Pursuant to § 2.2-4007.1 of the CODE OF VIRGINIA (1950), as amended, the Virginia Employment Commission has reviewed 16 VAC 5-10-10 through 16 VAC 5-80-40, the Regulations and General Rules Affecting Unemployment Compensation, and determined that these regulations should be continued without change, amendment or repeal, consistent with the stated objectives of applicable law, Title 60.2 of the CODE OF VIRGINIA (1950), as amended, the Virginia Unemployment Compensation Act (“Act”), as the Commission has taken and will continue to take sustained efforts to minimize the economic impact of its regulations on small businesses, within the constraints and its administration of the Act.
For example, over the years, the Commission has undertaken through regular review of its regulations, operations and procedures to:
1. Establish the least stringent compliance or reporting requirements feasible under its various regulatory programs, within the parameters of its federal conformity program requirements and state law;
2. Sought to establish the least stringent schedules or deadlines for compliance or reporting requirements upon the general public and employers, including small business employers, within these same parameters;
3. Consolidated or simplied compliance or reporting requirements through the use of a variety of options, including mail, telephone, fax, touchtone data entry and web base applications; and
4. Exempted small business employers, to the extent possible, from some requirements imposed upon larger employers in areas under the Commission’s administration or regulation.
While the Commission has also considered the establishment of performance standards for small business to replace design or operational standards required by its current regulations, the establishment of such performance standards is not applicable under its present federal and state regulatory requirements.
With regard to its claims adjudication process, the Commission has moved towards conducting more informal fact findings and appeals hearings by telephone, which has eased or cushioned the impact of this mandated process on the general public, both claimants and employers, including the Commonwealth’s small businesses/employers, and it has implemented a number of web based programs to assist claimants, employers and the general public with this process. Along similar lines, the Commission has automated its employer tax functions to make mandatory employer reporting requirements less burdensome. In addition, the Commission has automated its collection, analysis and dissemination of labor market data, including development and use of statistical sampling methods, in an effort to ease the burden of collecting such information from employers, including small businesses/ employers, while remaining in compliance with its federally or state mandated collection, compilation and reporting requirements.
Section 2.2-4007.1 of the CODE OF VIRGINIA (1950), as amended, requires than an Agency conducting small business regulatory review publish a notice of review and provide at least a 21-day public comment period. The Commission complied with this requirement. In response to its publication of a general notice in the Register and on Town Hall, the Commission received one public comment during its 30-day comment period. This comment proposed amending Regulations 16 VAC 5-80-10, -20 and -30 to require the provision of notice to subsequent employing units as to their non-liability for benefit charges so that such entities may determine whether or not they wish to expend resources in participating in and/or filing appeals in claims adjudication proceedings before the Commission.
While the Commission has carefully considered the public comment provided, it has determined that these particular regulations should also be continued without change, amendment or repeal. The Commission reached this determination after careful consideration of the proposed changes and its goal of keeping the employer tax rates of all Virginia employers, including small business employers, as low as possible. Any change in notice requirements, such as those proposed, which would have the effect of discouraging or suppressing the rate of participation by subsequent employers in the unemployment insurance (“UI”) claims adjudication process, adminstered under Article 5 of Chapter 6 of the Act, could result in payment of UI benefits to claimants who might otherwise not qualify for such benefits.
Since any UI benefits paid by the Commission must be recouped from all employers covered by the Act, including small business employers, by direct charges to their respective employer accounts, or indirect charges through pool cost and building fund charges, discouragement of subsequent employers, who have information on the qualification of a claimant for benefits, from participating in this process, could likely increase the risk of improper payment of UI benefits. This would result in attendant charge(s) to the liable employer, i.e., the last 30 day/240 hour employer, including such small business employers. The resulting charge from such lack of participation by subsequent employers could not only increase the tax rate of the specific liable employer charged, but could also increase the tax rate across the board for all employers in the Commonwealth who pay into the Unemployment Compensation Fund (“Trust Fund”), including small business employers. Such a potential direct or indirect tax rate increase is not in any employer’s interest,regardless of business size, including small business employers. This is particularly so during the present economic climate, when the Commission has paid out record numbers of unemployment insurance claims due to record numbers of job losses and unemployed individuals. This has also resulted in the Trust Fund’s currently being in “borrowed” status, i.e., having to borrow funds from the federal government. Additionally, the Trust Fund’s current funding status dictates that employers, including small business employers, are already paying higher State Unemployment Tax Act (SUTA) taxes and have lost a percentage (.3% ) of their Federal Unemployment Tax Act (FUTA) credit for 2011. Accordingly, the Commission has determined that modifying or relaxing the notice requirements for subsequent employers, as proposed by the public comment, could actually increase the tax burden for small businesses/ employers covered by the Act.
Additionally, the notice modifications proposed by the public comment could mislead certain subsequent employers about their nonliability for direct benefit charges. For example, dollar for dollar, reimbursuable employers, mostly government entities and certain non-profit organizations, could in some circumstances, depending upon the base period [wage] calculations for certain claimants, incur a direct charge to their employer tax account, even when such employers have been joined as a subsequent employing unit to a claim filed.
In conclusion, the Commission has reviewed its final regulations to ensure that they minimize the economic impact on small businesses in a manner consistent with the stated objectives of applicable law. The Commission finds that the regulations reviewed (1) are necessary and have a continued need, including for small businesses; (2) should not be changed or modified as a result of the public comments received during the public notice period; (3) are not overly complex; (4) do not unduly overlap, duplicate or conflict with federal or state law or regulation; and (5) do not need to be revised to reflect changes in technology, economic conditions or other factors.
