DEW Proposes Regulations to Rebuild the UI Trust Fund and Clarify Suitable Work

DEW has submitted proposed regulations that will be reviewed by the General Assembly this session. One regulation relates to rebuilding the Unemployment Insurance (UI) Trust Fund while the other relates to amending the definition of suitable work for UI claimants.

Trust Fund Rebuild

South Carolina is on track  to repay $977 million that was borrowed from the federal government for the UI Trust Fund before the end of 2015. The current outstanding balance on the loan is $195 million.

State law [South Carolina Code Section 41-31-45 (C)] states that “after the fund returns to solvency, the department must promulgate regulations concerning the income needed to pay benefits in each year and return the trust fund to an adequate level…”

Knowing that the Trust Fund is expected to be paid this year, DEW submitted a proposed regulation last year to rebuild the Trust Fund under the principle that South Carolina should never have to borrow money from the federal government again and that S.C. businesses want as much certainty and stability as possible when it comes to their unemployment taxes.

Proposed Rebuild regulation:

  • Uses a four-year rebuilding period based on the theory of a seven-year economic cycle and the desire to rebuild the fund during the good economic years.
  • Provides triggers to maintain stability for businesses in the event of an economic downturn and to avoid having to borrow money from the federal government again.
  • States that in the event that the balance of the UI Trust Fund at the end of the most recently completed fiscal year is greater than the fund adequacy target, DEW may use the surplus amount to reduce taxes in the following year.

The regulation was structured based on the current statute that was implemented to repay the loan. If the regulation is passed as written, no statutory changes would need to be made to rebuild the Trust Fund. View the regulation here.

Suitable Work

DEW is proposing to amend the suitable work regulation as a best practice recommendation from a third-party business process review. The proposed regulation is modeled after Georgia’s suitable work policy.

The regulation will provide guidance to UI claimants and the public on what DEW considers available suitable work in consideration of the claimant’s prior earnings and the length of unemployment.

Currently, claimants do not have a regulation or a statute to guide them in determining how the wage in an offer of work would be considered when determining whether the position is available suitable work and if their refusal to accept such work would be considered a disqualification. View the regulation here.

What’s  Next?

Both regulations were printed in the State Register on September 26, 2014 which opened up a public comment period on the regulations through November 12, 2014. There were not enough comments received to warrant a public hearing through the Administrative Law Court.

The regulations have been submitted to the General Assembly for review, and the General Assembly has 120 calendar days (during session) to review the regulations.