Unemployment Insurance

The Department of Labor and Industrial Relations (DOLIR) proposed the majority of language in HB 2041 to modify several provisions relating to unemployment compensation.

One of the most important elements of the bill is a measure to establish an employer surcharge that will fund automation upgrades for the Division of Employment Security (DES).  The surcharge, which is tied to an equal corresponding decrease in employer Unemployment Insurance taxes, will help utilize new technologies in order to take advantage of computer efficiencies.  The current computer system utilized by the DES is over forty years old, and there are no funds to replace it.  The automation surcharge will provide the funds needed to modernize the DES’ computer system—a priority for both the operation and improvement of services provided by the DES.

HB 2041 also included a provision dealing with confidentiality that is very important.  This language will establish criminal penalties for the unauthorized disclosure of confidential unemployment insurance information and is the result of a federal mandate.  If not enacted, Missouri’s unemployment insurance program will not be certified by the U.S. Department of Labor (USDOL).  If the program fails to be certified, Missouri would lose $34M in federal funds the state receives to administer the unemployment insurance program, and Missouri employers would lose $977M annually in Federal Unemployment Tax Act (FUTA) credits.

Other modifications result in small fiscal savings and greater department efficiencies, such as not mailing certain notices or sending certain notices electronically. 

Minimum Wage Law

HB’s 1883 and 2041 both contained identical provisions regarding Missouri’s Minimum Wage Law (MMWL). These provisions include changes pertaining to requirements for overtime compensation and a new section which grants the Department the proper authority to promulgate rules regarding the enforcement of the MMWL. HB 2041 contains an emergency clause pertaining to the changes in Section 290.505, however, an emergency clause pertaining to Section 290.523 does not exist in either bill.    

Prior to the passage of Proposition B (Prop B) Missouri’s Minimum Wage Law (MMWL) did not apply to any individual who received the minimum wage pursuant to the Federal Fair Labor Standards Act (FLSA).  With the passage of Prop B, all reference to federal law was removed and the MMWL applied to all covered employers and employees including, among others, firefighters and law enforcement.

The changes in Section 290.505 in HBs 1883 & 2041 do not change applicability of the MMWL, but states that the overtime provisions of the law do not apply to employees who are exempt from federal minimum wage or overtime requirements specified in Section 207 and 213 of the FLSA.  Section 213 (a)-(b) was included in Prop B.  Therefore, the MMWL overtime requirements do not apply to employees employed as firefighters and law enforcement in accordance with 207(k).  The requirement of overtime for employees in these capacities was recently overturned in the Wright decision issued by the Cole County Circuit Court, but the changes in these bills further clarify that the MMWL overtime requirements do not apply to employees in these capacities as well as employees that are paid on a commission rate basis in accordance with 207(i) and employees employed at a hospital or other establishment in accordance with 207(j).

The addition of the new Section 290.523 grants the Department authority to promulgate rules as are necessary for the enforcement and administration of the MMWL.  Since the passage of Prop B we have been unable to answer numerous questions because the issue is not specifically addressed by statute or rule.  This will be very beneficial in assisting constituents by answering questions and providing guidance relating to employers and employees rights and responsibilities as well as assisting the Department/Division with enforcement. Regulations have been drafted and will be ready to be filed with the Secretary of State’s Office on August 29, 2008.

Second Injury Fund

HB 1883 includes language that rejects and abrogates the Missouri Supreme Court decision in Schoemehl v. Treasurer of State, 217 S.W. 3d 900 (2007) and clarifies that the surviving dependent(s) of the employee is not entitled to receive the unpaid unaccrued permanent total disability benefits.  Under the act, all rights to unaccrued compensation for permanent total disability shall cease upon the death of the injured employee if the death was unrelated to compensable injury.  Unpaid unaccrued compensation for permanent partial disability will continue to be paid to dependents. 

This legislation would potentially create a savings for the Second Injury Fund and the employer/insurer.  By reducing the number of people that are eligible to receive permanent total disability benefits as dependents after the injured worker dies, the result would arguably be more money remaining in the Second Injury Fund.

Appropriations

HB 2005 includes very important funding for a Division of Workers’ Compensation (DWC) IT project. 

Initially, a decision item was submitted within the DOLIR FY09 Budget Request for $5 million for a DWC UI Modernization Computer System and Design.  The first phase - for a business system analysis - $850,000, was submitted/awarded in the FY08 Budget Request.  The second phase - to design and develop a new business system as recommended by the business analysis - will take approximately 3-4 years and cost $20 - $25 million.  DOLIR requested and was granted $5,000,000 to begin funding of this project.

The DOLIR FY09 budget also included a staff reduction of 87 employees, further adding to the department’s ability to meet reduced operating costs and to function more effectively and efficiently through the use of technology.