No. UI-C-233
Released October 1996

SUBJECT   : Railroad Unemployment Insurance Amendments Act of 1996

On October 9, 1996, the President signed the Railroad Unemployment Insurance Amendments Act of 1996. The amendments make important changes to the Railroad Unemployment Insurance Act (RUIA):

• Waiting periods are reduced to 7 days from 14 days,
• A waiting period is required only in the first period of continuing unemployment or sickness that begins in the benefit year,
• The maximum daily benefit rate increases to $42 from $36,
• Extended benefits are reduced to 65 days from 130 days for employees with 15 or more years of railroad service, and
• An earnings test prevents payment of unemployment benefits for a claim in which the employee's earnings exceed the amount of the monthly RUIA compensation base.

The amendments are effective October 9, 1996. The following explains the impact of the changes upon the unemployment and sickness benefit program.

Waiting Period

Prior Law: 14-day waiting periods. Before the amendments, section 2(a) of the RUIA provided no benefits for an employee's first registration period having more than 4 days of unemployment or sickness in each benefit year. This resulted in a 14-day waiting period. Benefits were payable for days of unemployment or sickness over 4 in subsequent registration periods in the same benefit year. Because of the 14-day waiting period, initial benefit payments were generally not received by employees until about 6 weeks after their first days of unemployment or sickness.

Amended Law: 7-day waiting periods. The amendments reduce the waiting period to 7 days. An employee who is sick or unemployed will be paid benefits for each day of sickness or unemployment in excess of 7 in his or her first 14-day registration period. A daily benefit rate of $42 would result in payment of $294 for a first registration period containing 14 days of sickness or unemployment.

As under prior law, a claim for as few as 5 days of unemployment or 5 days of sickness in a 14-day period still satisfies the waiting period requirement. Initial sickness claims must also include 4 consecutive days of sickness. Even though no benefits are payable on the basis of a first claim unless there are at least 8 days of unemployment or 8 days of sickness, employees are encouraged to file claims for such periods to fulfill the waiting period requirement. Benefits for any subsequent 14-day claims are then payable for all days over 4.

The amendments make no change to the provision that no benefits are payable for an employee's first 14 days of unemployment due to a strike. An employee who has a strike waiting period in a benefit year is not required to later serve a 7-day general waiting period.

No More Than One Waiting Period in a Period of Continuing Unemployment or Sickness

Prior Law - The first claim in the benefit year is a waiting period. Prior to the amendments, the RUIA required that the first registration period in each benefit year served as a waiting period. This was true regardless of whether the beneficiary had satisfied a waiting period requirement for an earlier benefit year in the same spell of unemployment or sickness. This provision resulted in some beneficiaries serving two waiting periods in close succession if the spell of unemployment or sickness began late in one benefit year and carried over to the next benefit year.

Amended Law - No more than one waiting period in a period of continuing unemployment or sickness, and only if the period of continuing unemployment or sickness is the first one beginning in the benefit year. The amendments to section 2 of the RUIA establish the concept of a "period of continuing unemployment." That term is defined as:

• a single registration period having more than 4 days of unemployment;
• a series of consecutive registration periods, each having more than 4 days of unemployment; or
• a series of successive registration periods, each having more than 4 days of unemployment if each succeeding registration period begins within 15 days after the last day of the immediately preceding registration period.

Under the amended section 2, an employee who continues to be unemployed from one benefit year into the next needs to satisfy only one waiting period; a second waiting period is not required when the employee's benefit claims continue into a new benefit year. If the period of continuing unemployment ends, for example, by the employee's return to work, the employee would have to serve a new waiting period for the current benefit year if he or she became unemployed again.

An employee who serves a waiting period for unemployment benefits in a benefit year, returns to work for any length of time and then becomes unemployed a second time in the same benefit year, would not have to serve a waiting period for the second period of continuing unemployment, even if the period continues into another benefit year.

Regarding sickness benefits, the amendments have the analogous requirement of one 7-day waiting period in the first period of continuing sickness in a benefit year. The definition of period of continuing sickness is:

• a period of consecutive days of sickness, whether from one or more causes; or
• a period of successive days of sickness due to a single cause without interruption of more than 90 consecutive days which are not days of sickness.

Periods of continuing unemployment and sickness end when an employee returns to work, stops
claiming benefits or exhausts rights to benefits.

Maximum Daily Benefit Rate

Prior Law - Maximum daily benefit rate indexed to tier I base. The maximum daily benefit rate was indexed to increases in the tier 1 railroad retirement compensation base. The indexing formula provided a maximum daily benefit rate of $36 for registration periods beginning on and after July 1, 1994, subject to increases in the tier I base.

Amended Law - Maximum daily benefit rate equals 5 percent of the monthly RUIA compensation base. Under the amendments, the maximum daily benefit rate now equals 5 percent of the RUIA monthly compensation base for the base year (calendar year) immediately preceding the beginning of the benefit year. The rate so computed is rounded down to the nearest multiple of $1.00. Effective with registration periods beginning on and after October 9,1996, the maximum daily benefit rate is $42 (5 percent of $850). The maximum daily benefit rate will increase to $43 in July 1997.

The amendments make no change to the formula for calculating daily benefit rates (60 percent of an employee's last daily pay rate in the base year), nor to the minimum rate of $12.70.

Extended Benefit Periods Reduced to 7 from 13 Registration Periods

Prior Law - Extended benefits were payable for 13 registration periods to employees with 15 or more years of service. The previous law provided extended unemployment and sickness benefits for 130 days in 13 registration periods to employees having 180 or more cumulative railroad service months (15 or more years of service). Employees with 10 to 14 years of service were entitled to extended benefits of 65 days in 7 registration periods. And, employees with less than 120 cumulative service months (10 years of service) were not eligible for extended benefits except under special emergency legislation.

Amended Law: No extended benefit period longer than 7 registration periods. Under the amendments, extended benefit periods for employees having 15 or more years of service are limited to 7 registration periods. Therefore, all employees with 10 or more years of service are entitled to 65 days of extended benefits in an extended period of 7 registration periods. This change applies to both extended unemployment and extended sickness benefits.

Earnings Test

Prior Law - The RUIA did not have a test for earnings. The previous law permitted payment of unemployment benefits for days of unemployment in excess of 4 in a registration period, regardless of an employee's earnings in the registration period. However, if an employee in train and engine service did not work on a particular day because of a work restriction, layover, or missing a turn in pool service, such day was not considered a day of unemployment and did not count in the calculation of benefits for the registration period.

Amended Law - Unemployment benefits are not payable for a registration period in which the employee earns more than the amount of the RUIA monthly compensation base. The amendments introduce a claim-by-claim earnings test to the eligibility requirements for unemployment benefits. No benefits are payable for any day in a registration period where the total amount of an employee's earnings or other remuneration from railroad and non-railroad work for days in the period exceeds the amount of the RUIA monthly compensation base. In determining the amount of remuneration attributable to days in the registration period, earnings that would have been payable for days the claimant was not available for work are included. For benefit year 1996, the earnings test is $850.00 per registration period; for benefit year 1997, the earnings test is $865.00.

The amendments make no change to the provisions that disallow payment of benefits in connection with work restrictions, layovers and missing turns in pool service.

Implementation

The amendments are effective October 9, 1996, the date of enactment. Accordingly, the 7-day waiting period, the $42.00 maximum daily benefit rate, the reduced extended benefit period and the earnings test are effective with registration periods beginning October 9, or later. Waiting periods of 14 days served prior to enactment are not subject to change. And, extended benefit periods of 13 registration periods with a beginning date prior to enactment will not be reduced to 7 registration periods.

Inquiries concerning the amendments and implementation should be addressed to the U.S. Railroad Retirement Board, Office of Programs - Policy and System, 844 North Rush Street, Chicago, Illinois 60611-2092.

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