News & Information

CCH® UNEMPLOYMENT INSURANCE — 5/10/13

Georgia required to pay benefits to some part-time educational workers

Georgia State Labor Commissioner Mark Butler has received notification from the U.S. Department of Labor (DOL) that the state could be out of conformity with federal law for not paying unemployment benefits to certain educational workers during regularly scheduled holiday breaks.

In November 2011, Commissioner Butler took steps to bring employees of private companies providing services to Georgia school systems under the same rules covering public school system teachers and employees. “The process took several months,” said Butler. “There were notices put in the newspaper, public hearings, and a rule filing with the Georgia’s Secretary of State office. We wanted to be sure that all educational workers were being treated equally and encourage these private companies to treat their employees fairly, too.”

Currently, public school employees and teachers cannot collect unemployment benefits during regularly scheduled breaks, per federal law. Many school systems have outsourced some services to private companies with promises of savings. Much of the savings occurs because the private companies do not pay their employees during regularly scheduled breaks; such as spring holidays, Christmas break, and summer vacation. In many cases, the companies instruct their employees to apply for unemployment benefits during these breaks. This practice has cost the state's unemployment trust fund more than $50 million over the past five years.

In late summer of 2012, the DOL expressed concern that Georgia was interpreting its own state law incorrectly on the issue of educational workers. Then, in an official letter dated April 2, 2013, the DOL wrote to Commissioner Butler that a hearing may be called that ultimately could threaten federal funding of Georgia Unemployment Insurance programs, unless the Department made retroactive unemployment payments totaling over $8 million to certain educational worker-employees of private companies.

The letter came only three days after the Georgia General Assembly failed to enact statute revisions supported by Commissioner Butler, the Georgia Association of Manufacturers, the National Federation of Independent Business (NFIB), the Georgia Child Care Association, and others. State Sen. Fran Millar (R., Dunwoody) was one of the sponsors of the the legislation, which unanimously passed the Senate Industry and Labor Committee twice and passed 36-16 in the full Senate as part of House Bill 361. The legislation was never considered by the State House of Representatives.

“The federal government was sitting on [and] ready to issue this notice that will cost Georgia’s businesses about $8 million per year,” said Butler. “If this bill had passed, our businesses and public school teachers would have been protected and this would not be happening.”

The legislation would have made clear a distinction that some believe allows educational workers to be treated differently depending on whether they are employed directly by a school system or by a company contracted to perform services in educational institutions. A March 1, 2013, order by Superior Court Judge Stephen G. Scarlett, Sr. of the Brunswick Judicial Circuit found that there is “no distinction between private employers and public employers” for educational workers. However, the DOL disagreed and instructed Georgia that, absent a change in the Georgia law to clarify the matter, these employees must receive retroactive payment of benefits.

“These businesses are knowingly gaming the system and ripping off the rest of Georgia’s employers to pay for their employees’ vacation time,” said Butler. “These workers deserve to be paid year-round just like their publicly employed counterparts. Instead, their employers underpay them and their ‘labor union’ tells them to be happy with an unemployment check instead of a paycheck during these breaks.”

“We will begin making retroactive payments to these companies’ employees, because I will protect unemployment insurance and workforce programs for Georgians who deserve them,” Butler continued. “But, we will continue to work with the DOL and the Georgia General Assembly to assure equal treatment for all educational workers” (Georgia Department of Labor Press Release, April 5, 2013).