SENATE BILL REPORT

                   SB 5359

              As Reported By Senate Committee On:

          Labor, Commerce & Trade, February 22, 1995

Title:  An act relating to self‑employment for unemployed claimants.

Brief Description:  Creating a self‑employment income support program.

Sponsors:  Senators Sheldon, Cantu, Rasmussen, Winsley and A. Anderson.

Brief History:

Committee Activity:  Labor, Commerce & Trade:  1/26/95, 2/22/95 [DPS].

SENATE COMMITTEE ON LABOR, COMMERCE & TRADE

Majority Report:  That Substitute Senate Bill No. 5359 be substituted therefor, and the substitute bill do pass.

  Signed by Senators Pelz, Chair; Heavey, Vice Chair; Deccio, Franklin, Fraser, Hale, Newhouse, Palmer and Wojahn.

Staff:  Jack Brummel (786-7428)

Background:  Many unemployed individuals have the potential for self-sufficiency through self-employment.  Washington was one of two states chosen by the federal Department of Labor to operate a pilot self-employment program for unemployed workers most likely to exhaust their unemployment benefits.  The three-year evaluation of the program has found that: (1) over 70 percent of the new businesses are still in operation; (2) employment in the new businesses is increasing at about 10 percent per year; and (3) average hourly wages for employees of the new businesses are $4 per hour higher than wages paid by control group businesses.  Based on the success of the pilot, Congress has authorized the use of unemployment compensation for self-employment efforts provided UI program costs do not exceed those the state would have otherwise incurred.

Summary of Substitute Bill:  Unemployed individuals that are likely to exhaust regular unemployment benefits may participate in a self-employment assistance program, and be exempt from the requirements relating to availability for work, active search for work, and refusal to accept suitable work.  Such programs must include entrepreneurial training, business counseling, and technical assistance.  Participants in a self-employment assistance program receive a self-employment allowance instead of unemployment benefits.  Income earned from self-employment is not deducted from the weekly benefit amount received by a participant.

The Commissioner of Employment Security is not obligated to spend departmental funds for the operation of self-employment assistance programs unless specific federal or state funding is provided.  The commissioner is authorized to make rules related to the act.

Substitute Bill Compared to Original Bill:  The substitute bill adds language regarding rule-making authority and the provision that the commissioner is not obligated to expend departmental funds.

Appropriation:  None.

Fiscal Note:  Requested on January 25, 1995.

Effective Date:  Ninety days after adjournment of session in which bill is passed.

Testimony For:  The bill allows unemployed individuals to continue collecting UI benefits while starting their own business.  It provides the training support needed for unemployed  people to become self-sufficient.

Testimony Against:  None.

Testified:  PRO:  Dale Zeigler, Employment Security; Corrine Tobeck, Mark Reisman, Grays Harbor Community College.