U.S. Chamber of Commerce - Dec. 3, 2002 -- U.S. Chamber Welcomes Safeguards for Unemployment Funds

Department of Labor Rulemaking Protects Jobless Workers

WASHINGTON, D.C. -- The United States Chamber of Commerce welcomed today’s decision by the Department of Labor to consider repealing an illegal Clinton-era regulation that jeopardized the solvency of state unemployment insurance funds by allowing those funds to be used for workers taking a voluntary leave of absence for reasons related to the birth or adoption of a child.

“Diverting money from unemployed workers and giving it to parents who take a voluntary leave of absence would have slashed holes in an important safety net for workers,” said Randel Johnson, Chamber vice president for labor policy. “States would have been forced to increase taxes on employers or reduce benefits for the unemployed to pay the additional cost, particularly now as numerous states’ unemployment funds are at or below recommended solvency levels already.”

The Clinton administration initiative would have obligated states to find as much as $14 billion to $31 billion every year according to some estimates, to fund a new parental leave program out of state unemployment insurance funds -- funds financed by employers and set aside to provide financial support for unemployed workers. The Chamber and other groups filed suit to stop the move, charging it violated the Federal Unemployment Tax Act and the Social Security Act, both of which permit unemployment benefits to be paid to unemployed workers who are able to and available for work.

“Congress established a voluntary, unpaid leave of absence program for employees to care for children or family members - the Family and Medical Leave Act,” said Johnson. “State unemployment funds - long supported by employers - were created to provide jobless workers with a paid stipend while they looked for work, not to provide paid family leave.

“The Clinton administration regulation - issued during an election year - may have been good politics, but it was bad public policy and probably illegal. Pulling the rug out from under people who are unemployed through no fault of their own and looking for a job is not a smart way to help any worker,” Johnson concluded.

The U.S. Chamber of Commerce is the world’s largest business federation representing more than three million businesses and organizations of every size, sector and region.

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