More threats to unemployment benefits on the horizon

The Arkansas legislature recently struck a huge blow to unemployment insurance by passing HB1489, (now Act 412) which reduces total benefits to unemployed workers by $50 million a year. It also lowers the number of weeks a worker can draw unemployment benefits from 25 to 20.

The new law will make it harder for low-income families who are out of work to get back on their feet, but this isn’t the end of the threats to Arkansas families who are between jobs. Two more bills could make that situation even worse.

The first is HB1540, which makes it easier for businesses to skirt unemployment insurance payroll tax contributions by broadening the definition of “independent contractor.” This is bad for workers because there is already a problem with employees being misclassified as “independent contractors” even without this more lenient definition. Misclassification has more than doubled between 2002 and 2011.[i] Workers who are misclassified often make significantly less, and this practice is more common in certain industries like construction, trucking, and home care. It also ends up costing the state income tax revenues. Some employers take advantage of defining workers as “independent contractors” because it is cheaper than paying for the coverage they would otherwise receive. This small definition change could leave many hardworking Arkansans without unemployment insurance.

The second, SB842, also amends the definition of employment so that fewer workers would be eligible for benefits. SB842 is worrisome because it excludes some legally admitted aliens who are under the Immigration and Nationality Act of 2011. This is concerning because it is possibly out of conformity with federal law, which does not deny unemployment benefits if an alien is lawfully present. Particularly troubling is the exclusion of children and families of honest workers just because they are legal aliens. Legal workers who contribute to the economy of our state should not be barred from the benefits that they have worked towards just like everyone else.

[i] US DOL Employment and Training Administration