Changes to Kentucky’s unemployment insurance system moves forward

The COVID-19 pandemic has highlighted issues in Kentucky’s workforce and unemployment insurance system. The Senate Economic Development, Tourism and Labor Committee passed legislation Tuesday morning to reform the state’s unemployment insurance system to reflect the realties of Kentucky’s economy.

House Bill 4, sponsored by Representative Russell Webber, reforms Kentucky’s unemployment insurance system while supporting re-employment, job training, and economic growth. 

Webber said the bill ties the number of weeks an individual can receive benefits to economic conditions. This approach, he said, is used in nine other states and assists with reemployment, as less weeks are available when the economy is good and many jobs are available. When the economy struggles, more weeks are available to unemployed individuals.

An upskill provision in the bill allows claimants to receive up to five additional weeks of benefits if the claimant is enrolled in pursuing higher education or training certifications. There is also a “work-share” provision in the bill that gives employers an alternative to lay-offs, allowing them to reduce hours and participate in a program where employees can receive prorated unemployment benefits.

These changes are being proposed as Kentucky has the third lowest workforce participation rate in the nation and state’s Unemployment Insurance Trust Fund has not been fully solvent since 1974.

“This is not a silver bullet; it does not solve all our workforce and unemployment problems. But it is a good piece of public policy that helps move us forward and allow our system to be solvent and solid,” Webber said in committee.

A committee substitute was passed along with the bill that changes the effective date to January 1, 2023 to give the Workforce Cabinet time to begin laying the groundwork for implementation and exempts seasonal employees who have a return-to-work date from the work search requirement.

Kentucky Chamber Senior Vice President of Public Affairs Kate Shanks testified in favor of the bill, highlighting the business community’s focus on addressing the state’s workforce shortage.. Shanks said Kentucky can’t be known as a state without workers and stated House Bill 4 would help tackle some of the challenges contributing to the issue.

“We urge the General Assembly to take bold steps to address Kentucky’s workforce shortage including passage of House Bill 4,” Shanks said.

The amended version of House Bill 4 now moves to the Senate floor for consideration. Stay tuned to The Bottom Line for more updates.