10-Point Plan for Texas Unemployment Insurance Reform

When crisis and calamity take jobs away, the market economy alone cannot provide working people the help they need to make ends meet. That is where the Texas Unemployment Insurance system comes in. While the magnitude of the COVID-19 pandemic is unprecedented, overwhelming the Texas Workforce Commission’s ability to serve applicants on a timely basis, it has also exposed structural weaknesses in the system. The millions of workers who lost jobs through layoffs or furloughs have had extraordinary difficulty applying for and accessing benefits. To modernize a critical earned benefit and better serve the needs of Texans, the Texas AFL-CIO and Every Texan (formerly known as the Center for Public Policy Priorities) propose the following reforms:

  1. Increase Staffing and Modernize Technology: The pandemic has caught the Texas Workforce Commission off guard, with low numbers of state employees with knowledge of unemployment insurance benefits. Many Texans were left without recourse and were unable to access assistance right away. The State of Texas should reverse its decades-long practice of cutting state agency budgets and personnel. In addition, most states that administer unemployment compensation across the nation are still using decades-old software and outdated computers.  It should be as easy to apply online for unemployment benefits in Texas as it is to update a driver’s license. Investment in modern, reliable, and modifiable computer systems is a first step.

  2. Remove Bureaucratic Barriers: During the pandemic, TWC has wisely waived the one-week waiting period before benefits begin and has suspended the work-search requirement. Mass unemployment should trigger these moves automatically. In addition, Congress should suspend the re-certification requirement — which requires a formal request for payment every two weeks even after eligibility has been certified — during declared disasters. In times of crisis, Texans who qualify for benefits should not face the frustration of long payment delays because they cannot reach the agency in timely fashion. TWC should do everything in its power to get benefits out as efficiently as possible rather than demanding steps that add to the agency’s work burden.

  3. End Employer Abuse of Independent Contractor Classification: In the pandemic, the federal government recognized quickly that independent contractors are workers, too, and should receive benefits when their sources of income dry up. The future of work would be dismal if it lights a path for employers to avoid offering benefits to workers. The Legislature must pass stricter guidelines of employee classification and put in place penalties and enforcement for violations. Employers who misclassify employees cheat the system of fundamental obligations like the employer’s share of Social Security and Medicare, non-mandatory benefits like health care contributions, paid vacation and paid sick leave, and Unemployment Insurance. Better yet, the perverse incentives for employers to reclassify workers must vanish: All workers should have access to benefits that affect their health, safety and ability one day to retire.

  4. Establish Return-to-Work Rules That Place Safety First: No worker should have to decide between risking their health or their families’ and returning to work. Current unemployment rules require claimants to accept “suitable work” or risk losing their benefits. The definition of “suitable work” should be expanded and clarified to ensure safety on the job. Texas should set clear expectations for workplace safety both in response to a pandemic and under normal circumstances.

  5. Modernize Eligibility Requirements to Reflect Today’s Economy: Texas has failed to adapt our unemployment insurance system to the times. The growing number of Texans who work part-time or work more than one job should not be excluded from collecting unemployment benefits. Outdated methods of calculating wages and other technicalities block the way for many otherwise eligible low-income workers. Many states have removed these hurdles and Texas should join them. In particular, part-time workers should be put on equal footing and Texas should adopt the Alternative Base Period for calculating benefits as well as establishing higher weekly income disregards for benefit calculations. 

  6. Strengthen Programs to Prevent Future Layoffs: The Texas Workforce Commission should increase support for the Shared Work program. The program allows employers to reduce hours rather resort to layoffs or furloughs while workers maintain employer-sponsored benefits and get unemployment benefits to cover reduced hours. This underutilized  program keeps workers connected with employers so that when economic conditions improve, employers can increase their hours again without having to rehire and train. The Workforce Commission should increase awareness of Shared Work and more actively encourage and help employers wishing to participate. The Texas Legislature should increase the percent of reduced hours eligible for this program from the current 40 percent to the federally allowed 60 percent to expand the viability of the program. 

  7. Increase the Wage Replacement Rate: People who lose their jobs currently receive benefits at levels that replace approximately 50 percent of their income for 26 weeks. However, when workers remain unemployed for long periods of time, the replacement rate leaves many with significant debt from unpaid rent or bills, making Texans more vulnerable to unexpected costs such as vehicle repair or medical emergencies. A wage replacement closer to 60 percent would mean a swifter recovery for Texans who lose work for no fault of their own.

  8. Further Expand Eligibility: A modern Unemployment Insurance system in Texas would cover more real-life situations where people lose jobs because of events outside their control. A mother who is fired because she had to attend to a child-care emergency is not eligible for benefits under the current system, nor is a person who leaves work as a result of sexual harassment. To qualify for benefits, such workers must rely on Texas Workforce Commission rulings. Texas must find ways to enhance the ability to qualify for benefits in these types of circumstances.

  9. Emergency Direct Relief: Whether a common disaster that eliminates jobs is statewide, regional or local, the unemployment system should provide immediate and direct temporary financial aid to all working people who lose their jobs as soon as possible. Currently, the system is designed to discourage people from applying for assistance. The Texas Workforce Commission system presents hurdles for Texans trying to file claims, making them prove that they are, indeed, unemployed through no fault of their own. This slows down, and far too often discourages, applicants from getting benefits for which they qualify. In a catastrophe, help should arrive before the bills do leaving no one behind.

  10. Reform Fraud and Overpayments Actions: In conducting investigations of misuse of the system, the Texas Workforce Commission should assume improper payments resulting from application misinformation were the result of honest errors unless evidence clearly suggests otherwise. Dogged pursuit of benefit overpayments caused by confused Texans should not impose an undue burden on people who apply in their time of need. When the State of Texas makes a mistake in awarding benefits, it should join other states that waive overpayments, which have occurred through no fault of the applicant.