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Legislation filed to reform KY unemployment insurance system

FRANKFORT, Ky. — The COVID-19 pandemic has compounded Kentucky’s existing workforce shortage, leaving the state’s unemployment insurance system overrun and insufficient. In response, Chairman Russell Webber of the House Economic Development and Workforce Investment Committee has filed legislation that would reform the current system to encourage re-employment, aid small businesses, and prepare Kentucky for the future.

Kentucky currently lags in the nation when it comes to workforce participation and the percentage of adults who are actively employed. Historically, Kentucky unemployment insurance system claimants have spent more time receiving benefits compared to other states, and the pandemic has only worsened the effects. A 2019 report from the Kentucky Chamber of Commerce shows the average duration of benefits for claimants to be among the highest in the nation at 18.2 weeks.

The measure, the Unemployment Insurance Sustainability Act of 2022, ensures benefits will be there for laid-off workers when they need them and assists those workers in retraining and upskilling to increase the potential for job opportunities. Additionally, the bill would implement a work-share program similar to those currently in place in 27 other states. The program would act as an alternative to laying-off workers by permitting employers to temporarily reduce hours and corresponding wages, making employees eligible to collect partial unemployment benefits.

The Unemployment Insurance Sustainability Act of 2022 has 5 key components:

  1. Strengthens Kentucky’s work search program to encourage re-employment
  2. Ties the maximum number of benefit weeks to economic conditions to support employment and make sure Kentucky is prepared for future downturns
  3. Helps laid-off workers upskill and retrain
  4. Makes unemployment taxes fair for small businesses and entrepreneurs
  5. Gives employers an alternative to lay-offs by establishing a work-share program

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