UI Claims Management

New West Virginia Unemployment Compensation Integrity Legislation



Jeff Aleixo

We have been closely following legislative developments at the state level in the wake of “Section 252” UC Integrity legislation included in the Federal Trade Adjustment Assistance Extension Act of 2011 (TAAEA).

The crux of the Section 252 legislation is that it requires states to prevent employers from receiving relief from erroneous UI benefit charges if they or their agents had failed to respond timely to request for information. Where the employer or the employer’s agent is at fault and partially or wholly responsible for the overpayment of UI benefits, then Section 252 requires that states NOT relieve an employer of charges. In such instances, the states MUST charge the employers, and they must do so effective on or before October 21, 2013. For further details on TAAEA and Section 252, see our earlier post here.

Enacted on April 2, 2012, West Virginia’s UC Integrity legislation went into effect July 1st, 2012.

West Virginia was the first state to enact legislation related to Section 252. Under West Viriginia’s Article 5, Employer Coverage and Responsibility, Section 21-5-7, Joint and separate accounts, numbers six through eight now address UC Integrity provisions.

The new legislation holds that if an employer has failed to furnish to the commissioner on or before August 31st of each year the wage information for all past periods necessary for the computation of the contribution rate, the employer’s rate shall be increased to 7.2% (if it had been lower). This is effective on and after July 1, 2012.

As per Section 252, it further holds that, effective July 1, 2012, a contributory employer’s account shall not be relieved of charges relating to a payment from the Fund if the department determines that:

a)      The erroneous payment was made because the employer, or an agent of the employer, was at fault for failing to respond timely or adequately to the request of the agency for information relating to the claim for compensation, and

b)      The employer or agent has established a pattern of failing to respond timely or adequately to such requests.

The legislative update also includes the following definitions for the purpose of this section:

a)      “Erroneous payment” means a payment that but for the failure by the employer or the employer’s agent with respect to the claim for unemployment compensation would not have been made.

b)      “Pattern of failing” means repeated documented failure on the part of the employer or the agent of the employer to respond as requested in this section, taking into consideration the number of instances of failure in relation to the total volume of requests by the agency to the employer or the employer’s agent as described in this section.

It is expected that within three to six months the definition of what constitutes a pattern for this purpose will become more solidified and less ambiguous. In the meantime, it is refreshing to see the West Virginia state legislature explicitly state that the volume of requests will be taken into consideration.

What does this mean for you? If you have operations in the state of West Virginia, ensure that your in-house and/or third party UC administrator is prepared for these changes. Employers with operations in Illinois, Minnesota, North Carolina, Nebraska, and Oklahoma also face recently-passed Section 252-related legislation. Employers in other states, be on the lookout for similar legislation likely headed your way.

Section 252 should put all employers on notice that contracting out UC management to third party firms does not relieve them of responsibility in the governments’ eyes.  Rather than take a “set it and forget it” mentality, employers must be vigilant in their selection of firms that can provide them with the transparent, proven results and real-time reporting necessary for true accountability.

How Will “Section 252” Impact You?

Download our one page Fact Sheet on Section 252 to get a better understanding of key provisions that will directly impact employers.

Disclaimer: This article is general in nature and is not intended to replace the guidance of an employment tax expert and/or legal professional with regards to an appropriate course of action in your particular circumstances. Please consult with a professional for appropriate advice in your case. Pursuant to IRS “Circular 230” rules, any information included herewithin is not intended or written to be used for the purpose of avoiding penalties under the federal Internal Revenue Code.