Institutions and those entrusted with their care have beclowned themselves so regularly over the years that Americans have lost faith in almost all sources of authority. In this environment, the New Hampshire Senate this week surveyed the cultural scene and said, “hold my beer.”
It’s hard to say what will be hurt most by the unemployment legislation the Senate’s Democratic majority passed on a party-line vote on Tuesday: New Hampshire businesses or the reputation of the New Hampshire Senate.
House Bill 1166, a hodgepodge of business mandates and impermissible exemptions to federal unemployment policy, is an absurdity that defies all attempts at reasonable explanation. In its totality, it is a stunning example of politicians choosing showmanship over the public official’s duty to govern.
On its face, the bill is a direct assault on New Hampshire businesses struggling to survive the coronavirus-caused recession. It would cost New Hampshire employers hundreds of millions of dollars, potentially triggering numerous business closures.
“I feel it kicks the businesses while they are down,” Wendy Hunt, president of the Greater Merrimack-Souhegan Valley Chamber of Commerce, wrote in testimony submitted to the Senate Commerce Committee. “It is the OPPOSITE of what the legislature should be doing for our business community.”
If it becomes law, the bill would burden employers with higher costs. But some of the worst parts of the bill would have a limited effect because they are really a publicity stunt disguised as legislation. The very legislators who champion the bill as a necessary protection for New Hampshire workers inserted a provision to prevent many of those alleged protections from taking effect.
Huge costs and violations of federal labor policy
At the Senate Commerce Committee on June 5, Deputy Employment Security Commissioner Richard Lavers explained how the bill’s excessively generous rewriting of state law on unemployment benefits would violate federal guidance, putting the state out of compliance with U.S. Department of Labor policy and causing the loss of federal money.
The bill lets an employee remain eligible for unemployment benefits if he or she “leaves employment due to a reasonable risk of exposure or infection, including self-quarantine, or to care for a family member, and either does not intend to return to the employer or the employer will not allow the individual to return.”
Federal guidance states that employees able and available to work are not eligible for benefits. The bill would let employees collect unemployment if they are able and available, and even if they do “not intend to return to work.”
“This one is not allowed,” Lavers told the committee. The eligibility provision “would also have what I assume is an unintended consequence of taking people that are now eligible for federally paid PUA and putting them on state UI that would have to be paid out of the state trust fund.”
That is, the bill moves people from federal Pandemic Unemployment Assistance to state-paid unemployment insurance benefits, causing a more rapid depletion of the state Unemployment Trust Fund, which is already expected to run out of funds by the end of November.
The bill also would make employees automatically eligible for unemployment benefits for certain COVID-19-related reasons, again in violation of U.S. Department of Labor guidance, and eliminate the one-week waiting period before benefits start.
“The main issue is that this provision, and I’m not speculating here at all, I’m not relying upon old guidance from the federal government, I’m relying on guidance issued one month ago today issued by the Department of Labor. This provision would make New Hampshire be out of compliance with U.S. Department of Labor, and we would be out of conformity with U.S. Department of Labor,” Lavers told the committee.
“That puts our federal grant funding in jeopardy.” he explained.
Going out of compliance with federal guidance “would mean that New Hampshire employers would no longer be eligible for their 90% reduction in their federal unemployment tax obligations,” Lavers said. “This would cost New Hampshire businesses over $200 million a year…. This is what they are telling states. They are cautioning states: Don’t do this.”
The committee’s response to these warnings was to insert a self-destruct button into the bill.
“In the event the United States Department of Labor provides a written notice to the New Hampshire department of employment security that any specific statutory change in this act will result in the loss of federal funding to New Hampshire then that specific statutory change, and that specific statutory change only, shall be inoperative,” an amendment introduced by Sen. Jon Morgan reads.
The “inoperative” clause is a case study in political cynicism. It could have one of only two outcomes. Either it makes those provisions instantly ineffective, in which case there’s zero point in passing them, or it makes them effective only for a brief period until an inevitable federal notice arrives, in which case there’s zero point in passing them.
No one seems to have checked with staff attorneys to find out how the provision would work. We did.
The language does not make the provisions Lavers warned about automatically inoperative based on guidance already issued by the Department of Labor. It would make them inoperative only after the U.S. Department of Labor issues additional written notice to the state, according to legislative staff.
So the self-destruct button would be triggered only after the bill had begun to damage the economy.
This is not governing. This is playing politics with New Hampshire’s economy.
Diverting $50 million from COVID-19 relief to a state department
The political games don’t end there.
The bill directs $50 million in federal CARES Act relief money to the Department of Employment Security for the purpose of upgrading its computer system.
But the department does not need or want the money. Its system was already upgraded with federal funds.
“New Hampshire is one of 16 states with a modernized unemployment benefits system,” Lavers told the Senate Commerce Committee on June 5.
The department replaced its computer system in 2009 and has enhanced it every year since with federal grant money, he said.
“We were paying benefits under the CARES Act before the CARES Act existed because of our modernized system,” Lavers said. “We do not need money for this purpose from the limited amount of money that are left in the CARES funds.”
Why in the world would Senate Democrats divert $50 million in coronavirus relief money to upgrade a computer system the that was already upgraded with federal money?
It turns out that Sen. Dan Feltes, who co-sponsored the legislation, has made upgrading that computer system part of his gubernatorial campaign. He claimed in April, without evidence, that the governor failed to upgrade the system that the department says is fully upgraded.
More ignored warnings
The remainder of the bill is filled with provisions that senators were warned would hurt New Hampshire individuals and businesses.
Tyler Brannon, director of health economics at the N.H. Department of Insurance, told the Senate Commerce Committee that the provision mandating private insurance coverage for COVID-19 treatment and testing was unnecessary and would help unscrupulous companies at the expense of Granite Staters.
Insurers already voluntarily cover COVID-19 testing and treatment at no cost, and the state’s emergency order mandates coverage for out-of-network providers if no in-network providers are available.
The bill goes further to mandate coverage for out-of-network providers at any time and force insurers to cover “any out-of-network charges.”
“The requirement will allow for price gouging by out-of-network providers, and it’s likely to benefit opportunistic, out-of-state companies at the expense of New Hampshire premium payers more than it is going to benefit New Hampshire members,” Brannon explained.
His warning was ignored and the provision was left in.
Another provision extends the federal Family and Medical Leave Act to businesses with as few as 15 employees “for any employee in quarantine, or covered family member in quarantine, for coronavirus or COVID-19, or for a COVID-19 related reason, as directed by a medical provider or under government direction.”
Not even Congress would force businesses smaller than 50 employees to bear the costs of the Family and Medical Leave Act. This provision could impose significant costs on small, mom-and-pop businesses that have only a few employees.
With a laundry list of additional costs being dumped on employers even before many are allowed to open at full capacity, the bill drew sharp criticism from business owners and groups.
The bill “will cause a significant increase to unemployment insurance taxes right when businesses are stretched thin and face significant losses already,” Ashley Haseltine, president of the Derry Londonderry Chamber of Commerce wrote.
Chris Woods, president of Advantage Insurance in Merrimack, submitted written committee testimony that the bill “will cost NH businesses who are already struggling additional money while incenting individuals to not go back to work.”
The Senate’s only response to these warnings came Tuesday when two Democratic senators, Sen. Shannon Chandley and Sen. Jeanne Dietsch, voted with Republicans to strip a provision mandating an additional $100 a week in unemployment benefits. That provision would have cost N.H. employers $53 million through the end of 2020 alone, the Department of Employment Security estimated.
The exact costs of the bill are not clear. As with other amended bills rushed through on Tuesday, it contained no fiscal note.
New Hampshire employers are struggling to survive an economically devastating 2020. They, and the employees they want to rehire, deserve lawmakers who take this moment seriously and who seek to help. Instead, senators are playing tricks with exploding bills and vanishing promises.