28236 Federal Register / Vol. 61, No. 108 / Tuesday, June 4, 1996 / Notices

1The FCRA regulates the operations of consumer

credit reporting agencies and users of consumer

reports.

move technologies in support of

community-oriented policing beyond

current state of the art. The solicitation

seeks proposals representing

partnerships between the public and

private sectors to support the research

and development of new technologies or

the innovative adaptation of existing

technologies that could be used as tools

for community policing. The solicitation

is not intended to fund the purchase of

currently available commercial off-theshelf technologies, systems, or products.

The National Institute of Justice

anticipates a funding level of up to $4

million, which will support several

awards under this solicitation.

Interested organizations should call

the National Criminal Justice Reference

Service (NCJRS) at 1–800–851–3420 to

obtain a copy of NIJ’s ‘‘Technology

Research and Development Partnership

Projects for Community Policing.’’ (refer

to document no. SL000149).

The solicitation is available

electronically via the Justice Technology

Information Network (JUSTNET) on the

Internet. JUSTNET’s address on the

World Wide Web is http://

www.nlectc.org. The solicitation is also

available through the NCJRS Bulletin

Board, which can also be accessed via

Internet. Telnet to ncjrsbbs.ncjrs.org, or

gopher to ncjrs.org:71. On World Wide

Web, connect to the NCJRS Justice

Information Center at http://

www.ncjrs.org. Those without Internet

access can dial the NCJRS Bulletin

Board via modem: dial 301–738–8895.

Set modem at 9600 baud, 8–N–1.

Jeremy Travis,

Director, National Institute of Justice.

[FR Doc. 96–13975 Filed 6–3–96; 8:45 am]

BILLING CODE 4410–18–P

DEPARTMENT OF LABOR

Employment and Training

Administration

Federal-State Unemployment

Compensation Program:

Unemployment Insurance Program

Letters Interpreting Federal

Unemployment Insurance Law

The Employment and Training

Administration interprets Federal law

requirements pertaining to

unemployment compensation as part of

its role in the administration of the

Federal-State unemployment

compensation program. These

interpretations are issued in

Unemployment Insurance Program

Letters (UIPLs) to the State Employment

Security Agencies (SESAs). The UIPL

described below is published in the

Federal Register in order to inform the

public.

UIPL 23–96

The State agencies which administer

the Unemployment Insurance program

collect information concerning the

wages paid by employers in the State.

This information is required to be

provided by State law, in accordance

with Section 1137(a)(3) of the Social

Security Act.

There has been a growing interest by

private entities to have electronic access

to the wage data collected by the State

in order to verify income for individuals

who apply for loans. This UIPL advises

States to the Department of Labor’s

interpretation of Federal law in regard

to the disclosure of this information to

private entities.

Dated: May 29, 1996.

Timothy M. Barnicle,

Assistant Secretary of Labor.

Directive: Unemployment Insurance Program

Letter No. 23–96

To: All State Employment Security Agencies

From: Mary Ann Wyrsch, Director,

Unemployment Insurance Service

Subject: Disclosure of Confidential

Employment Information to Private

Entities

Rescissions: None

Expiration Date: continuing

1. Purpose. To advise States of the

Department of Labor’s (Department) position

regarding the disclosure of certain

Unemployment Insurance (UI) information to

private entities.

2. Reference. Sections 303(a)(1), 303(a)(8)

and 303(f) of the Social Security Act (SSA);

20 C.F.R. Part 97; Office of Management and

Budget (OMB) Circular No. A–87; ET

Handbook No. 336; the Fair Credit Reporting

Act (FCRA), P.L. 91–508, 15 U.S.C. 1681 et

seq.

3. Background. Norwest Mortgage, in the

form of its subsidiary VIE (Verification of

Income & Employment), has signed an

agreement with the State of Iowa’s

Department of Employment Services (IDES)

to allow VIE to utilize Iowa wage records in

a novel way. It is our understanding that VIE

operates as a credit bureau and provides

electronic access to employment verification

information to credit approving entities

covered under the FCRA,1 such as mortgage

lenders which subscribe to its service. VIE

requires individuals seeking credit to sign a

consent form authorizing release of

information pertaining to them. The current

consent form does not, however, specify that

State records will be accessed. VIE receives

requests for verification from its subscribers

in the form of the loan applicant’s social

security number and State and forwards the

request electronically to the UI agency which

accesses its wage records for the requested

information and returns it to VIE. VIE passes

the information back to the requesting

subscriber. Only a few minutes elapse

between the subscriber’s request and receipt

of UI information via computer. The UI

information available to VIE’s subscribers is

limited to the employer’s name and address,

and the employee’s quarterly wages.

Although the information exchange was

originally inspired by mortgage lending, it is

applicable to all consumer lending.

The Department has been told that the

funds received from VIE as payments by the

IDES are kept in a separate account and the

VIE will pay for all IDES expenses in setting

up the service. IDES will also receive a

percentage of the amount VIE charges its

subscribers as a processing fee for each

transaction.

The procedure is marketed as offering

benefits to: lenders, by reducing loan

processing costs; loan applicants, by

shortening the verification period from weeks

to days; employers, who will no longer

receive employment verification requests; the

UI program, by providing program income;

and the economy in general by reducing bad

debt expenses.

The Department has examined the issue of

disclosure to private entities under the

circumstances described above. This UIPL is

issued to advise the States that, provided

certain conditions are met, no issues are

raised with respect to Federal UI law

requirements when State law permits the

information to be released.

Questions exist when a governmental

entity requires reports to be made for a given

reason, such as the administration of a State’s

UI law or the Income Eligibility and

Verification System required by Section

303(f), SSA, and subsequently releases the

information, even if the release is made with

the individual’s consent and results in

income to the UI program. Because the

information comes from employers’ private

records, employers have an interest in its

confidentiality. Therefore, States should seek

the input of employers before entering into

an agreement to release such information to

a private entity.

4. Discussion. a. Federal Law Requirements

in General. Section 303(a)(1), SSA, has long

been interpreted to prohibit disclosure of

claimant and employer UI information. The

rationale is that the disclosure of UI

information may deter individuals from filing

claims or employers from filing reports and

will impede the proper and effective

administration of the UI program.

Individuals/consumers have an interest in

confidentiality. Confidentiality of UI records

avoid publicity about individuals and

employers, and possible notoriety resulting

from publicity. Publicity could have

disrupting effects on the operations of the

State agency, would be likely to discourage

many individuals from claiming a statutory

entitlement, and may act as a disincentive for

employers to cooperate with the State agency

in the administration of the State UI law.

Further, Section 303(a)(8), SSA, limits

grants use to purposes necessary for the

proper and efficient administration of the

Federal-State UI program. Since individuals

have an interest in a release of sensitive
Federal Register / Vol. 61, No. 108 / Tuesday, June 4, 1996 / Notices 28237

information about themselves, it would not

be proper administration of the UI program

to release such information without the

individual’s informed consent.

Confidentiality of UI records is, therefore, an

elementary factor necessary in the proper

administration of the UI program, since the

release of UI information without the

individual’s informed consent would bring

notoriety upon the UI program.

Certain types of disclosure have, however,

been permitted. Disclosure of claimant and

employer information to public officials in

the performance of their official duties has

been permitted if the cost of providing the

information is paid for by the requesting

public official. States have also been

permitted to disclose information relating to

an individual to such individual or the

individual’s agent. The Department has now

concluded that States may disclose

employment and wage information to a

private entity under a written agreement

which (1) requires informed consent from the

individual to whom the information pertains,

(2) continues to safeguard the information

once in the hands of the private entity, and

(3) requires the private entity to pay all costs

associated with disclosure.

b. Informed Consent. States choosing to

disclose employment and wage information

to credit companies must require the

individual to sign a release. The release must

contain the following: (1) a specific statement

indicating that the individual’s employment

history will be released, (2) a statement that

the release is only for that particular credit

transaction, (3) a clear statement informing

the individual that the credit company may

use information from State governmental

files, and (4) a statement indicating all the

parties who may receive the information

released. Consent is not informed if an

individual is not told that governmental

records may be released and to whom the

information may be provided. States must

assure that all statements or forms provided

under the terms of any agreements require

the informed consent of the individual to use

the State’s records.

c. Safeguards. States must safeguard the

confidentiality of the UI information once a

private entity has been granted access to it.

In cases where the private entity is acting as

a gateway and passes the information along

to a subscriber or client, States must obtain

written assurances from the private entity

that such subscribers will also safeguard the

confidentiality of the information and that

the information may be used only for the

specific credit transaction authorized by the

individual’s release.

States must periodically audit a sample of

transactions accessing the wage records to

assure that the private entity has on file a

written release authorizing each access and

that the information is not being misused or

stored in a database for resale or other

unauthorized purpose to assure that no

access is made to the wage records without

authorization. If the private entity acts as a

gateway and audits its subscribers, it will be

sufficient for the State to periodically audit

the gateway’s audit process. A State must

ensure that any agreement permits it to

exercise control over the UI records even

after they are shared with private entities.

The State must be able to terminate the

agreement if it determines that the

confidentiality provisions are not adhered to.

The Department also recommends that the

agreement contain a definite expiration date

so that the State is assured an opportunity to

periodically evaluate such disclosure.

While it is recognized that no system is

foolproof, system security through increased

audits and other means must be such that

any breach will be easily detected. All

employees of private entities must be subject

to the same confidentiality requirements—

and State criminal penalties for violation of

those requirements—as are employees of the

State UI agency.

d. Income and Costs. Under Section

303(a)(8), SSA, funds received for the

administration of a State’s UI program may

be used only as necessary for the ‘‘proper and

efficient’’ administration of the State’s UI

law. Departmental regulations at 29 CFR

97.22(b) provide that OMB Circular No. A–

87 is used to determine whether an

expenditure of granted funds is an allowable

cost. Under both the SSA and the Circular,

costs of disclosing information for non-UI

purposes are not allowable because such

costs items are not necessary or reasonable

for proper and efficient performance and

administration of the Federal award allocated

to carry out the State’s UI program. The OMB

Circular also provides at paragraph 20 of

Attachment B that certain costs are not

allowable under a grant. These include fines,

penalties, damages and other settlements

resulting from violations (or alleged

violations) or failure to comply with law. As

a result, the Department recommends that

any agreement with a private entity provide

protection to the State for claims that may

arise from any unauthorized use of UI

records obtained under the agreement.

It is the Department’s position that income

generated by a State UI agency from the sale

of its wage records must be used only as

necessary for the proper and efficient

administration of the UI program pursuant to

administrative requirements for grants to the

States. (See 29 CFR 97.25(g)(2) and ET

Handbook No. 336, the ‘‘Program and Budget

Plan.’’) Therefore, States may not use any

money generated by the disclosure

authorized under this UIPL for any non-UI

purposes. For example, income from sales

may not benefit a State’s general fund or

another program.

5. Action Required. State administrators

are requested to provide the above

information to appropriate staff.

6. Inquiries. Direct questions to the

appropriate Regional Office.

[FR Doc. 96–13869 Filed 6–3–96; 8:45 am]

BILLING CODE 4510–30–M

Pension and Welfare Benefits

Administration

[Application No. D–10171, et al.]

Proposed Exemptions; The Everett

Clinic Profit Sharing Plan

AGENCY: Pension and Welfare Benefits

Administration, Labor.

ACTION: Notice of proposed exemptions.

SUMMARY: This document contains

notices of pendency before the

Department of Labor (the Department) of

proposed exemptions from certain of the

prohibited transaction restriction of the

Employee Retirement Income Security

Act of 1974 (the Act) and/or the Internal

Revenue Code of 1986 (the Code).

Written Comments and Hearing

Requests

All interested persons are invited to

submit written comments or request for

a hearing on the pending exemptions,

unless otherwise stated in the Notice of

Proposed Exemption, within 45 days

from the date of publication of this

Federal Register Notice. Comments and

request for a hearing should state: (1)

the name, address, and telephone

number of the person making the

comment or request, and (2) the nature

of the person’s interest in the exemption

and the manner in which the person

would be adversely affected by the

exemption. A request for a hearing must

also state the issues to be addressed and

include a general description of the

evidence to be presented at the hearing.

A request for a hearing must also state

the issues to be addressed and include

a general description of the evidence to

be presented at the hearing.

ADDRESSES: All written comments and

request for a hearing (at least three

copies) should be sent to the Pension

and Welfare Benefits Administration,

Office of Exemption Determinations,

Room N–5649, U.S. Department of

Labor, 200 Constitution Avenue, N.W.,

Washington, D.C. 20210. Attention:

Application No. stated in each Notice of

Proposed Exemption. The applications

for exemption and the comments

received will be available for public

inspection in the Public Documents

Room of Pension and Welfare Benefits

Administration, U.S. Department of

Labor, Room N–5507, 200 Constitution

Avenue, N.W., Washington, D.C. 20210.

Notice to Interested Persons

Notice of the proposed exemptions

will be provided to all interested

persons in the manner agreed upon by

the applicant and the Department

within 15 days of the date of publication

in the Federal Register. Such notice

shall include a copy of the notice of

proposed exemption as published in the

Federal Register and shall inform

interested persons of their right to

comment and to request a hearing

(where appropriate).

SUPPLEMENTARY INFORMATION: The

proposed exemptions were requested in

applications filed pursuant to section