HS HCS HB 472 -- EMPLOYERS AND EMPLOYEES

This bill makes a variety of changes in the law governing
employment security and the regulation of transient employers.

In the area of law governing employment security, the bill:

(1)  Decreases from 4.5% to 4% the multiplier for determining a
claimant's unemployment compensation.  This figure is multiplied
by the claimant's total wages earned in the quarter of highest
earnings during the work year on which the benefits are based;

(2)  Increases the maximum dollar amount for weekly benefits
from the current amount of $175 to $205 in 1998, $220 in 1999,
$235 in 2000 and $250 in 2001;

(3)  Increases the amount of wages on which employment security
taxes are levied.   Currently, the first $8,000 of an employee's
wages are subject to employment security taxes.  The bill
increases this "taxable wage base" amount to $8,500 in 1998 and
then allows this amount to increase $500 each year until the
unemployment compensation fund reaches $300 million.  If this
fund reaches $450 million, then the taxable wage base will be
decreased by $500.  The unemployment compensation fund is
necessary to fund unemployment benefits during economic
downturns, when employment benefits to be paid out exceed the
amount of employment security taxes being collected;

(4)  Redefines "stoppage of work," as that term is used in
determining whether a claimant is eligible for employment
security benefits.  Employees who belong to a collective
bargaining unit that initiates a strike will not be eligible for
benefits during the strike, unless the employer is found guilty
of unfair labor practices;

(5)  Excludes newspaper delivery and distribution from the
definition of "employment"; and

(6)  Clarifies that a pattern of absenteeism or tardiness may
constitute misconduct, resulting in the denial of employment
security benefits.

In the area of the law governing transient employers, the bill:

(1)  Requires that, on all construction projects requiring a
building permit, transient employers must show proof that they
have filed with the Director of Revenue a bond or irrevocable
letter of credit, and have been issued tax clearances from the
Department of Revenue and the Division of Employment Security.
The Department of Revenue must seek a court order to halt any
construction upon discovering that a transient employer has
failed to show such proof before obtaining a building permit, or
has secured a building permit through fraud or
misrepresentation.  Nothing in the bill is to be construed as
creating a liability upon the governmental entity in regard to
the issuance of any such permit;

(2)  Requires any contractor hiring a transient employer as a
subcontractor to also secure such proof from the transient
employer.  In the event the subcontractor is self-insured for
the purposes of workers' compensation, the contractor must
secure proof that such self-insurance has been approved by the
Division of Workers' Compensation; and

(3)  Allows a contractor to withhold payments to a subcontractor
to cover any monies owed to the Department of Revenue or the
Division of Workers' Compensation if the contractor is notified
by either agency that a subcontractor is not in compliance with
the transient employer bonding requirements set forth in
sections 285.230 to 285.234, RSMo.  Such withholding will not
subject the contractor to the laws requiring timely payment of
construction contracts.

HS HCS HB 472 -- EMPLOYMENT SECURITY (Luetkenhaus)

This substitute decreases from 4.5% to 4% the multiplier for
determining a claimant's unemployment compensation.  This figure
is multiplied by the claimant's total wages earned in the
quarter of highest earnings during the work year on which the
benefits are based.  The substitute increases the maximum dollar
amount for weekly benefits from the current amount of $175 to
$205 in 1998, $220 in 1999, $235 in 2000 and $250 in 2001.

The substitute also increases the amount of wages on which
employment security taxes are levied.   Currently, the first
$8,000 of an employee's wages are subject to employment security
taxes.  The substitute increases this "taxable wage base" amount
to $8,500 in 1998 and then allows this amount to increase $500
each year until the unemployment compensation fund reaches $300
million.  If this fund reaches $450 million, then the taxable
wage base will be decreased by $500.  The unemployment
compensation fund is necessary to fund unemployment benefits
during economic downturns, when employment benefits to be paid
out exceed the amount of employment security taxes being
collected.

The substitute also redefines "stoppage of work," as that term
is used in determining whether a claimant is eligible for
employment security benefits.  Employees who belong to a
collective bargaining unit that initiates a strike will not be
eligible for benefits during the strike, unless the employer is
found guilty of unfair labor practices.

The substitute clarifies that a pattern of absenteeism or
tardiness may constitute misconduct, resulting in the denial of
employment security benefits.  The substitute also requires the
Division of Employment Security to cancel all or part of an
individual's wage credits in any case of misconduct that
involves a conviction for a criminal act of deceit or dishonesty
in connection with his or her work.

FISCAL NOTE:  Partial Estimated Net Cost to General Revenue
Fund* of $124,745 for FY 1998, $824,838 for FY 1999, and
$1,713,424 for FY 2000.  *Unknown costs related to attendance
separation.  Partial Estimated Net Effect on Unemployment
Insurance Compensation Trust Fund* of Income of $18,462,961 for
FY 1998, Cost of $33,749,863 for FY 1999, and Cost of $7,245,742
for FY 2000.  *Impacted by change in employer wage base.
Unknown income and costs related to attendance separation.

HCS HB 472 -- EMPLOYMENT SECURITY

SPONSOR:  Luetkenhaus

COMMITTEE ACTION:  Voted "do pass" by the Committee on Workers'
Compensation and Employment Security by a vote of 13 to 1.

This substitute decreases from 4.5% to 4% the multiplier for
determining a claimant's unemployment compensation.  This figure
is multiplied by the claimant's total wages earned in the
quarter of highest earnings during the work year on which the
benefits are based.  The substitute increases the maximum dollar
amount for weekly benefits from the current amount of $175 to
$205 in 1998, $220 in 1999, $235 in 2000 and $250 in 2001.

The substitute also increases the amount of wages on which
employment security taxes are levied.   Currently, the first
$8,000 of an employee's wages are subject to employment security
taxes.  The substitute increases this "taxable wage base" amount
to $8,500 in 1998 and then allows this amount to increase $500
each year until the unemployment compensation fund reaches $300
million.  If this fund reaches $450 million, then the taxable
wage base will be decreased by $500.  The unemployment
compensation fund is necessary to fund unemployment benefits
during economic downturns, when employment benefits to be paid
out exceed the amount of employment security taxes being
collected.

The substitute also redefines "stoppage of work," as that term
is used in determining whether a claimant is eligible for
employment security benefits.  Employees who belong to a
collective bargaining unit that initiates a strike will not be
eligible for benefits during the strike, unless the employer is
found guilty of unfair labor practices.

FISCAL NOTE:  Estimated Net Cost to General Revenue Fund of
$124,745 for FY 1998, and an Increase of $824,838 for FY 1999,
and $1,713,424 for FY 2000.  Estimated Net Cost to Unemployment
Insurance Compensation Trust Fund of $18,462,961 for FY 1998,
and an Increase of $33,749,863 for FY 1999, and $7,245,742 for
FY 2000.

PROPONENTS:  Supporters say that Missouri is now 51st in the
nation (ahead of Puerto Rico) in maximum weekly amount for
unemployment compensation.  The $175 weekly maximum amount in
Missouri is 36% of the average weekly wage.  In Illinois it is
49%, in Kansas it is 60% and in Arkansas it is 66%.  The
proposed increases won't even put Missouri near the top, but
merely in the middle of the pack.

Testifying for the bill were Representative Luetkenhaus; and
AFL-CIO of MO.

OPPONENTS:  Those who oppose the bill say that as a general
rule, employers are against any percentage-based amounts.
Missouri is in the middle of the pack in terms of employment
security tax costs per employee, yet the maximum weekly benefit
amount for claimants is too low.  The reason is the way benefits
are allowed.  Currently, because Missouri uses the "highest
earning quarter" to determine a person's wages, a person earning
less than $6,000 in one quarter gets the maximum benefit
amount.  This applies to 90% of workers in Missouri.  In some
states, this number is 50%.  Some states require the applicant
to earn as much as $25,000 in the base period to qualify for the
maximum amount.  The distribution of the benefits gives too much
money to the worker laid off from a $7.50/hr job, so there is
not enough money to properly pay the worker laid off from the
$12.00/hr job.  Other issues to consider:  The need for a higher
reserve fund, so the state doesn't have to borrow from the
federal government and employers are saved fluctuations in their
employment security taxes; the tardiness and absenteeism
problem; and disallowing unemployment benefits while receiving
severance pay, as other states have done, would help reduce
employment security tax burdens.

Testifying against the bill were Missouri Poultry Federation;
Associated Industries of Missouri; Missouri Chamber of Commerce;
Merchant and Manufacturers Association; National Federation of
Independent Businesses; and Associated General Contractors of
Missouri.

Richard Smreker, Research Analyst

HB 472 -- Employment Security

Sponsor:  Luetkenhaus

This bill increases the maximum unemployment compensation weekly
benefit amount from $180 to an amount equal to 42% of the
state's average weekly wage, starting in 1998.  The percentage
will increase to 45% in 1999, 48% in the year 2000 and 50% in
the year 2001.