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HOUSE BILL NO. 179
INTRODUCED BY P. SLITER
BY REQUEST OF THE DEPARTMENT OF LABOR AND INDUSTRY
AN ACT REVISING CERTAIN LABOR LAWS PERTAINING TO UNEMPLOYMENT BENEFITS; PROVIDING FOR WITHHOLDING OF A PORTION OF BENEFITS FROM CERTAIN DELINQUENT TAXPAYERS FOR THE PAYMENT OF FEDERAL TAX OBLIGATIONS; CLARIFYING THE DEFINITION OF AGRICULTURAL LABOR; CLARIFYING THE ELIGIBILITY OF CERTAIN EDUCATIONAL EMPLOYEES FOR UNEMPLOYMENT BENEFITS; SPECIFYING THAT QUALIFYING WORK MUST MEET THE STATUTORY DEFINITION OF EMPLOYMENT; PROVIDING FOR THE WAIVER OF OVERPAYMENTS UNDER CERTAIN CIRCUMSTANCES; AMENDING SECTIONS 39-51-204, 39-51-301, 39-51-302, 39-51-2108, 39-51-2302, 39-51-2303, 39-51-2304, 39-51-3105, AND 39-51-3206, MCA; AND PROVIDING AN EFFECTIVE DATE.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:
Section 1. Internal revenue levy -- withholding of unemployment benefits to repay federal tax obligations. (1) The internal revenue service may levy against an individual's unemployment benefits if the individual:
(a) is liable for taxes, interest, or penalties owed to the internal revenue service; and
(b) has not paid the taxes, interest, or penalties in subsection (1)(a) within 10 days of receiving a notice and demand for repayment from the internal revenue service.
(2) Pursuant to 26 U.S.C. 6331(h)(2)(c), any amount payable as unemployment benefits may be levied against until the levy is released.
(3) The levy may be implemented electronically by the department and the internal revenue service.
(4) After receiving notice of a levy from the internal revenue service, the department shall deduct and withhold up to 15% from any unemployment benefits payable to the individual owing money to the internal revenue service. The amount withheld must be determined by the internal revenue service in accordance with 26 U.S.C. 6331(h)(2)(c).
(5) The department shall pay any amount deducted and withheld pursuant to this section to the internal revenue service on behalf of the individual. Any amount deducted and withheld must be treated as if it were paid to the individual as unemployment benefits and then paid by the individual to the internal revenue service in satisfaction of the individual's federal tax obligations.
Section 2. Section 39-51-204, MCA, is amended to read:
"39-51-204. Exclusions from definition of employment. (1) The term "employment" does not include:
(a) domestic or household service in a private home, local college club, or local chapter of a college fraternity or sorority, except as provided in 39-51-202(3). If an employer is otherwise subject to this chapter and has domestic or household service employment, all employees engaged in domestic or household service must be excluded from coverage under this chapter if the employer:
(i) does not meet the monetary payment test in any quarter or calendar year, as applicable, for the subject wages attributable to domestic or household service; and
(ii) keeps separate books and records to account for the employment of persons in domestic or household service.
(b) service performed by a dependent member of a sole proprietor for whom an exemption may be claimed under 26 U.S.C. 152 or service performed by a sole proprietor's spouse for whom an exemption based on marital status may be claimed by the sole proprietor under 26 U.S.C. 7703;
(c) service performed as a freelance correspondent or newspaper carrier if the person performing the service, or a parent or guardian of the person performing the service in the case of a minor, has acknowledged in writing that the person performing the service and the service are not covered. As used in this subsection:
(i) "freelance correspondent" is a person who submits articles or photographs for publication and is paid by the article or by the photograph; and
(ii) "newspaper carrier" means a person who provides a newspaper with the service of delivering newspapers singly or in bundles. The term does not include an employee of the paper who, incidentally to the employee's main duties, carries or delivers papers.
(d) service performed as a real estate broker or salesperson who is licensed pursuant to Title 37, chapter 51;
(e) service performed by a cosmetologist who is licensed under Title 37, chapter 31, or a barber who is licensed under Title 37, chapter 30, and:
(i) who has acknowledged in writing that the cosmetologist or barber is not covered by unemployment insurance and workers' compensation;
(ii) who contracts with a cosmetology salon, as defined in 37-31-101, or a barbershop, as defined in 37-30-101, which contract must show that the cosmetologist or barber:
(A) is free from all control and direction of the owner in the contract;
(B) receives payment for service from individual clientele; and
(C) leases, rents, or furnishes all of the cosmetologist's or barber's own equipment, skills, or knowledge; and
(iii) whose contract gives rise to an action for breach of contract in the event of contract termination. The existence of a single license for the cosmetology salon or barbershop may not be construed as a lack of freedom from control or direction under this subsection.
(f) casual labor not in the course of an employer's trade or business performed in any calendar quarter, unless the cash remuneration paid for the service is $50 or more and the service is performed by an individual who is regularly employed by the employer to perform the service. "Regularly employed" means that the service is performed during at least 24 days in the same quarter.
(g) service performed by sole proprietors, working members of a partnership, members of a member-managed limited liability company that has filed with the secretary of state, or partners in a limited liability partnership that has filed with the secretary of state;
(h) service performed for the installation of floor coverings if the installer:
(i) bids or negotiates a contract price based upon work performed by the yard or by the job;
(ii) is paid upon completion of an agreed-upon portion of the job or after the job is completed;
(iii) may perform service for anyone without limitation;
(iv) may accept or reject any job;
(v) furnishes substantially all tools and equipment necessary to provide the service; and
(vi) works under a written contract that:
(A) gives rise to a breach of contract action if the installer or any other party fails to perform the contract obligations;
(B) states that the installer is not covered by unemployment insurance; and
(C) requires the installer to provide a current workers' compensation policy or to obtain an exemption from workers' compensation requirements;
(i) service performed as a direct seller as defined by 26 U.S.C. 3508;
(j) service performed by a petroleum land professional. As used in this subsection, "petroleum land professional" means a person who:
(i) is engaged primarily in negotiating for the acquisition or divestiture of mineral rights or in negotiating a business agreement for the exploration or development of minerals;
(ii) is paid for service that is directly related to the completion of a contracted specific task rather than on an hourly wage basis; and
(iii) performs all services as an independent contractor pursuant to a written contract.
(k) service performed by an ordained, commissioned, or licensed minister of a church in the exercise of the church's ministry or by a member of a religious order in the exercise of duties required by the order;
(l) service performed by an individual receiving rehabilitation or remunerative work in a facility conducted for the purpose of carrying out a program of rehabilitation for individuals whose earning capacity is impaired by age or physical or mental deficiency or injury or providing remunerative work for individuals who, because of impaired physical or mental capacity, cannot be readily absorbed in the competitive labor market;
(m) service performed as part of an unemployment work-relief or work-training program assisted or financed in whole or in part by a federal agency or any agency of a state or political subdivision of the state by an individual receiving work relief or work training;
(n) service performed for a state prison or other state correctional or custodial institution by an inmate of that institution;
(o) service performed by an individual who is sentenced to perform court-ordered community service or similar work;
(p) service performed by elected public officials;
(q) agricultural labor, except as provided in 39-51-202(2), (4), or (6). If an employer is otherwise subject to this chapter and has agricultural employment, all employees engaged in agricultural labor must be excluded from coverage under this chapter if the employer:
(i) in any quarter or calendar year, as applicable, does not meet either of the tests relating to the monetary amount or number of employees and days worked for the subject wages attributable to agricultural labor; and
(ii) keeps separate books and records to account for the employment of persons in agricultural labor.
(r) service performed in the employ of any other state or its political subdivisions or of the United States government or of an instrumentality of any other state or states or their political subdivisions or of the United States, except that national banks organized under the national banking law are not entitled to exemption under this subsection and are subject to this chapter the same as state banks, if the service is excluded from employment as defined in section 3306(c)(7) of the Federal Unemployment Tax Act;
(s) service in which unemployment insurance is payable under an unemployment insurance system established by an act of congress if the department enters into agreements with the proper agencies under an act of congress and those agreements become effective in the manner prescribed in the Montana Administrative Procedure Act for the adoption of rules, to provide reciprocal treatment to individuals who have, after acquiring potential rights to benefits under this chapter, acquired rights to unemployment insurance under an act of congress or who have, after acquiring potential rights to unemployment insurance under the act of congress, acquired rights to benefits under this chapter;
(t) service performed in the employ of a school or university if the service is performed by a student who is enrolled and is regularly attending classes at a school or university or by the spouse of a student if the spouse is advised, at the time that the spouse commences to perform the service, that the employment of the spouse to perform the service is provided under a program to provide financial assistance to the student by the school or university and that the employment is not covered by any program of unemployment insurance;
(u) service performed by an individual who is enrolled at a nonprofit or public educational institution that normally maintains a regular faculty and curriculum and normally has a regularly organized body of students in attendance at the place where its educational activities are carried on, as a student in a full-time program taken for credit at an institution that combines academic instruction with work experience if the service is an integral part of the program and the institution has certified that fact to the employer, except that this subsection (1)(u) does not apply to service performed in a program established for or on behalf of an employer or group of employers;
(v) service performed as an officer or member of the crew of a vessel on the navigable waters of the United States; or
(w) service performed by an alien admitted to the United States to perform agricultural labor pursuant to sections 214(c) and 1101(a)(H)(ii)(a) of the Immigration and Nationality Act.
(2) An individual found to be an independent contractor by the department under the terms of 39-71-401(3) is considered an independent contractor for the purposes of this chapter. An independent contractor is not precluded from filing a claim for benefits and receiving a determination pursuant to 39-51-2402.
(3) This section does not apply to a state or local governmental entity or a nonprofit organization defined under section 501(c)(3) of the Internal Revenue Code unless the service is excluded from employment as defined in the Federal Unemployment Tax Act."
Section 3. Section 39-51-301, MCA, is amended to read:
"39-51-301. Administration -- duties and powers of department. (1) It is the duty of the department to administer this chapter and it may adopt, amend, or rescind rules, to employ persons, make expenditures, require reports, make investigations, and take action as it considers necessary or suitable in administering this chapter.
(2) The department shall determine its own organization and methods of procedure in accordance with the provisions of this chapter and shall have an official seal, which is judicially noticed.
(3) Whenever the department believes that a change in contribution or benefit rates will become necessary to protect the solvency of the fund, it shall promptly inform the governor and the legislature and make recommendations with respect to the change.
(4) The department and the board may issue subpoenas and compel testimony and the production of evidence, including books and records, in regard to any investigation or proceeding under this chapter.
(5) The department shall delegate to the department of revenue duties associated with the administration of unemployment insurance contributions and the employment security account so long as the duties are carried out in conformity with the requirements of the program budget plan with the United States department of labor. The delegated duties do not include oversight duties such as revenue quality control, risk management, and trust fund management. The department of revenue must receive funds from the department for the performance of the delegated duties. The department of revenue has rulemaking authority with respect to any function or duty delegated to the department of revenue pursuant to this section.
(6) Employees transferring from the department to the department of revenue as a result of a delegation of duties in subsection (5) are entitled to all rights including those under 2-15-131, possessed as a state officer or employee before transferring, including rights to tenure in office and of rank or grade, rights to vacation and sick pay and leave, rights under any retirement or personnel plan or labor union contract, rights to compensatory time earned, and any other rights under any law or administrative policy including the State Employee Protection Act. Employees transferring must be considered internal applicants by the department for recruitment purposes for the period from July 1, 1997, through June 30, 1998.
(7) The department of revenue shall succeed the department in its rights to property relating to the delegation of duties in subsection (5) to the extent that is consistent with federal property transfer policy. The property includes real property, records, office equipment, forms, supplies, and contracts other than the program budget plan with the United States department of labor.
(8) (a) The delegation of duties in subsection (5) does not affect the validity of any pending judicial or administrative proceeding.
(b) Appeals that were filed with the board of labor appeals or the department's hearings bureau before July 1, 1997, must follow the procedures and processes in effect when the appeal was first taken. An appeal that is filed on or after July 1, 1997, must be taken in accordance with the procedures and processes in effect on the date the appeal is filed.
(c) The department of revenue must be substituted for the department and succeed to all audits, determinations, and other actions that have not been appealed to the board of labor appeals or the department's hearings bureau prior to July 1, 1997.
(9) The rights, privileges, and duties of the holders of bonds and other obligations issued and of the parties to contracts, leases, indentures, and other transactions entered into before the delegation of duties in subsection (5) remain in effect, and none of those rights, privileges, duties, covenants, or agreements are impaired or diminished by reason of the delegation of duties. The department of revenue is substituted for the department and, subject to the provisions of subsection (5), succeeds to the rights and duties under the provisions of those bonds, contracts, leases, indentures, and other transactions. The provisions of this subsection (9) do not apply to the program budget plan agreement between the department and the United States department of labor."
Section 4. Section 39-51-302, MCA, is amended to read:
"39-51-302. Administrative rules. (1) The department may adopt procedural and substantive rules necessary to implement this chapter.
(2) The department shall delegate rulemaking authority to the department of revenue with respect to any function or duty delegated to the department of revenue pursuant to 39-51-301(5)."
Section 5. Section 39-51-2108, MCA, is amended to read:
"39-51-2108. Payment of benefits based on
service services in public, charitable, or educational organizations. (1)
Benefits based on service services in employment defined in 39-51-203(5) and (6) are payable in the same amount, on the
same terms, and subject to the same conditions as compensation benefits payable on the basis of other service services
subject to this chapter, except that benefits based on service services in an instructional, research, or principal administrative
capacity for an educational institution may not be paid to an individual for any week of unemployment which begins during
the period between two successive academic years or during a similar period between two regular terms, whether or not
successive, or during a period of paid sabbatical leave provided for in the individual's contract if the individual performs the
services in the first of the academic years or terms and if the individual has a contract or reasonable assurance of a contract
to perform services services or a reasonable assurance of performing services in any instructional, research, or principal
administrative capacity for the any educational institution for both in the second of the academic years or both terms.
(2) Benefits based on services in any other capacity for an educational institution must be denied to any individual for
any week which commences during a period between 2 successive academic years or terms if the individual performs the
services in the first of the academic years or terms and there is a reasonable assurance that the individual will perform the
services in the second of the academic years or terms. If any individual is denied benefits and was not offered an
opportunity to perform the
service services for the educational institution for the second of the academic years or terms, the
individual is entitled to a retroactive payment of the benefits for each week for which the individual filed a timely claim for
benefits and for which benefits were denied solely by reason of the denial provided for in this section.
(3) Benefits based on services described in subsections (1) and (2) of this section must be denied to any individual for any week that commences during an established and customary vacation period or holiday recess if the individual performs the services in the period immediately before the vacation period or holiday recess and there is reasonable assurance that the individual will perform the service in the period immediately following the vacation period or holiday recess.
(4) Benefits based on services described in subsections (1) and (2) to an individual who performed the services for an educational institution while in the employ of an educational service agency must be denied as specified in subsections (1) through (3). The term "educational service agency" means a governmental agency or governmental entity which is established and operated exclusively for the purpose of providing the service to one or more educational institutions."
Section 6. Section 39-51-2302, MCA, is amended to read:
"39-51-2302. Disqualification for leaving work without good cause. (1) An individual must be disqualified for benefits if the individual has left work without good cause attributable to the individual's employment.
(2) The individual may not be disqualified if the individual leaves:
(a) employment because of personal illness or injury not associated with misconduct upon the advice of a licensed and practicing physician and, after recovering from the illness or injury when recovery is certified by a licensed and practicing physician, the individual returned to and offered service to the individual's employer and the individual's regular or comparable suitable work was not available, as determined by the department, provided the individual is otherwise eligible; or
(b) temporary work accepted during a period of unemployment caused by a lack of work with the individual's regular employer if upon leaving the temporary work the individual returned immediately to work for the individual's regular employer, provided that the individual is unemployed for nondisqualifying reasons.
(3) To requalify for benefits, an individual shall perform services
other than self-employment for which remuneration is
received equal to or in excess of six times the individual's weekly benefit amount subsequent to the week in which the act
causing the disqualification occurred unless the individual has been in regular attendance at an educational institution
accredited by the state of Montana for at least 3 consecutive months from the date of the individual's enrollment. The
services must constitute employment as defined in 39-51-203 and 39-51-204."
Section 7. Section 39-51-2303, MCA, is amended to read:
"39-51-2303. Disqualification for discharge due to misconduct. An individual
shall must be disqualified for benefits
after being discharged:
(1) for misconduct connected with the individual's work or affecting the individual's employment until the individual
has performed services
, other than self-employment,:
(a) for which remuneration is received equal to or in excess of eight times the individual's weekly benefit amount subsequent to the week in which the act causing the disqualification occurred; and
(b) which constitute employment as defined in 39-51-203 and 39-51-204; or
(2) for gross misconduct connected with the individual's work or committed on the employer's premises, as determined by the department, for a period of 52 weeks."
Section 8. Section 39-51-2304, MCA, is amended to read:
"39-51-2304. Disqualification for failure to apply for or to accept suitable work. (1) An individual is disqualified
for benefits if the individual fails without good cause either to apply for available and suitable work when
so directed to do
so by the employment office or the department or to accept an offer of suitable work which the individual is physically able
and mentally qualified to perform or to return to customary self-employment, if any, when so directed to do so by the
department. Such The disqualification continues for the week in which such the failure occurs and until the individual has
performed services , other than self-employment, for which remuneration is received equal to or in excess of six times that
individual's weekly benefit amount subsequent to the date week the act causing the disqualification occurred, with a
reduction in the individual's maximum benefit amount equal to six times the weekly benefit amount, as determined by the
department, provided the individual has not left this work under disqualifying circumstances. The services must constitute
employment as defined in 39-51-203 and 39-51-204.
(2) In determining whether or not any work is suitable for an individual, the department shall consider:
(a) the degree of risk involved to the individual's health, safety, and morals;
(b) the individual's physical fitness and prior training;
(c) the individual's experience and previous earnings;
(d) the individual's length of unemployment and prospects for securing local work in the customary occupation; and
(e) the distance of the available work from the individual's residence.
(3) Notwithstanding any other provisions of this chapter, including subsection (4), no work may be considered suitable and benefits may not be denied under this chapter to any otherwise eligible individual for refusing to accept new work under any of the following conditions:
(a) if the position offered is vacant due directly to a strike, lockout, or other labor dispute;
(b) if the wages, hours, or other conditions of the work offered are substantially less favorable to the individual than those prevailing for similar work in the locality;
(c) if, as a condition of being employed, the individual would be required to join a company union or to resign from or refrain from joining any bona fide labor organization.
(4) Subject to subsection (3), after 13 weeks of unemployment, suitable work is work that meets the criteria in this section and that offers 75% of the individual's earnings in previous insured work in the individual's customary occupation. No individual, however, is required to accept a job paying less than the federal minimum wage."
Section 9. Section 39-51-3105, MCA, is amended to read:
"39-51-3105. Assignment, pledge, or encumbrance of right to benefits void -- benefits exempt from levy, execution, attachment, or other remedy for collection of debt -- exception. Any assignment, pledge, or encumbrance of any right to benefits that are or may become due or payable under this chapter is void, and the rights to benefits are exempt from levy, execution, attachment, or any other remedy provided for the collection of debt. Benefits received by an individual, as long as they are not mingled with other funds of the recipient, are exempt from any remedy for the collection of all debts except as provided in 39-51-2207, 39-51-2208, 39-51-3106, [section 1], and 39-51-3206. Any waiver of an exemption provided for in this section is void."
Section 10. Section 39-51-3206, MCA, is amended to read:
"39-51-3206. Collection of benefit overpayments. A person who receives benefits not authorized by this chapter shall
repay to the department either directly or, as authorized by the department, by offset of future benefits to which the claimant
may be entitled, or by a combination of both methods, a sum equal to the amount of the overpayment. A benefit offset may
not exceed 50% of the weekly benefits to which a claimant is entitled unless the claimant gives written consent, except in
cases of theft or fraud, when benefits may be offset by as much as 100% of the weekly benefits to which a claimant is
entitled. The sum is collectible in the manner provided in this chapter for the collection of past-due contributions
department finds that the benefits were received through no fault of the person and the recovery of the benefits would be
against equity and good conscience. The department may waive the benefit overpayment if the department finds that the
claimant did not conceal or misrepresent material facts to obtain the overpaid benefits and that recovery of the benefit
overpayment would cause a long-term financial hardship on the claimant. An action for collection of overpaid benefits must
be brought within 5 years after the date of the overpayment. Notwithstanding any other provision of this chapter, the
department may recover an overpayment of benefits paid to any individual under the laws of this state or another state or
under an unemployment benefit program of the United States."
Section 11. Codification instruction. [Section 1] is intended to be codified as an integral part of Title 39, chapter 51, part 31, and the provisions of Title 39, chapter 51, part 31, apply to [section 1].
Section 12. Saving clause. [This act] does not affect rights and duties that matured, penalties that were incurred, or proceedings that were begun before [the effective date of this act].
Section 13. Severability. If a part of [this act] is invalid, all valid parts that are severable from the invalid part remain in effect. If a part of [this act] is invalid in one or more of its applications, the part remains in effect in all valid applications that are severable from the invalid applications.
Section 14. Effective date. [This act] is effective July 1, 1999.
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