VOLUME I Chapter 7 Unemployment Law and Procedure

• Jurisdiction: South Carolina

Chapter 7 Unemployment Law and Procedure¹James M. Klein (Retired)Distinguished University Professor & Professor of Law EmeritusUniversity of ToledoJack E. CohoonSouth Carolina Legal Services

I. Introduction

The purpose ofthis chapter is to provide insight into South Carolina's unemployment compensation system. The laws and regulations governing this system are important both for the workers for whom benefits are an essential safety net and for the employers whose taxes fund the system.

The federal enabling legislation² and its relation to the South Carolina Unemployment Compensation Act³ are discussed first. This part includes an overview of the South Carolina statutes and regulations, as well as a discussion of the federal programs that supplement the state program. Second, there will be an examination of the procedural aspects of the unemployment compensation system, including the steps that a claimant must follow from the initial claim for benefits, through administrative appeals, to judicial review. Finally, this chapter will examine several substantive and procedural issues that regularly arise in an unemployment compensation appeal with an accompanying review of the South Carolina case law.

II. Substantive Aspects of the Federal and South Carolina Unemployment Insurance System

A. Federal System of Unemployment Insurance

Congress created the federal unemployment insurance program in the Social Security Act of 1935.⁴ The program was intended to enable unemployed workers "to tide themselves over, until they get back to their old work or find other employment without having to resort to relief."⁵ The Unemployment Insurance provisions of the Social Security Act established federal standards to which participating states were required to adhere upon adoption of individual state plans.

Federal legislation governing unemployment compensation programs provides for substantial federal financial support to the states in the form of tax and fiscal benefits.⁶ There are also significant tax benefits for covered employers as well. All covered employers are required by the Federal Unemployment Tax Act⁷ to pay into the Treasury an excise tax of six percent (6%)⁸ on the first $7,000 of each employee's annual wages.⁹ The benefit to employers is realized in the form of a tax credit against their obligation to pay the federal excise tax.¹⁰ No monies may be granted to a state unless the Secretary of Labor certifies the amount paid,¹¹ and certification is conditional upon the Secretary's determination that the state's program complies with federal requirements.¹²

B. Operation of the South Carolina Unemployment Compensation Program

1. History

The General Assembly enacted South Carolina's first unemployment compensation law on June 6, 1936.¹³ It contained a sweeping statement of public policy that remains codified in the law to this day. The General Assembly recognized that "[e]conomic insecurity due to unemployment is a serious menace to health, morals and welfare of the people of this State" and sought "to prevent its spread and to lighten its burden which so often falls with crushing force upon the unemployed worker and his family."¹⁴ To this end, the General Assembly declared that "[t]he public good and general welfare of the citizens of this State require the enactment of this measure.. .for the compulsory setting aside of unemployment reserves to be used for the benefit of persons unemployed through no fault of their own."¹⁵

2. General Provisions Regarding Coverage

Most employers are covered by the Act. A private sector employer is generally covered if he or she has at least one employee for some portion of the day in each of 20 different weeks within the current or preceding calendar year and it pays wages of $1,500 in any calendar quarter in the immediate or preceding calendar year.¹⁶ "Employment" is defined as "service, including service in interstate commerce, performed for wages under any contract of hire, written or oral, express or implied.. .."¹⁷

Each calendar year a covered employer must pay a contribution with respect to wages for employment that is not to be deducted from employees' earnings.¹⁸ The rate of an employer's contribution depends, in part, on a system of variable rates known as an "experience rating." Through this system, employers with stable employment records may secure rates reduced below the standard rate.¹⁹ These rates can increase, however, if the statewide reserve ratio falls below a certain point.²⁰

3. Special Provisions Regarding Coverage for Certain Categories of Employment

There are special provisions regarding coverage for several types of employment. Each provision includes rules for eligibility which are outside the scope of this chapter. These categories include domestic service,²¹ agricultural labor,²² certain types of employment in state and local government,²³ school employees,²⁴ employees of charitable, educational and other non-profit organizations,²⁵ and maritime services.²⁶ The applicable provision of law must be reviewed carefully to determine eligibility.

4. Claimant Eligibility for Benefits

a. In General

A person may become eligible for benefits when he or she has earned sufficient wages to meet statutory requirements and has been separated under qualifying circumstances. Persons who work less than a full-time schedule are to be treated no differently than full-time employees,²⁷ however; "casual labor not in the course of the employing unit's trade or business," is exempt.²⁸ In addition, each claimant must serve a waiting period of one week.²⁹ The claimant must be able to work, available, to work, and actively seeking work. Once these basic requirements are met, benefit rights are established and weekly benefits are paid to replace wages lost during the period of unemployment.

b. The Claimant Must Satisfy a Base Period of Earnings

The threshold inquiry when determining eligibility is whether the employee made enough in wages to qualify for unemployment benefits. This is known as "monetary eligibility." The specifics of monetary eligibility are outside the scope of this chapter. This is determined by examining income during the claimant's "base period." The first four of the last five completed calendar quarters constitutes the claimant's "base period."³⁰ The most recent completed quarter is not considered part of the "base period." To be monetarily eligible for Unemployment Insurance (UI) benefits, the claimant must

1. Have at least $1,092 in covered employment (with an employer who paid UI taxes) during the base period's highest quarter.
2. Have earned at least $4,455 from covered employment during the base period.
3. Have total base period wages that is equal to, or exceeds, 1.5 times the high quarter wages' total.³¹

If there are insufficient wages during the "base period" to establish eligibility, the Department will consider the claimant's "alternate base period."³² This includes the four most recently completed calendar quarters, including the most recently completed quarter preceding a new claim's effective date.

If the claimant's base period total is deemed to be insufficient, the claimant may request a reconsideration or appeal and provide evidence of additional wages that may have not been previously considered.³³ The claimant must file a separate claim for each successive week of unemployment, even if the claimant is not receiving benefits because the claim is under appeal.³⁴

c. The Claimant Must Be Able to Work, Be Available for Work, and Be Actively Seeking Work

The claimant must be able, available for, and actively seeking work to be eligible for unemployment compensation benefits. The burden of proof is on the claimant to show compliance with benefit eligibility requirements.³⁵

(1) Able to Work

The claimant must be able to work in order to receive unemployment benefits. This means that the claimant must have the ability to work at the individual's usual trade, occupation, or business or in such other trade, occupation, or business for which the individual's prior training or experience shows the individual to be fit or qualified. It also means that the claimant must be able to work the same hours as he or she was previously working before losing his or her job.³⁶ This requirement has its limits. There are exceptions if the reasons for unavailability involve religious observances or some other fundamental constitutional right.³⁷ Also, as discussed below, there are statutory exceptions in the case of workers who must change jobs due to domestic abuse, illness or disability of themselves or an immediate family member, the transfer of a spouse to another city or state, or a spouse who must move due to military reassignment.³⁸

(2) Available for Work

An individual claimant must be available for work either at a locality at which the individual earned wages for insured work during the individual's base period or at a new locality to which the individual has moved and where it may reasonably be expected that work suitable for the individual will be available. The courts have interpreted this to mean that the claimant must be currently attached to the labor market.³⁹ This is a question of fact for the Department, which must determine whether a claimant has unrestricted exposure to the labor market by looking at the facts and circumstances of each case. ⁴⁰

(3) Actively Seeking Work

The claimant must be actively seeking work, meaning that he or she must be personally searching for work in order to qualify for unemployment benefits.⁴¹ The claimant must also be seeking but unable to find full-time work.⁴² The Department requires claimants to make at least four contacts with prospective employers each week, with at least one of these contacts being through the Department's own work-search website. The failure to conduct searches as required can result in a determination that a claimant is ineligible for benefits.

The refusal to accept an offer of work can result in...