Unemployment Insurance Systems Modernization Act of 2020

II 116TH CONGRESS 2D SESSION S. 4244 To amend title III of the Social Security Act to provide for improvements to State unemployment systems and to strengthen program integrity. IN THE SENATE OF THE UNITED STATES JULY 21, 2020 Mr. YOUNG (for himself and Mr. SASSE) introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To amend title III of the Social Security Act to provide for improvements to State unemployment systems and to strengthen program integrity. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Unemployment Insur- 4 ance Systems Modernization Act of 2020’’. 5 SEC. 2. IMPROVEMENTS TO STATE UNEMPLOYMENT SYS- 6 TEMS AND STRENGTHENING PROGRAM IN- 7 TEGRITY. 8 (a) UNEMPLOYMENT COMPENSATION SYSTEMS.— 9 VerDate Sep 11 2014 18:49 Aug 01, 2020 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S4244.IS S4244 pbinns on DSKJLVW7X2PROD with BILLS 2 •S 4244 IS (1) IN GENERAL.—Section 303(a) of the Social 1 Security Act (42 U.S.C. 503(a)) is amended— 2 (A) in the matter preceding paragraph (1), 3 by striking ‘‘provision for—’’ and inserting 4 ‘‘provision for each of the following:’’; 5 (B) at the end of each of paragraphs (1) 6 through (10) and paragraph (11)(B), by strik- 7 ing ‘‘; and’’ and inserting a period; and 8 (C) by adding at the end the following new 9 paragraph: 10 ‘‘(13) The State system shall, in addition to 11 meeting the requirements under section 1137, meet 12 the following requirements: 13 ‘‘(A) The system shall be capable of han- 14 dling a surge of claims that would represent a 15 twentyfold increase in claims from January 16 2020 levels, occurring over a one-month period. 17 ‘‘(B) The system shall be capable of— 18 ‘‘(i) adjusting wage replacement levels 19 for individuals receiving unemployment 20 compensation; 21 ‘‘(ii) adjusting weekly earnings dis- 22 regards, including the ability to adjust 23 such disregards in relation to an individ- 24 VerDate Sep 11 2014 18:49 Aug 01, 2020 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S4244.IS S4244 pbinns on DSKJLVW7X2PROD with BILLS 3 •S 4244 IS ual’s earnings or weekly benefit amount; 1 and 2 ‘‘(iii) providing for wage replacement 3 levels that vary based on the duration of 4 benefit receipt. 5 ‘‘(C) The system shall have in place an 6 automated process for receiving and processing 7 claims for disaster unemployment assistance 8 under section 410(a) of the Robert T. Stafford 9 Disaster Relief and Emergency Assistance Act 10 (42 U.S.C. 5177(a)), with flexibility to adapt 11 rules regarding individuals eligible for assist- 12 ance and the amount payable. 13 ‘‘(D) In the case of a State that makes 14 payments of short-time compensation under a 15 short-time compensation program (as defined in 16 section 3306(v) of the Internal Revenue Code of 17 1986), the system shall have in place an auto- 18 mated process of receiving and processing 19 claims for short-time compensation. 20 ‘‘(E) The system shall have in place an 21 automated process for receiving and processing 22 claims for— 23 ‘‘(i) unemployment compensation for 24 Federal civilian employees under sub- 25 VerDate Sep 11 2014 18:49 Aug 01, 2020 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S4244.IS S4244 pbinns on DSKJLVW7X2PROD with BILLS 4 •S 4244 IS chapter I of chapter 85 of title 5, United 1 States Code; 2 ‘‘(ii) unemployment compensation for 3 ex-servicemembers under subchapter II of 4 chapter 85 of title 5, United States Code; 5 and 6 ‘‘(iii) trade readjustment allowances 7 under sections 231 through 233 of the 8 Trade Act of 1974 (19 U.S.C. 2291– 9 2293).’’. 10 (2) EFFECTIVE DATE.—The amendment made 11 by paragraph (1) shall apply to weeks of unemploy- 12 ment beginning on or after the earlier of— 13 (A) the date the State changes its statutes, 14 regulations, or policies in order to comply with 15 such amendment; or 16 (B) October 1, 2023. 17 (b) ELECTRONIC TRANSMISSION OF UNEMPLOYMENT 18 COMPENSATION INFORMATION.—Section 303 of the So- 19 cial Security Act (42 U.S.C. 503) is amended by adding 20 at the end the following new subsection: 21 ‘‘(n) ELECTRONIC TRANSMISSION OF UNEMPLOY- 22 MENT COMPENSATION INFORMATION.— 23 ‘‘(1) IN GENERAL.—Not later than October 1, 24 2023, the State agency charged with administration 25 VerDate Sep 11 2014 18:49 Aug 01, 2020 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S4244.IS S4244 pbinns on DSKJLVW7X2PROD with BILLS 5 •S 4244 IS of the State law shall use a system developed (in 1 consultation with stakeholders) and designated by 2 the Secretary of Labor for automated electronic 3 transmission of requests for information relating to 4 unemployment compensation and the provision of 5 such information between such agency and employ- 6 ers or their agents. 7 ‘‘(2) USE OF APPROPRIATED FUNDS.—The Sec- 8 retary of Labor may use funds appropriated for 9 grants to States under this title to make payments 10 on behalf of States as the Secretary determines is 11 appropriate for the use of the system described in 12 paragraph (1). 13 ‘‘(3) EMPLOYER PARTICIPATION.—The Sec- 14 retary of Labor shall work with the State agency 15 charged with administration of the State law to in- 16 crease the number of employers using this system 17 and to resolve any technical challenges with the sys- 18 tem. 19 ‘‘(4) REPORTS ON USE OF ELECTRONIC SYS- 20 TEM.—After the end of each fiscal year, on a date 21 determined by the Secretary, each State shall report 22 to the Secretary information on— 23 ‘‘(A) the proportion of employers using the 24 designated system described in paragraph (1); 25 VerDate Sep 11 2014 18:49 Aug 01, 2020 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S4244.IS S4244 pbinns on DSKJLVW7X2PROD with BILLS 6 •S 4244 IS ‘‘(B) the reasons employers are not using 1 such system; and 2 ‘‘(C) the efforts the State is undertaking 3 to increase employer’s use of such system. 4 ‘‘(5) ENFORCEMENT.—Whenever the Secretary 5 of Labor, after reasonable notice and opportunity for 6 hearing to the State agency charged with the admin- 7 istration of the State law, finds that there is a fail- 8 ure to comply substantially with the requirements of 9 paragraph (1), the Secretary of Labor shall notify 10 such State agency that further payments will not be 11 made to the State until the Secretary of Labor is 12 satisfied that there is no longer any such failure. 13 Until the Secretary of Labor is so satisfied, such 14 Secretary shall make no future certification to the 15 Secretary of the Treasury with respect to the 16 State.’’. 17 (c) UNEMPLOYMENT COMPENSATION INTEGRITY 18 DATA HUB.— 19 (1) IN GENERAL.—Section 303(a) of the Social 20 Security Act (42 U.S.C. 503(a)), as amended by 21 subsection (a), is amended by adding at the end the 22 following new paragraph: 23 ‘‘(14) The State agency charged with adminis- 24 tration of the State law shall use the system des- 25 VerDate Sep 11 2014 18:49 Aug 01, 2020 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S4244.IS S4244 pbinns on DSKJLVW7X2PROD with BILLS 7 •S 4244 IS ignated by the Secretary of Labor for cross-match- 1 ing claimants of unemployment compensation under 2 State law against any databases in the system to 3 prevent and detect fraud and improper payments.’’. 4 (2) EFFECTIVE DATE.—The amendment made 5 by paragraph (1) shall apply to weeks of unemploy- 6 ment beginning on or after the earlier of— 7 (A) the date the State changes its statutes, 8 regulations, or policies in order to comply with 9 such amendment; or 10 (B) October 1, 2023. 11 (d) USE OF NATIONAL DIRECTORY OF NEW HIRES 12 IN ADMINISTRATION OF UNEMPLOYMENT COMPENSATION 13 PROGRAMS AND PENALTIES ON NONCOMPLYING EMPLOY- 14 ERS.— 15 (1) IN GENERAL.—Section 303 of the Social 16 Security Act (42 U.S.C. 503), as amended by sub- 17 section (b), is amended by adding at the end the fol- 18 lowing new subsection: 19 ‘‘(o) USE OF NATIONAL DIRECTORY OF NEW 20 HIRES.— 21 ‘‘(1) IN GENERAL.—Not later than October 1, 22 2023, the State agency charged with administration 23 of the State law shall— 24 VerDate Sep 11 2014 18:49 Aug 01, 2020 Jkt 099200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S4244.IS S4244 pbinns on DSKJLVW7X2PROD with BILLS 8 •S 4244 IS ‘‘(A) compare information in the National 1 Directory of New Hires established under sec- 2 tion 453(i) against information about individ- 3 uals claiming unemployment compensation to 4 identify any such individuals who may have be- 5 come employed, in accordance with any regula- 6 tions or guidance that the Secretary of Health 7 and Human Services may issue and consistent 8 with the computer matching provisions of the 9 Privacy Act of 1974; 10 ‘‘(B) take timely action to verify whether 11 the individuals identified pursuant to subpara- 12 graph (A) are employed; and 13 ‘‘(C) upon verification pursuant to sub- 14 paragraph (B), take appropriate action to sus- 15 pend or modify unemployment compensation 16 payments, and to initiate recovery of any im- 17 proper unemployment compensation payments 18 that have been made. 19 ‘‘(2) ENFORCEMENT.—Whenever the Secretary 20 of Labor, after reasonable notice and opportunity for 21 hearing to the State agency charged with the admin- 22 istration of the State law, finds that there is a fail- 23 ure to comply substantially with the requirements of 24 paragraph (1), the Secretary of Labor shall notify 25 VerDate Sep 11 2014 18:49 Aug 01, 2020 Jkt 099200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S4244.IS S4244 pbinns on DSKJLVW7X2PROD with BILLS 9 •S 4244 IS such State agency that further payments will not be 1 made to the State until the Secretary of Labor is 2 satisfied that there is no longer any such failure. 3 Until the Secretary of Labor is so satisfied, such 4 Secretary shall make no future certification to the 5 Secretary of the Treasury with respect to the 6 State.’’. 7 (2) PENALTIES.— 8 (A) IN GENERAL.—Section 453A(d) of the 9 Social Security Act (42 U.S.C. 653a(d)), in the 10 matter preceding paragraph (1), is amended by 11 striking ‘‘have the option to set a State civil 12 money penalty which shall not exceed’’ and in- 13 serting ‘‘set a State civil money penalty which 14 shall be no less than’’. 15 (B) EFFECTIVE DATE.—The amendment 16 made by subparagraph (A) shall apply to pen- 17 alties assessed on or after October 1, 2023. 18 (e) STATE PERFORMANCE.— 19 (1) IN GENERAL.—Section 303 of the Social 20 Security Act (42 U.S.C. 503), as amended by sub- 21 sections (b) and (d), is amended by adding at the 22 end the following new subsection: 23 ‘‘(p) STATE PERFORMANCE.— 24 VerDate Sep 11 2014 18:49 Aug 01, 2020 Jkt 099200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S4244.IS S4244 pbinns on DSKJLVW7X2PROD with BILLS 10 •S 4244 IS ‘‘(1) IN GENERAL.—For purposes of assisting 1 States in meeting the requirements of this title, title 2 IX, title XII, or chapter 23 of the Internal Revenue 3 Code of 1986 (commonly referred to as ‘the Federal 4 Unemployment Tax Act’), the Secretary of Labor 5 may— 6 ‘‘(A) consistent with subsection (a)(1), es- 7 tablish measures of State performance, includ- 8 ing criteria for acceptable levels of performance, 9 performance goals, and performance measure- 10 ment programs; 11 ‘‘(B) consistent with subsection (a)(6), re- 12 quire States to provide to the Secretary of 13 Labor data or other relevant information from 14 time to time concerning the operations of the 15 State or State performance, including the meas- 16 ures, criteria, goals, or programs established 17 under paragraph (1); 18 ‘‘(C) require States with sustained failure 19 to meet acceptable levels of performance or with 20 performance that is substantially below accept- 21 able standards, as determined based on the 22 measures, criteria, goals, or programs estab- 23 lished under subparagraph (A), to implement 24 specific corrective actions and use specified 25 VerDate Sep 11 2014 18:49 Aug 01, 2020 Jkt 099200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S4244.IS S4244 pbinns on DSKJLVW7X2PROD with BILLS 11 •S 4244 IS amounts of the administrative grants under this 1 title provided to such States to improve per- 2 formance; and 3 ‘‘(D) based on the data and other informa- 4 tion provided under subparagraph (B)— 5 ‘‘(i) to the extent the Secretary of 6 Labor determines funds are available after 7 providing grants to States under this title 8 for the administration of State laws, recog- 9 nize and make awards to States for per- 10 formance improvement, or performance ex- 11 ceeding the criteria or meeting the goals 12 established under subparagraph (A); or 13 ‘‘(ii) to the extent the Secretary of 14 Labor determines funds are available after 15 providing grants to States under this title 16 for the administration of State laws, pro- 17 vide incentive funds to high-performing 18 States based on the measures, criteria, 19 goals, or programs established under sub- 20 paragraph (A). 21 ‘‘(2) ENFORCEMENT.—Whenever the Secretary 22 of Labor, after reasonable notice and opportunity for 23 hearing to the State agency charged with the admin- 24 istration of the State law, finds that there is a fail- 25 VerDate Sep 11 2014 18:49 Aug 01, 2020 Jkt 099200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S4244.IS S4244 pbinns on DSKJLVW7X2PROD with BILLS 12 •S 4244 IS ure to comply substantially with the requirements of 1 paragraph (1), the Secretary of Labor shall notify 2 such State agency that further payments will not be 3 made to the State until the Secretary of Labor is 4 satisfied that there is no longer any such failure. 5 Until the Secretary of Labor is so satisfied, such 6 Secretary shall make no future certification to the 7 Secretary of the Treasury with respect to the 8 State.’’. 9 (2) EFFECTIVE DATE.—The amendments made 10 by this subsection shall take effect on the date of en- 11 actment of this Act. 12 (f) FUNDING.—Out of any money in the Treasury of 13 the United States not otherwise appropriated, there are 14 appropriated to the Secretary of Labor $3,000,000,000 to 15 assist States in carrying out the amendments made by this 16 section, which may include regional or multi-State efforts. 17 Amounts appropriated under the preceding sentence shall 18 remain available until expended. 19 Æ VerDate Sep 11 2014 18:49 Aug 01, 2020 Jkt 099200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6301 E:\BILLS\S4244.IS S4244 pbinns on DSKJLVW7X2PROD with BILLS