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SD unemployment council discussing benefits for reduced-hours employees

PIERRE -- The state Department of Labor and its unemployment insurance advisory council plan to analyze the pros and cons of making partial UI benefits available for South Dakota workers whose employers reduce their hours rather than have lay-offs.

Labor Secretary Marcia Hultman and state unemployment insurance director Pauline Heier discussed the topic Monday with members of the UI council.

They informally agreed that several employer groups would survey members, while the department's UI staff would look at potential administration expenses and possible effects on the unemployment trust fund.

The proposal comes in the wake of difficulty for South Dakota's unemployment trust fund.

The fund went through severe stress during the 2008-2010 recession and needed a federal loan. South Dakota employers saw higher tax rates and surcharges to get the fund back into solvency. The surcharges have been repealed and employers will pay less in taxes starting for 2015.

The findings about the partial-benefits approach will be presented in October at the council's next meeting. Heier said approximately two dozen states currently offer the programs.

State law would need to be changed for South Dakota to join them.

State Rep. Ray Ring, D-Vermillion, attempted that during the 2014 legislative session. His measure, HB 1226 was killed after its first hearing by the House Commerce and Energy Committee.

Known as work-share plans, Heier said they are voluntary, meaning a business would need to present its specific plan to the Labor Department.

She said work-share would be intended for workers whose hours are cut 10 percent to 60 percent. Businesses would be required to continue to provide the same retirement, insurance and any other benefits.

Shawn Lyons worked against Ring's legislation in Lyons' role as executive director for the South Dakota Retailers Association. Lyons also serves on the state UI advisory council.

"I can only speak for my industry. I've had no interest in that whatsoever," Lyons said Monday.

But Lyons said he's willing to survey his members once he receives more factual information.

The department also will analyze another proposal that would allow related businesses who employ the same worker to reduce their total costs by designating a single pay-master responsible for the unemployment insurance taxes on that employee, rather than multiple businesses continuing to paying for that worker.

Businesses pay on the first $14,000 of wages to an employee this year. The wage base increases to $15,000 in 2015. Two related businesses, for example, could each pay into the fund on the wage base for the same employee. A single pay-master would eliminate the need for one of them to pay.