions'' are no
longer listed as being public domain information, although
``precedential decisions on benefit eligibility'' would be public
domain information, as are any other precedential decision. Appeals
records and decisions are now treated under paragraph (b) of Sec.
603.5.
(b) UC Appeals Records (``Administration of the UC Program'' in the
Proposed Rule)
In the proposed rule, paragraph (b) of Sec. 603.5 addressed the
inapplicability of the confidentiality requirement when disclosure was
necessary for the proper administration of the UC program. However,
paragraph (a) of Sec. 603.6 of the proposed rule also required the
disclosure of confidential UC information necessary for the proper
administration of the UC program. Because the rule requires this
disclosure, the Department determined that the exception at paragraph
(b) of Sec. 603.5 relating to ``administration of the UC program'' was
repetitive and unnecessary. As a result, proposed paragraph (b) of
Sec. 603.5 has been deleted from the final rule and replaced with the
new paragraph on ``UC appeals records''.
This new paragraph on UC appeals records was developed to minimize
the confusion on the part of commenters, caused by its original
placement within the definition of ``public domain.'' In the proposed
rule, appeals records were treated as being excluded from the
confidentiality requirements because they were identified as ``public
domain'' information. Because some commenters took this to mean that
appeals records must be in the public domain, the Department has placed
``UC appeals records'' in paragraph (b) as an exception to the
confidentiality requirement. Thus it should be clear that a State may,
but need not, disclose these records.
Two commenters argued that hearing records and appeals decisions
should be closed to the public. One commenter noted that employers may
have to disclose ``trade secrets such as customer lists, cost and price
data, sales forecasts, and financial reports during [the] proceeding.''
This commenter noted that parties may also have to ``submit information
that may be embarrassing, such as drug test results, or inflammatory,
such as allegations of sexual harassment'' and that ``a critical
element of a case may require disclosure of information that would be
protected by law in other contexts, such as personal medical
information.''
Although the Department recognizes that these are strong arguments
for closing appeals hearings and keeping all appeals records
confidential, there are also arguments for open hearings and records.
The Department has historically held that the public interest in proper
administration of the UC program, specifically in payments of benefits
only to eligible individuals, and in open governmental adjudicatory
proceedings is served by open hearings and hearing records. Further,
public access to hearings ensures fair treatment by the appeals
tribunal. Thus, in recognition of these competing views, the Department
continues to believe that any determination of whether to close
appellate hearings and keep records confidential should be left to the
States. As a result, the final rule maintains the position that appeals
records and decisions are not subject to the confidentiality
requirement.
One commenter addressed the issue of redacting information that may
identify the individual or claimant. The Department agrees that social
security account numbers should be redacted from appeals records and
decisions before they may be made available to the public. Identity
theft related to misuse of social security account numbers is a growing
concern, and, as a result, an individual may be reluctant to pursue an
appeal if it results in his or her social security account number
becoming publicly available. While the Department does not believe
redaction of an individual or employer's name is necessary, the final
rule does not prohibit States from redacting more information than is
required to be kept confidential. Indeed, we recognize that redaction
of such information already occurs in some States and may be mandated
by both the State's UC law and other State confidentiality statutes.
Recognizing this, the final rule provides that disclosure of appeals
records and decisions, including precedential decisions, is conditioned
upon the above redactions as consistent with applicable laws.
As a result of these comments, the final rule has been revised to
provide that appeals records and decisions are excluded from the
confidentiality requirement as are precedential determinations on
coverage of employers, employment, and wages (which usually are
appellate decisions). The final rule also conditions disclosure of
these records upon the redaction of social security account numbers,
provided that such disclosure is otherwise consistent with Federal and
State law.
(d) Informed Consent
The proposed rule provided for disclosure of confidential UC
information on the basis of informed consent to an ``agent or
attorney'' of the individual or employer about whom the information
pertains and to ``third parties.'' Under both informed consent
provisions, a written release from the individual or employer was
required; however, additional conditions were placed upon disclosures
to ``third parties'' because of the greater potential for misuse of the
information. The ``third parties'' provision was intended to capture
those requests for confidential UC information that occur on an ongoing
basis (such as an income verification service for lenders), not
requests wherein the entity is acting as an agent, that is, someone who
is working on behalf of the individual or employer (such as an attorney
representing an individual or employer in the litigation of a UC
claim). This distinction was not clear to commenters and led to
confusion as to the intent and actual requirements of each provision.
As a result of comments, the Department has made several changes in
paragraph (d) in the final rule. The paragraph has been restructured to
eliminate confusion regarding the requirements of each provision
(including the requirements associated with written releases). Further,
we re-
[[Page 56835]]
titled paragraph (d)(2) and we clarified that it applies to instances
where an entity is not acting as an agent and to instances where
disclosure is made on an ongoing basis. Specific changes relating to
the each provision are addressed below following a discussion of the
comments that led to those changes.
As a general note, the Department emphasizes that this provision
imposes minimum requirements on disclosure. The final rule does not
require States to disclose information under this exception. Also, if a
State authorizes disclosure based on informed consent, the final rule
does not prohibit States from placing additional restrictions on such
disclosures.
Paragraph (d)(1)--Agent (``Agent or Attorney'' in the Proposed Rule)
The title of paragraph (d)(1) was changed from ``Agent or
attorney'' in the proposed rule to ``Agent'' in the final rule with
explanation provided as to the meaning of ``agent,'' which would
include an attorney. These changes resulted from confusion expressed by
commenters and to better distinguish between paragraph (d)(1) and
paragraph (d)(2) (discussed below) and their differing requirements. It
was and still is intended that disclosures under paragraph (d)(1) will
generally be one-time only events in terms of both the individual (or
employer) requesting the disclosure and the agent receiving the
information.
Two commenters requested explanation of the term ``agent.'' Under
common usage, the term ``agent'' describes one who acts for or in the
place of an individual or employer by the authority of that individual
or employer. In response to such comments, paragraph (d)(1) of the
final rule has been changed to include this description of ``agent.''
Several commenters expressed concern that the proposed rule did not
permit disclosure to elected officials performing constituent services.
(This was discussed above under Sec. 603.2 regarding disclosure to
public officials.) The Department disagrees. When an elected official
is acting in response to a constituent's inquiry about a UC matter,
such as the individual's UC claim, the elected official is acting on
the individual's behalf and, therefore, is effectively the individual's
agent in resolving issues related to the claim. This general principle
of acting on behalf of an individual (or employer) may apply to other
situations, such as a governor's ombudsman acting on the individual's
(or employer's) behalf. We do not believe it practical to attempt to
list all possible applications of this principle in the final rule.
However, to eliminate the confusion regarding constituent services, the
final rule now explicitly acknowledges that an elected official
performing constituent services is acting as an agent of the
constituent.
The following discussion pertains to comments on the proposed
written release requirements associated with disclosures to an agent
under paragraph (d)(1).
Some commenters noted that many States have established
``electronic'' relationships with claimants and employers and
questioned whether the requirement for ``written releases'' would mean
that States could not do business electronically. In response to such
comments, paragraph (d)(1) of the final rule was revised to permit a
State to disclose confidential UC information based on an
electronically submitted release, if the State determines that the
release is authentic. The final rule does not prescribe requirements
for determining if a written (including electronic) release is
authentic. Rather, such a determination would depend upon the State's
own practices and whether the State has established such ``electronic
relationships''.
Another commenter pointed out that elected officials may receive
requests for assistance that do not specifically authorize the
disclosure of confidential UC information, even though such disclosure
is necessary for the official to adequately respond to the constituent.
In response, the final rule has been revised by adding language in
paragraph (d)(1) that permits the elected official to present
reasonable evidence of a request for assistance, such as a letter from
the individual or employer requesting assistance or a written record of
a telephone request from the individual or employer rather than being
required to present the ``written release'' described in the proposed
rule. It is the Department's experience that, in most cases, a U.S.
Congressman's request for the Department's assistance in reviewing a
particular claim includes such reasonable evidence and, as a result, it
is unnecessary to request further evidence from the Congressman.
One commenter argued that an attorney's legal and ethical
obligations would sufficiently protect the party about whom information
is requested without the need for written releases. While the
Department recognizes these obligations, we are not convinced that an
attorney should in all cases automatically be given any information
regarding a client without the client's knowledge, which is evinced
through a written release. However, the Department agrees that an
attorney's assertion that he or she has been retained to represent an
individual or employer on a UC matter is sufficient to authorize the
disclosure of confidential UC information to the attorney. As in the
above case of disclosure to an elected official performing constituent
services, when the individual or employer retains an attorney for UC
purposes, the expectation is that the attorney will have access to the
confidential UC information necessary to act on behalf of the
individual or employer. As a result, paragraph (d)(1) of the final rule
has been revised to permit disclosure when the attorney asserts that he
or she has been retained to represent the individual or employer on a
UC matter.
Paragraph (d)(2)--Third Party (Other Than an Agent) or Disclosures Made
on an Ongoing Basis (``Third Party'' in the Proposed Rule)
As mentioned previously, the title of paragraph (d)(2) was changed
from ``Third party'' in the proposed rule to ``Third party (other than
an agent) or disclosures made on an ongoing basis'' in the final rule
in an effort to better distinguish it from paragraph (d)(1).
The purpose behind this provision is to permit disclosure of
confidential UC information, under certain conditions, to third parties
who are not acting as the agent of the individual or employer and to
third parties who may reasonably be expected to obtain confidential UC
information on an ongoing basis. These often include situations where
an entity requests or encourages an individual to permit the disclosure
of confidential UC information through signing a release form. One such
example is the disclosure of wage records to a third party for purposes
of determining if an individual qualifies for a mortgage. Such a
practice, when routinely followed, may result in the entity compiling
considerable information pertaining to individuals. (The Department
notes that, if the third party entity is a governmental entity, then
the governmental entity may be able to obtain information under
paragraph (e), permitting disclosure to public officials for use in the
performance of his or her official duties, without such a written
release.)
As explained in the proposed rule, the Department believes that
additional protections, including additional conditions attached to the
written release, are necessary for these types of third party
disclosures because of the greater potential threat to employer or
individual privacy posed by the entity's collection, storage,
maintenance, use,
[[Page 56836]]
and possible misuse of confidential UC information. (This question was
dealt with in Unemployment Insurance Program Letter 23-96 (``Disclosure
of Confidential Employment information to Private Entities,'' 61 FR
28236), which is superseded by this final rule.) The purpose specified
in the release must be limited to providing a service or benefit to the
individual signing the release that such individual expects to receive
as a result of signing the release, or carrying out administration or
evaluation of a public program to which the release pertains. If the
release does not meet these requirements, the State may not disclose
confidential UC information. It is expected that the entity requesting
information on an ongoing basis would create a standard release form,
approved by the State agency, that would meet all these requirements.
States are expected to use their judgment in confirming whether a
release provides a service or benefit to the individual.
Additional requirements are payment of costs, safeguards, and
agreements, as provided in Sec. Sec. 603.8 through 603.10. Also, the
States are required by Sec. Sec. 603.9 and 603.10 to impose certain
penalties for the misuse of data and to maintain systems sufficient to
allow an audit of disclosed information, among other things.
One commenter argued that the rule should permit sharing
information for purposes of evaluating education and training programs
established under State law. The commenter stated that ``States should
also be allowed to share data on an interagency basis where the same
level of confidentiality protections are in place within the State''
without requiring ``informed consent.'' The Department agrees and notes
that the rule already provides for the type of data-sharing addressed
in the comment. Where sharing occurs with another governmental entity
for purposes of administering a law, disclosure of confidential UC
information is permitted under paragraph (e) (discussed below) without
any ``informed consent'' on the part of the individual. Further, under
this rule, administering a law includes conducting research with
respect to whatever program(s) are administered under the law. This is
discussed in paragraph (e) (exception pertaining to disclosures to
``public officials'') since it relates directly to that exception and
serves to clarify an element of that provision. No change is made in
paragraph (d)(2) of the final rule as a result of this comment.
Another commenter stated that the Department should permit a system
where confidential UC information will automatically be disclosed for
certain purposes under the Workforce Investment Act unless the
individual ``opts out'' from disclosing personal information. Under the
proposed and the final rule, this type of system would be permissible
when disclosure is solely to public officials in the performance of his
or her official duties. However, for non-governmental entities, the
Department believes that any sharing of confidential UC information in
this regard should be made only following an affirmative release by the
individual. A passive system, such as an ``opt out'' system, does not
guarantee that the individual fully understands the purposes of the
disclosure and may result in the individual feeling coerced to disclose
data. No change in the final rule is made as a result of this comment.
(e) Public Official
The proposed rule provided for disclosure of confidential UC
information to a public official in the performance of his or her
official duties. Since the 1970s, the Department's guidance to States
has recognized this exception, which allows for a variety of uses of
confidential UC information that the Department believes are
beneficial, such as law enforcement, fraud and benefit accuracy in
programs not addressed by Federal UC law (for example, Black Lung and
State workers' compensation programs), program assessment (for example,
of WIA and Vocational Education programs), and research.
The proposed rule described ``performance of official duties'' as
administration or enforcement of law or, in the case of the legislative
branch, oversight of UC law. It also stated that although research by a
public official was permitted under this exception, this exception did
not include research by an individual at a public or private
university. However, it also stated that, where appropriate, a
researcher could obtain access to confidential UC information under the
exceptions provided for in proposed paragraph (f) (agent or contractor
of a public official) or proposed paragraph (d)(2) (third party). Under
paragraph (f) of the proposed rule, the public official would maintain
the responsibility of insuring that the confidential UC information is
safeguarded by its agent (for example, the researcher). The Department
continues to believe that there is less risk of unauthorized use or
disclosure of confidential UC information if responsibility for
safeguarding confidentiality remains within the executive or
legislative branches of government.
As discussed above in Sec. 603.2 (d) (definition of public
official), commenters expressed concern that limiting disclosure to
only those legislators with ``oversight'' responsibility for the UC
program was vague and, as a result, difficult to implement and
determine as to the performance of ``oversight'' functions. In
response, this reference to ``oversight'' was removed from the final
rule. In so doing, paragraph (e) also required revision since it, too,
included the ``oversight'' limitation as to elected officials (with
regard to the meaning of ``performance of official duties'').
As a result, paragraph (e) of the final rule has been revised so
that ``performance of official duties'' now means ``administration or
enforcement of law or the execution of the official responsibilities of
a Federal, State, or local elected official.'' For further
clarification, it also now provides that ``administration of law''
includes research related to the law administered by the public
official. This sentence has been added to the final rule to eliminate
any confusion regarding whether research conducted by a public official
is part of the administration of its law.
In addition, new language has been added to the final rule to
explain that ``execution of official responsibilities'' does not
include solicitation of contributions or expenditures to or on behalf
of a candidate for public or political office or a political party.
This language has been added to make it clear that UC records are not
to be used to identify subjects for campaign solicitations.
(f) Agent or Contractor of Public Official
The proposed rule provided for disclosure of confidential UC
information to an agent or contractor of a public official to whom
disclosure is permissible under paragraph (e) (public official). This
provision took into account that certain functions, including research,
are often contracted out by public agencies. If confidential UC
information could not be disclosed to agents or contractors of public
officials, valuable research might be forgone or become more expensive,
as agencies would have to undertake interviews of program participants
in order to gather program evaluation information. A public official,
ideally one with responsibility for the program or initiative on which
research is being conducted, would be required to enter into the
written agreement required by Sec. 603.10 and be held responsible for
use of the information by the contractor or
[[Page 56837]]
agent. Redisclosure of such information by a public official to an
agent or contractor would be permitted only as provided in Sec.
603.9(c).
One commenter suggested that the regulation be expanded ``to allow
State agencies to disclose [confidential] UC information to researchers
if the State agencies believe that the results of such research would
be beneficial to the agency for the administration of agency
programs,'' in light of the fact ``States do not have to pay'' for
research from which they benefit. Another commenter, from a university,
indicated concern that the public official must actually pay for the
research as opposed to private foundations. The same commenter
expressed concern that a university could not be viewed as an ``agent''
of the public official if the university was performing research of
privately funded programs, such as employer-funded training or those
supported by entities such as the United Way. The commenter stated that
this ``significantly narrowed'' allowable uses of data.
In response, the Department notes that neither the proposed nor
this final rule prohibits the sharing of information with researchers
when an official of a public agency believes the research would be
beneficial to the public agency. In such case, the researcher functions
as the public agency's ``agent,'' even if the research was not
initiated or funded by the agency, or even if the research may have
applicability beyond the agency itself. To address the commenter's
example of private training programs, the Department believes that
allowing a public agency to correlate results of private research
initiatives with its own programs would be beneficial to the public
agency and, thus, the public agency could be persuaded to accept
responsibility for the disclosure and use of confidential UC
information. The Department believes this properly balances the need to
protect confidential UC information with the desire to not restrict
research. Therefore, no change is made in the final rule.
The Department emphasizes (as it stated in the preamble to the
proposed rule) that States should provide non-confidential UC
information to researchers in lieu of confidential UC information.
Indeed, the expectation is that State agencies would explore this
approach prior to providing confidential UC information. State agencies
may, for example, encrypt identifiers before providing data to a
researcher so that the researcher cannot identify individuals or
employers. The agency could add subsequent years of data for the
researcher using the same encryption so that the researcher can conduct
longitudinal studies.
(g) Bureau of Labor Statistics
The proposed rule provided that the confidentiality requirement did
not apply to information collected exclusively for statistical purposes
under a cooperative agreement with the Bureau of Labor Statistics (BLS)
and that Part 603 did not restrict or impose any condition on the
transfer of any other information to the BLS under an agreement, or the
BLS's disclosure or use of such information.
Under the proposed rule, transfers of information to the BLS were
excepted from the confidentiality requirement because the conditions
under which they occur already satisfied the requirements of the
confidentiality rule, and the Department did not wish to interfere with
the BLS' existing agreements or the ability of the BLS to carry out its
statistical programs. Specifically, safeguards, agreements, and payment
of costs are already in place. The BLS funds States for collection and
disclosure of information. The BLS applies strict safeguards to protect
the confidentiality of information it receives. Transfers of
information to the BLS are governed by agreements that provide
assurance that these safeguards will be followed. Moreover, the
exemption for BLS is also based on the fact that its data is integrally
related to the administration of the UC program. The collection and
reporting authority of BLS is based on existing Federal law (29 U.S.C.
2) and subject to the confidentiality protections outlined in the
Secretary of Labor's Order No. 9-75.
The U.S. Census Bureau commented on the proposed rule and expressed
concern that ``several components of the proposed rule, if enacted,
would be problematic for the Census Bureau's need to continue accessing
[UC information].'' Further, the Census Bureau wanted to ensure that
its activities would not be hampered by implementation of the
confidentiality rule. As such, the Census Bureau requested it be
afforded the same exemption as BLS from the confidentiality
requirement. Another commenter also expressed support for exempting the
Census Bureau from the confidentiality requirement.
The Department fully supports the Census Bureau's analytical
efforts and its policy-relevant research. However, based on the Census
Bureau's description of its current processes for securing and
protecting confidential UC information and the fact that it is a public
agency (to whose officials States are permitted to disclose
confidential UC information), it appears that the rule would not
inhibit its ability to obtain this information. Indeed, the rule merely
sets forth the Department's long-standing guidance to States regarding
disclosure to public officials and the terms and conditions which
apply. States should already be following this guidance when disclosing
to the Census Bureau. Therefore, no change to the rule is made as a
result of these comments.
(i) UC Program Oversight and Audits (``As Required by Federal Law'' in
the Proposed Rule)
This paragraph of the proposed rule provided for the disclosure of
confidential UC information as required by ``Federal Law.'' However,
other Federal agencies would already be covered under Sec. 603.5(e)
(disclosure to public officials, including disclosure to the IRS for
Health Coverage Tax Credit (HCTC) purposes), Sec. 603.5 (h)
(disclosure in response to a court order or to an official with
subpoena authority), or Sec. 603.6(a) (disclosure necessary for the
proper administration of the UC program, including disclosures to the
Internal Revenue Service for purposes of UC tax administration). Given
the unnecessary duplication it presented, proposed paragraph (i) (as
required by Federal law) has been revised in the final rule (as
discussed below).
To be more specific regarding its scope, paragraph (i) of the final
rule is now limited to UC program oversight and audits. The proposed
rule lacked such a provision (unlike the 1992 proposed rule) and the
Department believes it is necessary to explicitly address the
inapplicability of the confidentiality requirement to any disclosure to
the Federal Government for purposes of UC program oversight and audits.
As a result, paragraph (i) of the final rule provides that the
confidentiality requirement does not apply to any disclosures to a
Federal official for purposes of UC program oversight and audits,
including disclosures necessary under the Department's rules at 20 CFR
part 601 and 29 CFR parts 96 and 97.
The Department notes that the final rule does not implement the
Secretary of Labor's authority under Section 303(a)(6), SSA. Section
303(a)(6) requires that State UC laws include provision for ``[t]he
making of such reports, in such form and containing such information,
as the Secretary of Labor may from time to time require * * * Section
303(a)(6) stands as a basis for requiring disclosure to the Department.
[[Page 56838]]
Section 603.6 What disclosures are required by this subpart?
(``What disclosures are required by Federal UC law'' in the
proposed rule.)
In the proposed rule, this section was entitled, ``What disclosures
are required by Federal UC law?'' The Department determined, upon
further review, that a more appropriate characterization of this
section is ``disclosures required by this subpart'' since the
regulation is the mechanism that effectively implements the provisions
of Federal UC law.
Paragraph (a) of the proposed rule set forth the Department's
interpretation of Section 303(a)(1), SSA, as requiring disclosure of
all information necessary for the proper administration of the UC
program. This included disclosure to the Internal Revenue Service for
purposes of UC tax administration or to the U.S. Citizenship and
Immigration Services for purposes of verifying a claimant's immigration
status. It also required disclosure for purposes of interstate and
cross-program offsets under Section 303(g), SSA.
The Department believes it is necessary to clarify that the
disclosures required under paragraph (a) are not subject to the
confidentiality requirement. As a result, the final rule explicitly
provides that the confidentiality requirement of 303(a)(1), SSA, and
Sec. 603.4 are not applicable to the disclosures required under
paragraph (a). This paragraph continues to provide that
``administration of the UC program'' includes disclosures to claimants,
employers, the Internal Revenue Service (for purposes of UC tax
administration), and the U.S. Citizenship and Immigration Services (for
purposes of verifying a claimant's immigration status).
Section 603.7 What requirements apply to subpoenas, other compulsory
process, and disclosure to officials with subpoena authority?
(a) In General
In the proposed rule, this section set forth the Department's long-
standing position on State responses to subpoenas and other compulsory
processes attempting to obtain confidential UC information. Under
certain conditions, it required the State or State UC agency to file
and pursue a motion to quash, in the appropriate forum, when a subpoena
or other compulsory process of a lawful authority, which required the
production of or appearance for testimony about such information, is
served upon the State UC agency or the State. If such a motion were
denied, after a hearing in the appropriate forum, confidential UC
information may be disclosed, but only upon such terms as the court or
other forum may order, including that the recipient protect the
disclosed information and pay the State's or State UC agency's costs of
disclosure.
Several State UC agencies noted that the proposed rule appeared to
require a motion to quash a subpoena even though most subpoenas can be
avoided or resolved through other means that are far more efficient and
economical. These commenters recommended that the rule recognize these
other means. Another commenter noted that the court may order the
disclosure of information through ``a true court order, and not merely
a subpoena,'' and questioned the application of the rule in such cases.
The Department agrees with these comments. As a result, this provision
of the final rule has been revised to recognize that other means of
avoiding disclosure of confidential UC information may be pursued
before the need to file a motion to quash. Also, the final rule now
recognizes that a motion to quash is necessary only if the court has
not already ruled on the disclosure.
(b) Exceptions
The proposed rule provided two exceptions to the requirement to
quash a subpoena: First, where a court has previously issued a binding
precedential decision that requires such disclosures and, second, when
confidential UC information is requested by an official of State or
Federal government, other than a clerk of court on behalf of a
litigant, with authority to obtain the information by subpoena under
State or Federal law. These proposed exceptions recognized that filing
a motion to quash in these circumstances may indeed be futile and a
waste of administrative resources. They would also facilitate State
cooperation with law enforcement.
Commenters requested clarification of the reference to ``binding
legal precedent,'' noting that courts routinely deny motions to quash
or otherwise order disclosure of confidential UC information without
ever publishing a decision that may be considered precedential. In the
same vein, another commenter objected to ``futile'' motions to quash,
while another addressed this situation by urging an exception for
situations ``where the obligation to disclose such data has been well
established by a pattern of prior judicial decisions.'' The Department
agrees that well-established patterns of judicial decisions may be
treated as precedent. As a result, the final rule has been revised to
permit disclosure where a well-established pattern of prior court
decisions have required the same type of disclosure. Nonetheless, the
Department encourages those States within which courts routinely deny
motions to quash, to examine their laws and regulations to determine if
an amendment may result in such motions being upheld.
Two State UC agencies noted the proposed rule's exception from
filing a motion to quash applied to State or Federal governmental
officials with subpoena authority, but did not apply to county or
metropolitan governmental officials with the authority to subpoena
records, such as prosecutors. The Department notes that, generally, a
governmental official will need to exercise subpoena authority only
when State UC law does not specifically allow the disclosure to such
official. However, the Department did not intend to prohibit these
officials from obtaining information for administration of their
official duties. As a result, the final rule has been revised to
include ``local'' governmental officials within this exception.
One commenter noted that Sec. 603.7(b) of the proposed rule was
``confusing'' because it stated that the exceptions to filing a motion
to quash a subpoena applied ``regardless of whether a subpoena was
issued.'' The quoted language was included to permit the State UC
agency, if it so chose, to disclose information that was requested by a
public official with subpoena authority without forcing the public
official to actually issue the subpoena. To more accurately reflect
this option, the Department has changed the final rule to clarify that
the State or State UC agency may disclose the requested confidential UC
information to a public official with subpoena authority without the
actual issuance of a subpoena.
The Department believes that filing motions to quash subpoenas
involving the disclosure of confidential UC information is an important
means of avoiding unnecessary or unlawful disclosures, which might
deter claimants from exercising their rights or employers from
providing information. Where the exceptions apply, a State may still
file such a motion if warranted, or may file a motion to require that
the recipient protect the disclosed information or for reimbursement of
costs. (As described in Sec. 603.8(b), seeking reimbursement in some
manner is required if grant funds are used to cover the costs of the
disclosure.) If the State law is sufficiently rigorous concerning the
disclosure of confidential UC information, the courts may be less
inclined to enforce
[[Page 56839]]
subpoenas; so, States may wish to review their State laws in this
regard. To conserve time and funds, States may wish to pursue a motion
to quash by mail or by telephone if permitted by State law.
Finally, some commenters questioned the need for the proposed rule
to address disclosing confidential UC information to public officials
with subpoena authority given that Sec. 603.5(e) permits disclosure to
public officials. The Department's answer is that disclosures under
Sec. 603.5(e) must be made under the agreements described in Sec.
603.10, which require, among other things, the payment of costs and the
safeguarding of information, before any information may be disclosed.
Thus, that provision is limited to cases where disclosure is explicitly
authorized or required under the State UC law. The subpoena exception,
however, pertains to situations where governmental officials have the
authority to demand information under their laws, but where State UC
law may not permit such disclosure or where an agreement may not have
been entered into, thus necessitating the public official to obtain the
confidential UC information through a subpoena. Therefore, no change is
made in the final rule.
Section 603.8 What are the requirements for the payment of costs and
program income?
(a) In General
This paragraph of the proposed rule explained, in general, that
grant funds could not be used to pay any of the costs of making any
disclosure (except as provided in paragraph (b) of this section). Upon
review, clarifications to proposed paragraph (a) became necessary.
First, ``disclosure to the IRS for HCTC purposes'' was
misidentified in proposed paragraph (a) as a reference to Sec.
603.5(h) when it should have referenced Sec. 603.5(i). However, as
discussed previously, proposed paragraph (i) of Sec. 603.5 was
replaced with a new provision in the final rule concerning UC program
oversight and audits. In the discussion concerning the changes to
proposed paragraph (i), it was explained that ``disclosure to the IRS
for HCTC purposes,'' like disclosures to other Federal agencies, would
already be covered under the provision relating to disclosure to public
officials (Sec. 603.5(e)). As a result, rather than correct the
misidentification in proposed paragraph (a) of Sec. 603.8, we have
deleted the reference to ``disclosure to the IRS for HCTC purposes.''
Second, revision to the final rule became necessary because the
rule did not distinguish between the two types of informed consent
disclosures (addressed in Sec. 603.5(d)) as they related to the use of
grant funds for the costs of such disclosures. Thus, revision to
paragraph (a) (and to paragraph (b) of this section, as discussed
below) became necessary to make explicit the fact that grant funds have
never been allowed to be used for the costs of making disclosures to
third parties (other than agents) on the basis of informed consent.
Accordingly, the final rule was revised to explicitly state that grant
funds may not be used to pay for the costs of disclosures under Sec.
603.5(d)(2) (third party (other than an agent) or disclosures made on
an ongoing basis).
(b) Use of Grant Funds Permitted
This paragraph of the proposed rule set forth the circumstances
under which grant funds may be used to pay for the costs of disclosing
confidential UC information. As discussed above, revision to this
paragraph became necessary to clarify that grant funds may be used to
pay for costs associated with disclosures to an agent on the basis of
informed consent. Therefore, paragraph (b) of the final rule has been
revised to make this permitted use of grant funds explicit.
As discussed previously, Sec. 603.5(i) of the proposed rule was
changed to explicitly address the inapplicability of the
confidentiality requirement to any disclosure for purposes of UC
program oversight and audits. In so doing, revision to Sec. 603.8(b)
of the proposed rule was also required in order to properly address
those costs relating to disclosures for UC program oversight and audits
under Sec. 603.5(i) of the final rule. Accordingly, Sec. 603.8 (b) of
the final rule has been revised to specifically provide that grant
funds may be used to pay the costs associated with disclosures to the
Department for oversight and audits.
(d) Payment of Costs
The proposed rule required the payment of costs, calculated in
accordance with paragraph (c), to be paid by the recipient of the
information either in advance or by way of reimbursement. If the
recipient is not a public official, such costs, except for good reason,
would be required to be paid in advance. Payment in advance means full
payment of costs before or at the time the disclosed information is
given in hand or sent to the recipient.
The proposed rule further provided that the requirement for payment
of costs is met when a State UC agency has in place a reciprocal data-
sharing agreement or arrangement with another agency or entity.
``Reciprocal'' means that the relative benefits received by each party
to the agreement or arrangement are approximately equal.
Two commenters observed that the proposed rule appeared to prohibit
another entity from paying costs on behalf of the recipient and
suggested that the rule be amended to permit such payments. The purpose
of requiring payment of costs is to assure that UC grant funds are not
used for purposes unrelated to the administration of the UC program.
Receiving payment from an entity other than the recipient accomplishes
this. As a result of these comments, the final rule has been revised to
recognize that costs may be paid by another source on behalf of the
recipient.
Two other commenters requested clarification regarding the proposed
rule's statement that, if the recipient is not a public official,
``costs, except for good reasons (such as when the disclosure involves
minimal cost) must be paid'' in advance. These commenters questioned
whether the reference to ``minimal costs'' meant that the recipient
need not pay any costs. As noted elsewhere in the rule, all costs
incurred by a recipient must be paid except when there ``is not more
than an incidental amount of [UC agency] staff time and no more than
nominal processing costs'' are involved. (Sec. 603.8(b).) Thus, the
reference to minimal costs only relates to the advance payment of
costs. To avoid confusion, the Department has deleted the reference to
minimal costs from the final rule.
(e) Program Income
The proposed rule provided that reimbursed costs and any funds
generated by the disclosure of information are program income and may
be used only as permitted by 29 CFR 97.25(g) (on program income). It
also provided that program income may not be used to benefit a State's
general fund or another program.
One commenter expressed concern about how the cost requirements
would impact the Wage Record Interchange System (WRIS), which is an
interstate data exchange system that facilitates the exchange of UC
wage records for assessing program performance under the WIA. Noting
that the proposed rule provided that UC grant funds may be used to pay
if disclosure does not result in ``more than an incidental amount of
staff time and no more than nominal processing costs are involved,''
the commenter stated a belief that WRIS
[[Page 56840]]
costs are ``relatively minor'' and therefore should be considered
incidental or nominal. The Department does not agree. By permitting the
use of UC grants where costs of disclosure are incidental or nominal,
we merely recognize that some costs are so small that there may be no
practical purpose served by attempting to recover these costs.
Generally, these will be one-time only, ad hoc requests from
individuals or their agents. The Department does not believe that the
costs of setting up agreements, establishing data exchange protocols,
and exchanging data on an ongoing basis can be said to be incidental or
nominal. No change in the final rule is made as a result of this
comment.
Section 603.9 What safeguards and security requirements apply to
disclosed information?
(b) Safeguards To Be Required of Recipients
Paragraph (b) of the proposed rule set forth the safeguards that
the State or State UC agency had to require of recipients.
Paragraph (b)(1)(vii) of the proposed rule required States to
maintain a tracking system sufficient to allow an audit of compliance
with the requirements of this subpart. The purpose of maintaining this
system was to ensure that recipients of disclosed information were
complying with the required safeguards. The proposed rule provided that
this responsibility could not be handed over to the recipient. It also
provided that where recipients were required to pay for the costs of
making a disclosure, the costs of maintaining this system should be
reflected in the amount charged to the recipient. Thus, the maintenance
of this system would not increase costs for State UC agencies.
Several commenters stated that it was impractical or expensive to
maintain a ``tracking system'' that is ``sufficient to allow an audit
of compliance.'' As a result of these comments, the requirement for a
``tracking system'' has been deleted from Sec. 603.9(b)(1)(vii) of the
final rule. However, the Department continues to believe that some
system must exist for allowing an audit if there is to be any guarantee
that confidential UC information received from a UC agency is not
misused. Therefore, the final rule requires a system ``sufficient to
allow an audit of compliance.'' While tracking individual transactions
may be the most efficient means of monitoring certain disclosures,
other methods may be equally effective. For example, in the case of
wage records that are routinely transmitted to another governmental
agency, it is sufficient that, prior to any audit, the UC agency be
able to re-run the computer program that generated the wage records
that were transmitted and use that output for the basis of its audit.
The Department also notes that not all disclosures must be subject to
this system. For example, the safeguards required by Sec. 603.9 do not
apply to disclosures made to an individual (Sec. 603.5(c)) or the
individual's agent (Sec. 603.5(d)(1)).
Paragraph (b)(2) of the proposed rule specifically required the
State to conduct, in the case of optional disclosures to entities on
the basis of informed consent (Sec. 603.5(d)(2)), a periodic audit of
sample transactions to assure that the entity receiving information has
on file a written release authorizing each access. The audit was
required to ensure that the information was not being used for any
unauthorized purpose.
Several commenters expressed concern regarding this requirement,
stating that such audits are costly and burdensome. As the Department
noted in the general comments regarding increased costs and burden,
this audit requirement is applicable only to disclosure made under
Sec. 603.5(d)(2) pertaining to a third party (other than an agent) or
disclosures made on an ongoing basis. (The Department notes that, in
cases involving governmental entities receiving information under
Sec. Sec. 603.5(e) or 603.6, the recipient is merely required to
provide for ``on-site inspections.'' The final rule does not mandate
audits in these cases given the nature of the governmental entities,
which are also subject to their own confidentiality laws; however, the
Department believes it is important to maintain the right to perform
``on-site inspections'' in the event any allegation of misuse arises.)
The Department believes States must take reasonable actions to
periodically audit these third parties. As discussed previously, the
Department is concerned that such disclosures have a greater potential
threat to employer or individual privacy. As such, we do not believe it
is responsible to provide confidential UC information to such third
parties without some requirement for auditing. Therefore, no change is
made to the final rule.
The proposed rule did not, as commenters appeared to assume,
dictate when audits must occur, nor did it dictate the nature and the
extent of the audit. The Department believes these matters are best
left to the States, which are in the best position to determine how
often a particular recipient should be audited, taking into account
volume, any past audit exceptions, and the nature of the recipient,
such as whether the recipient is in the business of disclosing
information for profit. What is important is that any audit process be
sufficient to assure that no misuse of confidential UC information is
taking place. The Department also notes that the costs of performing
any such audits must be built into the agreement that authorizes
disclosure of confidential UC information to the recipient. Thus, for
example, the costs of auditing a private business that receives
confidential UC information under an informed consent agreement are to
be built into the disclosure agreement. No change is made in the final
rule as a result of these comments.
Paragraph (b)(2) of the proposed rule also required that all
employees of entities receiving access to information under Sec.
603.5(d)(2) be subject to the same confidentiality requirements, and
State criminal penalties for violation of those requirements, as are
employees of the State UC agency.
The National Association of State Workforce Agencies questioned how
penalties would be assessed for information that is sent from one State
to another State, particularly in regard to the WRIS. The specific
question was whether the law of the sending or receiving State would
apply in the case of unauthorized disclosures. The Department believes
that no State should disclose confidential UC information to another
entity--including another State--unless it retains the authority to
apply its legal sanctions for unauthorized uses. This is reflected in
Sec. 603.9(b)(1), regarding safeguards to be required of recipients,
which provides that ``The State or State UC agency must * * * (v)
Require each recipient agency or entity to (A) Instruct all personnel
having access to the disclosed information about * * * the sanctions
specified in the State law for unauthorized disclosure of information *
* * ''.
As a practical matter, the Department recognizes that a receiving
State is in a better position to apply sanctions on violators who
reside in that State, provided its confidentiality law is applicable to
such violation. As such, in the case of interstate data sharing
arrangements such as WRIS, a wise additional step is to require the
receiving State to take the lead in applying legal sanctions. Although
no change to the rule is made as a result of this comment, a State must
make certain that prior to the release of confidential UC information
to an entity outside the State, some provision exists to protect
[[Page 56841]]
such information, either by the disclosing State or by the law of the
receiving State within which the entity exists.
Section 603.11 How do States notify claimants and employers about the
uses of their information?
(a) Claimants
This section of the proposed rule required State UC agencies to
notify claimants and employers how confidential UC information about
them may be requested and utilized. This section was derived from the
current 20 CFR 603.4 (revised by this rule) but, unlike the current 20
CFR 603.4, it applied to employers as well as claimants. State privacy
law may require more detailed notification.
(b) Employers
The proposed rule provided that current Part 603 (specifically,
Sec. 603.4 of that Part) implemented the notification requirement
applicable to the IEVS of Section 1137(a)(6), SSA. The proposed rule
restated the notification requirement of Section 1137(a)(6), SSA, as a
general requirement of Section 303(a)(1), SSA. It further explained
that notifying claimants and employers what use may be made of UC
information is necessary to maintaining their confidence in the
Federal-State UC system, which is critical to its proper and efficient
administration.
With regard to claimant notification, several State UC agencies
questioned the proposed requirement that claimants be notified ``at the
time of application, and periodically thereafter, in what situations
confidential UC information pertaining to the claimant may be requested
and utilized'' and the similar requirement for employers. Some
requested more detail about when the notification is provided, what is
meant by ``periodically thereafter,'' and the contents of the notice,
specifically with respect to the details of the ``situations'' the
notice must cover. One commenter objected to orally informing claimants
at the time of ``initial claim intake'' because of the costs involved.
Others suggested that notification ``at the time an initial claim is
filed by an individual'' would be adequate.
The requirement that claimants be notified ``at the time of filing
[a claim] and periodically thereafter'' has been a requirement of
Section 1137(a)(6), SSA, pertaining to the IEVS program, since 1984. As
such, it became a part of the Department's implementation of the IEVS
program, currently found at 20 CFR 603.4 (revised by this rule). Thus,
State UC agencies should already be notifying claimants concerning
sharing of confidential UC information under IEVS. This final rule
merely expands this claimant notification requirement so that the
notice refers to uses beyond the IEVS program. It also extends
notification to employers as well as claimants.
Since the requirement that claimants be notified ``periodically
thereafter'' is a statutory requirement, States must periodically
notify claimants. The Department recognizes that ``periodic'' notice to
UC claimants is not always necessary due to the relatively short
duration of UC claims. Although some commenters asked for clarification
as to how this ``periodic'' requirement could be met, we believe that
the rule is clear that ``notice on or attached to subsequent additional
claims will satisfy the requirements for periodic notice thereafter.''
States are not required to offer other forms of periodic notice to
claimants if they offer such notice as part of taking an additional
claim.
The content of the notice to claimants need not be complex or
lengthy. It could, for example, simply state that confidential UC
information will be used for other governmental purposes, including
verifying an individual's eligibility for other governmental programs.
Although the statutory requirement appears to permit oral notice, the
Department prefers, but does not require, that notice be written. Such
written notification may be, for example, in the form of a benefit
rights pamphlet or a special enclosure in a routine mailing to the
claimant that is associated with the initial application. In the case
of Internet claims, a special screen may advise the claimant of the
uses of confidential UC information. The notice need not say that UC
information will be used for UC purposes, or address any releases that
may be authorized by the claimant. At the same time, this rule does not
prohibit States from providing such information.
Concerns relating to the content of the notification may have been
a result of the language in the proposed rule referring to identifying
the ``situations'' within which confidential UC information may be
requested and utilized. The use of the word ``situations'' was not
intended to require that the notice contain an exhaustive listing of
all potential recipients of confidential UC information. In response to
any misperception and to provide more guidance on the actual contents
of the notice (including assuring any notice meets the IEVS
requirement), Sec. 603.11(a) is revised to provide that claimants must
be notified ``at the time of application, and periodically thereafter,
that confidential UC information pertaining to the claimant may be
requested and utilized for other governmental purposes, including, but
not limited to, verification of eligibility under other government
programs.''
With regard to employer notification, the content of such notice
may be as simple as that which is given to the claimant. It is
sufficient that employers be notified annually with their yearly
contribution rate notices (although special provision would need to be
made for reimbursing employers since they do not receive annual rate
notices), through any agency UC letter sent to all employers, or a
statement on the quarterly wage report form. To parallel the revision
to Sec. 603.11(a) (concerning claimant notification), Sec. 603.11(b)
is revised to provide that employers must be notified ``that wage
information and other confidential UC information may be requested and
utilized for other governmental purposes, including, but not limited
to, verification of an individual's eligibility for other government
programs.''
Executive Order 12866
This final rule is a ``significant regulatory action'' within the
meaning of Executive Order 12866 because it meets the criteria of
Section 3(f)(4) of that Order in that it raises novel or legal policy
issues arising out of legal mandates, the President's priorities, or
the principles set forth in the Executive Order. Accordingly, the final
rule has been submitted to, and reviewed by, the Office of Management
and Budget (OMB).
However, the 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 entitlement, grants, user fees
or loan programs, or the rights and obligations of recipients thereof.
Further, the Department has evaluated the final 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 final rule protects State UC agencies from
becoming clearinghouses of confidential UC information and preserves UC
grant funds for program purposes. In addition, the final rule
[[Page 56842]]
maintains State flexibility in deciding whether to permit certain
disclosures of confidential UC information for purposes other than the
administration of the UC program so long as certain safeguards are
followed.
Executive Order 13132
This rule was reviewed in accordance with Executive Order 13132. It
was determined that the rule may have federalism implications. During
an earlier stage in this rulemaking process, a federalism consultation
with organizations representing State elected officials was held at the
Department on October 19, 2000. These organizations expressed no
concerns at that time or in the following months. Twenty-five States
submitted comments on the 1992 proposed regulation, and these comments
were considered in the development of the most recent proposed rule
published in the Federal Register on August 12, 2004 (69 FR 50022).
In connection with the most recent proposed rule, federalism
consultations with organizations representing State elected officials
occurred on October 4 and 5, 2004. Again, these organizations expressed
no concerns during the consultation process. The majority of comments
received were from individual State agencies. The Department believes
this final rule adequately addresses the concerns expressed in those
comments.
Executive Order 12988
The Department drafted and reviewed this final regulation in
accordance with Executive Order 12988, Civil Justice Reform, and it
does not unduly burden the Federal court system. The final rule was
written to minimize litigation and provide a clear legal standard for
affected conduct, and was reviewed carefully to eliminate drafting
errors and ambiguities.
Unfunded Mandates Reform Act of 1995 and Executive Order 12875
This final rule was reviewed in accordance with 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, we have not prepared a budgetary impact statement.
Paperwork Reduction Act
The following sections of this final rule contain information
collection requirements or revises information collection requirements
in current 20 CFR part 603: Sec. Sec. 603.5, 603.6, 603.7, 603.8,
603.9, 603.10, 603.11, 603.22, and 603.23. As required by the Paperwork
Reduction Act of 1995 (44 U.S.C. 3507(d)), the information collection
requirements in this final rule were submitted to the OMB for approval
during the NPRM stage. This collection of information was approved
under OMB control number 1205-0238 through August 31, 2007.
The annual burden associated with this final rule for all States
combined is approximately 25,810 hours.
Regulatory Flexibility Act
This final rule does not have a ``significant economic impact on a
substantial number of small entities.'' The final rule affects States
and State agencies, which are not within the definition of ``small
entity'' under 5 U.S.C. 601(6). Under 5 U.S.C. 605(b), the Secretary
has certified to the Chief Counsel for Advocacy of the Small Business
Administration to this effect. Accordingly, no regulatory flexibility
analysis is required.
Congressional Review Act
This final rule is not a ``major rule'' as defined by Section 804
of the Small Business Regulatory Enforcement Fairness Act of 1996. This
final rule does not result in an annual effect on the economy of $100
million or more; a major increase in costs or prices; or significant
adverse effects on competition, employment, investment, productivity,
innovation, or the ability of United States-based companies to compete
with foreign-based companies in domestic and export markets.
Effect on Family Life
The Department certifies that this final rule was assessed in
accordance with Pub. L. 105-277, 112 Stat. 2681, and that the final
rule does not adversely affect the well-being of the nation's families.
List of Subjects in 20 CFR Part 603
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 No. 17.225, Unemployment Insurance.
Signed at Washington, DC on September 18, 2006.
Emily Stover DeRocco,
Assistant Secretary of Labor, Employment and Training Administration.
Words of Issuance
0
For the reasons set forth in the preamble, part 603 of Title 20, Code
of Federal Regulations is revised as set forth below:
PART 603--FEDERAL-STATE UNEMPLOYMENT COMPENSATION (UC) PROGRAM;
CONFIDENTIALITY AND DISCLOSURE OF STATE UC INFORMATION
Subpart A--In General
Sec.
603.1 What are the purpose and scope of this part?
603.2 What definitions apply to this part?
Subpart B--Confidentiality and Disclosure Requirements
603.3 What is the purpose and scope of this subpart?
603.4 What is the confidentiality requirement of Federal UC law?
603.5 What are the exceptions to the confidentiality requirement?
603.6 What disclosures are required by this subpart?
603.7 What requirements apply to subpoenas, other compulsory
processes, and disclosure to officials with subpoena authority?
603.8 What are the requirements for payment of costs and program
income?
603.9 What safeguards and security requirements apply to disclosed
information?
603.10 What are the requirements for agreements?
603.11 How do States notify claimants and employers about the uses
of their information?
603.12 How are the requirements of this part enforced?
Subpart C--Mandatory Disclosure for Income and Eligibility Verification
System (IEVS)
603.20 What is the purpose and scope of this subpart?
603.21 What is a requesting agency?
603.22 What information must State UC agencies disclose for purposes
of an IEVS?
603.23 What information must State UC agencies obtain from other
agencies, and crossmatch with wage information, for purposes of an
IEVS?
Authority: 42 U.S.C. 1302(a); Secretary's Order No. 4-75 (40 FR
18515) and Secretary's Order No. 14-75 (November 12, 1975).
Subpart A--In General
Sec. 603.1 What are the purpose and scope of this part?
The purpose of this part is to implement the requirements of
Federal
[[Page 56843]]
UC law concerning confidentiality and disclosure of UC information.
This part applies to States and State UC agencies, as defined in Sec.
603.2(f) and (g).
Sec. 603.2 What definitions apply to this part?
For the purposes of this part:
(a)(1) Claim information means information about:
(i) Whether an individual is receiving, has received, or has
applied for UC;
(ii) The amount of compensation the individual is receiving or is
entitled to receive; and
(iii) The individual's current (or most recent) home address.
(2) For purposes of subpart C (IEVS), claim information also
includes:
(i) Whether the individual has refused an offer of work and, if so,
a description of the job offered including the terms, conditions, and
rate of pay; and
(ii) Any other information contained in the records of the State UC
agency that is needed by the requesting agency to verify eligibility
for, and the amount of, benefits.
(b) Confidential UC information and confidential information mean
any UC information, as defined in paragraph (j) of this section,
required to be kept confidential under Sec. 603.4.
(c) Public domain information means--
(1) Information about the organization of the State and the State
UC agency and appellate authorities, including the names and positions
of officials and employees thereof;
(2) Information about the State UC law (and applicable Federal law)
provisions, rules, regulations, and interpretations thereof, including
statements of general policy and interpretations of general
applicability; and
(3) Any agreement of whatever kind or nature, including interstate
arrangements and reciprocal agreements and any agreement with the
Department of Labor or the Secretary, relating to the administration of
the State UC law.
(d) Public official means an official, agency, or public entity
within the executive branch of Federal, State, or local government who
(or which) has responsibility for administering or enforcing a law, or
an elected official in the Federal, State, or local government.
(e) Secretary and Secretary of Labor mean the cabinet officer
heading the United States Department of Labor, or his or her designee.
(f) 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.
(g) State UC agency means an agency charged with the administration
of the State UC law.
(h) State UC law means the law of a State approved under Section
3304(a) of the Internal Revenue Code of 1986 (26 U.S.C. 3304(a)).
(i) Unemployment compensation (UC) means cash benefits payable to
individuals with respect to their unemployment.
(j) UC information and State UC information means information in
the records of a State or State UC agency that pertains to the
administration of the State UC law. This term includes those State wage
reports collected under the IEVS (Section 1137 of the Social Security
Act (SSA)) that are obtained by the State UC agency for determining UC
monetary eligibility or are downloaded to the State UC agency's files
as a result of a crossmatch but does not otherwise include those wage
reports. It does not include information in a State's Directory of New
Hires, but does include any such information that has been disclosed to
the State UC agency for use in the UC program. It also does not include
the personnel or fiscal information of a State UC agency.
(k) Wage information means information in the records of a State UC
agency (and, for purposes of Sec. 603.23 (IEVS)), information reported
under provisions of State law which fulfill the requirements of Section
1137, SSA) about the--
(1) Wages paid to an individual,
(2) Social security account number (or numbers, if more than one)
of such individual, and
(3) Name, address, State, and the Federal employer identification
number of the employer who paid such wages to such individual.
Subpart B--Confidentiality and Disclosure Requirements
Sec. 603.3 What is the purpose and scope of this subpart?
This subpart implements the basic confidentiality requirement
derived from Section 303(a)(1), SSA, and the disclosure requirements of
Sections 303(a)(7), (c)(1), (d), (e), (h), and (i), SSA, and Section
3304(a)(16), Federal Unemployment Tax Act (FUTA). This subpart also
establishes uniform minimum requirements for the payment of costs,
safeguards, and data-sharing agreements when UC information is
disclosed, and for conformity and substantial compliance with this
proposed rule. This subpart applies to States and State UC agencies, as
defined in Sec. 603.2(f) and (g), respectively.
Sec. 603.4 What is the confidentiality requirement of Federal UC law?
(a) Statute. Section 303(a)(1) of the SSA (42 U.S.C. 503(a)(1))
provides that, for the purposes of certification of payment of granted
funds to a State under Section 302(a) (42 U.S.C. 502(a)), State law
must include provision for such methods of administration as are found
by the Secretary of Labor to be reasonably calculated to insure full
payment of unemployment compensation when due.
(b) Interpretation. The Department of Labor interprets Section
303(a)(1), SSA, to mean that ``methods of administration'' that are
reasonably calculated to insure the full payment of UC when due must
include provision for maintaining the confidentiality of any UC
information which reveals the name or any identifying particular about
any individual or any past or present employer or employing unit, or
which could foreseeably be combined with other publicly available
information to reveal any such particulars, and must include provision
for barring the disclosure of any such information, except as provided
in this part.
(c) Application. Each State law must contain provisions that are
interpreted and applied consistently with the interpretation in
paragraph (b) of this section and with this subpart, and must provide
penalties for any disclosure of confidential UC information that is
inconsistent with any provision of this subpart.
Sec. 603.5 What are the exceptions to the confidentiality
requirement?
The following are exceptions to the confidentiality requirement.
Disclosure of confidential UC information is permissible under the
exceptions in paragraphs (a) through (g) of this section only if
authorized by State law and if such disclosure does not interfere with
the efficient administration of the State UC law. Disclosure of
confidential UC information is permissible under the exceptions in
paragraphs (h) and (i) of this section without such restrictions.
(a) Public domain information. The confidentiality requirement of
Sec. 603.4 does not apply to public domain information, as defined at
Sec. 603.2(c).
(b) UC appeals records. Disclosure of appeals records and
decisions, and precedential determinations on coverage of employers,
employment, and wages, is permissible provided all social security
account numbers have been removed and such disclosure is otherwise
consistent with Federal and State law.
(c) Individual or employer. Disclosure for non-UC purposes, of
confidential UC
[[Page 56844]]
information about an individual to that individual, or of confidential
UC information about an employer to that employer, is permissible.
(d) Informed consent. Disclosure of confidential UC information on
the basis of informed consent is permissible in the following
circumstances--
(1) Agent--to one who acts for or in the place of an individual or
an employer by the authority of that individual or employer if--
(i) In general--
(A) The agent presents a written release (which may include an
electronically submitted release that the State determines is
authentic) from the individual or employer being represented;
(B) When a written release is impossible or impracticable to
obtain, the agent presents such other form of consent as is permitted
by the State UC agency in accordance with State law;
(ii) In the case of an elected official performing constituent
services, the official presents reasonable evidence (such as a letter
from the individual or employer requesting assistance or a written
record of a telephone request from the individual or employer) that the
individual or employer has authorized such disclosure; or
(iii) In the case of an attorney retained for purposes related to
the State's UC law, the attorney asserts that he or she is representing
the individual or employer.
(2) Third party (other than an agent) or disclosure made on an
ongoing basis--to a third party that is not acting as an agent or that
receives confidential information following an informed consent
disclosure on an ongoing basis (even if such entity is an agent), but
only if that entity obtains a written release from the individual or
employer to whom the information pertains.
(i) The release must be signed and must include a statement--
(A) Specifically identifying the information that is to be
disclosed;
(B) That State government files will be accessed to obtain that
information;
(C) Of the specific purpose or purposes for which the information
is sought and a statement that information obtained under the release
will only be used for that purpose or purposes; and
(D) Indicating all the parties who may receive the information
disclosed.
(ii) The purpose specified in the release must be limited to--
(A) Providing a service or benefit to the individual signing the
release that such individual expects to receive as a result of signing
the release; or
(B) Carrying out administration or evaluation of a public program
to which the release pertains.
Note to paragraph (d): The Electronic Signatures in Global and
National Commerce Act of 2000 (E-Sign), Pub. L. 106-229, may apply
where a party wishes to effectuate electronically an informed
consent release (Sec. 603.5(d)(2)) or a disclosure agreement (Sec.
603.10(a)) with an entity that uses informed consent releases. E-
Sign, among other things, sets forth the circumstances under which
electronic signatures, contracts, and other records relating to such
transactions (in lieu of paper documents) are legally binding. Thus,
an electronic communication may suffice under E-Sign to establish a
legally binding contract. The States will need to consider E-Sign's
application to these informed consent releases and disclosure
agreements. In particular, a State must, to conform and
substantially comply with this regulation, assure that these
informed consent releases and disclosure agreements are legally
enforceable. If an informed consent release or disclosure agreement
is to be effectuated electronically, the State must determine
whether E-Sign applies to that transaction, and, if so, make certain
that the transaction satisfies the conditions imposed by E-Sign. The
State must also make certain that the electronic transaction
complies with every other condition necessary to make it legally
enforceable.
(e) Public official. Disclosure of confidential UC information to a
public official for use in the performance of his or her official
duties is permissible. ``Performance of official duties'' means
administration or enforcement of law or the execution of the official
responsibilities of a Federal, State, or local elected official.
Administration of law includes research related to the law administered
by the public official. Execution of official responsibilities does not
include solicitation of contributions or expenditures to or on behalf
of a candidate for public or political office or a political party.
(f) Agent or contractor of public official. Disclosure of
confidential UC information to an agent or contractor of a public
official to whom disclosure is permissible under paragraph (e) of this
section.
(g) Bureau of Labor Statistics. The confidentiality requirement
does not apply to information collected exclusively for statistical
purposes under a cooperative agreement with the Bureau of Labor
Statistics (BLS). Further, this part does not restrict or impose any
condition on the transfer of any other information to the BLS under an
agreement, or the BLS's disclosure or use of such information.
(h) Court order; official with subpoena authority. Disclosure of
confidential UC information in response to a court order or to an
official with subpoena authority is permissible as specified in Sec.
603.7(b).
(i) UC Program Oversight and Audits. The confidentiality
requirement does not apply to any disclosure to a Federal official for
purposes of UC program oversight and audits, including disclosures
under 20 CFR part 601 and 29 CFR parts 96 and 97.
Sec. 603.6 What disclosures are required by this subpart?
(a) The confidentiality requirement of 303(a)(1), SSA, and Sec.
603.4 are not applicable to this paragraph (a) and the Department of
Labor interprets Section 303(a)(1), SSA, as requiring disclosure of all
information necessary for the proper administration of the UC program.
This includes disclosures to claimants, employers, the Internal Revenue
Service (for purposes of UC tax administration), and the U.S.
Citizenship and Immigration Services (for purposes of verifying a
claimant's immigration status).
(b) In addition to Section 303(f), SSA (concerning an IEVS), which
is addressed in subpart C, the following provisions of Federal UC law
also specifically require disclosure of State UC information and State-
held information pertaining to the Federal UC and benefit programs of
Unemployment Compensation for Federal Employees (UCFE), Unemployment
Compensation for Ex-Servicemembers (UCX), Trade Adjustment Assistance
(TAA) (except for confidential business information collected by
States), Disaster Unemployment Assistance (DUA), and any Federal UC
benefit extension program:
(1) Section 303(a)(7), SSA, requires State law to provide for
making available, upon request, to any agency of the United States
charged with the administration of public works or assistance through
public employment, disclosure of the following information with respect
to each recipient of UC--
(i) Name;
(ii) Address;
(iii) Ordinary occupation;
(iv) Employment status; and
(v) A statement of such recipient's rights to further compensation
under the State law.
(2) Section 303(c)(1), SSA, requires each State to make its UC
records available to the Railroad Retirement Board, and to furnish such
copies of its UC records to the Railroad Retirement Board as the Board
deems necessary for its purposes.
(3) Section 303(d)(1), SSA, requires each State UC agency, for
purposes of determining an individual's eligibility benefits, or the
amount of benefits, under a food stamp program established under the
Food Stamp Act of 1977, to disclose, upon request, to officers and
[[Page 56845]]
employees of the Department of Agriculture, and to officers or
employees of any State food stamp agency, any of the following
information contained in the records of the State UC agency--
(i) Wage information,
(ii) Whether an individual is receiving, has received, or has made
application for, UC, and the amount of any such compensation being
received, or to be received, by such individual,
(iii) The current (or most recent) home address of such individual,
and
(iv) Whether an individual has refused an offer of employment and,
if so, a description of the employment so offered and the terms,
conditions, and rate of pay therefore.
(4) Section 303(e)(1), SSA, requires each State UC agency to
disclose, upon request, directly to officers or employees of any State
or local child support enforcement agency, any wage information
contained in the records of the State UC agency for purposes of
establishing and collecting child support obligations (not to include
custodial parent support obligations) from, and locating, individuals
owing such obligations.
(5) Section 303(h), SSA, requires each State UC agency to disclose
quarterly, to the Secretary of Health and Human Services (HHS), wage
information and claim information as required under Section 453(i)(1)
of the SSA (establishing the National Directory of New Hires),
contained in the records of such agency, for purposes of Subsections
(i)(1), (i)(3), and (j) of Section 453, SSA (establishing the National
Directory of New Hires and its uses for purposes of child support
enforcement, Temporary Assistance to Needy Families (TANF), TANF
research, administration of the earned income tax credit, and use by
the Social Security Administration).
(6) Section 303(i), SSA, requires each State UC agency to disclose,
upon request, to officers or employees of the Department of Housing and
Urban Development (HUD) and to representatives of a public housing
agency, for purposes of determining an individual's eligibility for
benefits, or the amount of benefits, under a housing assistance program
of HUD, any of the following information contained in the records of
such State agency about any individual applying for or participating in
any housing assistance program administered by HUD who has signed a
consent form approved by the Secretary of HUD--
(i) Wage information, and
(ii) Whether the individual is receiving, has received, or has made
application for, UC, and the amount of any such compensation being
received (or to be received) by such individual.
(7) Section 3304(a)(16), FUTA requires each State UC agency--
(i) To disclose, upon request, to any State or political
subdivision thereof administering a Temporary Assistance to Needy
Families Agency (TANF) program funded under part A of Title IV of the
SSA, wage information contained in the records of the State UC agency
which is necessary (as determined by the Secretary of HHS in
regulations) for purposes of determining an individual's eligibility
for TANF assistance or the amount of TANF assistance; and
(ii) To furnish to the Secretary of HHS, in accordance with that
Secretary's regulations at 45 CFR 303.108, wage information (as defined
at 45 CFR 303.108(a)(2)) and UC information (as defined at 45 CFR
303.108(a)(3)) contained in the records of such agency for the purposes
of the National Directory of New Hires established under Section 453(i)
of the SSA.
(c) Each State law must contain provisions that are interpreted and
applied consistently with the requirements listed in this section.
Sec. 603.7 What requirements apply to subpoenas, other compulsory
processes, and disclosure to officials with subpoena authority?
(a) In general. Except as provided in paragraph (b) of this
section, when a subpoena or other compulsory process is served upon a
State UC agency or the State, any official or employee thereof, or any
recipient of confidential UC information, which requires the production
of confidential UC information or appearance for testimony upon any
matter concerning such information, the State or State UC agency or
recipient must file and diligently pursue a motion to quash the
subpoena or other compulsory process if other means of avoiding the
disclosure of confidential UC information are not successful or if the
court has not already ruled on the disclosure. Only if such motion is
denied by the court or other forum may the requested confidential UC
information be disclosed, and only upon such terms as the court or
forum may order, such as that the recipient protect the disclosed
information and pay the State's or State UC agency's costs of
disclosure.
(b) Exceptions. The requirement of paragraph (a) of this section to
move to quash subpoenas shall not be applicable, so that disclosure is
permissible, where--
(1) Court Decision--a subpoena or other compulsory legal process
has been served and a court has previously issued a binding
precedential decision that requires disclosures of this type, or a
well-established pattern of prior court decisions have required
disclosures of this type, or
(2) Official with Subpoena Authority--Confidential UC information
has been subpoenaed, by a local, State or Federal governmental
official, other than a clerk of court on behalf of a litigant, with
authority to obtain such information by subpoena under State or Federal
law. The State or State UC agency may choose to disclose such
confidential UC information to these officials without the actual
issuance of a subpoena.
Sec. 603.8 What are the requirements for payment of costs and program
income?
(a) In general. Except as provided in paragraph (b) of this
section, grant funds must not be used to pay any of the costs of making
any disclosure of UC information. Grant funds may not be used to pay
any of the costs of making any disclosures under Sec. 603.5(d)(2)
(third party (other than an agent) or disclosure made on an ongoing
basis), Sec. 603.5(e) (optional disclosure to a public official),
Sec. 603.5(f) (optional disclosure to an agent or contractor of a
public official), and Sec. 603.5(g) (optional disclosure to BLS),
Sec. 603.6(b) (mandatory disclosures for non-UC purposes), or Sec.
603.22 (mandatory disclosure for purposes of an IEVS).
(b) Use of grant funds permitted. Grant funds paid to a State under
Section 302(a), SSA, may be used to pay the costs of only those
disclosures necessary for proper administration of the UC program.
(This may include some disclosures under Sec. 603.5(a) (concerning
public domain information), Sec. 603.5(c) (to an individual or
employer), and Sec. 603.5(d)(1) (to an agent).) In addition, grant
funds may be used to pay costs of disclosures under Sec. 603.5(i) (for
UC Program Oversight and Audits) and Sec. 603.6(a) (for the proper
administration of the UC program). Grant funds may also be used to pay
costs associated with disclosures under Sec. 603.7(b)(1) (concerning
court-ordered compliance with subpoenas) if a court has denied recovery
of costs, or to pay costs associated with disclosures under Sec.
603.7(b)(2) (to officials with subpoena authority) if the State UC
agency has attempted but not been successful in obtaining reimbursement
of costs. Finally, grant funds may be used to pay costs associated with
any disclosure of UC information if not more than an
[[Page 56846]]
incidental amount of staff time and no more than nominal processing
costs are involved in making the disclosure.
(c) Calculation of costs. The costs to a State or State UC agency
of processing and handling a request for disclosure of information must
be calculated in accordance with the cost principles and administrative
requirements of 29 CFR part 97 and Office of Management and Budget
Circular No. A-87 (Revised). For the purpose of calculating such costs,
any initial start-up costs incurred by the State UC agency in
preparation for making the requested disclosure(s), such as computer
reprogramming necessary to respond to the request, and the costs of
implementing safeguards and agreements required by Sec. Sec. 603.9 and
603.10, must be charged to and paid by the recipient. (Start-up costs
do not include the costs to the State UC agency of obtaining,
compiling, or maintaining information for its own purposes.) Postage or
other delivery costs incurred in making any disclosure are part of the
costs of making the disclosure. Penalty mail, as defined in 39 U.S.C.
3201(1), must not be used to transmit information being disclosed,
except information disclosed for purposes of administration of State UC
law. As provided in Sections 453(e)(2) and 453(g) of the SSA, the
Secretary of HHS has the authority to determine what constitutes a
reasonable amount for the reimbursement for disclosures under Section
303(h), SSA, and Section 3304(a)(16)(B), FUTA.
(d) Payment of costs. The costs to a State or State UC agency of
making a disclosure of UC information, calculated in accordance with
paragraph (c) of this section, must be paid by the recipient of the
information or another source paying on behalf of the recipient, either
in advance or by way of reimbursement. If the recipient is not a public
official, such costs, except for good reason must be paid in advance.
For the purposes of this paragraph (d), payment in advance means full
payment of all costs before or at the time the disclosed information is
given in hand or sent to the recipient. The requirement of payment of
costs in this paragraph is met when a State UC agency has in place a
reciprocal cost agreement or arrangement with the recipient. As used in
this section, reciprocal means that the relative benefits received by
each are approximately equal. Payment or reimbursement of costs must
include any initial start-up costs associated with making the
disclosure.
(e) Program income. Costs paid as required by this section, and any
funds generated by the disclosure of UC information under this part,
are program income and may be used only as permitted by 29 CFR 97.25(g)
(on program income). Such income may not be used to benefit a State's
general fund or other program.
Sec. 603.9 What safeguards and security requirements apply to
disclosed information?
(a) In general. For disclosures of confidential UC information
under Sec. 603.5(d)(2) (to a third party (other than an agent) or
disclosures made on an ongoing basis); Sec. 603.5(e) (to a public
official), except as provided in paragraph (d) of this section; Sec.
603.5(f) (to an agent or contractor of a public official); Sec.
603.6(b)(1) through (4), (6), and (7)(i) (as required by Federal UC
law); and Sec. 603.22 (to a requesting agency for purposes of an
IEVS), a State or State UC agency must require the recipient to
safeguard the information disclosed against unauthorized access or
redisclosure, as provided in paragraphs (b) and (c) of this section,
and must subject the recipient to penalties provided by the State law
for unauthorized disclosure of confidential UC information.
(b) Safeguards to be required of recipients. (1) The State or State
UC agency must:
(i) Require the recipient to use the disclosed information only for
purposes authorized by law and consistent with an agreement that meets
the requirements of Sec. 603.10;
(ii) Require the recipient to store the disclosed information in a
place physically secure from access by unauthorized persons;
(iii) Require the recipient to store and process disclosed
information maintained in electronic format, such as magnetic tapes or
discs, in such a way that unauthorized persons cannot obtain the
information by any means;
(iv) Require the recipient to undertake precautions to ensure that
only authorized personnel are given access to disclosed information
stored in computer systems;
(v) Require each recipient agency or entity to:
(A) Instruct all personnel having access to the disclosed
information about confidentiality requirements, the requirements of
this subpart B, and the sanctions specified in the State law for
unauthorized disclosure of information, and
(B) Sign an acknowledgment that all personnel having access to the
disclosed information have been instructed in accordance with paragraph
(b)(1)(v)(A) of this section and will adhere to the State's or State UC
agency's confidentiality requirements and procedures which are
consistent with this subpart B and the agreement required by Sec.
603.10, and agreeing to report any infraction of these rules to the
State UC agency fully and promptly,
(vi) Require the recipient to dispose of information disclosed or
obtained, and any copies thereof made by the recipient agency, entity,
or contractor, after the purpose for which the information is disclosed
is served, except for disclosed information possessed by any court.
Disposal means return of the information to the disclosing State or
State UC agency or destruction of the information, as directed by the
State or State UC agency. Disposal includes deletion of personal
identifiers by the State or State UC agency in lieu of destruction. In
any case, the information disclosed must not be retained with personal
identifiers for longer than such period of time as the State or State
UC agency deems appropriate on a case-by-case basis; and
(vii) Maintain a system sufficient to allow an audit of compliance
with the requirements of this part.
(2) In the case of disclosures made under Sec. 603.5(d)(2) (to a
third party (other than an agent) or disclosures made on an ongoing
basis), the State or State UC agency must also--
(i) Periodically audit a sample of transactions accessing
information disclosed under that section to assure that the entity
receiving disclosed information has on file a written release
authorizing each access. The audit must ensure that the information is
not being used for any unauthorized purpose;
(ii) Ensure that all employees of entities receiving access to
information disclosed under Sec. 603.5(d)(2) are subject to the same
confidentiality requirements, and State criminal penalties for
violation of those requirements, as are employees of the State UC
agency.
(c) Redisclosure of confidential UC information. (1) A State or
State UC agency may authorize any recipient of confidential UC
information under paragraph (a) of this section to redisclose
information only as follows:
(i) To the individual or employer who is the subject of the
information;
(ii) To an attorney or other duly authorized agent representing the
individual or employer;
(iii) In any civil or criminal proceedings for or on behalf of a
recipient agency or entity;
(iv) In response to a subpoena only as provided in Sec. 603.7;
(v) To an agent or contractor of a public official only if the
person redisclosing is a public official, if the redisclosure is
authorized by the State
[[Page 56847]]
law, and if the public official retains responsibility for the uses of
the confidential UC information by the agent or contractor;
(vi) From one public official to another if the redisclosure is
authorized by the State law;
(vii) When so authorized by Section 303(e)(5), SSA, (redisclosure
of wage information by a State or local child support enforcement
agency to an agent under contract with such agency for purposes of
carrying out child support enforcement) and by State law; or
(viii) When specifically authorized by a written release that meets
the requirements of Sec. 603.5(d) (to a third party with informed
consent).
(2) Information redisclosed under paragraphs (c)(1)(v) and (vi) of
this section must be subject to the safeguards in paragraph (b) of this
section.
(d) The requirements of this section do not apply to disclosures of
UC information to a Federal agency which the Department has determined,
by notice published in the Federal Register, to have in place
safeguards adequate to satisfy the confidentiality requirement of
Section 303(a)(1), SSA.
Sec. 603.10 What are the requirements for agreements?
(a) Requirements. (1) For disclosures of confidential UC
information under Sec. 603.5(d)(2) (to a third party (other than an
agent) or disclosures made on an ongoing basis); Sec. 603.5(e) (to a
public official), except as provided in paragraph (d) of this section;
Sec. 603.5(f) (to an agent or contractor of a public official); Sec.
603.6(b)(1) through (4), (6), and (7)(i) (as required by Federal UC
law); and Sec. 603.22 (to a requesting agency for purposes of an
IEVS), a State or State UC agency must enter into a written,
enforceable agreement with any agency or entity requesting
disclosure(s) of such information. The agreement must be terminable if
the State or State UC agency determines that the safeguards in the
agreement are not adhered to.
(2) For disclosures referred to in Sec. 603.5(f) (to an agent or
contractor of a public official), the State or State UC agency must
enter into a written, enforceable agreement with the public official on
whose behalf the agent or contractor will obtain information. The
agreement must hold the public official responsible for ensuring that
the agent or contractor complies with the safeguards of Sec. 603.9.
The agreement must be terminable if the State or State UC agency
determines that the safeguards in the agreement are not adhered to.
(b) Contents of agreement. (1) In general. Any agreement required
by paragraph (a) of this section must include, but need not be limited
to, the following terms and conditions:
(i) A description of the specific information to be furnished and
the purposes for which the information is sought;
(ii) A statement that those who request or receive information
under the agreement will be limited to those with a need to access it
for purposes listed in the agreement;
(iii) The methods and timing of requests for information and
responses to those requests, including the format to be used;
(iv) Provision for paying the State or State UC agency for any
costs of furnishing information, as required by Sec. 603.8 (on costs);
(v) Provision for safeguarding the information disclosed, as
required by Sec. 603.9 (on safeguards); and
(vi) Provision for on-site inspections of the agency, entity, or
contractor, to assure that the requirements of the State's law and the
agreement or contract required by this section are being met.
(2) In the case of disclosures under Sec. 603.5(d)(2) (to a third
party (other than an agent) or disclosures made on an ongoing basis),
the agreement required by paragraph (a) of this section must assure
that the information will be accessed by only those entities with
authorization under the individual's or employer's release, and that it
may be used only for the specific purposes authorized in that release.
(c) Breach of agreement. (1) In general. If an agency, entity, or
contractor, or any official, employee, or agent thereof, fails to
comply with any provision of an agreement required by this section,
including timely payment of the state's or state UC agency's costs
billed to the agency, entity, or contractor, the agreement must be
suspended, and further disclosure of information (including any
disclosure being processed) to such agency, entity, or contractor is
prohibited, until the State or State UC agency is satisfied that
corrective action has been taken and there will be no further breach.
In the absence of prompt and satisfactory corrective action, the
agreement must be canceled, and the agency, entity, or contractor must
be required to surrender to the state or state UC agency all
confidential UC information (and copies thereof) obtained under the
agreement which has not previously been returned to the state or state
UC agency, and any other information relevant to the agreement.
(2) Enforcement. In addition to the actions required to be taken by
paragraph (c)(1) of this section, the state or state UC agency must
undertake any other action under the agreement, or under any law of the
State or of the United States, to enforce the agreement and secure
satisfactory corrective action or surrender of the information, and
must take other remedial actions permitted under State or Federal law
to effect adherence to the requirements of this subpart B, including
seeking damages, penalties, and restitution as permitted under such law
for any charges to granted funds and all costs incurred by the state or
the state UC agency in pursuing the breach of the agreement and
enforcement as required by this paragraph (c).
(d) The requirements of this section do not apply to disclosures of
UC information to a Federal agency which the Department has determined,
by notice published in the Federal Register, to have in place
safeguards adequate to satisfy the confidentiality requirement of
Section 303(a)(1), SSA, and an appropriate method of paying or
reimbursing the State UC agency (which may involve a reciprocal cost
arrangement) for costs involved in such disclosures. These
determinations will be published in the Federal Register.
Sec. 603.11 How do States notify claimants and employers about the
uses of their information?
(a) Claimants. Every claimant for compensation must be notified, at
the time of application, and periodically thereafter, that confidential
UC information pertaining to the claimant may be requested and utilized
for other governmental purposes, including, but not limited to,
verification of eligibility under other government programs. Notice on
or attached to subsequent additional claims will satisfy the
requirement for periodic notice thereafter.
(b) Employers. Every employer subject to a State's law must be
notified that wage information and other confidential UC information
may be requested and utilized for other governmental purposes,
including, but not limited to, verification of an individual's
eligibility for other government programs.
Sec. 603.12 How are the requirements of this part enforced?
(a) Resolving conformity and compliance issues. For the purposes of
resolving issues of conformity and substantial compliance with the
requirements set forth in subparts B and C, the provisions of 20 CFR
601.5(b) (informal discussions with the
[[Page 56848]]
Department of Labor to resolve conformity and substantial compliance
issues), and 20 CFR 601.5(d) (Secretary of Labor's hearing and decision
on conformity and substantial compliance) apply.
(b) Conformity and substantial compliance. Whenever the Secretary
of Labor, after reasonable notice and opportunity for a hearing to the
State UC agency of a State, finds that the State law fails to conform,
or that the State or State UC agency fails to comply substantially,
with:
(1) The requirements of Title III, SSA, implemented in subparts B
and C of this part, the Secretary of Labor shall 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 Department
of Labor shall make no further payments to such State.
(2) The FUTA requirements implemented in this subpart B, the
Secretary of Labor shall make no certification under that section to
the Secretary of the Treasury for such State as of October 31 of the
12-month period for which such finding is made.
Subpart C--Mandatory Disclosure for Income and Eligibility
Verification System (IEVS)
Sec. 603.20 What is the purpose and scope of this subpart?
(a) Purpose. Subpart C implements Section 303(f), SSA. Section
303(f) requires States to have in effect an income and eligibility
verification system, which meets the requirements of Section 1137, SSA,
under which information is requested and exchanged for the purpose of
verifying eligibility for, and the amount of, benefits available under
several federally assisted programs, including the Federal-State UC
program.
(b) Scope. This subpart C applies only to a State UC agency.
Note to paragraph (b): Although not implemented in this part
603, Section 1137(a)(1), SSA, provides that each State must require
claimants for compensation to furnish to the State UC agency their
social security account numbers, as a condition of eligibility for
compensation, and further requires States to utilize such account
numbers in the administration of the State UC laws. Section
1137(a)(3), SSA, further provides that employers must make quarterly
wage reports to a State UC agency, or an alternative agency, for use
in verifying eligibility for, and the amount of, benefits. Section
1137(d)(1), SSA, provides that each State must require claimants for
compensation, as a condition of eligibility, to declare in writing,
under penalty of perjury, whether the individual is a citizen or
national of the United States, and, if not, that the individual is
in a satisfactory immigration status. Other provisions of Section
1137(d), SSA, not implemented in this regulation require the States
to obtain, and individuals to furnish, information which shows
immigration status, and require the States to verify immigration
status with the Bureau of Citizenship and Immigration Services.
Sec. 603.21 What is a requesting agency?
For the purposes of this subpart C, requesting agency means:
(a) Temporary Assistance to Needy Families Agency--Any State or
local agency charged with the responsibility of administering a program
funded under part A of Title IV of the SSA.
(b) Medicaid Agency--Any State or local agency charged with the
responsibility of administering the provisions of the Medicaid program
under a State plan approved under Title XIX of the SSA.
(c) Food Stamp Agency--Any State or local agency charged with the
responsibility of administering the provisions of the Food Stamp
Program under the Food Stamp Act of 1977.
(d) Other SSA Programs Agency--Any State or local agency charged
with the responsibility of administering a program under a State plan
approved under Title I, X, XIV, or XVI (Supplemental Security Income
for the Aged, Blind, and Disabled) of the SSA.
(e) Child Support Enforcement Agency--Any State or local child
support enforcement agency charged with the responsibility of enforcing
child support obligations under a plan approved under part D of Title
IV of the SSA.
(f) Social Security Administration--Commissioner of the Social
Security Administration in establishing or verifying eligibility or
benefit amounts under Titles II (Old-Age, Survivors, and Disability
Insurance Benefits) and XVI (Supplemental Security Income for the Aged,
Blind, and Disabled) of the SSA.
Sec. 603.22 What information must State UC agencies disclose for
purposes of an IEVS?
(a) Disclosure of information. Each State UC agency must disclose,
upon request, to any requesting agency, as defined in Sec. 603.21,
that has entered into an agreement required by Sec. 603.10, wage
information (as defined at Sec. 603.2(k)) and claim information (as
defined at Sec. 603.2(a)) contained in the records of such State UC
agency.
(b) Format. The State UC agency must adhere to standardized formats
established by the Secretary of HHS (in consultation with the Secretary
of Agriculture) and set forth in 42 CFR 435.960 (concerning
standardized formats for furnishing and obtaining information to verify
income and eligibility).
Sec. 603.23 What information must State UC agencies obtain from other
agencies, and crossmatch with wage information, for purposes of an
IEVS?
(a) Crossmatch with information from requesting agencies. Each
State UC agency must obtain such information from the Social Security
Administration and any requesting agency as may be needed in verifying
eligibility for, and the amount of, compensation payable under the
State UC law.
(b) Crossmatch of wage and benefit information. The State UC agency
must crossmatch quarterly wage information with UC payment information
to the extent that such information is likely, as determined by the
Secretary of Labor, to be productive in identifying ineligibility for
benefits and preventing or discovering incorrect payments.
[FR Doc. 06-8185 Filed 9-26-06; 8:45 am]
BILLING CODE 4510-30-P