Unemployment benefits during a federal funding lapse

CLASSIFICATION
   EMPLOYMENT AND TRAINING ADMINISTRATION                 Unemployment Insurance
               ADVISORY SYSTEM                            CORRESPONDENCE SYMBOL
          U.S. DEPARTMENT OF LABOR                        OUI/DUIO
             Washington, D.C. 20210                       DATE
                                                          November 22, 2021


ADVISORY:        UNEMPLOYMENT INSURANCE PROGRAM LETTER NO. 3-22

TO:              STATE WORKFORCE AGENCIES

FROM:            ANGELA HANKS
                 Acting Assistant Secretary

SUBJECT:         Impacts of Lapses in Federal Appropriations on State Administration of
                 Unemployment Insurance (UI) Programs and Federal Agencies

1. Purpose. To inform state and Federal agencies of their responsibilities during a lapse in
   Federal appropriations that leads to a full or partial Federal government shutdown.

2. Action Requested. The Employment and Training Administration (ETA) requests that State
   Administrators provide the information contained in this Unemployment Insurance Program
   Letter (UIPL) to appropriate staff.

3. Summary and Background.

   a. Summary – This UIPL provides guidance to states on the treatment of excepted Federal
      employees who work full time during a full or partial Federal government shutdown and
      provides answers to commonly asked questions regarding procedures States and Federal
      agencies should use to administer UI programs effectively in the event of a Federal
      government shutdown. This UIPL supersedes UIPL No. 31-13 and its changes, although
      much of the guidance in UIPL No. 31-13 remains unchanged here.

   b. Background – A Federal government shutdown occurs when there is a full or partial lapse
      in annual appropriations to Federal agencies, which causes the agencies to furlough
      Federal employees. During a shutdown, an affected agency is generally required to stop
      performing any activities funded by annual appropriations that are not excepted by law
      unless there are other funding sources available that can legally support ongoing work.

       Federal employees who are furloughed from work during a lapse in appropriations are
       considered unemployed and may be eligible for unemployment compensation (UC),
       including Unemployment Compensation for Federal Employees (UCFE), while they are
       on furlough. Excepted employees are individuals who are not furloughed and who are
       required to continue working their regular hours, but who are not paid during the
       shutdown for their work due to the lapse in appropriations. Excepted workers may be
       either full-time or intermittent. Intermittent workers, who work only as necessary, may
       work full-time in some weeks, part-time in some weeks, or not work at all. Excepted

   RESCISSIONS                                             EXPIRATION DATE
   UIPL No. 31-13 and its changes                          Continuing

      workers working full-time are not considered unemployed for purposes of receiving UC
      under the regular Federal-state program or the UCFE program. In contrast, intermittent
      workers may be eligible for benefits for weeks in which they do not work full-time. A
      more complete discussion follows in Section 4 of this UIPL.

      Public Law 116-1 was enacted on January 16, 2019, and requires that “[e]ach employee
      of the United States Government or of a District of Columbia public employer furloughed
      as a result of a covered lapse in appropriations shall be paid for the period of the lapse in
      appropriations, and each excepted employee who is required to perform work during a
      covered lapse in appropriations shall be paid for such work, at the employee's standard
      rate of pay, at the earliest date possible after the lapse in appropriations ends, regardless
      of scheduled pay dates.” 31 U.S.C. § 1341(c)(2). While this legislation requires payment
      of excepted employees who work during a lapse in appropriations, Congress must still
      enact appropriations to pay for work performed during a shutdown. Until Congress does
      so, there is no guarantee that employees will be paid.

      In the most recent Federal government shutdown, in December 2018-January 2019, a
      number of states attempted to pass laws and/or regulations to support payment of
      excepted employees. States, however, may not use Federal funds for compensating these
      employees for any week in which full-time excepted work was performed and should not
      expect Federal reimbursement or assistance with regard to recovering any UC payments
      made to them for excepted work when the lapse in appropriations ends.

      This UIPL also explains Federal law with regard to treatment of excepted workers during
      a Federal government shutdown for both the regular Federal-state UI program and the
      UCFE program.

      In addition, the attachment to this UIPL provides states and Federal agencies with
      answers to questions commonly asked about the administration of the UCFE program
      during a Federal government shutdown. States and Federal agencies should reference the
      information in this UIPL during a shutdown to ensure effective and efficient operation of
      the UI program and to prevent UI claims processing delays.

4. “Excepted” Federal Employees may not be considered “unemployed” under state law
   as applied to the federal/state UI program and to the UCFE program.

   Pursuant to Office of Personnel Management guidance outlined in the Guidance for
   Shutdown Furloughs, dated October 11, 2013, “excepted” employees in the context of a
   shutdown furlough are defined as—

             employees who are funded through annual appropriations who are nonetheless
             excepted from the furlough because they are performing work that, by law, may
             continue to be performed during a lapse in appropriations. Excepted employees
             include employees who are performing emergency work involving the safety of
             human life or the protection of property or performing certain other types of
             excepted work. Each Federal agency’s legal counsels, working with senior agency

           managers, determine which employees are designated to be handling “excepted”
           and “non-excepted” functions.

A requirement in Federal UI law commonly referred to as the “withdrawal standard”
provides that “all money withdrawn from the unemployment fund of the state shall be used
solely in the payment of unemployment compensation, exclusive of expenses of
administration, and for refunds of sums erroneously paid into such fund…” Social Security
Act (SSA) § 303(a)(5) (42 U.S.C. § 503(a)(5)); Federal Unemployment Tax Act (FUTA) §
3304(a)(4) (26 U.S.C. § 3304(a)(4)). Section 3306(h) of FUTA defines “compensation” as
“cash benefits payable to individuals with respect to their unemployment.” This means that
states may pay individuals UC only if they are experiencing “unemployment.”

While neither the Social Security Act (SSA) nor FUTA, nor any Federal regulations, define
“unemployment,” the Department originally provided a definition of the term in 1950 in its
model for state legislation to meet the requirements of Federal UI law. The model defined the
term “week of unemployment” as “any week during which [an individual] performs less than
full-time work for any employing unit if the wages payable to [the individual] with respect to
such week are less than the weekly benefit amount.” Manual of State Employment Security
Legislation (1950), Section 2(t), p. 22. The Department further explained the term
“unemployment” in UIPL No. 08-98, stating that “Federal law has authorized withdrawals
from a state’s unemployment fund only with respect to an individual’s unemployment,” and
that “Federal law limits the payment of UC to periods in which an individual has experienced
unemployment, that is, an actual reduction in hours worked.” This UIPL cited, among other
things, a January 31, 1939, Social Security Board statement that explained, “since under
[specified provisions of the governing Federal statute that were later reorganized], any
benefits paid under a state law must be paid with respect to unemployment, a state's plan for
the payment of partial benefits must safeguard against the payment for reduced earnings
without accompanying unemployment.” Thus, the Department has a longstanding legal
interpretation dating to nearly the inception of the Federal-state Unemployment Insurance
system, providing that “unemployment” must include a reduction in work hours, and not
merely a reduction in earnings.

Federal law governing UCFE, in 5 U.S.C. § 8502(b), requires states to pay compensation “to
a Federal employee in the same amount, on the same terms, and subject to the same
conditions as the compensation which would be payable to him under the unemployment
compensation law of the State . . . ,” As used in 5 U.S.C. § 8502(b), a state’s “unemployment
compensation law” refers to its law implementing the regular UC program. In addition, the
regulation in 20 CFR 609.2(r) provides that the definition of a “week of unemployment” for
UCFE purposes means a week of unemployment as defined in the applicable state law.
Therefore, the definition of a “week of unemployment” in a state’s regular UC law applies to
the UCFE program, as do FUTA’s and the SSA’s requirements (except where Federal law
provides otherwise).

Excepted Federal employees working full-time during a Federal government shutdown are
not “unemployed” for UC purposes, and are thus ineligible to receive UC. However,

   intermittent excepted workers who work only part-time may be eligible for UC for the period
   for which they are not working.

5. Inquiries. Please direct inquiries to the appropriate ETA Regional Office.

6. References.

   •   5 U.S.C. Section 8501, et seq.;
   •   26 U.S.C. Sections 3304 and 3306;
   •   42 U.S.C. Section 503;
   •   Public Law 116-1, Government Employee Fair Treatment Act of 2019, codified at 31
       U.S.C. Section 1341;
   •   20 C.F.R. Part 609, Unemployment Compensation for Federal Employees;
   •   ET Handbook No. 391, Unemployment Compensation for Federal Employees (UCFE)
       Instructions for State Agencies;
   •   ET Handbook No. 301, UI PERFORMS: Benefits Timeliness & Quality Nonmonetary
       Determinations Quality Review;
   •   ET Handbook No. 384, Unemployment Compensation for Ex-Servicemembers (UCX);
   •   Manual of State Employment Security Legislation (1950), Section 2(t), p. 22;
   •   Office of Personnel Management, Guidance for Shutdown and Furloughs,
       https://www.opm.gov/policy-data-oversight/pay-leave/furlough-guidance/guidance-for-
       shutdown-furloughs.pdf;
   •   UIPL No. 08-98, Unemployment Compensation (UC) - Payment Only for Periods of
       Unemployment, issued January 12, 1998,
       https://wdr.doleta.gov/directives/corr_doc.cfm?DOCN=1840;
   •   UIPL No. 31-13, Impacts of the Federal Government Shutdown and Unemployment
       Compensation for Federal Employees and State Administrative Funding for State UI
       Programs, issued October 11, 2013,
       https://wdr.doleta.gov/directives/corr_doc.cfm?DOCN=7589;
   •   UIPL No. 31-13, Change 1, Impacts of the Federal Government Shutdown and
       Unemployment Compensation for Federal Employees (UCFE) and State Administrative
       Funding for State Unemployment Insurance (UI) Programs, issued October 24, 2013,
       https://wdr.doleta.gov/directives/corr_doc.cfm?DOCN=6475; and
   •   UIPL No. 31-13, Change 2, Impacts of the Federal Government Shutdown and
       Unemployment Compensation for Federal Employees (UCFE) and State Administrative
       Funding for State Unemployment Insurance (UI) Programs, issued November 22, 2013,
       https://wdr.doleta.gov/directives/corr_doc.cfm?DOCN=8790.

7. Attachment.

   •   Attachment I: Questions and Answers for Administering the Unemployment Insurance
       Program During a Lapse in Federal Appropriations

                                                            Attachment I to UIPL No. 3-22

                            Questions and Answers for
    Administering the Unemployment Insurance Program During a Lapse in Federal
                                 Appropriations

A. General

    1. Question: What is a furlough?

      Answer: A furlough occurs when a Federal employee is placed in a temporary non-duty,
      non-pay status because of lack of work, lack of funds, or other non-disciplinary reasons.

    2. Question: What is a shutdown?

      Answer: Every year Congress appropriates funds for Federal agencies to operate in the
      upcoming fiscal year. In the absence of either an enacted appropriation or a Continuing
      Resolution (a Congressional action to provide short-term funding for Federal agencies
      and programs to continue in operation until regular appropriations are enacted), Federal
      agencies must “shut down” (cease spending) due to the lapse in appropriations, with
      limited exceptions as discussed below.

    3. Question: Why is a furlough necessary during a Federal government shutdown?

      Answer: A furlough is necessary because an agency no longer has the necessary funds to
      operate and must cease activities that are not excepted pursuant to the Antideficiency Act
      (31 U.S.C. §§ 1341-1342).

    4. Question: What are excepted employees?

      Answer: Pursuant to Office of Personnel Management guidance outlined in the Guidance
      for Shutdown Furloughs, dated October 11, 2013, “excepted” employees in the context of
      a shutdown furlough are defined as—

             employees who are funded through annual appropriations who are nonetheless
             excepted from the furlough because they are performing work that, by law, may
             continue to be performed during a lapse in appropriations. Excepted employees
             include employees who are performing emergency work involving the safety of
             human life or the protection of property or performing certain other types of
             excepted work. Each Federal agency’s legal counsels, working with senior agency
             managers, determine which employees are designated to be handling “excepted”
             and “non-excepted” functions.

      See https://www.opm.gov/policy-data-oversight/pay-leave/furlough-
      guidance#url=Shutdown-Furlough for copies of Office of Management and Budget and

   Department of Justice issuances, which provide guidance on the application of these
   criteria.

5. Question: Who is NOT subject to a furlough during a Federal government shutdown?

   Answer: The following employees are not subject to a furlough during a Federal
   government shutdown:

          Excepted employees. Employees performing excepted activities (see Question 4
           above). These employees are excepted from the furlough because they are
           performing work that, by law, may legally continue to be performed during a
           lapse in appropriations.

          Presidential appointees who are not covered by the leave system in 5 U.S.C.
           chapter 63. These employees are not “excepted” as discussed above; however,
           they are not subject to furlough because their salary is an obligation incurred by
           the year, without consideration of hours of duty required, so they may not be
           placed in a non-duty, non-pay status.

          Exempt employees. Federal employees are “exempt” from furlough if they are not
           affected by a lapse in appropriations. This includes employees who are not funded
           by annually appropriated funds. Employees performing these functions, as
           determined by each Federal agency, will generally continue to be governed by the
           normal pay, leave, and other civil service rules.

          Federal employees carrying out functions that are funded through other than the
           Federal appropriation process.

6. Question: Are employees who do not fall into one of the categories described in Q.5,
   above, subject to a furlough during a shutdown?

   Answer: Yes. Federal employees who are not designated as excepted and whose salaries
   are funded through annual appropriations are barred from working during a shutdown,
   except to perform minimal activities as necessary to execute an orderly suspension of
   agency operations related to non-excepted activities. These employees will be furloughed
   and may be eligible for UCFE (although as explained elsewhere in this UIPL, any UCFE
   paid may be subject to an overpayment determination).

7. Question: When establishing the UCFE claim, should the state flag or uniquely identify
   claims by individuals who are subject to the furlough?

   Answer: Yes. The Department of Labor (Department) recommends that states include an
   indicator on the UCFE claim to identify claims filed by furloughed Federal workers. This
   will ensure states can identify UCFE claims filed by furloughed Federal workers when
   establishing overpayments. States will also be able to monitor any activity that may occur
   after the shutdown ends and identify potential fraudulent activity.

    8. Question: How should states proceed when the shutdown has ended and furloughed
      claimants have not returned to work?

      Answer: If an individual identified by the state as a furloughed Federal worker continues
      to certify for UCFE after an announcement is made that the shutdown has ended and
      Federal workers may return to work, the state must investigate and determine why the
      claimant has not returned to work and whether there is continuing UCFE eligibility.

B. Furloughed Federal Employees Residing Outside the United States

      Question: Are furloughed Federal employees, who are working outside the U.S. at the
      time of the furlough, eligible for UCFE benefits if they are unable to be physically
      present to file an unemployment claim in one of the 50 states, the District of Columbia,
      Puerto Rico, or the U.S. Virgin Islands?

      Answer: Yes. The UCFE statute does not require Federal employees to be physically
      present in the state where the claim is filed to be eligible for benefits. Rather, under the
      statute at 5 U.S.C. § 8502, eligibility is determined based on state law requirements for
      regular UC. In UIPL No. 31-13, the Department interpreted 20 CFR 609.8(b)(ii) to
      require individuals to be physically present in a state in order to file a UCFE claim.
      However, the statutory provision that 20 CFR 609.8(b)(ii) interprets, 5 U.S.C. § 8504, is
      merely an assignment of wages provision; it does not contain requirements for eligibility.
      Eligibility requirements are in the regulations at 20 CFR 609.3. Nothing in the statute nor
      in the regulations requires that a Federal employee, to be eligible for UCFE, be physically
      present in the state of residence to file a UCFE claim. Thus, states must allow Federal
      employees who are working outside the U.S. at the time of the furlough to file in the
      same manner as other applicants under state law.

C. Excepted Federal Employees

    1. Question: Are excepted employees, who continue to work full-time during a shutdown,
      but who will not be compensated until the end of the lapse in appropriations, eligible for
      UCFE?

      Answer: No. Pursuant to Federal and state UI requirements, and as explained in this
      UIPL, because these individuals continue to provide full-time services, excepted
      employees are not unemployed. Therefore, they are not eligible for UCFE.

    2. Question: Are excepted intermittent employees, who continue to work during a
      shutdown, eligible for UCFE?

      Answer: Individuals classified as “excepted intermittent” employees may be working
      less than full-time and, therefore, may be eligible for partial UCFE during the Federal
      government shutdown depending on the hours of work or the amount of wages earned.

      Excepted intermittent employees who continue to work full-time will not be eligible for
      UCFE.

    3. Question: May a state pass a law or create a policy that would allow full-time excepted
      workers to receive UCFE or state UC while working full-time during the furlough?

      Answer: No. Because excepted employees who continue to work full-time during a
      shutdown are not unemployed, states are prohibited from paying these individuals UCFE
      during the furlough using Federal funds, or paying state UC because that would be out of
      conformity with the Federal law “withdrawal standard” as discussed elsewhere in this
      UIPL. States who wish to provide these individuals with some type of payment during a
      shutdown must ensure that the payments are funded from a source other than the state’s
      unemployment fund. Further, states are cautioned that no funding from any account in the
      unemployment trust fund may be used to reimburse the state for any such payments, and
      no part of the Federal administrative grant under SSA Title III may be used to pay for the
      administrative costs associated with any such payments.

D. Furloughed Federal Employees

      Question: In FY 2019, Congress enacted a provision indicating that Federal employees
      furloughed as a result of a lapse in appropriation will be paid back pay as soon as a new
      appropriation is enacted. Does this language make furloughed employees ineligible to
      apply for UI benefits?

      Answer: No. Furloughed Federal employees have a loss of hours and a loss of wages.
      While the provision indicates that furloughed employees will be paid upon the enactment
      of a new appropriation, until a new appropriation is in place, which provides for such
      payments, they still have a loss of wages, and thus are still unemployed during the
      furlough. However, the later provision of back pay to furloughed Federal employees who
      received UCFE may result in overpayments under state law.

E. Required Documentation for UCFE Claims

    1. Question: What documentation is acceptable from furloughed Federal employees as
      proof of employment and wages for a UCFE claim?

      Answer: Normally, furloughed Federal employees should provide copies of the Standard
      Form-8 (SF-8) or the Standard Form-50 (SF-50) when filing for UCFE; however, due to
      the circumstances involved with a Federal government shutdown, many of these
      employees may not have been issued either form. Further, given the very limited Federal
      government human resources staff working during the shutdown, the processing of the
      states’ Request for Wage and Separation Information, ETA-931, may be delayed.
      Therefore, states are encouraged to have claimants complete an affidavit to establish their
      employment and wages using earnings and leave statement(s), W-2 forms, and/or other
      types of documentation that can establish that the individual is a current Federal
      employee and has worked and earned sufficient base period wages to qualify for UCFE.

      The UCFE claim should be filed using the affidavit if the state has not received a
      response to the ETA-931 within 12 days of submission.

    2. Question: Is there a specific affidavit form that states must use in taking these UCFE
      claims?

      Answer: No. States may use the Form ETA-935, Claimant’s Affidavit of Federal
      Civilian Service, Wages and Reason for Separation, or states may use their own affidavit
      form(s) in taking UCFE claims.

F. Claims Processing

    1. Question: What responsibilities do Federal agencies have to respond to states’ request
      for wage and separation information in the context of a Federal government shutdown?

      Answer: Under 20 CFR 609.21(a), Federal agencies must respond to requests from state
      agencies “[w]ithin four workdays after receipt from a state agency of a request for
      Federal findings on a form furnished by the state agency, and prescribed by the
      Department, a Federal agency shall make such Federal findings, complete all copies of
      the form, and transmit the completed copies to the state agency.” This information is
      necessary for states to appropriately set up and collect overpayments of UCFE paid to
      these individuals. However, if the Federal agency does not respond within 12 days of the
      date the state sent the request, the state will follow normal operating procedures using an
      affidavit process to determine both monetary and non-monetary eligibility. See ETA
      Handbook 391, Chapter IV for instructions on processing affidavits.

    2. Question: Should states advise applicants who were furloughed that any UCFE paid will
      be required to be repaid once they receive back pay?

      Answer: As mentioned in the body of this UIPL, Congress passed Public Law 116-1 on
      January 16, 2019, that requires payment of back pay to all employees of the United States
      Government and of a District of Columbia public employer furloughed as a result of a
      covered lapse in appropriations. The back pay must cover the period of the lapse in
      appropriations. Therefore, all furloughed Federal workers and District of Columbia
      public employees will be paid once the furlough ends. States are encouraged to advise
      these applicants that they may be required to repay all UCFE received, and if state law
      allows wage garnishment as a means of recovery, applicants should be advised also that
      their wages may be garnished to repay the UCFE received.

G. Work Search Requirements

      Question: What work search requirements apply to Federal furloughed workers
      determined to be eligible for UCFE?

      Answer: States should apply the work search provisions in state law, including waivers
      of the work search requirements that may apply when a claimant remains work-attached,
      but is only temporarily furloughed.

      The Office of Personnel Management provided the following information to Federal
      employees in its Guidance for Shutdown Furloughs (see Question and Answer under
      Working during a Furlough - question C.3 in the Guidance for Shutdown Furloughs).

          May employees take other jobs while on furlough?

              A. While on furlough, an individual remains an employee of the Federal
              Government. Therefore, executive branch-wide standards of ethical conduct and
              rules regarding outside employment continue to apply when an individual is
              furloughed (specifically, the executive branch-wide standards of ethical conduct
              (the standards), at 5 CFR part 2635). In addition, there are specific statutes,
              which prohibit certain outside activities, and agency-specific supplemental rules
              that require prior approval of, and sometimes prohibit, outside employment.
              Therefore, before engaging in outside employment, employees should review
              these regulations and then consult their agency ethics official to learn if there are
              any agency-specific supplemental rules governing the employee.

H. Claim Cancellation/Withdrawal

    1. Question: May states offer claimants the opportunity to withdraw their claim(s) in order
      to avoid an overpayment(s); for example, on claims that have not yet been established
      (e.g., claims for which states have not issued a monetary determination)?

      Answer: Yes, the state may allow claimants the opportunity to withdraw claims that have
      not yet been established if: (1) the claimants request that their applications be withdrawn;
      and (2) such withdrawal is not prohibited under state law.

    2. Question: May states cancel claims that have already been established (i.e., claims for
      which states have issued a monetary determination) but for which they have not yet
      issued payments(s)?

      Answer: States may take appropriate action in accordance with their respective state
      laws on the cancellation of any UCFE claims. Cancellation of a claim may be initiated
      only by the claimant.

I. Overpayments

    1. Question: May states require a Federal agency to recover a benefit overpayment through
      wage garnishment for employees with UCFE overpayments?

      Answer. Yes. After providing claimants the opportunity for appeal and voluntary
      reimbursement, if state law requires employers to recover overpayments the state may
      require that a Federal agency garnish wages to recoup any overpayments. In these cases,
      the state should notify the Federal agency, in writing, of its responsibility to collect from
      the employee the amount overpaid (see UCFE Handbook No. 391, page V-6).

    2. Question: May states waive the recovery of UCFE overpayments caused by the
      compensation (reimbursement) that furloughed employees will receive for the period that
      they were furloughed?

      Answer: There are no special UCFE provisions that would allow for a waiver of the
      recovery of UCFE overpayments caused by the compensation of furloughed Federal
      employees after the shutdown. Therefore, states must apply to UCFE overpayments the
      same waiver of the recovery of UCFE overpayment provisions they would apply to other
      UI program overpayments.

J. Back Pay

      Question: How does a state process furloughed Federal workers’ UCFE claims once
      back pay has been received?

      Answer: Although state law provisions vary, most provide for disqualification or
      reduction in benefits for any week or part of a week during which a claimant receives
      income such as earnings; wages in lieu of notice; dismissal pay; workers’ compensation;
      back pay; holiday or vacation pay; payments made under an employer’s pension plan or
      Old-Age, Survivors, and Disability Insurance (OASDI); and UC under another state or
      Federal law. States should allocate the back pay Federal furloughed workers receive in
      accordance with state law.

K. Administrative Funding

    1. Question: Can states still draw down administrative funding during a Federal
      government shutdown?

      Answer: In the event of a Federal government shutdown, no additional UI administrative
      funding will be issued to state agencies. However, during past shutdowns, the Payment
      Management System has remained operational and is expected to remain operational
      during any future shutdowns, allowing states access to any administrative funding that
      had been made available to the state prior to the shutdown.

2. Question: May states continue to pay UC (including UCFE) if the state no longer has any
   administrative funding available?

   Answer: Yes. States may use, and are encouraged to use, other state resources to pay for
   the administration of UI program operations to prevent the disruption of UC processing.

   The Department will advise states as soon as possible about funding available for
   administrative costs associated with the Federal government shutdown. Additional
   guidance will be provided to states once the Federal government shutdown ends.

3. Question: If a state uses state resources to enable continued administration of the UI
   program after Federal administrative funding for the program is exhausted, will the state
   receive full-year funding once a Federal appropriation for the program is enacted?

   Answer: In prior Federal government shutdowns, once a Federal appropriation was
   enacted, the appropriation provided for funding of the administration of the UI program
   to avoid a gap in funding (i.e., funding was provided from the point in the fiscal year
   when the shutdown began). While there is no guarantee that such funding will be
   provided in the future, Congress has in the past provided the funding for state UI
   administration as though a lapse in appropriation had not occurred.

4. Question: What Federal funding sources should states consider using to enable continued
   UI program operations in the event the state exhausts all available state UI administrative
   funding?

   Answer: In the event that a state is approaching exhaustion of currently available state
   administrative funding, the state should immediately contact the Administrator for the
   Office of Unemployment Insurance, at (202) 693-3029.

   States are encouraged to identify other available funding sources that may be used for
   administration of the state’s UI program such as Reed Act funds, other special
   distributions that can be used for state administration of the program, and any remaining
   UI Modernization Act incentive funds. States are also encouraged to consider the use of
   UI penalty and interest funds for this purpose.

5. Question: If a state must stop paying benefits due to a lapse in administrative funding,
   what, if any, claimant notification is required?

   Answer: States must make every effort to provide individual notification to claimants
   prior to stopping benefit payments. States are also strongly encouraged to ensure that
   notification is posted on state websites and in various statewide media announcements. If
   possible, states should accept claims and encourage claimants to continue to certify
   continued claims for benefits even if payments cannot be issued. This helps avoid work
   associated with backdating of claims once administrative funding is resolved.

    6. Question: Will there be any restrictions on state transfers to their unemployment
      accounts in the Unemployment Trust Fund (UTF)?

      Answer: No restrictions on state transfers to the UTF are anticipated should a Federal
      government shutdown occur.

    7. Question: Will states still have access to funding for Disaster Unemployment Assistance
      (DUA) during a shutdown?

      Answer: Yes. Excepted staff at the Department will be made available to process DUA
      funding authorizations from the Federal Emergency Management Agency (FEMA), and
      FEMA will have excepted personnel available to process disaster requests.

L. UI Cross-matches

    1. Question: Will there be any impact on the cross-match with the Social Security
      Administration during a shutdown?

      Answer: Historically, during shutdowns the cross-match has been operational for states’
      use as under normal conditions. If the Social Security Administration cross-match is not
      operational during a particular shutdown, states will be notified.

    2. Question: Will there be any impact on the National Directory of New Hires (NDNH)
      operation during a shutdown?

      Answer: Historically, the NDNH system has continued to be operational during
      shutdowns; however, there will be minimal or no technical support. If NDNH is not
      operational during any particular shutdown, states will be notified.

    3. Question: Will the Systematic Alien Verification for Eligibility (SAVE) system be
      operational during a shutdown?

      Answer: Historically, the SAVE system has been operational during a shutdown. If the
      SAVE system is not operational during a particular shutdown, states will be notified.

M. Reporting

    1. Question: Should states continue to submit UI required reports?

      Answer: Yes. States should continue to submit UI required reports during a shutdown,
      using the same process, software, and deadlines. Please be aware that no technical or
      operational support will be available until the shutdown ends and Department staff return
      to work.

    2. Question: May states take a workload count on Form ETA 207, as described in ET
      Handbook No. 401, 5th Edition, page 1-1-10, for non-monetary determinations regarding
      the back payments?

      Answer: Yes. Back pay is considered deductible income (see ET Handbook No. 301)
      and is a countable non-monetary determination.

N. Benefit Accuracy Measurement (BAM) Sampling

    1. Question: What is the effect of UCFE payments to furloughed employees on the BAM
      sample when determining the accuracy of paid and denied claims?

      Answer: Once the state agency issues any UCFE payment (to furloughed workers or
      workers separated for other reasons), there is a potential that the payment may be selected
      for the BAM sample, in accordance with ETA Handbook No. 395, 5th Edition. If
      sampled, state agency BAM units should treat these UCFE payments as normal BAM
      cases, and evaluate them based on all applicable eligibility criteria, even when the
      claimants returned the payments.

      State BAM units should take into consideration that state agencies made UCFE payments
      based on all the facts of the status of furloughed Federal employees that existed at the
      time the UCFE was paid. Therefore, back pay that was provided after the UCFE was paid
      does not, in and of itself, result in an improper payment for BAM purposes. BAM
      investigators must conduct sufficient fact-finding to determine whether the claimant was
      furloughed or excepted or intermittent, or a reduced-hour employee, as a result of the
      Federal government shutdown.

    2. Question: How should BAM investigators code the UCFE cases (where element (c1)
      program code equals ‘2 UI-UCFE’, ‘4 UI-UCFE-UCX’, ‘5 UCFE’, or ‘6 UCFE-UCX’)
      involving key week benefit payments which were paid to Federal employees who were
      furloughed as a result of the total or partial shutdown of the Federal government and who
      subsequently received back pay for the time they were in furlough status?

      Answer: If the Federal employee received back pay, then BAM investigators must
      address the back payment in their coding of key week accuracy.

      It is possible that some of the furloughed Federal employees who received back pay also
      received a key week benefit payment that was partially or totally funded taking into
      consideration UCFE base period wages.

      If the Federal employees receiving back pay for the time they were in furlough status are
      considered ineligible for UCFE for the week in which the back payment is applied, under
      state law, the state’s BAM unit must record the payment as being improper since the key
      week payment is “not due.” State law determines the type of issue – back pay or
      employment status. However, since the improper payment is created as the direct result
      of an appropriation of funding that occurs after the time the individual was originally

   determined eligible for benefits, BAM investigators must treat the payment as
   “technically proper.” If the BAM investigator finds that an error was made in allowing
   the original benefit payment or was due to other issues, then the case will be coded with a
   value of 10 or 11 in element (ei2) and must code the rest of the error elements consistent
   with the finding.

3. Question: How should BAM investigators code cases involving previously furloughed
   Federal employees to ensure these cases are treated as “technically proper?”

   Answer: To support the coding of such cases as being classified as “technically proper.”
   BAM investigators are instructed to enter the following codes:
       a value of 15 in element (ei2). (This value indicates that “BAM determines
         payment was too large, although the payment is technically proper due to rules
         other than finality or formal warning rule.”)
       a cause code value of 620 in element (ei3) to reflect the back pay award;
       a responsibility code of 0004 into element (ei4) to represent the overpayment was
         caused by a third party;
       the (ei5) detection point element code of 40 to reflect verification of eligibility
         with third-parties; and
       a value of 10 for elements (ei6), (ei7), and (ei9) to indicate these parties acted in
         good faith.

4. Question: Are BAM units expected to reopen any closed UCFE cases impacted by
   Federal law that provides for back pay for a period of furlough?

   Answer: Yes, state BAM units are expected to reopen any closed UCFE cases involving
   Federal employees furloughed and who subsequently received back pay. These cases
   must be reviewed to ensure that coding instructions described above are properly
   followed. BAM units should use reopen code ‘9’ to show that the “[d]ata of a closed case
   were changed or payment accuracy status updated as a result of additional information
   obtained through investigation methods other than crossmatch with new hire or wage
   records.” ET Handbook No. 395, 5th Edition, p. V-25 (2009).

5. Question: Will coding these UCFE cases as “technically proper” affect the state’s
   improper payment rate?

   Answer: Selected UCFE cases coded following the instructions, provided above, will not
   negatively affect the state’s improper payment or operational rate (used for the
   Overpayment Detection Measure). Additionally, the Employment and Training
   Administration’s improper payment estimation program will exclude these “technically
   proper” payments in the computation of the state and national improper payment rates.