HOUSE BILL REPORT

HB 2772

BYRepresentatives Vekich and Walker; by request of Employment Security Department

Revising provisions for disqualification from unemployment compensation benefits.

House Committe on Commerce & Labor

Majority Report:  The substitute bill be substituted therefor and the substitute bill do pass.  (11)

      Signed by Representatives Vekich, Chair; Cole, Vice Chair; Smith, Ranking Republican Member; Forner, Jones, R. King, Leonard, O'Brien, Prentice, Walker and Wolfe.

House Staff:Chris Cordes (786-7117)

AS REPORTED BY COMMITTEE ON COMMERCE & LABOR FEBRUARY 2, 1990

BACKGROUND:

To be eligible for unemployment compensation, an unemployed person must register for work at an employment office, be able and willing to accept suitable work, and be actively searching for work. The claimant will be disqualified for benefits beginning with the week in which he or she quit or was terminated if the claimant voluntarily quit the job without good cause or was terminated for misconduct connected with work.  If the claimant was terminated because of a felony or gross misdemeanor conviction connected with work, or because of admitting the commission of the felony or gross misdemeanor to a competent authority, the claimant may not receive any benefits based on wage credits earned prior to the termination.

Until 1988, the Employment Security Department determined eligibility for unemployment compensation benefits based on the reasons for leaving the last job.  In Othello Community Hospital v. Employment Security Department, 52 Wn. App. 592 (1988), the Washington court of appeals held the department's policy invalid with respect to other job separations in the base year.  The court found that a hospital employee who had been discharged for theft of hospital property, and who had been subsequently employed and terminated from other jobs, could not base eligibility on the wage credits accrued during employment with the hospital even though the job termination for theft was not the employee's last job separation. The department's determination that benefits charges would be made against the hospital was overturned.

As a result of the Othello case, the department reviews all separations from employment during the base year for potentially disqualifying separations.

SUMMARY:

SUBSTITUTE BILL:  It is the intent of the Legislature that adjudication of eligibility for unemployment benefits be limited to the worker's most recent job termination, except for cases involving felony misconduct.  To be eligible for unemployment compensation benefits, an unemployed person must show, in addition to being able and willing to work and searching for work, that his or her most recent separation from employment was not because of voluntarily quitting work, because of misconduct connected with work, or because of a conviction for a felony or gross misdemeanor connected with work.

Disqualification because of a felony or gross misdemeanor must be based on a conviction and may not be based on admitting the act to a competent authority.

SUBSTITUTE BILL COMPARED TO ORIGINAL:  The substitute bill includes an intent section to clarify that the Legislature intends the Employment Security Department to adjudicate only the last separation from employment, with the exception of felony/gross misdemeanor misconduct cases.

Fiscal Note:      Available.

Effective Date:The bill contains an emergency clause and takes effect immediately.

House Committee ‑ Testified For:    Graeme Sackrison and Mary Pat Frederick, Employment Security Department.

House Committee - Testified Against:      Dale Tuvey, Employer Advisory Services; Vincent Rota, Washington State Hospital Association; and Clif Finch, Association of Washington Business.

House Committee - Testimony For:    Because of the recent court case, when a claimant applies for unemployment benefits, the Employment Security Department must adjudicate all employment separations that occurred during the claimant's base year.  Over the past several months, the department has shown that the overwhelming majority of disqualifications result from the claimant's most recent job termination.  Relatively few disqualifications arise out of previous job terminations.  The cost of adjudicating all job separations is very large, while the savings to the trust fund is comparatively small.  The process required by the court appears to be costing $2 for every $1 saved.

House Committee - Testimony Against:      The adjudication procedures implemented by the department have been in place a very short time and should be tested over a longer period.  Requiring adjudication of all base year separations may save the trust fund more money in the long run than a few months' experience shows.  The department also should consider whether a simpler, less costly procedure could be used.  For example, separations could be adjudicated only if the base year employer requested it.