Unemployment benefits for people who volunteer

CLASSIFICATION
                                                          Unemployment Insurance
   EMPLOYMENT AND TRAINING ADMINISTRATION
                                                          CORRESPONDENCE SYMBOL
               ADVISORY SYSTEM                            OUI-DL
          U.S. DEPARTMENT OF LABOR                        DATE
             Washington, D.C. 20210                       April 19, 2012

ADVISORY: UNEMPLOYMENT INSURANCE PROGRAM LETTER NO. 16-12

TO:             STATE WORKFORCE AGENCIES

FROM:           JANE OATES /s/
                Assistant Secretary

SUBJECT:       Payment of Unemployment Compensation to Individuals who are Volunteering

1. Purpose. To strongly encourage states to both promote volunteerism in their communities,
   and interpret state law to not disqualify individuals from receipt of Unemployment
   Compensation (UC) as a result of volunteer activities.

2. References.
    • Sections 3304 and 3306 of the Federal Unemployment Tax Act (FUTA);
    • Title III of the Social Security Act (SSA);
    • Section 134 of the Workforce Investment Act of 1998 (WIA);
    • Fair Labor Standards Act of 1938 (FLSA);
    • 20 CFR Part 604;
    • Training and Employment Guidance Letter (TEGL) No. 12-09, Joint Guidance for States
      Seeking to Implement Subsidized Work-Based Training Programs for Unemployed
      Workers; and
    • Unemployment Insurance Program Letter (UIPL) No. 787, “The Secretary’s Decision in
      the South Dakota Conformity Hearing Held July 7, 1964, Disqualification for Base-
      Period Wages of $6,000 or Over.”

3. Background. The Department of Labor (Department) has encouraged America’s
   unemployed workers to pursue education and training opportunities as the economy recovers
   to improve their skills and better position themselves for employment opportunities in the
   future. In TEGL No. 12-09, the Department previously issued guidance to states seeking to
   implement subsidized work-based training programs for unemployed workers. In this UIPL,
   the Department recognizes that volunteering for governmental entities and non-profit
   organizations can help unemployed workers develop and maintain skills, expand their
   network of contacts, and enhance their resumes, all while making a positive impact on their
   communities.

   Volunteerism can be a viable and successful strategy that supports reemployment and does
   not need to interfere with UC recipients’ responsibilities to be able and available for work
   and actively seeking work. Therefore, the Department encourages states: to promote
   volunteering by individuals receiving UC; to review their current “able and available” and

 RESCISSIONS                                             EXPIRATION DATE
 None                                                    Continuing

   “work search” requirements; and implement policies that allow individuals to volunteer
   consistent with the requirements of Federal law without making them ineligible for UC.

   This UIPL provides guidance for states regarding volunteerism and also reminds states of
   some limitations in Federal law.

4. Application of Able and Available and Work Search Requirements. Federal regulations
   at 20 CFR part 604 require state UC law to provide that individuals must be able to work and
   available for work (A&A) to be eligible for UC. Generally speaking, a state may consider an
   individual available for work if he or she is “available for all work for all or a portion of the
   week claimed, provided that any limitation placed by the individual on his or her availability
   does not constitute a withdrawal from the labor market.” 20 CFR 604.4(a). This regulation
   provides some latitude to states in deciding whether participation in certain activities would
   remove the individual from the labor market. For example, a state may provide that an
   individual remains available for work while performing volunteer activities provided the
   individual is willing to stop the volunteer activity upon an offer of suitable work.
   Additionally, states may, consistent with this regulation, determine an individual to be
   available for work while performing a volunteer activity when the individual’s volunteer
   activity does not occur when the individual would customarily work or is otherwise of a
   sufficiently limited nature that it “does not constitute a withdrawal from the labor market.”

   States have significant flexibility in establishing work search requirements. For example,
   states may limit the number of hours an individual may volunteer to ensure sufficient time to
   actively seek work. In addition, states may establish different work search requirements that
   apply to individuals who volunteer. Individuals who volunteer should, of course, continue a
   rigorous search for work that satisfies the requirements of the state against which they are
   claiming benefits.

   Note that the Middle Class Tax Relief and Job Creation Act of 2012 (Public Law 112-96),
   enacted on February 22, 2012, added a new paragraph (12) to section 303(a), SSA, to require
   that a state’s law, as a condition of UC administrative grants, provide that “as a condition of
   eligibility for regular compensation for any week, a claimant must be able to work, available
   to work, and actively seeking work.” The Department will be issuing guidance in the near
   future to address this new statutory requirement.

5. Prohibition on Conditioning UC Eligibility on Volunteer Work. Section 3304(a)(4)
   FUTA requires, as a condition for employers in a state to receive credit against the Federal
   tax, that state law provide 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 . . . .”
   Section 303(a)(5) SSA provides a similar requirement as a condition for a state to receive
   administrative grants. Section 3306(h), FUTA, defines compensation as “cash benefits
   payable to individuals with respect to their unemployment.”

   The Secretary of Labor’s decision, published in UIPL No. 787, in the 1964 conformity case
   involving South Dakota interpreted these sections to mean UC eligibility must be based on
   the “fact or cause” of unemployment:

       [I]t was the intent of Congress to create a social insurance system under which
       entitlement to benefits was a matter of right on the part of those who became
       involuntarily unemployed because of lack of work, e.g., laid off from work or
       otherwise unemployed through no fault of their own, and who are able to work
       and available for work, but who are unable to find suitable work. In short, what
       Congress was prescribing was wage insurance for the relief of the unemployed, to
       compensate for wage loss resulting from unemployment due to lack of work,
       without regard to any . . . criteria of entitlement having no reasonable relationship
       to “unemployment.”

   Thus, state law must provide that eligibility for UC must only be based on factors related to
   unemployment. Therefore, while volunteer activities may be beneficial to both the
   unemployed workers and the community in which they live, states may not condition
   payment (or non-payment) of UC based on the individual performing volunteer activities,
   since those activities are unrelated to the fact or cause of the unemployment.

6. Limitations on Use of UC Administrative Funds for Activities Involving Volunteering.
   Section 303(a)(8), SSA, requires, as a condition for the receipt of grants for the
   administration of the state UC law, that all moneys received for the administration of the
   state law be expended “solely for the purposes and in the amounts found necessary by the
   Secretary of Labor for the proper and efficient administration of such State law.” States may
   use UC administrative grants to inform claimants of their UC rights, including how their UC
   eligibility may be affected by volunteering. But because activities related to providing
   detailed information on volunteer opportunities or helping claimants locate volunteer
   opportunities are not necessary for the proper and efficient administration of the state UC
   law, UC administrative grants may not be used to pay the costs associated with performing
   these activities. However, it is important to note that funds made available to states under
   WIA, could be used to provide information to individuals about volunteer opportunities
   under WIA Section 134(d)(2)(B).

7. Worker Protections Related to Volunteer Activities. States choosing to promote
   volunteerism should know that individuals who freely volunteer their services to
   governmental entities and non-profit organizations are not considered to be employees
   subject to the minimum wage and overtime requirements of the FLSA if certain conditions
   are met. The work must be for civic, charitable or humanitarian reasons, without promise,
   expectation or receipt of compensation for services rendered. A volunteer for a public
   agency but not a non-profit organization can be paid expenses, reasonable benefits or a
   nominal fee to perform such services. The services must be offered freely and without
   pressure or coercion, direct or implied, from an employer or agency. Finally, the person
   must not be otherwise employed by the same employer to perform the same type of services
   as those for which the individual proposes to volunteer.

    8. Volunteering Resources. The Administration has supported volunteering activities as a way
    for individuals to participate in our nation’s recovery and renewal by serving their
    communities. Information about the Administration’s focus on volunteering and community
    service may found on the United We Serve Web site at www.serve.gov.

9. Action Requested. Administrators are requested to do the following:

    • Provide this guidance to the appropriate staff;
    • Review UC policies and procedures and consider implementing policies that support
       promoting volunteering as a reemployment strategy;
    • Coordinate policies related to volunteerism across UC and appropriate workforce
       programs such as the Employment Service and WIA.

10. Inquiries. Questions should be directed to the appropriate Regional Office.