Unemployment Compensation Amendments of 1999

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Unemployment Compensation Amendments 
of 1999''.

SEC. 2. AMENDMENTS TO EXTENDED BENEFIT PROGRAM.

    (a) Repeal of Certain State Law Requirements.--Section 202 of the 
Federal-State Extended Unemployment Compensation Act of 1970 (26 U.S.C. 
3304 note) is amended--
            (1) by striking paragraphs (3), (4), (5), (6), and (7) of 
        subsection (a); and
            (2) by repealing subsection (c).
    (b) Establishment of Mandatory Triggers Based on Total 
Unemployment.--
            (1) State `on' and `off' indicators.--Subsection (d) of 
        section 203 of such Act is amended to read as follows:

                   ``State `On' and `Off' Indicators

    ``(d) For purposes of this section--
            ``(1) There is a State `on' indicator for a week if--
                    ``(A)(i) the average rate of total unemployment in 
                such State (seasonally adjusted) for the period 
                consisting of the most recent three months for which 
                data for all States are published before the close of 
                the week equals or exceeds 7.5 percent, and
                    ``(ii) the average rate of total unemployment in 
                such State (seasonally adjusted) for the 3-month period 
                referred to in clause (i) equals or exceeds 110 percent 
                of such average for either (or both) of the 
                corresponding 3-month periods ending in the two 
                preceding calendar years; or
                    ``(B) the average rate of total unemployment for 
                such State (seasonally adjusted) for the period 
                consisting of the most recent 3 months for which data 
                for all States are published before the close of the 
                week equals or exceeds 10 percent.
            ``(2) There is a State `off' indicator for a week unless 
        the requirements of subparagraph (A) or (B) of paragraph (1) 
        are satisfied.''.
            (2) Determination of rates of total unemployment and 
        insured unemployment.--Subsection (e) of section 203 of such 
        Act is amended to read as follows:

``Determination of Rates of Total Unemployment and Insured Unemployment

    ``(e)(1) For purposes of this Act, determinations of the rate of 
total unemployment in any State for any period (and of any seasonal 
adjustments) shall be made by the Secretary.
    ``(2)(A) For purposes of subsection (f)(2), the rate of insured 
unemployment for any thirteen-week period shall be determined by 
reference to the average monthly covered employment under the State law 
for the first four of the most recent six calendar quarters ending 
before the close of such period.
    ``(B) For purposes of subsection (f)(2), the term `rate of insured 
unemployment' means the percentage arrived at by dividing--
            ``(i) the average weekly number of individuals filing 
        claims for regular compensation for weeks of unemployment with 
        respect to the specified period, as determined on the basis of 
        the reports made by the State agency to the Secretary, by
            ``(ii) the average monthly covered employment for the 
        specified period.
    ``(C) Determinations under subsection (f)(2) shall be made by the 
State agency in accordance with regulations prescribed by the 
Secretary.''.
    (c) Requirements for Supplemental Benefits During High Unemployment 
Periods.--
            (1) In general.--Subparagraph (B) of section 202(b)(3) of 
        such Act is amended to read as follows:
    ``(B) For purposes of subparagraph (A), the term `high unemployment 
period' means any period during which an extended benefit period would 
be in effect if--
            ``(i)(I) section 203(d)(1)(A)(i) were applied by 
        substituting `10 percent' for `7.5 percent'; and
            ``(II) section 203(d)(1)(B) were applied by substituting 
        `12.5 percent' for `10 percent'; and
            ``(ii) section 203(f)(1)(A)(i) were applied by substituting 
        `8 percent' for `6.5 percent'.''.
            (2) Technical amendment.--Subsection (b) of section 202 of 
        such Act is amended by moving the text of paragraph (3)(A) of 
        such subsection 2 ems to the left.
    (d) Amendments to Alternative Trigger.--Section 203(f) of such Act 
is amended--
            (1) in paragraph (1), by striking ``Effective with respect 
        to compensation for weeks of employment beginning after March 
        6, 1993, the'' and inserting ``In lieu of applying the 
        indicator specified in subsection (d)(1)(A), a'';
            (2) by amending paragraph (2) to read as follows:
    ``(2) A State may by law provide that, for the purpose of beginning 
or ending any extended period under this section, in addition to the 
indicators specified in subsection (d) and paragraph (1) of this 
subsection--
            ``(A) there is a State `on' indicator for a week if the 
        rate of insured unemployment under State law for the period 
consisting of such week and the immediately preceding twelve weeks 
equals or exceeds 6 percent; and
            ``(B) there is a State `off' indicator for a week if the 
        requirement set forth in subparagraph (A) is not satisfied.
Notwithstanding the provision of any State law described in this 
paragraph, any week for which there would otherwise be a State `on' 
indicator shall continue to be such a week and shall not be determined 
to be a week for which there is a State `off' indicator.''.

SEC. 3. SPECIAL DISTRIBUTIONS TO THE STATES.

    Section 903(a)(3) of the Social Security Act (42 U.S.C. 1103(a)(3)) 
is amended--
            (1) in subparagraph (A) by amending clauses (i) and (ii) to 
        read as follows:
                            ``(i) be subject to subparagraphs (B) and 
                        (C), to the extent such amounts are not in 
                        excess of the sum of--
                                    ``(I) $20,000,000, plus
                                    ``(II) the amount determined by the 
                                Secretary of Labor to be the difference 
                                between the amount necessary for the 
                                proper and efficient administration of 
                                the unemployment compensation program 
                                for the succeeding fiscal year (taking 
                                into account workload and other 
                                appropriate factors) and 
                                $2,419,000,000, and
                            ``(ii) be subject to subparagraph (D), to 
                        the extent such amounts are in excess of the 
                        sum of subclauses (I) and (II) of clause 
                        (i).'';
            (2) in subparagraph (B) by striking ``(A)(i)'' and 
        inserting ``(A)(i)(II)'';
            (3) by redesignating subparagraphs (B) and (C) as 
        subparagraphs (C) and (D), respectively; and
            (4) by inserting after subparagraph (A) the following new 
        subparagraph:
    ``(B) The Secretary of Labor shall reserve the amount specified in 
subparagraph (A)(i)(I) (at the close of fiscal years 1999, 2000, and 
2001) to award grants to the States in fiscal years 2000, 2001, and 
2002 to assist in the implementation of alternative base periods for 
determining the eligibility of claimants. Such alternative base periods 
shall reduce the period of time between the end of the base period for 
a claimant and the filing of a claim for compensation. The amounts 
reserved pursuant to this subparagraph shall be available to the 
Secretary of Labor for obligation through fiscal year 2002.''.

SEC. 4. SOLVENCY REQUIREMENTS.

    Section 903(b) of the Social Security Act (42 U.S.C. 1103(b)) is 
amended by adding at the end the following new paragraph:
    ``(3)(A) If the Secretary of Labor finds that, as of December 31, 
2001, a State has not achieved, or made acceptable progress toward 
achieving, the solvency target established pursuant to subparagraph 
(B), then, subject to the limitation described in subparagraph (C), the 
amount available under this section for transfer to such State account 
for the succeeding fiscal year shall, in lieu of being so transferred, 
be transferred to the States meeting the requirements of this 
subsection. The transfers shall be made to such States based on the 
share of funds of each such State under subsection (a)(2), except that, 
for purposes of this subparagraph, the ratio under subsection (a)(2) 
shall be adjusted by excluding the wages attributable to the States 
failing to meet the requirements of this subparagraph.
    ``(B)(i) For December 31, 2001, the solvency target shall be an 
average high cost multiple of 1.0. For purposes of this subparagraph, 
the average high cost multiple represents the number of years a State 
could pay unemployment compensation (based on the reserve ratio of such 
State) if the State paid such compensation at a rate equivalent to the 
average benefit cost rate such State paid in the three calendar years 
during the preceding 20 calendar years (or, if longer, during the 
period consisting of the preceding three recessions as determined by 
the National Bureau of Economic Research) that the benefit cost rates 
were the highest. For purposes of making this determination--
            ``(I) the term `reserve ratio' means the ratio determined 
        by dividing the balance in the State account at the end of the 
        calendar year by the total covered wages in the State for such 
        year;
            ``(II) the term `benefit cost rate' means the rate 
        determined by dividing the unemployment compensation paid 
        during a calendar year by the total covered wages in the State 
        for such year; and
            ``(III) the ratio and rates determined under subclauses (I) 
        and (II) shall exclude the wages and unemployment compensation 
        paid by employers covered under section 3309 of the Internal 
        Revenue Code of 1986.
    ``(ii) For December 31, 2001, acceptable progress towards achieving 
the solvency target shall mean that a State has reduced any difference 
between 1.0 and the average high cost multiple of such State (if such 
multiple is less than 1.0) that the Secretary found to exist as of 
December 31, 1998, by an amount equal to or exceeding 5 percent of such 
difference.
    ``(iii) The Secretary may adjust the solvency target specified in 
clause (i), or the criteria for determining whether there is acceptable 
progress towards achieving the solvency target specified in clause 
(ii), for States that experience significant increases in unemployment 
during the period between December 31, 1998, and December 31, 2001. The 
Secretary shall establish objective criteria for making such 
adjustments.
    ``(iv) A State shall include, as part of the annual State plan 
relating to the administration of grants under this title, such 
information as the Secretary may request relating to the manner in 
which the State intends to achieve the solvency target established 
pursuant to this paragraph.
    ``(C) The requirements of subparagraph (A) shall apply to excess 
(referred to in subsection (a)(1)) remaining in the employment security 
account at the close of fiscal year 2002 that are equal to or less than 
$2,900,000,000. Such requirements shall not apply to any such excess 
amounts that are greater than $2,900,000,000.''.

SEC. 5. TREATMENT OF SHORT-TIME COMPENSATION PROGRAMS.

    (a) General Rule.--Section 3306 of the Internal Revenue Code of 
1986 (26 U.S.C. 3306) is amended by adding at the end the following new 
subsection:
    ``(u) Short-Time Compensation Program.--For purposes of this 
chapter, the term `short-time compensation program' means a program 
under which--
            ``(1) the participation of an employer is voluntary;
            ``(2) an employer reduces the number of hours worked by 
        employees in lieu of temporary layoffs;
            ``(3) such employees whose workweeks have been reduced by 
        at least 10 percent are eligible for unemployment compensation;
            ``(4) the amount of unemployment compensation payable to 
        any such employee is a pro rata portion of the unemployment 
        compensation which would be payable to the employee if such 
        employee were totally unemployed;
            ``(5) such employees are not required to meet the 
        availability for work or work search test requirements while 
        collecting short-time compensation benefits, but are required 
        to be available for their normal workweek;
            ``(6) eligible employees may participate in an employer-
        sponsored training program to enhance job skills if such 
        program has been approved by the State agency;
            ``(7) the State agency may require an employer to continue 
        to provide health benefits, and retirement benefits under a 
        defined benefit pension plan (as defined in section 414(j)) to 
        any employee whose workweek is reduced pursuant to the program 
        as though the workweek of such employee had not been reduced;
            ``(8) the State agency may require an employer (or an 
        employers' association which is party to a collective 
        bargaining agreement) to submit a written plan describing the 
        manner in which the requirements of this subsection will be 
        implemented and containing such other information as the 
        Secretary of Labor determines is appropriate; and
            ``(9) the program meets such other requirements as the 
        Secretary of Labor determines are appropriate.''.
    (b) Conforming Amendments.--
            (1) Subparagraph (E) of section 3304(a)(4) of such Code (26 
        U.S.C. 3304(a)(4)(E)) is amended to read as follows:
                    ``(E) amounts may be withdrawn for the payment of 
                short-time compensation under a short-time compensation 
                program (as defined under section 3306(u));''.
            (2) Paragraph (5) of section 3306(f) of such Code (26 
        U.S.C. 3306(f)(5)) is amended to read as follows:
            ``(5) amounts may be withdrawn for the payment of short-
        time compensation under a short-time compensation program (as 
        defined under subsection (u)); and''.
            (3) Section 303(a)(5) of the Social Security Act (42 U.S.C. 
        503(a)(5)) is amended by striking ``the payment of short-time 
        compensation under a plan approved by the Secretary of Labor'' 
        and inserting ``the payment of short-time compensation under a 
        short-time compensation program (as defined in section 3306(u) 
        of the Internal Revenue Code of 1986)''.

SEC. 6. EFFECTIVE DATE.

    (a) In General.--Except as provided in subsection (b), the 
provisions of this Act shall take effect on the date of enactment of 
this Act.
    (b) Extended Benefit Amendments.--
            (1) Except as provided in paragraph (2), the provisions of 
        section 2 of this Act shall take effect for the weeks beginning 
        on or after October 1, 2002.
            (2) Pursuant to the enactment of appropriate provisions of 
        the State law, the provisions of section 2 may, with respect to 
        such State, take effect for weeks which begin earlier than the 
        weeks specified in paragraph (1), but not earlier than 60 days 
        after the date of enactment of this Act.

Summary: Amends title IX (Employment Security Administrative Financing) of the Social Security Act (SSA) to modify the ceiling on the Federal Unemployment Account.
Provides for special distributions of funds to the States under SSA title IX.
Directs the Secretary of Labor to reserve specified amounts for grants to States to assist in implementing alternative base periods for determining the eligibility of claimants for unemployment compensation.
Requires States to achieve or make substantial progress toward achieving certain solvency targets for their unemployment compensation accounts. Directs the Secretary to transfer to other States' accounts the amount that would otherwise be transferred to the account of a State that violates such requirement under SSA title IX.
Revises SSA title IX requirements for distribution to States of certain excess amounts in the Employment Security Administration Account as of the close of FY 2002.
Amends the North American Free Trade Agreement Implementation Act to extend the self-employment assistance program.
Amends the Federal Unemployment Tax Act (FUTA) under the Internal Revenue Code to set forth requirements for treatment of short-time compensation programs.