II 

111TH CONGRESS 

1ST SESSION S. 1646 

To keep Americans working by strengthening and expanding short-time 

compensation programs that provide employers with an alternative to layoffs. 

IN THE SENATE OF THE UNITED STATES 

AUGUST 7, 2009 

Mr. REED introduced the following bill; which was read twice and referred to 

the Committee on Finance 

A BILL 

To keep Americans working by strengthening and expanding 

short-time compensation programs that provide employers with an alternative to layoffs. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Keep Americans Work5 ing Act’’. 

6 SEC. 2. PURPOSE. 

7 The purpose of this Act is to keep Americans working 

8 by strengthening and expanding short-time compensation 

9 programs that provide employers with an alternative to 

10 layoffs. 


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1 SEC. 3. TREATMENT OF SHORT-TIME COMPENSATION PRO2 GRAMS. 

3 (a) IN GENERAL.—Section 3306 of the Internal Rev4 enue Code of 1986 is amended by adding at the end the 

5 following new subsection: 

6 ‘‘(v) SHORT-TIME COMPENSATION PROGRAM.—For 

7 purposes of this chapter, the term ‘short-time compensa8 tion program’ means a program under which— 

9 ‘‘(1) the participation of an employer is vol10 untary; 

11 ‘‘(2) an employer reduces the number of hours 

12 worked by employees through certifying that such 

13 reductions are in lieu of temporary layoffs; 

14 ‘‘(3) such employees whose workweeks have 

15 been reduced by at least 10 percent are eligible for 

16 unemployment compensation; 

17 ‘‘(4) the amount of unemployment compensa18 tion payable to any such employee is a pro rata por19 tion of the unemployment compensation which would 

20 be payable to the employee if such employee were to21 tally unemployed; 

22 ‘‘(5) such employees are not expected to meet 

23 the availability for work or work search test require24 ments while collecting short-time compensation bene25 fits, but are required to be available for their normal 

26 workweek; 


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1 ‘‘(6) eligible employees may participate in an 

2 employer-sponsored training program to enhance job 

3 skills if such program has been approved by the 

4 State agency; 

5 ‘‘(7) beginning on the date which is 2 years 

6 after the date of enactment of this subsection, the 

7 State agency shall require an employer to certify 

8 that continuation of health benefits and retirement 

9 benefits under a defined benefit pension plan (as de10 fined in section 3(35) of the Employee Retirement 

11 Income Security Act of 1974) is not affected by par12 ticipation in the program; 

13 ‘‘(8) the State agency shall require an employer 

14 (or an employer’s association which is party to a col15 lective bargaining agreement) to submit a written 

16 plan describing the manner in which the require17 ments of this subsection will be implemented and 

18 containing such other information as the Secretary 

19 of Labor determines is appropriate; 

20 ‘‘(9) in the case of employees represented by a 

21 union, the appropriate official of the union has 

22 agreed to the terms of the employer’s written plan 

23 and implementation is consistent with employer obli24 gations under the National Labor Relations Act; and 


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1 ‘‘(10) the program meets such other require2 ments as the Secretary of Labor determines appro3 priate.’’. 

4 (b) ASSISTANCE AND GUIDANCE IN IMPLEMENTING

5 PROGRAMS.— 

6 (1) ASSISTANCE AND GUIDANCE.— 

7 (A) IN GENERAL.—In order to assist 

8 States in establishing, qualifying, and imple9 menting short-time compensation programs, as 

10 defined in section 3306(v) of the Internal Rev11 enue Code of 1986 (as added by subsection 

12 (a)), the Secretary of Labor (in this section re13 ferred to as the ‘‘Secretary’’) shall— 

14 (i) develop model legislative language 

15 which may be used by States in developing 

16 and enacting short-time compensation pro17 grams and shall periodically review and re18 vise such model legislative language; 

19 (ii) provide technical assistance and 

20 guidance in developing, enacting, and im21 plementing such programs; 

22 (iii) establish biannual reporting re23 quirements for States, including number of 

24 averted layoffs, number of participating 


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1 companies and workers, and retention of 

2 employees following participation; and 

3 (iv) award start-up grants to State 

4 agencies under subparagraph (B). 

5 (B) GRANTS.— 

6 (i) IN GENERAL.—The Secretary shall 

7 award start-up grants to State agencies 

8 that apply not later than September 30, 

9 2010, in States that enact short-time com10 pensation programs after the date of en11 actment of this Act for the purpose of cre12 ating such programs. The amount of such 

13 grants shall be awarded depending on the 

14 costs of implementing such programs. 

15 (ii) ELIGIBILITY.—In order to receive 

16 a grant under clause (i) a State agency 

17 shall meet requirements established by the 

18 Secretary, including any reporting require19 ments under clause (iii). Each State agen20 cy shall be eligible to receive not more than 

21 one such grant. 

22 (iii) REPORTING.—The Secretary may 

23 establish reporting requirements for State 

24 agencies receiving a grant under clause (i) 

25 in order to provide oversight of grant 


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1 funds used by States for the creation of 

2 short-time compensation programs. 

3 (iv) FUNDING.—There are appro4 priated, out of any moneys in the Treasury 

5 not otherwise appropriated, to the Sec6 retary, such sums as the Secretary certifies 

7 as necessary for the period of fiscal years 

8 2010 and 2011 to carry out this subpara9 graph. 

10 (2) TIMEFRAME.—The initial model legislative 

11 language referred to in paragraph (1)(A) shall be 

12 developed not later than 60 days after the date of 

13 enactment of this Act. 

14 (c) REPORTS.— 

15 (1) INITIAL REPORT.—Not later than 4 years 

16 after the date of enactment of this Act, the Sec17 retary shall submit to Congress and to the President 

18 a report or reports on the implementation of this 

19 section. Such report or reports shall include— 

20 (A) a study of short-time compensation 

21 programs; 

22 (B) an analysis of the significant impedi23 ments to State enactment and creation of such 

24 programs; and 


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1 (C) such recommendations as the Sec2 retary determines appropriate. 

3 (2) SUBSEQUENT REPORTS.—After the submis4 sion of the report under paragraph (1), the Sec5 retary may submit such additional reports on the 

6 implementation of short-time compensation pro7 grams as the Secretary deems appropriate. 

8 (3) FUNDING.—There are appropriated, out of 

9 any moneys in the Treasury not otherwise appro10 priated, to the Secretary, $1,500,000 to carry out 

11 this subsection, to remain available without fiscal 

12 year limitation. 

13 (d) CONFORMING AMENDMENTS.— 

14 (1) INTERNAL REVENUE CODE OF 1986.— 

15 (A) Subparagraph (E) of section 

16 3304(a)(4) of the Internal Revenue Code of 

17 1986 is amended to read as follows: 

18 ‘‘(E) amounts may be withdrawn for the 

19 payment of short-time compensation under a 

20 short-time compensation program (as defined in 

21 section 3306(v));’’. 

22 (B) Subsection (f) of section 3306 of the 

23 Internal Revenue Code of 1986 is amended— 


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1 (i) by striking paragraph (5) (relating 

2 to short-term compensation) and inserting 

3 the following new paragraph: 

4 ‘‘(5) amounts may be withdrawn for the pay5 ment of short-time compensation under a short-time 

6 compensation program (as defined in subsection 

7 (v));’’, and 

8 (ii) by redesignating paragraph (5) 

9 (relating to self-employment assistance 

10 program) as paragraph (6). 

11 (2) SOCIAL SECURITY ACT.—Section 303(a)(5) 

12 of the Social Security Act is amended by striking 

13 ‘‘the payment of short-time compensation under a 

14 plan approved by the Secretary of Labor’’ and in15 serting ‘‘the payment of short-time compensation 

16 under a short-time compensation program (as de17 fined in section 3306(v) of the Internal Revenue 

18 Code of 1986)’’. 

19 (3) REPEAL.—Subsections (b) through (d) of 

20 section 401 of the Unemployment Compensation 

21 Amendments of 1992 (26 U.S.C. 3304 note) are re22 pealed. 

23 (e) EFFECTIVE DATE.—The amendments made by 

24 this section shall take effect on the date of enactment of 

25 this Act. 


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1 SEC. 4. TEMPORARY FINANCING OF CERTAIN SHORT-TIME 

2 COMPENSATION PROGRAMS. 

3 (a) PAYMENTS TO STATES WITH CERTIFIED PRO4 GRAMS.— 

5 (1) IN GENERAL.—Not later than 30 days after 

6 the date of enactment of this Act, the Secretary 

7 shall establish a program under which the Secretary 

8 shall make payments to any State unemployment 

9 trust fund to be used for the payment of unemploy10 ment compensation if the Secretary approves an ap11 plication for certification submitted under paragraph 

12 (3) for such State to operate a short-time compensa13 tion program (as defined in section 3306(v) of the 

14 Internal Revenue Code of 1986 (as added by section 

15 3(a))) which requires the maintenance of health and 

16 retirement employee benefits as described in para17 graph (7) of such section 3306(v), notwithstanding 

18 the otherwise effective date of such requirement. 

19 (2) FULL REIMBURSEMENT.—Subject to sub20 section (d), the payment to a State under paragraph 

21 (1) shall be an amount equal to 100 percent of the 

22 total amount of benefits paid to individuals by the 

23 State pursuant to the short-time compensation pro24 gram during the period— 


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1 (A) beginning on the date a certification is 

2 issued by the Secretary with respect to such 

3 program; and 

4 (B) ending on September 30, 2011. 

5 (3) CERTIFICATION REQUIREMENTS.— 

6 (A) IN GENERAL.—Any State seeking full 

7 reimbursement under this subsection shall sub8 mit an application for certification at such time, 

9 in such manner, and complete with such infor10 mation as the Secretary may require (whether 

11 by regulation or otherwise), including informa12 tion relating to compliance with the require13 ments of paragraph (7) of such section 3306(v). 

14 The Secretary shall, within 30 days after receiv15 ing a complete application, notify the State 

16 agency of the State of the Secretary’s findings 

17 with respect to the requirements of such para18 graph (7). 

19 (B) FINDINGS.—If the Secretary finds 

20 that the short-time compensation program oper21 ated by the State meets the requirements of 

22 such paragraph (7), the Secretary shall certify 

23 such State’s short-time compensation program 

24 thereby making such State eligible for full reim25 bursement under this subsection.


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1 (b) TIMING OF APPLICATION SUBMITTALS.—No ap2 plication under subsection (a)(3) may be considered if sub3 mitted before the date of enactment of this Act or after 

4 the latest date necessary (as specified by the Secretary) 

5 to ensure that all payments under this section are made 

6 before September 30, 2011. 

7 (c) TERMS OF PAYMENTS.—Payments made to a 

8 State under subsection (a)(1) shall be payable by way of 

9 reimbursement in such amounts as the Secretary esti10 mates the State will be entitled to receive under this sec11 tion for each calendar month, reduced or increased, as the 

12 case may be, by any amount by which the Secretary finds 

13 that the Secretary’s estimates for any prior calendar 

14 month were greater or less than the amounts which should 

15 have been paid to the State. Such estimates may be made 

16 on the basis of such statistical, sampling, or other method 

17 as may be agreed upon by the Secretary and the State 

18 agency of the State involved. 

19 (d) LIMITATIONS.— 

20 (1) GENERAL PAYMENT LIMITATIONS.—No 

21 payments shall be made to a State under this sec22 tion for benefits paid to an individual by the State 

23 pursuant to a short-time compensation program that 

24 is in excess of 26 weeks of benefits. 


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1 (2) EMPLOYER LIMITATIONS.—No payments 

2 shall be made to a State under this section for bene3 fits paid to an individual by the State pursuant to 

4 a short-time compensation program if such indi5 vidual is employed by an employer— 

6 (A) whose workforce during the 3 months 

7 preceding the date of the submission of the em8 ployer’s short-time compensation plan has been 

9 reduced by temporary layoffs of more than 20 

10 percent; 

11 (B) on a seasonal, temporary, or intermit12 tent basis; or 

13 (C) engaged in a labor dispute. 

14 (3) PROGRAM PAYMENT LIMITATION.—In mak15 ing any payments to a State under this section pur16 suant to a short-time compensation program, the 

17 Secretary may limit the frequency of employer par18 ticipation in such program. 

19 (e) CHARGING RULE.—Under a short-time com20 pensation program reimbursed under this section, a State 

21 may require short-time compensation benefits paid to an 

22 individual to be charged to a participating employer re23 gardless of the base period charging rule. 

24 (f) RETENTION REQUIREMENT.— 


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1 (1) IN GENERAL.—A participating employer 

2 under this section is required to comply with the 

3 terms of the written plan approved by the State 

4 agency and act in good faith to retain participating 

5 employees, and the State shall, in the event of any 

6 violation, require such employer to repay to the 

7 State a sum based on the amount expended by the 

8 State under the program as a result of that viola9 tion. 

10 (2) OVERSIGHT AND MONITORING.—The Sec11 retary shall establish an oversight and monitoring 

12 process by regulation by which State agencies will 

13 ensure that participating employers comply with the 

14 requirements of paragraph (1). 

15 (3) PENALTY REMITTANCE.—In the case of any 

16 State which receives reimbursement under this sec17 tion, if such State determines that a violation of 

18 paragraph (1) has occurred, the State shall transfer 

19 an appropriate amount to the United States of the 

20 repayment the State required of the employer pursu21 ant to such paragraph. 

22 (g) FUNDING.—There are appropriated, from time to 

23 time, out of any moneys in the Treasury not otherwise 

24 appropriated, to the Secretary, such sums as the Secretary 

25 certifies are necessary to carry out this section (including 


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1 to reimburse any additional administrative expenses in2 curred by the States in operating such short-time com3 pensation programs). 

4 (h) DEFINITION OF STATE.—In this section, the term 

5 ‘‘State’’ includes the District of Columbia, the Common6 wealth of Puerto Rico, and the Virgin Islands. 

Æ 


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