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Unemployment Insurance is an important safety net for individuals who become unemployed through no fault of their own. Nebraska employers pay into the Unemployment Insurance Trust Fund through a combined tax rate to fund benefits for up to 26 weeks for individuals who lose their job. Additionally, in Nebraska people who voluntarily quit their job are also eligible to receive up to 13 weeks of benefits. Although the weekly benefit amount is not large, it provides important support to help workers and families through financial challenges when unemployed.
The long term sustainability of safety net systems like Unemployment Insurance can be jeopardized when the system is abused beyond its original purpose. Nebraska allows an individual to reapply for unemployment benefits after voluntarily leaving a job a second time after only one week of work. A person could choose to quit their job, collect 13 weeks of unemployment benefits, go back to work for one week, then voluntarily quit again and collect another 13 weeks of benefits. Abuse of the system in this way costs employers higher contribution rates to the Unemployment Insurance Trust Fund, as well as incentivizes a revolving door practice of some individuals. It also burdens the system for those who truly need unemployment benefits when they lose their job due to circumstances beyond their control.
This past week I presented LB 203 to the Business and Labor Committee to require a “requalification” for unemployment benefits for those who quit their job without a reason. In order to qualify for 13 weeks of benefits a second time, the applicant would have to work long enough to earn four times their weekly benefit amount. To illustrate, an individual who received $300 per week for 13 weeks after quitting their job voluntarily would have to earn at least $1200 in wages before they could receive another 13 weeks of benefits after voluntarily quitting a second time.
Workers who lose their job due to layoff or other causes beyond their control are unaffected. They will be eligible for the full 26 weeks of benefits. Additionally, individuals who quit because of significant changes in their salary, benefits, or working conditions are classified as “good cause quits”, and are also unaffected. Persons who leave a job voluntarily the first time remain fully eligible for 13 weeks of benefits. Only those who leave their job voluntarily two or more times are impacted by the proposed change.
According to the Nebraska Department of Labor 7,912 Nebraskans received unemployment benefits in 2015 after leaving a job voluntarily. Of those, 2,880 received a second round of benefits that averaged $2,575. Annually that amounts to over $7 million. While the second and subsequent round claimants could requalify under LB 203, the Department of Labor estimates the annual savings to Nebraska job creators will approach $5 million with the new requalification requirement.
Nebraska is one of only 3 states that do not require a requalification for benefits after a person voluntarily leaves a job without good cause. In comparison to the four times weekly requirement proposed in LB 203, Iowa requires 10 times the weekly benefit amount, while South Dakota requires 6 and Wyoming requires 8.
Government can and should provide a safety net for individuals who experience hard times or struggle during economic downturns. The sustainability and effectiveness of those programs should be carefully preserved. Taxpayers and businesses should not bear the additional burden for individuals who may abuse the system.