II 

117TH CONGRESS 

1ST SESSION S. 2898 

To amend title III of the Social Security Act to provide for improvements 

to State unemployment systems and to strengthen program integrity, 

and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

SEPTEMBER 29, 2021 

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

to the Committee on Finance 

A BILL 

To amend title III of the Social Security Act to provide 

for improvements to State unemployment systems and 

to strengthen program integrity, and for other purposes. 

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 ‘‘Unemployment Insur5 ance Systems Modernization Act of 2021’’. 

6 SEC. 2. IMPROVEMENTS TO STATE UNEMPLOYMENT SYS7 TEMS AND STRENGTHENING PROGRAM IN8 TEGRITY. 

9 (a) UNEMPLOYMENT COMPENSATION SYSTEMS.— 


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1 (1) IN GENERAL.—Section 303(a) of the Social 

2 Security Act (42 U.S.C. 503(a)) is amended— 

3 (A) in the matter preceding paragraph (1), 

4 by striking ‘‘provision for—’’ and inserting 

5 ‘‘provision for each of the following:’’; 

6 (B) at the end of each of paragraphs (1) 

7 through (10), by striking ‘‘; and’’ and inserting 

8 a period; 

9 (C) in paragraph (11)(B), by striking 

10 ‘‘The immediate’’ and inserting ‘‘the imme11 diate’’; and 

12 (D) by adding at the end the following new 

13 paragraph: 

14 ‘‘(13) The State system shall, in addition to 

15 meeting the requirements under section 1137, meet 

16 the following requirements: 

17 ‘‘(A) The system shall be capable of accu18 rately and expeditiously processing a surge of 

19 claims, including those filed under temporary 

20 Federal benefit programs that the State may be 

21 expected to administer, that would represent a 

22 twentyfold increase in claims from January 

23 2020 levels, occurring over a one-month period. 

24 ‘‘(B) The system shall be capable of— 


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1 ‘‘(i) adjusting wage replacement levels 

2 for each individual receiving unemployment 

3 compensation, but not to exceed 100 per4 cent of wage replacement; 

5 ‘‘(ii) adjusting weekly earnings dis6 regards, including the ability to adjust 

7 such disregards in relation to an individ8 ual’s earnings or weekly benefit amount; 

9 and 

10 ‘‘(iii) providing for wage replacement 

11 levels that vary based on the individual’s 

12 duration of benefit receipt. 

13 ‘‘(C) The system shall have in place an 

14 automated process for receiving and processing 

15 claims for disaster unemployment assistance 

16 under section 410(a) of the Robert T. Stafford 

17 Disaster Relief and Emergency Assistance Act 

18 (42 U.S.C. 5177(a)), with flexibility to adapt 

19 rules regarding individuals eligible for assist20 ance and the amount payable. 

21 ‘‘(D) In the case of a State that makes 

22 payments of short-time compensation under a 

23 short-time compensation program (as defined in 

24 section 3306(v) of the Internal Revenue Code of 

25 1986), the system shall have in place an autoVerDate Sep 11 2014 22:10 Sep 30, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S2898.IS S2898

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1 mated process of receiving and processing 

2 claims for short-time compensation. 

3 ‘‘(E) The system shall have in place an 

4 automated process for receiving and processing 

5 claims for— 

6 ‘‘(i) unemployment compensation for 

7 Federal civilian employees under sub8 chapter I of chapter 85 of title 5, United 

9 States Code; 

10 ‘‘(ii) unemployment compensation for 

11 ex-servicemembers under subchapter II of 

12 chapter 85 of title 5, United States Code; 

13 and 

14 ‘‘(iii) trade readjustment allowances 

15 under sections 231 through 233 of the 

16 Trade Act of 1974 (19 U.S.C. 2291– 

17 2293). 

18 ‘‘(F) The system shall have in place an 

19 automated process capable of receiving and 

20 processing claims under future temporary Fed21 eral benefit programs, such as those that 

22 may— 

23 ‘‘(i) provide extended benefits for indi24 viduals exhausting State compensation 

25 (such as under the Pandemic Emergency 


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1 Unemployment Compensation program es2 tablished in section 2107 of the CARES 

3 Act (15 U.S.C. 9025)); or 

4 ‘‘(ii) expand coverage to include indi5 viduals not eligible for State compensation 

6 (such as under the Pandemic Unemploy7 ment Assistance program established in 

8 section 2102 of the CARES Act (15 

9 U.S.C. 9021)).’’. 

10 (2) EFFECTIVE DATE.—The amendments made 

11 by paragraph (1) shall apply to weeks of unemploy12 ment beginning on or after the earlier of— 

13 (A) the date the State changes its statutes, 

14 regulations, or policies in order to comply with 

15 such amendment; or 

16 (B) October 1, 2024. 

17 (b) ELECTRONIC TRANSMISSION OF UNEMPLOYMENT

18 COMPENSATION INFORMATION.—Section 303 of the So19 cial Security Act (42 U.S.C. 503) is amended by adding 

20 at the end the following new subsection: 

21 ‘‘(n) ELECTRONIC TRANSMISSION OF UNEMPLOY22 MENT COMPENSATION INFORMATION.— 

23 ‘‘(1) IN GENERAL.—Not later than October 1, 

24 2024, the State agency charged with administration 

25 of the State law shall use a system developed (in 


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1 consultation with stakeholders) and designated by 

2 the Secretary of Labor for automated electronic 

3 transmission of requests for information relating to 

4 unemployment compensation and the provision of 

5 such information between such agency and employ6 ers or their agents. Such system shall ensure that 

7 any information shared is secure and safeguarded 

8 from potential abuse or misuse. 

9 ‘‘(2) USE OF APPROPRIATED FUNDS.—The Sec10 retary of Labor may use funds appropriated for 

11 grants to States under this title to make payments 

12 on behalf of States as the Secretary determines is 

13 appropriate for the use of the system described in 

14 paragraph (1). 

15 ‘‘(3) EMPLOYER PARTICIPATION.—The Sec16 retary of Labor shall work with the State agency 

17 charged with administration of the State law to in18 crease the number of employers using this system 

19 and to resolve any technical challenges with the sys20 tem. 

21 ‘‘(4) REPORTS ON USE OF ELECTRONIC SYS22 TEM.—After the end of each fiscal year, on a date 

23 determined by the Secretary, each State shall report 

24 to the Secretary information on— 


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1 ‘‘(A) the proportion of employers using the 

2 designated system described in paragraph (1); 

3 ‘‘(B) the reasons employers are not using 

4 such system; and 

5 ‘‘(C) the efforts the State is undertaking 

6 to increase employer’s use of such system. 

7 ‘‘(5) ENFORCEMENT.—Whenever the Secretary 

8 of Labor, after reasonable notice and opportunity for 

9 hearing to the State agency charged with the admin10 istration of the State law, finds that there is a fail11 ure to comply substantially with the requirements of 

12 paragraph (1), the Secretary of Labor shall notify 

13 such State agency that further payments will not be 

14 made to the State until the Secretary of Labor is 

15 satisfied that there is no longer any such failure. 

16 Until the Secretary of Labor is so satisfied, such 

17 Secretary shall make no future certification to the 

18 Secretary of the Treasury with respect to the 

19 State.’’. 

20 (c) UNEMPLOYMENT COMPENSATION INTEGRITY

21 DATA HUB.— 

22 (1) IN GENERAL.—Section 303(a) of the Social 

23 Security Act (42 U.S.C. 503(a)), as amended by 

24 subsection (a), is amended by adding at the end the 

25 following new paragraph: 


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1 ‘‘(14) The State agency charged with adminis2 tration of the State law shall use the system des3 ignated by the Secretary of Labor for cross-match4 ing claimants of unemployment compensation under 

5 State law against any databases in the system to 

6 prevent and detect fraud and improper payments.’’. 

7 (2) EFFECTIVE DATE.—The amendment made 

8 by paragraph (1) shall apply to weeks of unemploy9 ment beginning on or after the earlier of— 

10 (A) the date the State changes its statutes, 

11 regulations, or policies in order to comply with 

12 such amendment; or 

13 (B) October 1, 2024. 

14 (d) USE OF NATIONAL DIRECTORY OF NEW HIRES

15 IN ADMINISTRATION OF UNEMPLOYMENT COMPENSATION

16 PROGRAMS AND PENALTIES ON NONCOMPLYING EMPLOY17 ERS.— 

18 (1) IN GENERAL.—Section 303 of the Social 

19 Security Act (42 U.S.C. 503), as amended by sub20 section (b), is amended by adding at the end the fol21 lowing new subsection: 

22 ‘‘(o) USE OF NATIONAL DIRECTORY OF NEW

23 HIRES.— 


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1 ‘‘(1) IN GENERAL.—Not later than October 1, 

2 2024, the State agency charged with administration 

3 of the State law shall— 

4 ‘‘(A) compare information in the National 

5 Directory of New Hires established under sec6 tion 453(i) against information about individ7 uals claiming unemployment compensation to 

8 identify any such individuals who may have be9 come employed, in accordance with any regula10 tions or guidance that the Secretary of Health 

11 and Human Services may issue and consistent 

12 with the computer matching provisions of the 

13 Privacy Act of 1974; 

14 ‘‘(B) take timely action to verify whether 

15 the individuals identified pursuant to subpara16 graph (A) are employed; and 

17 ‘‘(C) upon verification pursuant to sub18 paragraph (B), take appropriate action to sus19 pend or modify unemployment compensation 

20 payments, and to initiate recovery of any im21 proper unemployment compensation payments 

22 that have been made. 

23 ‘‘(2) ENFORCEMENT.—Whenever the Secretary 

24 of Labor, after reasonable notice and opportunity for 

25 hearing to the State agency charged with the adminVerDate Sep 11 2014 22:10 Sep 30, 2021 Jkt 019200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S2898.IS S2898

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1 istration of the State law, finds that there is a fail2 ure to comply substantially with the requirements of 

3 paragraph (1), the Secretary of Labor shall notify 

4 such State agency that further payments will not be 

5 made to the State until the Secretary of Labor is 

6 satisfied that there is no longer any such failure. 

7 Until the Secretary of Labor is so satisfied, such 

8 Secretary shall make no future certification to the 

9 Secretary of the Treasury with respect to the 

10 State.’’. 

11 (2) PENALTIES.— 

12 (A) IN GENERAL.—Section 453A(d) of the 

13 Social Security Act (42 U.S.C. 653a(d)), in the 

14 matter preceding paragraph (1), is amended by 

15 striking ‘‘have the option to set a State civil 

16 money penalty which shall not exceed’’ and in17 serting ‘‘set a State civil money penalty which 

18 shall be not less than’’. 

19 (B) EFFECTIVE DATE.—The amendment 

20 made by subparagraph (A) shall apply to pen21 alties assessed on or after October 1, 2024. 

22 (e) STATE PERFORMANCE.— 

23 (1) IN GENERAL.—Section 303 of the Social 

24 Security Act (42 U.S.C. 503), as amended by subVerDate Sep 11 2014 22:10 Sep 30, 2021 Jkt 019200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S2898.IS S2898

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1 sections (b) and (d), is amended by adding at the 

2 end the following new subsection: 

3 ‘‘(p) STATE PERFORMANCE.— 

4 ‘‘(1) IN GENERAL.—For purposes of assisting 

5 States in meeting the requirements of this title, title 

6 IX, title XII, or chapter 23 of the Internal Revenue 

7 Code of 1986 (commonly referred to as ‘the Federal 

8 Unemployment Tax Act’), the Secretary of Labor 

9 may— 

10 ‘‘(A) consistent with subsection (a)(1), es11 tablish measures of State performance, includ12 ing criteria for acceptable levels of performance, 

13 performance goals, and performance measure14 ment programs; 

15 ‘‘(B) consistent with subsection (a)(6), re16 quire States to provide to the Secretary of 

17 Labor data or other relevant information from 

18 time to time concerning the operations of the 

19 State or State performance, including the meas20 ures, criteria, goals, or programs established 

21 under paragraph (1); 

22 ‘‘(C) require States with sustained failure 

23 to meet acceptable levels of performance or with 

24 performance that is substantially below accept25 able standards, as determined based on the 


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1 measures, criteria, goals, or programs estab2 lished under subparagraph (A), to implement 

3 specific corrective actions and use specified 

4 amounts of the administrative grants under this 

5 title provided to such States to improve per6 formance; and 

7 ‘‘(D) based on the data and other informa8 tion provided under subparagraph (B)— 

9 ‘‘(i) to the extent the Secretary of 

10 Labor determines funds are available after 

11 providing grants to States under this title 

12 for the administration of State laws, recog13 nize and make awards to States for per14 formance improvement, or performance ex15 ceeding the criteria or meeting the goals 

16 established under subparagraph (A); or 

17 ‘‘(ii) to the extent the Secretary of 

18 Labor determines funds are available after 

19 providing grants to States under this title 

20 for the administration of State laws, pro21 vide incentive funds to high-performing 

22 States based on the measures, criteria, 

23 goals, or programs established under sub24 paragraph (A). 


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1 ‘‘(2) ENFORCEMENT.—Whenever the Secretary 

2 of Labor, after reasonable notice and opportunity for 

3 hearing to the State agency charged with the admin4 istration of the State law, finds that there is a fail5 ure to comply substantially with the requirements of 

6 paragraph (1), the Secretary of Labor shall notify 

7 such State agency that further payments will not be 

8 made to the State until the Secretary of Labor is 

9 satisfied that there is no longer any such failure. 

10 Until the Secretary of Labor is so satisfied, such 

11 Secretary shall make no future certification to the 

12 Secretary of the Treasury with respect to the 

13 State.’’. 

14 (2) EFFECTIVE DATE.—The amendments made 

15 by this subsection shall take effect on the date of en16 actment of this Act. 

17 (f) FUNDING.—Notwithstanding any other provision 

18 of law, out of any payments of compensation from the un19 employment fund of the State that were made under the 

20 provisions of subtitle A of title II of division A of the 

21 CARES Act and are determined to have been made in 

22 error and are subsequently recovered by the State, the 

23 State may, immediately following receipt of such recovered 

24 amount— 


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1 (1) deposit 50 percent of such amount in a 

2 fund from which moneys may be withdrawn to carry 

3 out the provisions of, and the amendments made by, 

4 this section, including any regional or multi-State ef5 forts; and 

6 (2) pay 50 percent of such amount to the Sec7 retary of the Treasury to the credit of the account 

8 of the State in the Unemployment Trust Fund. 

9 (g) PERMISSIBLE USE OF CARES ACT FUNDING.— 

10 Section 2118 of the CARES Act (15 U.S.C. 9034) is 

11 amended by adding at the end the following new sub12 section: 

13 ‘‘(d) PERMISSIBLE USE OF GRANT FUNDS.—A grant 

14 to a State or territory awarded under subsection (b)(3) 

15 may be used for purposes of carrying out the provisions 

16 of, and the amendments made by, subsections (a) through 

17 (e) of section 2 of the Unemployment Insurance Systems 

18 Modernization Act of 2021.’’. 

Æ 


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