Middle Class Tax Relief and Job Creation Act
In February 2012, Congress passed the Middle Class Tax Relief and Job Creation Act (P.L. 112-96). Among the major provisions, this bill includes:
- Continued phase out of federal extended unemployment benefits. Workers in states with high unemployment could receive between 89 and 99 weeks of benefits until May 2012. The maximum duration of benefits was gradually reduced, reaching 73 weeks in Sept. 2012. Unless Congress takes further action, federal extended benefits will end completely in December 2012.
- Extended the 2 percentage point temporary reduction in payroll taxes through the end of 2012.
The final bill rejected a damaging proposal in the House-passed version of H.R. 3630, which would have granted states sweeping authority to drug test UI applicants. However, the final compromise allows limited use of drug testing in two cases: 1) if the individual applying for benefits was terminated from a previous job because of drug use; and 2) if the individual is seeking a job for which drug testing is routinely used. The U.S. Department of Labor is developing regulations that will clarify the scope of this authority.
The final bill included a number of measures designed to help unemployed workers get back to work. It created consistent work search requirements for individuals receiving unemployment benefits. It provided one-time funding for reemployment services and in-depth assessments of benefit recipients. And it directed grants to states for self-employment assistance programs, which allow jobless workers to start a business while collecting unemployment benefits.
In a major step forward for work sharing, the final bill provided new funding for state programs that give employers an alternative to layoffs. Under work sharing, employers can reduce work hours instead of laying off workers, and eligible employees can apply for pro-rated unemployment benefits to help make up for lost wages. The law updated short-time compensation provisions in federal law for the first time in 20 years. In a significant boost to implementation, the Act provided nearly $500 million in temporary funding to states in three ways:
- Full federal reimbursement for STC benefits paid to workers for up to three years in states with existing work sharing programs;
- Partial reimbursement of benefits paid to workers in states without existing programs that enter agreements with the U.S. Department of Labor; and
- Grants to states to increase business participation and upgrade state programs that are in line with new STC provisions.
For more information, see, A Breakthrough for Work Sharing: A Summary of the Layoff Prevention Act of 2012, released by CLASP and the National Employment Law Project (NELP). Also, see the U.S. Department of Labor's implementation web site at http://www.ows.doleta.gov/unemploy/jobcreact.asp