LANSING – Governor Rick Snyder signed into law Monday two of the most significant legislative packages of his administration to date when he approved bills addressing the state’s debt to the federal government for unemployment aid, restructuring what jobs those receiving assistance would have to accept and overhauling the workers’ compensation system.
Overall, Snyder said the legislation would improve Michigan’s business climate.
“This is good government again in action,” he said. “This is going to make a big difference.”
At a signing ceremony cheered by business groups, Snyder spent most of his time discussing the legislation (SB 483 , PA 267, and SB 484 , PA 268) that would allow the state to issue revenue bonds that would allow it to pay off its $3.2 billion federal unemployment aid debt. Businesses, which fund the employment system, would have to repay those bonds.
But businesses would save because the state would no longer get hit with hundreds of millions in federal penalties, nor federal interest rate, which is higher than what the state bonds would carry. In the current year, the state had to spend $38 million from the general fund to make its first interest payment on its federal debt.
“Essentially, we’ll be able to get out of that burden at a lower cost,” Snyder said.
There was little controversy over this move. What was much more controversial were a series of changes to the unemployment system.
SB 806 (PA 269) makes several changes for businesses, including increasing the wage base employers pay unemployment taxes on and shortening their experience window from five years to three years, permitting companies to get rid of bad jobless claim years more quickly. Small businesses also can spread their unemployment tax payments out over the year.
For jobless workers, the legislation requires that after 10 weeks of state assistance they take a job if it pays at least their area’s prevailing wage or is 120 percent more than their assistance check, even if it’s outside of their field of training. They would also have to conduct a “systematic and sustained search for work,” with various reports on their progress due to the state.
Workers who fail to keep their training up to date, steal from the business or are let go after missing three consecutive days of work without informing their boss would also not be eligible for jobless benefits under the bill.
The bill would make no changes to the maximum weekly unemployment benefit of $362, which was set in 2002. Snyder said that could possibly be a future topic of discussion.
And the changes to workers’ compensation (HB 5002 , PA 266) are the most sweeping in a generation to the statute governing how workers injured on the job can receive benefits from their employer.
Snyder said the bill will lead to a “cleaner, simpler system for our employers and employees to know what’s going on.”
Unions and worker advocates fiercely protested the legislation, which they said skews the workers’ compensation heavily in favor of business and makes it much more difficult for injured workers to get compensation from their employer.
Republicans had said the legislation will codify existing case law, which sets workers compensation benefits at 80 percent of an injured workers after-tax wages. Their future wage earning capacity would be determined by reasonably available, suitable jobs, but not whether wages from those jobs are actually earned or not.
Democrats call this provision “phantom wages,” but proponents say it gets at the heart of the reason behind the bill – providing an incentive for people who can find work to do so, instead of milking the workers’ compensation system.
Police officers and firefighters were exempted from the changes.
“We hope that this will speed things up,” said Rep. Bradford Jacobsen (R-Oxford), the bill sponsor. “We want to see the employees get back to work as soon as they are able and the employers get what cost-savings they can along the way.”
Snyder was asked whether some of these changes would negatively impact the middle class. He responded that the sale of unemployment bonds had widespread support.
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