[Federal Register: August 12, 2004 (Volume 69, Number 155)]
[Proposed Rules]
[Page 50021-50040]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr12au04-28]
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Part III
Department of Labor
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Employment and Training Administration
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20 CFR Part 603
Federal-State Unemployment Compensation Program (UC); Confidentiality
and Disclosure of State UC Information; Proposed Rule
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DEPARTMENT OF LABOR
Employment and Training Administration
20 CFR Part 603
RIN 1205-AB18
Federal-State Unemployment Compensation Program (UC);
Confidentiality and Disclosure of State UC Information
AGENCY: Employment and Training Administration, Labor.
ACTION: Notice of Proposed Rulemaking (NPRM); request for comments.
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SUMMARY: This proposed rule would set forth statutory confidentiality
and disclosure requirements of Title III of the Social Security Act
(SSA) and the Federal Unemployment Tax Act (FUTA) concerning
unemployment compensation (UC) information. It would also amend the
Income and Eligibility Verification System (IEVS) regulations, a system
of required information sharing primarily among state and local
agencies administering several federally assisted programs.
DATES: Written comments must be submitted on or before October 12,
2004.
ADDRESSES: Comments may be mailed or delivered to Cheryl Atkinson,
Administrator, Office of Workforce Security, Employment and Training
Administration, U.S. Department of Labor, 200 Constitution Avenue, NW.,
Room S-4231, Washington, DC 20210. Comments may be submitted
electronically to the Office of Workforce Security at the e-mail
address: confidentialityrule@dol.gov. Receipt of submissions, whether
by U.S. mail, other delivery, or e-mail, will not be acknowledged.
All comments will be available for public inspection and copying
during normal business hours at the Office of Workforce Security,
Employment and Training Administration, U.S. Department of Labor, 200
Constitution Avenue, NW., Room S-4231, Washington, DC 20210. Copies of
the proposed rule are available in alternate formats of large print and
electronic file on computer disk, which may be obtained at the above-
stated address. The proposed rule is also available at the Web address
http://www.workforcesecurity.doleta.gov.
FOR FURTHER INFORMATION CONTACT: Gerard Hildebrand, Chief, Division of
Legislation, Office of Workforce Security, Employment and Training
Administration, (202) 693-3038 (this is not a toll-free number) or 1-
877-889-5627 (TTY), or by e-mail at hildebrand.gerard@dol.gov.
SUPPLEMENTARY INFORMATION:
Background
On March 23, 1992, the Employment and Training Administration (ETA)
published a proposed rule (57 FR 10063) concerning the confidentiality
and disclosure of state UC information. The proposed rule was never
finalized. Commenters expressed different views over how restrictive
the rule should be, and some found the proposed rule unnecessarily
lengthy and complex. Given the lapse of time, ETA has decided to
publish a new proposed rule, described below.
Discussion of Proposed Rule
As explained below, ETA believes that confidentiality protections
for UC information (meaning information in the records of a state or
state UC agency that pertains to the administration of state UC law)
are still necessary. Comments on the 1992 proposal will become part of
the new rulemaking record and were considered in developing this
proposed rule. This proposed rule sets forth requirements very similar
to those in the 1992 proposal, but it would allow more optional state
disclosures. It would also now permit the Department to waive
safeguards and agreement requirements for disclosures to Federal
agencies which have in place adequate alternative safeguards for
protecting the confidentiality of information and an appropriate method
of paying or reimbursing the state UC agency for costs involved in such
disclosures. In addition, this proposed rule is streamlined. Whereas
the text of the 1992 proposal contained 12 subparts and 77 sections,
this proposal is condensed into three subparts and 16 sections.
Further, it uses plain language and a user-friendly question-and-answer
format.
This proposed rule would implement Federal UC law provisions
concerning confidentiality and disclosure of UC information and
establish uniform minimum requirements for the payment of costs,
safeguards, and data-sharing agreements to ensure responsible use when
UC information is disclosed. The confidentiality requirement
implemented by this rule is derived from Section 303(a)(1), SSA. The
disclosure requirements are from Sections 303(a)(7), (c)(1), (d), (e),
(f), (h), and (i) of the SSA and Section 3304(a)(16), FUTA. This
proposed rule would revise the regulations at 20 CFR Part 603, which
currently implement only Section 303(f) (concerning IEVS) of the SSA,
to implement all of these statutory provisions. (Section 303(f)
requires that each state UC agency provide for information to be
requested and exchanged with state and local agencies administering
several federally assisted programs for purposes of income and
eligibility verification, in accordance with a state system which meets
the requirements of Section 1137 of the SSA.) The disclosure provisions
that this rule would implement all require disclosure to government
entities, but they vary with respect to the specific information to be
disclosed and the terms and conditions of disclosure.
This rule does not address the scope of the Secretary of Labor's
authority under Section 303(a)(6) of the SSA to require reports from
the states. We note this because the preamble to the 1992 proposed rule
asked for comments concerning the scope of this provision. We have
decided not to address this matter in this proposed rule.
The confidentiality and disclosure requirements in Title III of the
SSA relating to UC information are conditions for receipt of grants by
the states for UC administration. The disclosure requirements in the
FUTA are conditions required of a state in order for employers in that
state to receive credit against the Federal unemployment tax under 26
U.S.C. 3302.
Other Federal laws may require use or disclosure of confidential UC
information. For example, the Workforce Investment Act (WIA) of 1998,
Pub. L. 105-220, requires states to measure their progress in providing
services funded under Title I of the WIA against state and local
performance measures using ``quarterly wage records, consistent with
State law.'' 29 U.S.C. 2871(f)(2); 20 CFR 666.150(a). Because these
laws do not condition receipt of UC grants under the SSA or
certification for employer tax credits under FUTA on such use or
disclosure, this proposed rule would not implement these laws. However,
the disclosure of confidential UC information in compliance with the
WIA and other Federal laws would be permitted under the general
exceptions to confidentiality in Sec. 603.5 of this proposed rule.
(For more information on the requirement to use wage records under the
WIA, see 20 CFR 666.150.) ETA strongly encourages states whose laws do
not permit disclosure for WIA purposes to amend their laws.
We believe that these proposed regulations are necessary and
important for several reasons. The Federal Privacy Act does not protect
the confidentiality
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of UC information even though it is the same type of information, wage
and employment information, that is highly protected when collected for
the administration of other Federal programs, such as Social Security
and the Federal income tax. Except for its provisions governing the
collection of Social Security numbers, the Privacy Act does not apply
to state records containing UC information because they are not Federal
records. Although state laws address the privacy of such records, they
do so to varying degrees. At the same time, as mentioned, a number of
provisions of Federal law now require use or disclosure of confidential
UC information. States have repeatedly sought guidance from the
Department of Labor on confidentiality and disclosure issues. Further,
several of the provisions in Title III, SSA, instruct the Secretary of
Labor to establish safeguards to protect the confidentiality of UC
information when disclosed.
The proposed rule is based on several ``fair information''
principles that are fundamental to any confidentiality policy and are
reflected in a number of sections throughout. The principles include
notice, choice, access and amendment, security safeguards, and
accountability.
Notice. Subjects of an information collection (persons or
organizations from or about whom information is collected) should be
notified what information is collected and of the possible uses of that
information. Under this proposed rule, state UC agencies would be
required to inform claimants and employers of the uses of UC
information collected, including possible non-UC uses. Specifically,
Section 603.11 of this proposed rule would require states to provide
individualized notice to claimants at the time of filing an initial
claim and periodically thereafter, and to employers on their quarterly
wage report form or reimbursement billing, that confidential UC
information may be requested and disclosed. A requirement for notice to
claimants exists in current part 603. This proposed rule would extend a
notice requirement to employers.
Choice. To the extent possible, subjects of an information
collection should have choices about how information about them is
used. Proposed Sec. 603.5(c) and (d) would allow states to disclose
information to an individual, employer, their agent or attorney, or to
another third party, on the basis of informed consent. In the case of
disclosure to a third party other than an agent or attorney, the
proposed rule would require consent to be in writing and contain
features, such as specific identification of the information to be
disclosed and the specific purposes for the disclosure, ensuring the
consent is truly informed.
Access and amendment. Subjects of an information collection should
have the right to access and amend information about them. This is
important to ensure the accuracy of information that will be used to
make decisions about individuals (such as eligibility for government
benefits or services). UC information is used to determine whether an
individual is eligible for benefits or an employer is liable for UC
taxes. The opportunity to access and amend UC information usually
occurs during the claims determination process or when tax coverage
decisions are made, because individuals and employers participate and
provide input into these processes. Section 603.5(c) would also permit
states to provide individuals or employers access to UC information
about themselves for non-UC purposes.
Security safeguards. Security controls are important to protect the
confidentiality and integrity of data, including data shared with other
government agencies or recipients. Section 603.4(b) of this proposed
rule would require states to maintain the ``confidentiality of any UC
information which reveals the name or any identifying particular about
any individual or any past or present employer or employing unit, or
which could foreseeably be combined with other publicly available
information to reveal any such particulars'' except as provided in this
regulation. This would require that state agencies employ effective
methods to protect confidentiality of UC information. These methods may
include management, operational, and technical security controls.
Section 603.9 would set forth minimum security safeguards that
state agencies must require of recipients of disclosed data to ensure
continued data confidentiality and integrity. For example, Sec.
603.9(b)(1)(ii) and (iii) would require that information be stored in a
place physically secure from access by unauthorized persons and
maintained in a way that unauthorized persons cannot obtain the
information by any means. Section 603.9(b)(1)(v) would also require
instruction of personnel about confidentiality requirements and signed
acknowledgments that the instruction occurred. Section 603.9(b)(1)(vi)
would require the return or destruction of disclosed UC information
once the purpose for which the information was disclosed has been
served. Section 603.9(b)(1)(vii) would require states to maintain a
tracking system sufficient to allow an audit of compliance with this
regulation's requirements. Section 603.10(b)(1)(vi) would require data-
sharing agreements to include provision for state on-site inspection of
recipients to assure compliance with the security safeguards.
Accountability. Mechanisms should exist to ensure the
accountability of individuals and entities handling confidential data.
Section 603.4(c) of this proposed rule would require state law to
provide penalties for any unauthorized disclosure of confidential UC
information. Section 603.9(b)(1)(v) would require state agencies to
inform employees of the applicable sanctions for unauthorized
disclosures. Section 603.9(a) would further require states or state
agencies to subject recipients of confidential UC information under
data-sharing agreements to penalties provided by state law for
unauthorized disclosure. Section 603.10(c) would require suspension and
ultimately termination of any data-sharing agreement or contract if a
recipient fails to follow the specified safeguards. This provision
would also require states to take other action against an entity
violating a data-sharing agreement.
Section-by-Section Description of Proposed Rule
Subpart A--Confidentiality and Disclosure Requirements in General
Subpart A sets forth the purpose and scope of the proposed rule, as
well as definitions that would apply to subparts B and C.
Section 603.1, Purpose and Scope
This section describes the purposes and scope of proposed new part
603, which differ materially from the purposes and scope of the present
part 603. While the present part 603 addresses only the requirements
concerning a state UC agency's participation in the IEVS under Section
303(f) of the SSA, new part 603 would address additional disclosure
requirements in Federal UC law and the basic requirement of
confidentiality derived from Section 303(a)(1) of the SSA. New part 603
would apply to states and state UC agencies, as defined in Sec.
603.2(f) and (g).
Section 603.2, Definitions
This section defines the terms that would apply to new part 603.
Paragraph (a) defines ``claim information'' as information about:
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Whether an individual is receiving, has received, or has
applied for UC;
The amount of compensation the individual is receiving or
is entitled to receive;
The individual's current (or most recent) home address;
and, for purposes of subpart C (concerning disclosure to an IEVS),
Whether the individual has refused an offer of work and,
if so, a description of the job offered including the terms,
conditions, and rate of pay; and
Any other information contained in the records of the
state UC agency that is needed by the requesting agency to verify
eligibility for, and the amount of, benefits.
Paragraph (b) defines ``confidential UC information'' and
``confidential information'' as any UC information required to be kept
confidential under Sec. 603.4.
Paragraph (c) defines ``public domain information'' as:
Information about the organization of the state and the
state UC agency and appellate authorities, including the names and
positions of officials and employees thereof;
Information about the state UC law (and applicable Federal
law) provisions, rules, regulations, and interpretations thereof,
including statements of general policy and interpretations of general
applicability, appeals records and decisions, and precedential
determinations on coverage of employers, employment, and wages; and
Any agreement of whatever kind or nature, including
interstate arrangements and reciprocal agreements and any agreement
with the Department of Labor or the Secretary, relating to the
administration of the state UC law.
Paragraph (d) defines ``public official'' as an official, agency,
or public entity within the executive branch of Federal, state, or
local government who (or which) has responsibility for administering or
enforcing a law, or a legislator in the Federal, state, or local
government with oversight responsibility for the UC program.
Paragraph (e) defines ``Secretary'' and ``Secretary of Labor'' to
mean the cabinet officer heading the United States Department of Labor,
or his or her designee.
Paragraph (f) defines ``state'' to mean one of the ``states''
included in the federal-state UC program, including Puerto Rico, the
United States Virgin Islands, and the District of Columbia.
Paragraph (g) defines ``state UC agency'' to mean an agency charged
with administration of a state's UC law. The proposed definition does
not include Employment Service offices or state revenue departments
except when administering a state's UC law. However, officials of such
agencies may be able to obtain access to UC information under the
exception to confidentiality for public officials, under Sec.
603.5(e).
Paragraph (h) defines ``state UC law'' to mean the UC law of a
state, approved under the FUTA, 26 U.S.C. Sec. 3304(a). Any law of a
state (including official interpretations thereof) that may affect
state eligibility for Title III, SSA, administrative grants or
certification under the FUTA is part of the ``state UC law'' as defined
in this proposed rule. This definition is not intended to cover Wagner-
Peyser Act-funded programs or programs funded under the WIA.
Paragraph (i) defines ``unemployment compensation (UC)'' as cash
benefits to individuals with respect to their unemployment.
Paragraph (j) defines ``UC information'' and ``state UC
information'' as information in the records of a state or state UC
agency that pertains to the administration of the state UC law. This
definition includes information pertaining to the administration of the
state UC law regardless of whether that information is housed by the
state UC agency. For example, the definition includes employer UC tax
rates, UC tax identification numbers, and claimant weekly benefit
amounts, even when those records are housed by a tax agency.
The definition also includes state wage reports, collected under
the IEVS required by Section 1137, SSA, that are obtained by the state
UC agency for determining UC monetary eligibility or are downloaded to
the state UC agency's files as a result of a crossmatch. It does not
include IEVS records collected by a state tax department that are
neither used for determining UC eligibility nor downloaded to the state
UC agency's files. Section 1137(a)(5)(B), SSA, gives the Secretary of
Health and Human Services (HHS) primary authority to establish
safeguards to protect IEVS records against ``unauthorized disclosure
for other [non-IEVS] purposes.'' The Department of Labor has authority
only to establish safeguards for IEVS records ``in the case of the
unemployment compensation program,'' and under Title III, SSA. Thus,
the Department of Labor is responsible for establishing safeguards only
with respect to IEVS records obtained by a state UC agency for
determining benefit eligibility, or copies of IEVS records that have
been disclosed to the state UC agency as a result of a crossmatch.
The proposed definition of ``UC information'' and ``state UC
information'' does not include any information in a state Directory of
New Hires, even when the directory is maintained by the state UC
agency, since these records are collected for purposes of complying
with Title IV, SSA (concerning Federal aid to states for services to
needy families with children and for child-welfare services). However,
once information from a state directory is disclosed to the state UC
agency for UC uses, the disclosed information becomes part of that
agency's UC information, and that information would be subject to this
proposed rule.
Further, the definition does not include the personnel or fiscal
information of a state UC agency. In addition, the proposed definition
of ``UC information'' and ``state UC information'' does not include
information about employment service activities or job training
activities, even though such activities may be performed within the
same umbrella agency where UC activities are performed, because such
information does not pertain to the administration of the state UC law.
Finally, the definition does not include records of the following
Federal UC and benefit programs: the Unemployment Compensation for
Federal Employees (UCFE) program (5 U.S.C. 8501-8508); the Unemployment
Compensation for Ex-Servicemembers (UCX) program (5 U.S.C. 8521-8525);
the Trade Adjustment Assistance (TAA) and Alternative Trade Adjustment
Assistance (ATAA) programs (19 U.S.C. 2271-2321); the NAFTA
Transitional Adjustment Assistance (NAFTA-TAA) program (19 U.S.C. 2331)
(which is being phased out); and the Disaster Unemployment Assistance
(DUA) program (42 U.S.C. 5171); or any Federal UC benefit extension
program. This is because such information pertains to the
administration of Federal, not state, UC law and is covered by other
regulations, operating instructions, and agreements with states.
Paragraph (k) defines ``Wage information'' to mean information in
the records of a state UC agency (and, for purposes of Sec. 603.23,
information reported under provisions of state law which fulfill the
requirements of Section 1137 of the SSA) about the wages paid to an
individual, the Social Security account number (or numbers) of such
individual, and the name, address, state, and Federal employer
identification number of the employer
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who paid such wages to such individual.
Subpart B--Confidentiality and Disclosure Requirements
Subpart B sets forth the basic proposed requirement of
confidentiality, permissible exceptions to the rule of confidentiality,
and mandatory disclosure requirements. It also proposes requirements
on: (1) Payment of costs (for disclosures of UC information which are
not made in the course of the administration of the state UC laws), (2)
safeguards, (3) agreements between the state UC agency and agencies or
entities requesting confidential UC information, which set forth the
terms and conditions for making such disclosures and the remedies that
apply in the case of breach of an agreement, and (4) conformity and
substantial compliance with this proposed rule.
Section 603.3, Purpose and Scope
This section sets forth the purpose and scope of proposed subpart
B. It expressly states that the purpose of subpart B is to set forth
the requirements of Section 303(a)(1) of the SSA, as such requirements
concern the confidentiality of state UC information, to implement the
disclosure requirements of Sections 303(a)(7), (c)(1), (d), (e), (h),
and (i), SSA, and Section 3304(a)(16), FUTA, and to establish uniform
minimum requirements for the payment of costs, safeguards, data-sharing
agreements when UC information is disclosed, and conformity and
substantial compliance with this proposed rule. Subpart B would apply
to states and state UC agencies, as defined in Sec. 603.2(f) and (g).
Section 603.4, Confidentiality Requirement of Federal UC Law
Paragraph (a) of Sec. 603.4 quotes the ``methods of
administration'' requirement of Section 303(a)(1) of the SSA, which is
the basis for the confidentiality requirement.
Paragraph (b) sets forth the Department's interpretation of Section
303(a)(1), SSA, as including a basic requirement of confidentiality. It
would require states to maintain the confidentiality of any UC
information which reveals the name or any identifying particular about
any individual or any past or present employer or employing unit, or
which could foreseeably be combined with other publicly available
information to reveal any such particulars, and to include provision
for barring the disclosure of any such information, except as provided
in new part 603.
The confidentiality requirement has its origin in the beginning of
the program and is derived from Section 303(a)(1) of the SSA. Section
303(a)(1), SSA, requires states to provide in their laws for such
``methods of administration'' as the Secretary of Labor determines are
``reasonably calculated to insure full payment of unemployment
compensation when due.'' From the early years of the program this
provision has been interpreted to require the confidentiality of
information collected from individuals and employers for UC program
administration. Confidentiality is necessary to avoid deterring
individuals from claiming benefits or exercising their rights, to
encourage employers to provide information necessary for program
operations, to avoid interference with the administration of the UC
program, and to avoid notoriety for the program if program information
were misused.
Although the Department of Labor's interpretation of Section
303(a)(1), SSA, as requiring confidentiality is longstanding, it has
not previously been set forth in regulations. However, Unemployment
Insurance Program Letters (UIPLs) 23-96 (``Disclosure of Confidential
Employment Information to Private Entities'') and 34-97 (``Disclosure
of Confidential Unemployment Compensation Information''), which would
be superseded upon completion of this Rulemaking, set forth the
confidentiality requirement.
The confidentiality requirement would apply, by its express terms,
only to state information. (``UC information'' is information that
``pertain[s] to administration of the State UC law * * *''. (Emphasis
added.)) Nevertheless, the regulations and operating instructions
governing the Federal UC and benefit programs of UCFE, UCX, TAA, ATAA
and DUA require states to apply the same state law confidentiality
protections that apply to state UC program information to information
of those Federal UC and benefit programs. (See UCFE--20 CFR 609.13(b);
UCX--20 CFR 614.14(b); TAA and ATAA--20 CFR 617.57(b); and DUA--20 CFR
Sec. 625.16(b).) Thus, in order to fulfill their responsibilities
under the respective Federal program regulations and their
administrative agreements with the Secretary of Labor, the states would
need to apply the confidentiality protections of state law conforming
with these part 603 proposed regulations to UCFE, UCX, TAA, ATAA and
DUA program information. In addition, in accordance with Sec. 603.6,
states would need to apply the disclosure provisions of proposed part
603 to state-held information from the Federal UC and benefit programs
of UCFE, UCX, TAA and ATAA (except, as described in the following
paragraph, for confidential business information held by the states
under the TAA program), and DUA, as well as to state UC information.
The disclosure provisions of proposed part 603 would not apply,
however, to the confidential business information that the states
collect under the TAA program, as reauthorized by the Trade Act of
2002, P.L. 107-210, or collected under the NAFTA-TAA program, which is
being phased out. A state may, under the reauthorized and expanded TAA
program, collect confidential business information upon request by the
Secretary of Labor under authority of Section 221(a)(2) of the Trade
Act (19 U.S.C. 2271(a)(2)), which requires a state to ``assist'' the
Secretary of Labor in the review of a petition for certification of
eligibility to apply for benefits by ``verifying such information and
providing such other assistance as the Secretary may request.'' This
information concerns changes in sales or production, imports of
competitive articles, and shifts in production. Employers and their
customers would be very reluctant to disclose this business information
to the state were it subject to disclosure under the proposed
exceptions to confidentiality in Sec. 603.5 or the mandatory
disclosure requirements of Sec. 603.6. A proposed rulemaking to
implement the reauthorized TAA program will address the confidentiality
of this business information.
Paragraph (c) would require each state law to contain provisions
that are interpreted and applied consistently with the requirements of
this subpart and provide for penalties for any disclosure of
confidential information that is inconsistent with any provision of
this subpart.
Section 603.5, Exceptions to the Confidentiality Requirement
This section sets forth the permissible exceptions to the
confidentiality requirement. Disclosure would be permissible under
exceptions at paragraphs (a) through (g) only if authorized by state
law and if the state determines the resources required for such
disclosure does not interfere with the efficient administration of the
state UC program and law. Disclosure is permissible under exceptions
(h) through (j) without such restriction.
Paragraph (a) would provide that information in the public domain,
as defined in Sec. 603.2(c), is not covered by
[[Page 50026]]
the confidentiality requirement. This means it would be up to the state
to determine whether and how much of such information is open to the
public or is kept confidential.
Some UC information, such as employer names and addresses, is
public in the sense that it is available from other public sources like
telephone directories but is not public domain information for purposes
of this rule.
Appeals hearing records and decisions are included in the
definition of ``public domain information'' and, therefore, would be
excluded from the confidentiality requirement. The Department of Labor
has historically stated, and repeats here, that the public interest in
proper administration of the UC program, specifically in payments of
benefits only to eligible individuals, and in open governmental
adjudicatory proceedings (to preserve a fair process to claimants and
employers by avoiding star-chamber-type proceedings), is served by open
hearings and hearing records. However, nothing in the proposed rule
would prohibit states from making agency hearings or hearing records
confidential as a matter of state law or practice.
Paragraph (b) would provide that the confidentiality requirement
does not apply to essential program activities, e.g. those activities
relating to the taking of claims for UC, the determination of
eligibility (including appeals), the payment of benefits, the
determination of employer liability, the collection of amounts due the
state's unemployment fund, or any other activity directly related to
the administration of the UC program. As a specific example, Section
303(g), SSA, permits states to withhold UC payable under state laws to
recover overpayments of benefits made to individuals by another state
or to recover an overpayment of state UC from a payment made under a
Federal unemployment benefit or allowance program if the state has
entered into an agreement with the Secretary of Labor under Section
303(g)(2), SSA, and if it reciprocally recovers overpayments made under
a Federal unemployment benefit or allowance program from state
payments. Disclosure of information which is necessary for purposes of
carrying out these interstate and cross-program recoveries is
permissible under this section (and, as discussed below, such
disclosure is required under Sec. 603.6(a)).
The Department of Labor emphasizes that paragraph (b) applies only
when disclosure is necessary for the proper administration of the UC
program. Redisclosure by a recipient for any separate or non-essential
purpose is not authorized under this exception. As a result, prior to
any disclosure under this paragraph, states are expected to take
reasonable measures to assure that no impermissible redisclosure
occurs. If, for example, information is provided to another state's UC
agency, this may be as simple as assuring that a state's laws contain
similar confidentiality requirements. In the case of disclosure to an
agent or contractor, such as a collections agency, this means building
confidentiality requirements and safeguards into the contract.
Paragraph (c) would permit disclosure of UC information about an
individual to that individual, or of UC information about an employer
to that employer.
Paragraph (d) would permit disclosure of UC information on the
basis of informed consent to: (1) An agent or attorney of an
individual, of information that pertains to that individual, or to an
agent or attorney of an employer, of information that pertains to that
employer, and (2) to a third party only if that entity obtains a
written release from the individual or employer to whom the information
pertains. In the case of disclosures to an agent or attorney, the agent
or attorney must present a written release from the individual or
employer being represented, or, if a written release is impossible or
impracticable to obtain, such other form of consent as is permitted by
the state UC agency in accordance with state law. In the case of
disclosures to a third party, the release must be signed and must
include the following statements:
Specific identification of the information that is to be
disclosed;
That state government files will be accessed to obtain
that information;
The specific purpose or purposes for which the information
is sought and a statement that information obtained under the release
will be used only for that purpose or purposes; and
The parties who may receive the information released.
The purpose specified in the release must be limited to providing a
service or benefit to the individual signing the release that such
individual expects to receive as a result of signing the release, or
carrying out administration or evaluation of a public program to which
the release pertains. Further, payment of costs, safeguards, and
agreements would be required, as provided in proposed Sec. Sec. 603.8
through 603.10. Also, the states would be required by proposed
Sec. Sec. 603.9 and 603.10 to impose certain penalties for misuse of
data, additional audits, and additional terms in disclosure agreements.
The principle behind disclosure to a third party on the basis of
informed consent is that individuals and employers should be able to
waive their privacy when they believe it is in their interest to do so.
The confidentiality requirement exists to serve the interests of
individuals and employers as well as the needs of the federal-state UC
program. However, as described, additional conditions would be required
because of the greater potential threat to employer or individual
privacy posed by third-party collection, storage, maintenance, use, and
possible misuse of confidential UC information. This question is dealt
with in Unemployment Insurance Program Letter 23-96 (``Disclosure of
Confidential Employment information to Private Entities,'' 61 FR
28236), which would be superseded upon completion of this rulemaking.
Finally, the Electronic Signatures in Global and National Commerce
Act of 2000 (E-Sign), P.L. No. 106-229, may apply where one or more
parties wish to use an electronic informed consent release (Sec.
603.5(d)) or a disclosure agreement (Sec. 603.10). E-Sign, among other
things, sets forth the circumstances under which electronic signatures,
contracts, and other records relating to such transactions (in lieu of
paper documents) are legally binding. Thus, an electronic communication
may suffice under E-Sign to establish a legally binding contract. The
states would need to consider E-Sign's application to these informed
consent releases and disclosure agreements. In particular, a state
must, to conform and substantially comply with this proposed
regulation, assure that these informed consent releases and disclosure
agreements would be legally enforceable. If an informed consent release
or disclosure agreement is to be effectuated electronically, the state
would have to determine whether E-Sign applies to that transaction,
and, if so, make certain that the transaction satisfies the conditions
imposed by E-Sign. The state would also be required to make certain
that the electronic transaction complies with every other condition
necessary to make it legally enforceable. A note following proposed
Sec. 603.5(d) explains this.
Paragraph (e) would allow disclosure of UC information to a public
official in the performance of his or her official duties. Since the
1970s, the Department of Labor's guidance to states has recognized this
exception, which allows for a variety of uses of UC information that
ETA believes are beneficial, such as law enforcement, fraud and benefit
accuracy in programs not addressed by
[[Page 50027]]
Federal UC law (for example, Black Lung and state workers' compensation
programs), program assessment (for example, of WIA and Vocational
Education programs), and research.
``Performance of official duties'' means administration or
enforcement of law or, in the case of the legislative branch, oversight
of UC law. It does not mean the conduct of research by an individual at
a public or private university, although, where appropriate, a
researcher could obtain access to confidential UC information under the
exceptions provided for in paragraph (f) (agent or contractor of a
public official) or (d)(2) (disclosure to a third party on the basis of
informed consent), discussed elsewhere. ETA believes that there is less
risk of unauthorized use or disclosure of UC information if
responsibility for safeguarding confidentiality rests within the
executive or legislative branches of government. ETA also believes that
limiting access within the legislative branch to those legislators who
need the information to help oversee the UC program further minimizes
the possibility of unauthorized use.
Paragraph (f) would allow disclosure of UC information to an agent
or contractor of a public official to whom disclosure is permissible
under paragraph (e). This provision takes into account that research is
often contracted out by public agencies. If confidential UC information
could not be disclosed to agents or contractors of public officials,
valuable research might be forgone or become more expensive, as
agencies would have to undertake interviews of program participants in
order to gather program evaluation information. A public official,
ideally one with responsibility for the program or initiative on which
research is being conducted, would be required to enter into the
written agreement required by proposed Sec. 603.10 and be held
responsible for use of the information by the contractor or agent.
Redisclosure of such information by a public official to an agent or
contractor would be permitted only as provided in proposed Sec.
603.9(c).
When possible, states should provide non-confidential information
to researchers in lieu of confidential information. State agencies may,
for example, encrypt identifiers before providing data to a researcher
so that the researcher cannot identify individuals or employers. The
agency could add subsequent years of data for the researcher using the
same encryption so that the researcher can conduct longitudinal
studies.
Paragraph (g) would provide that the confidentiality requirement
does not apply to information collected exclusively for statistical
purposes under a cooperative agreement with the Bureau of Labor
Statistics (BLS) and that part 603 would not restrict or impose any
condition on the transfer of any other information to the BLS under an
agreement, or the BLS's disclosure or use of such information.
Transfers of information to the BLS would be excepted from the
confidentiality requirement because the conditions under which they
occur already satisfy the requirements of the confidentiality rule, and
ETA does not wish to interfere with the BLS' existing agreements or the
ability of the BLS to carry out its statistical programs. Specifically,
safeguards, agreements, and payment of costs are already in place. The
BLS applies strict safeguards to protect the confidentiality of
information it receives. It also funds states for collection and
disclosure of information. Finally, transfers of information to the BLS
are governed by agreements that provide assurance that these safeguards
will be followed.
Paragraph (h) would permit disclosure of UC information in response
to a court order, or to an official with subpoena authority, as
specified in Sec. 603.7(b).
Paragraph (i) would permit disclosure of UC information as required
by Federal law.
Section 603.6, Disclosures Required by Federal UC Law
This section lists disclosures required by Federal UC law. These
requirements apply to state UC information as well as to information
from the Federal UC and benefit programs of UCFE, UCX, TAA and ATAA
(except for the confidential business information compiled by the
states under the TAA program), DUA, and any Federal extended UC benefit
program. These statutory requirements, by their terms, require
disclosure of information maintained regarding these Federal programs,
as well as state UC information, either because they specifically state
that they include such Federal information or are written broadly
enough to cover it. The utility of the information exchanges listed in
this section would be impeded if this Federal information was not
included in them.
Paragraph (a) sets forth the Department of Labor's interpretation
of Section 303(a)(1) of the SSA as requiring disclosure of all
information necessary for the proper administration of the UC program.
This paragraph requires, for example, disclosure to the Internal
Revenue Service for purposes of UC tax administration or to the Bureau
of Citizenship and Immigration Services (formerly the Immigration and
Naturalization Service) for purposes of verifying a claimant's
immigration status. It also requires disclosure for purposes of
interstate and cross-program offsets under Section 303(g), SSA.
Paragraph (b) covers other provisions of Federal UC law, with the
exception of Section 303(f), concerning an IEVS, which is addressed in
subpart C, that specifically require disclosure of certain state UC
information and state-held Federal UC benefit information. These
provisions include Sections--
303(a)(7), SSA, which requires state law to provide for
making available, upon request, to any agency of the United States
charged with the administration of public works, or assistance through
public employment, the name, address, ordinary occupation, and
employment status of each recipient of UC, and statement of such
recipient's rights to further compensation under state law.
303(c)(1), SSA, which requires each state to make its UC
records available to the Railroad Retirement Board, and to furnish such
copies of its UC records to the Railroad Retirement Board as the Board
deems necessary for its purposes. This statutory provision requires a
state to make ``its records'' available to the Railroad Retirement
Board. Because Section 303 concerns state administration of the
federal-state UC program, we interpret use of the term ``records'' in
Section 303(c)(1) to limited to disclosure of UC records and not to
include other records of the state.
303(d)(1), SSA, which requires each state UC agency, for
purposes of determining an individual's eligibility benefits, or the
amount of benefits, under a food stamp program established under the
Food Stamp Act of 1977, to disclose, upon request, to officers and
employees of the Department of Agriculture and state food stamp
agencies, any of the following information contained in the records of
such state agency--
(i) Wage information,
(ii) Whether an individual is receiving, has received, or has made
application for, UC, and the amount of any such compensation being
received, or to be received, by such individual,
(iii) The current (or most recent) home address of such individual,
and
(iv) Whether an individual has refused an offer of employment and,
if so, a description of the employment so offered and the terms,
conditions, and rate of pay therefore.
[[Page 50028]]
303(e)(1), SSA, which requires each state UC agency to
disclose, upon request, directly to officers or employees of any state
or local child support enforcement agency, any wage information
contained in the records of the state UC agency for purposes of
establishing and collecting child support obligations from, and
locating, individuals owing such obligations.
As explained in detail in UIPL 45-89 (55 FR 1886, January 19,
1990), Section 303(e)(1) limits required disclosure to use for purposes
of establishing ``child support obligations'' being enforced by a child
support enforcement agency. Accordingly, state UC agencies would not be
required to disclose information for purposes related to support
obligations for the custodial parent of the child receiving services
from the child support enforcement agency. The Department intends to
pursue legislation that would expand the purposes for which disclosure
of wage information (as well as intercept of UC) is required under
Section 303(e) to include enforcement of custodial parent support. In
the meantime, however, State UC agencies are encouraged to disclose
information related to such obligations under the optional disclosure
permitted under Sec. 603.5(e).
303(h), SSA, which requires each state UC agency to
disclose quarterly, to the Secretary of Health and Human Services
(HHS), wage information and claim information as required under Section
453(i)(1) of the SSA (establishing the National Directory of New
Hires), contained in the records of such agency, for purposes of
Subsections (i)(1), (i)(3), and (j) of Section 453, SSA (establishing
the National Directory of New Hires and its uses for purposes of child
support enforcement, Temporary Assistance to Needy Families (TANF),
TANF research, administration of the earned income tax credit, and use
by the Social Security Administration).
303(i), SSA, which requires each state UC agency to
disclose, upon request, to officers or employees of the Department of
Housing and Urban Development (HUD) and to representatives of a public
housing agency, for purposes of determining an individual's eligibility
for benefits, or the amount of benefits, under a housing assistance
program of HUD, any of the following UC information contained in the
records of such state agency about any individual applying for or
participating in any housing assistance program administered by HUD who
has signed a consent form approved by the Secretary of HUD--
(i) Wage information, and
(ii) Whether the individual is receiving, has received, or has made
application for, UC, and the amount of any such compensation being
received (or to be received) by such individual.
Section 303(i)(2) states that the ``Secretary of Labor shall
prescribe regulations governing how often and in what form information
may be disclosed under paragraph (1)(A)'' of Section 303(i). However,
what is a useful frequency and format for such disclosure depends upon
the needs of a particular requesting agency (in the case of Section
303(i), either HUD or a particular public housing agency) and the
amount the agency is willing to reimburse the UC agency for providing
the information. These will vary depending upon the circumstances of
the particular requesting agency and the state or locality in which it
operates. The preferences of the requesting agency may also change over
time, along with changes in technology. Thus, in order to provide
states and localities with needed flexibility, and to avoid drafting
regulatory requirements that may need frequent revision, we have chosen
not to regulate the frequency and format of disclosures at this time.
3304(a)(16), Federal Unemployment Tax Act (FUTA), which
requires each state UC agency--
(i) To disclose, upon request, to any state or political
subdivision thereof administering a TANF program funded under part A of
Title IV of the SSA, wage information contained in the records of the
state UC agency which is necessary (as determined by the Secretary of
HHS in regulations), for purposes of determining an individual's
eligibility for TANF assistance or the amount of TANF assistance; and
(ii) To furnish to the Secretary of HHS, in accordance with that
Secretary's regulations at 45 CFR 303.108, wage information (as defined
at 45 CFR 303.108(a)(2)) and UC information (as defined at 45 CFR
303.108(a)(3)) contained in the records of such agency for the purposes
of the National Directory of New Hires established under Section 453(i)
of the SSA.
Paragraph (c) would require each state law to contain provisions
that are interpreted and applied consistently with this section.
Section 603.7, Subpoenas, Other Compulsory Process, and Disclosure to
Officials With Subpoena Authority
This section sets forth the Department of Labor's long-standing
position on state responses to subpoenas and other compulsory
processes. With two exceptions, it would require the state or state UC
agency to file and pursue a motion to quash, in the appropriate forum,
when a subpoena or other compulsory process of a lawful authority,
which requires the production of or appearance for testimony about
confidential UC information, is served upon the state UC agency or the
state. If such a motion were denied, after a hearing in the appropriate
forum, confidential UC information may be disclosed, but only upon such
terms as the court or other forum may order, including that the
recipient protect the disclosed information and pay the state's or
state UC agency's costs of disclosure.
The proposed exceptions are, first, where a court has previously
issued a binding precedential decision that requires such disclosures
and, second, when confidential UC information is requested by an
official of state or Federal government, other than a clerk of court on
behalf of a litigant, with authority to obtain the information by
subpoena under state or Federal law. These proposed exceptions
recognize that filing a motion to quash in these circumstances may
indeed be futile and a waste of administrative resources. They would
also facilitate state cooperation with law enforcement.
We believe that filing motions to quash subpoenas involving the
disclosure of confidential UC information is an important means of
avoiding unnecessary or unlawful disclosures, which might deter
claimants from exercising their rights or employers from providing
information. Where the exceptions apply, a state may still file such a
motion if warranted, or may file a motion to require that the recipient
protect the disclosed information or for reimbursement of costs. (As
described in proposed Sec. 603.8(b), seeking reimbursement in some
manner would be required if grant funds are used to cover the costs of
the disclosure.) If the state law is sufficiently rigorous concerning
the release of confidential UC information, the courts may be less
inclined to enforce subpoenas; so, states may wish to review their
state laws in this regard. To conserve time and funds, states may wish
to pursue a motion to quash by mail or by telephone if permitted by
state law.
Section 603.8, Payment of Costs; Program Income
This section would set forth rules on the use of UC grant funds for
disclosures of UC information, recovery of the state's and state UC
agency's costs for disclosing information not made in the course of the
administration of the UC
[[Page 50029]]
program, and use of program income. It would require payment of costs
for any disclosures made for purposes other than administration of the
UC program, with limited exceptions for requests involving incidental
costs and some situations involving subpoenas. The statutory principle
underlying these rules is that funds granted under Title III of the SSA
for the administration of the state UC law may not be used for other
purposes. This is required by the explicit statutory terms of Section
302(a) of the SSA (providing for payments to states for ``proper and
efficient administration'' of state UC law), Section 303(a)(8) of the
SSA (limiting expenditure of UC grants to amounts necessary for
``proper and efficient administration'' of state UC law), and Section
303(a)(9) of the SSA (requiring repayment to the Secretary Labor of any
funds expended for purposes other than, or in amounts in excess of,
those necessary for the proper administration of state UC law). It is a
conformity requirement for approved state laws and is a substantial
compliance requirement for the states and state UC agencies under
Section 303(b) of the SSA. Thus, even if a required disclosure in Title
III, SSA, or Section 3304(a)(16) does not explicitly require payment of
costs, such payment is required by this section under authority of the
sections of Title III, SSA, mentioned above.
Paragraph (a) of Sec. 603.8 sets forth the general rule
prohibiting the use of grant funds to pay any of the costs of making
any disclosure except as provided in paragraph (b). It also specifies
that grant funds may not be used to pay any of the costs of making any
disclosures for non-UC purposes under Sec. 603.5(e) (to a public
official), Sec. 603.5(f) (to an agent or contractor of a public
official), Sec. 603.5(g) (to BLS), Sec. 603.6(b) (as required by
Federal UC law for non-UC purposes), or Sec. 603.22 (to HHS or a
requesting agency for purposes of an IEVS)).
Paragraph (b) sets out the exceptions when use of grant funds would
be permitted to pay the costs of disclosures. Grant funds may be used
to pay the costs of disclosures made for purposes of administration of
the UC program (which may include some disclosures under Sec. Sec.
603.5(a) (public domain information), (c) (to an individual or
employer), or (d) (on the basis of informed consent)). Grant funds may
also be used to pay the costs of disclosures made in response to
requests involving only incidental staff time and no more than nominal
processing costs, and for disclosures in response to subpoenas under
Sec. 603.7(b)(1) (when a court decision requires disclosure) if a
court has denied recovery of costs, or to officials with subpoena
authority under Sec. 603.7(b)(2) if the state UC agency has attempted
but not been successful in obtaining reimbursement of costs.
Paragraph (c) sets out how costs would have to be calculated. Costs
would be required to be calculated in accordance with the cost
principles and administrative requirements of 29 CFR part 97 and Office
of Management and Budget Circular No. A-87 (Revised). Costs would be
required to be charged to and paid by the recipient and would include
any initial start-up costs incurred by the state UC agency, such as
computer reprogramming required to respond to a request, and the costs
of implementing safeguards and agreements required by Sec. Sec. 603.9
and 603.10. (Start-up costs would not include the costs to the state UC
agency of obtaining, compiling, or maintaining information for its own
purposes.) Postage or other delivery costs incurred in making any
disclosure would be part of the costs of making the disclosure. Penalty
mail, as defined in 39 U.S.C. 3201(1), must not be used to transmit
information being disclosed, except when the disclosure is made for
purposes of administration of the UC program. By statute (Sections
453(e)(2) and 453(g) of the SSA), the Secretary of HHS has the
authority to determine what constitutes a reasonable amount for the
reimbursement for disclosures under Sections 303(h), SSA, and
3304(a)(16)(B), FUTA.
Paragraph (d) would require the payment of costs, calculated in
accordance with paragraph (c), to be paid by and collected from the
recipient of the information either in advance or by way of
reimbursement. If the recipient is not a public official, such costs,
except for good reason, would be required to be paid and collected in
advance. Payment in advance would mean full payment of costs before or
at the time the disclosed information is given in hand or sent to the
recipient. ETA's intention is that the ``good reason'' exception
generally be associated with disclosures involving minimal costs.
The requirement for payment of costs would be met when a state UC
agency has in place a reciprocal data-sharing agreement or arrangement
with another agency or entity. ``Reciprocal'' means that the relative
benefits received by each party to the agreement or arrangement are
approximately equal.
Paragraph (e) would provide that reimbursed costs and any funds
generated by the disclosure of information are program income and may
be used only as permitted by 29 CFR 97.25(g) (on program income).
Program income may not be used to benefit a state's general fund or
another program.
Section 603.9, Safeguards for Disclosed Information
This proposed section sets forth the safeguards that states and
state UC agencies would have to require of recipients who obtain
confidential UC information under: Sec. Sec. 603.5(d)(2) (disclosure
to a third party on the basis of informed consent); (e) (disclosure to
a public official), except as provided in paragraph (d) of this
section; (f) (disclosure to an agent or contractor of a public
official); Sec. 603.6(b)(1) through (4), (6), and (7)(i) (disclosures
required by Federal UC law, except for disclosures to HHS under
Sections 303(h), SSA, and 3304(a)(16)(B), FUTA); or Sec. 603.22 (to a
requesting agency for purposes of an IEVS). These safeguards are
similar to those in present part 603 that currently apply to
disclosures under an IEVS but have been simplified to provide
flexibility to states. They would preclude the unauthorized use,
access, and redisclosure of the information.
Not all the disclosure requirements of Title III, SSA, referred to
above explicitly require safeguards, but Section 303(a)(1), SSA,
provides a basis for the requirement. Safeguards protect against the
misuse or improper redisclosure of disclosed information and,
therefore, like the confidentiality requirement itself, maintain
claimant and employer confidence in the UC system and their willingness
to participate and cooperate in its administration. This participation
and cooperation is essential to the system's effective administration.
Requiring safeguards is therefore a ``method of administration''
reasonably calculated to insure full payment of UC when due.
Paragraph (a) sets forth the general rules, which would require the
state or state UC agency to require that the recipient of disclosed
information safeguard the information against unauthorized access or
redisclosure as provided in paragraphs (b) and (c), and that the
recipient be subject to penalties provided by the state law for
unauthorized disclosure.
Paragraph (b) sets forth safeguards that the state or state UC
agency would have to require of recipients.
Paragraph (b)(1)(i) would require states or state UC agencies to
require recipients to use the disclosed information only for purposes
authorized by law and consistently with an agreement that meets the
requirements of Sec. 603.10.
[[Page 50030]]
Paragraph (b)(1)(ii) would require the recipient to store the
disclosed information in a place physically secure from access by
unauthorized persons.
Paragraph (b)(1)(iii) would require the recipient to store or
process disclosed information maintained in electronic format, such as
magnetic tapes or discs, in such a way that unauthorized persons cannot
obtain the information by any means.
Paragraphs (b)(1)(ii) and (iii) can be met by, among other things,
placing paper files in a locked cabinet or room, and in the case of
information maintained electronically, using electronic passwords or
computer encoding to block access by unauthorized persons.
Paragraph (b)(1)(iv) provides for precautions to ensure that only
authorized personnel are given access to disclosed information stored
in computer systems.
Paragraph (b)(1)(v) would require each recipient agency to give
specified instructions to all personnel having access to the disclosed
information and to sign an acknowledgment that all such personnel have
been so instructed and that they will adhere to the state's or state UC
agency's confidentiality requirements and procedures which are
consistent with subpart B and the agreement required by Sec. 603.10,
and will report any infractions to the state UC agency.
Paragraph (b)(1)(vi) would require the recipient to dispose of
information disclosed or obtained, and any copies thereof made by the
recipient agency, entity, or contractor, after the purpose for which
the information is disclosed is served, except for disclosed
information possessed by any court. Disposal means return of the
information to the disclosing state or state UC agency or destruction
of the information, as directed by the state or state UC agency.
Disposal includes deletion of personal identifiers by the state or
state UC agency in lieu of destruction. The state or state UC agency
would set appropriate time limits on retention on a case-by-case basis
in order to prohibit permanent records storage.
Paragraph (b)(1)(vii) would require states to maintain a tracking
system sufficient to allow an audit of compliance with the requirements
of this subpart. States would be free to specify the details for this
disclosure tracking system. Tracking by states is necessary to ensure
that recipients of disclosed information are complying with the
required safeguards. This responsibility may not be handed over to the
recipient. Where recipients would be required to pay for the costs of
making a disclosure, the costs of tracking should be reflected in the
amount charged to the recipient. As a result, tracking, like other
provisions in this proposed rule, should not increase costs for state
UC agencies.
Paragraph (b)(2) would specifically require the state to conduct,
in the case of optional disclosures to entities on the basis of
informed consent (Sec. 603.5(d)(2)), a periodic audit of sample
transactions to assure that the entity receiving information has on
file a written release authorizing each access. The audit would be
required to ensure that the information is not being used for any
unauthorized purpose. This provision would also require that all
employees of entities receiving access to information pursuant to Sec.
603.5(d)(2) be subject to the same confidentiality requirements, and
state criminal penalties for violation of those requirements, as are
employees of the state UC agency.
The safeguards in proposed paragraph (b) do not address specific or
new technologies used in storing and sharing confidential UC
information. Nevertheless, these safeguards would be applicable to
disclosures of confidential UC information no matter what medium of
storing and sharing the information is used. ETA encourages efficient
use of technologies in storage, retention, and, where appropriate,
sharing of information. Proposed paragraph (b) would not restrict the
types of media that may be used to transmit confidential UC information
as long as the safeguards are met.
Paragraph (c)(1) would permit a state or state UC agency to
authorize any recipient of confidential information under paragraph (a)
(which applies to disclosure to a public official, except as provided
in paragraph (d) of this section, to an agent or contractor of a public
official, and to any other entity on the basis of informed consent) to
redisclose information only in eight situations. These are
redisclosure:
To the individual or employer who is the subject of the
information (paragraph (c)(1)(i)).
To attorney or other duly authorized agent representing
the individual or employer (paragraph (c)(1)(ii)).
In a civil or criminal proceedings for or on behalf of a
recipient agency or entity (paragraph (c)(1)(iii)).
As provided in Sec. 603.7, in response to a subpoena
(paragraph (c)(1)(iv)).
To agents and contractors of public officials (paragraph
(c)(1)(v)). Under this provision, the recipient public official would
remain responsible for the uses of the confidential UC information by
the agent or contractor.
By one public official to another public official
(paragraph (c)(1)(vi)). This provision would take into account
situations in which public officials in different agencies or in
different states need to share confidential UC information with each
other in the course of administering a public program.
Of wage information from state and local child support
enforcement agencies to agents under contract with such agencies for
purposes of carrying out child support enforcement, consistent with
Section 303(e)(5) of the SSA (paragraph (c)(1)(vii)) and state law.
Though proposed paragraph (c)(1)(vii) covers only wage information,
redisclosure of other confidential UC information between a state or
local child support enforcement agency and its contractor or agent
would be permitted by paragraph (c)(1)(v).
By an entity that has obtained confidential UC information
on the basis of informed consent, when authorized by the state and by a
written release from the individual or employer to whom the information
pertains that meets the requirements of proposed Sec. 603.5(d)(2)
(paragraph (c)12(1)(viii)).
The redisclosure provisions would allow sharing of confidential UC
information by a public official to an individual administering the WIA
who is not a public official if the individual is an agent or
contractor of a public official, or on the basis of informed consent.
Paragraph (c)(2) would require that information redisclosed under
paragraphs (c)(1)(v) and (vi) be subject to the safeguards in paragraph
(b).
Paragraph (d) would provide that the safeguards in this section,
including the limitations on redisclosure, do not apply to disclosures
of UC information to a Federal agency where the Department has
published a notice in the Federal Register that the Federal agency has
appropriate safeguards, and limitations on redisclosure, to protect the
confidentiality of the disclosed information consistent with Section
303(a)(1), SSA. The reason for this exception is to avoid unnecessary
duplication of requirements, or the creation of inconsistent
requirements, concerning safeguards and restrictions on redisclosure,
for Federal agencies that already follow strong safeguards for
protecting the confidentiality of information. This exception is
limited to Federal agencies because the Department, through its regular
contacts with such agencies, is in a position to easily determine
whether the applicable
[[Page 50031]]
Federal laws and regulations provide safeguards and limitations
consistent with Section 303(a)(1), SSA. Two disclosures for which the
Department has already determined that a Federal agency has in place
adequate alternative safeguards include disclosures to the Internal
Revenue Service (IRS) for purposes of administering the Health Coverage
Tax Credit (HCTC), and disclosures of wage and claim information to HHS
for purposes of the National Directory of New Hires.
The HCTC, established by the Trade Act of 2002 (Pub. L. 107-210),
is a partial Federal tax credit toward the purchase of qualified health
insurance for eligible individuals and their families. Eligible
individuals include workers covered by the TAA program who are either
receiving Trade Readjustment Allowances (TRA) or who would be eligible
for TRA but for not having exhausted UC and eligible participants in
the ATAA program. The IRS, which administers the HCTC, needs
information from state workforce agencies (SWAs) about who is eligible
for TRA, or would be but for not having exhausted UC, as well as
information about who is participating in the ATAA program, to
determine eligibility for the tax credit. UC information needed by the
IRS would fall within the protection of this rule, and TAA and ATAA
information would be subject under state law to the same
confidentiality protections as contained in this rule.
However, Section 6103 of the Internal Revenue Code and IRS
regulations on the confidentiality of tax return information (26 CFR
301.6103(a)-1 et seq.) are sufficient to protect the confidentiality of
this information consistent with Section 303(a)(1), SSA. (Once this
information about ATAA, TRA, and UC eligibility is submitted to the IRS
or its agents, it becomes protected tax return information.) Requiring
the IRS to follow the requirements of this regulation in addition to
Section 6103 and IRS regulatory requirements would be unnecessarily
burdensome and may create conflicting obligations for that agency.
Accordingly, the requirements of Sec. 603.9 of this rule, concerning
safeguards, do not apply to disclosures to the IRS for purposes of
administering the HCTC. The Department has determined that the IRS has
appropriate alternative safeguards, and limitations on redisclosure, to
protect the confidentiality of the disclosed information consistent
with Section 303(a)(1), SSA.
Similarly, wage and claim information disclosed to HHS for purposes
of the National Directory of New Hires is protected by a ``security
plan'' of HHS which the Department of Labor has determined provides
safeguards adequate to meet the requirement of Section 303(a)(1) to
maintain confidentiality. Further, laws governing information in the
National Directory of New Hires impose strict controls on redisclosure
and disposal of that information. See, e.g., 42 U.S.C. 653(i), (j),
(l), and (m). Accordingly, the requirements of Sec. 603.9 of this
rule, concerning safeguards, do not apply disclosures to the HHS for
purposes of the National Directory of New Hires. The Department has
determined that HHS has appropriate alternative safeguards, and
limitations on redisclosure, to protect the confidentiality of the
disclosed information consistent with Section 303(a)(1), SSA.
Section 603.10, Agreements
This section sets out the proposed requirements concerning data-
sharing agreements with parties obtaining confidential UC information.
The required terms and conditions are similar to those contained in the
existing part 603 but have been simplified to provide state
flexibility.
Paragraph (a)(1) would require a state or state UC agency to enter
into a written, enforceable agreement with any agency or entity
requesting disclosure of UC information under proposed Sec.
603.5(d)(2) (disclosure to a third party on the basis of informed
consent); (e) (disclosure of information to a public official), except
as provided in paragraph (d) of this section; (f) (disclosure to an
agent or contractor of a public official); Sec. 603.6(b)(1) through
(4); (6); and (7)(i) (where disclosure is required by Federal UC law,
except to HHS under Sections 303(h), SSA, and 3304(a)(16)(B), FUTA);
and Sec. 603.22 (to a requesting agency for purposes of an IEVS).
Paragraph (a)(2) requires, for disclosure to an agent or contractor
of a public official, that the state or state UC agency enter into a
written, enforceable agreement (whether on paper or electronic) with
the public official on whose behalf of the agent or contractor will
obtain information, which requires the public official to ensure that
the agent or contractor complies with the safeguards of Sec. 603.9.
The purpose of this provision would be to have the public official with
responsibility for the public purpose that is being carried out by the
use of the disclosed information, assume responsibility for
safeguarding the confidentiality of the data.
Paragraph (b)(1) sets out the terms and conditions that would be
required to be included in all agreements, and also provides that the
terms and conditions of any agreement need not be limited to those
specifically required. Required to be included would be:
A description of the specific information to be furnished
and the purposes for which the information is sought;
A statement that those who request or receive information
under the agreement will be limited to those with a need to access it
for purposes listed in the agreement;
The methods and timing of requests for information,
including the format to be used;
Provision for paying the state or state UC agency for any
costs of furnishing information, as required by Sec. 603.8 (on costs);
Provision for safeguarding the information disclosed, as
required by Sec. 603.9 (on safeguards); and
Provision for on-site inspections of the agency, entity,
or contractor to assure that the requirements of the state's law and
the agreement or contract are being met.
Paragraph (b)(2) would require that, for disclosures under Sec.
603.5(d)(2) (to a third party on the basis of informed consent), the
agreement required by paragraph (a) of this section must assure that
the information will be accessed by only those entities with
authorization under the individual's or employer's release, and that it
may be used only for the specific purposes authorized in that release.
This safeguard is included in UIPL 23-96 (Disclosure of Confidential
Employment Information to Private Entities), which will be superseded
by a final rule.
A single, comprehensive agreement would satisfy the requirement for
an agreement in cases where repeated disclosures to the same entity
occur.
Paragraph (c) discusses enforcement and breach of agreements.
Paragraph (c)(1) would prescribe the steps to be taken in case of
any breach of an agreement, including failure to timely pay for the
costs of any disclosure. First, the agreement would have to be
suspended, and any further disclosure would have to be prohibited,
until the state or state UC agency is satisfied that corrective action
has been taken and that no further breach of the agreement will occur.
Second, in the absence of prompt and satisfactory corrective action,
the agreement would have to be cancelled, and the party would have to
surrender all information obtained under the agreement and any
[[Page 50032]]
other information relevant to the agreement.
It is necessary to the integrity of the confidentiality requirement
that any breach of an agreement, whatever its importance may seem in
the abstract, be promptly addressed and corrected, and, in the absence
of prompt and satisfactory correction, that the agreement be cancelled
and the state or state UC agency retrieve and secure all disclosed
information.
Paragraph (c)(2) would require that the state and state UC agency
utilize all available legal enforcement tools. Thus, in addition to the
actions required to be taken in accordance with paragraph (c)(1), the
state or state UC agency would be required to undertake any other
action under the agreement, or under any law of the state or of the
United States, to enforce the agreement and secure satisfactory
corrective action or surrender of information. Other remedial actions
the state would be required to undertake include seeking damages,
penalties, and restitution for any charges to granted funds, and
recompense for all costs incurred by the state or state UC agency in
pursuing legal action for the breach of the agreement and enforcement
as required by paragraph (c).
Paragraph (d) would except from the requirements of this section,
concerning agreements and their enforcement, disclosures of UC
information to a Federal agency that the Department has determined to
have in place adequate safeguards to satisfy Section 303(a)(1), SSA's
requirement of maintaining confidentiality, and to have an appropriate
method of paying or reimbursing the state UC agency (which may involve
a reciprocal cost arrangement) for costs involved in such disclosures.
For the reasons described in the discussion of Sec. 603.9(d)
(concerning safeguards), the Department has determined or will
determine that in certain cases Federal agencies already have in place
safeguards adequate to satisfy confidentiality concerns.
The Department believes that for these disclosures, when the
relevant Federal agency also has in place a method determined adequate
by the Department of Labor to reimburse state UC agencies for the costs
associated with disclosure, the state UC agencies should be excepted
from the requirement to enter into written agreements. The reasons are
several. First, the safeguards that govern information disclosed to
Federal agencies are already codified in statute, regulation, or the
Federal agency's written operating policies and procedures, so there is
no need to memorialize them by agreement. Further, most disclosures to
Federal agencies are documented in the sense that they are either
explicitly or implicitly required by statute or are the subject of a
memorandum of understanding between the Department of Labor and the
recipient Federal agency. Finally, for Federal agencies that already
have a method in place that is determined adequate by the Department of
Labor to reimburse state UC agencies for the costs associated with
disclosure, there is no need to negotiate cost reimbursement by
agreement.
Two agencies that the Department has determined to already have in
place appropriate alternative safeguards (as indicated in the
discussion of Sec. 603.9, safeguards) and to have appropriate methods
in place to reimburse state UC agencies for costs associated with
disclosure are the IRS, for purposes of administering the HCTC, and
HHS, for purposes of the National Directory of New Hires. Thus, the
requirements of this section, concerning agreements and their
enforcement, do not apply to the IRS, for purposes of administering the
HCTC, or to HHS, for purposes of the National Directory of New Hires.
Section 603.11, Notification of Claimants and Employers
This section would require state UC agencies to notify claimants
and employers how confidential UC information about them may be
requested and utilized. This section is derived from present Sec.
603.4 but, unlike the present Sec. 603.4, would be applicable to
employers as well as claimants. State privacy law may require more
detailed notification.
Section 603.4 of the present part 603 implements the notification
requirement applicable to the IEVS of Section 1137(a)(6) of the SSA.
This section restates the notification requirement of Section
1137(a)(6), SSA, as a general requirement of Section 303(a)(1) of the
SSA. Notifying claimants and employers what use may be made of UC
information is necessary to maintaining their confidence in the
federal-state UC system, which is critical to its proper and efficient
administration.
Section 603.12, Enforcement
For a state to receive Federal grants to fund UC administration,
and for employers in the state to receive credit against the Federal
unemployment tax, state law must conform and its practices must
substantially comply with the requirements of Federal UC law.
Conformity means that a state's law contains provisions required by
Federal UC law, and that those provisions are interpreted consistently
with Federal UC law. Substantial compliance means that a state's
administration of its law is substantially consistent with Federal UC
law.
This section sets forth how the Department of Labor would determine
and enforce conformity and substantial compliance with the
confidentiality and disclosure requirements of Title III of the SSA and
Section 3304(a)(16), FUTA, as provided in subparts B and C of this
regulation. The procedures in 20 CFR 601.5 would apply, meaning that if
any issue involving conformity and substantial compliance arose, the
Department would generally first hold informal discussions with state
officials. Should informal discussions fail to resolve the issue, the
Department would offer the state UC agency an opportunity for a
hearing. If the Secretary of Labor were to find, after reasonable
notice and opportunity for a hearing, a failure to conform or
substantially comply with the confidentiality and disclosure
requirements of Title III, SSA, as provided in subparts B and C, the
Secretary would notify the Governor of the state that grants to fund
state administration of the UC program would be withheld. For failure
to conform or substantially comply with the disclosure requirements of
Section 3304(a)(16), FUTA, as provided in subpart B, the Secretary
would make no certification under FUTA to the Secretary of the Treasury
that employers in the state are eligible to receive credit against the
Federal unemployment tax.
All the confidentiality and disclosure requirements set forth in
this proposed regulation are intended to be both conformity and
substantial compliance requirements, even though some of the disclosure
provisions in Title III, SSA, mention only substantial compliance and
do not explicitly require that they be provided for in state law (the
definition of a conformity requirement). However, since only state law
can compel the state UC agency to hold information confidential or to
disclose information, a conformity mandate is inherent in these
provisions. Additionally, since these provisions are exceptions to
Section 303(a)(1), SSA's confidentiality requirement, which is itself a
conformity requirement, conformity is implied, since an exception to
state law is needed to permit or compel disclosure. We note that, as a
practical matter, the effect of a state's nonconformity or lack of
substantial compliance under Title III, SSA, is the same: loss to the
state of Federal UC administrative grants.
[[Page 50033]]
Two provisions of Section 303, SSA, mention neither conformity nor
substantial compliance (Sections 303(c) and 303(f)). Section 303(c)
(requiring, among other things, disclosures to the Railroad Retirement
Board) uses terminology of strict compliance, though we interpret it to
require substantial compliance to be in keeping with our interpretation
of the rest of the requirements in Title III, SSA. Section 303(f)
(requiring disclosures for IEVS purposes) is completely silent on
enforcement. However, that section would be a meaningless requirement
if enforcement authority did not exist. Further, the structure of Title
III, SSA, which gives the Secretary of Labor authority to distribute
grant funds to states who meet the requirements of Title III, SSA,
indicates that the Secretary of Labor has authority to implement and
enforce its provisions.
Conformity and substantial compliance with proposed part 603 may
require amendments to state law (including regulations) or to state UC
agency policy or practice. Each state would need to review its law and
data-sharing agreements to ensure that they conform and substantially
comply with the confidentiality and disclosure requirements of Title
III, SSA, and Section 3304(a)(16), FUTA, as provided in this proposed
rule.
Subpart C--Income and Eligibility Verification System (IEVS)
Subpart C would implement Section 303(f) of the SSA. That section
requires states to have an IEVS which meets the requirements of Section
1137 of the SSA, under which information is requested and exchanged for
the purpose of verifying eligibility for, and the amount of, benefits
available under several federally assisted programs including the
federal-state UC program. Because the purpose of these regulations is
limited to addressing confidentiality and disclosure of UC information
by state government agencies, subpart C includes only those portions of
the present part 603 IEVS regulations which address that subject.
Consequently, subpart C merely notes, but does not implement, the
requirement of Section 1137 SSA, and the present part 603 concerning
claimant provision of Social Security account numbers and other
requirements of Section 1137, SSA. Nevertheless, those requirements are
statutory and states must still comply with them.
Section 303(f), SSA, is a mandatory disclosure requirement like the
requirements addressed in Sec. 603.6 of subpart B. In addition to
requiring disclosure, however, Section 303(f) requires state UC
agencies to obtain information from other agencies. In order to clarify
what information state UC agencies must obtain from other agencies and
in what circumstances, this proposed rule addresses Section 303(f), the
IEVS requirements, in a separate subpart. Enforcement of subpart C,
however, would occur under Sec. 603.12 of subpart B.
Section 603.20, Purpose and Scope
This section sets forth the purpose and scope of proposed subpart
C. It also notes the statutory requirements (under Section 1137, SSA)
that states have wage record systems and that claimants furnish
statements regarding their Social Security account numbers (as
discussed above), and, under the 1988 amendments to Section 1137, SSA,
nationality or immigration status.
This subpart applies only to state UC agencies, as they, not
states, are required to disclose information referred to in subpart C.
Section 603.21, Definition
This section defines ``requesting agency,'' in accordance with
Section 1137 SSA, to mean an agency that administers Temporary
Assistance to Needy Families, Medicaid, Food Stamps, or other SSA
programs under Titles I, II, X, XIV, or XVI, SSA.
Section 603.22, Disclosure of Information
This section sets forth the basic requirement of the subpart that
each state UC agency must disclose wage and claim information to
requesting agencies and that the state UC agency must adhere to
standardized formats established by the Secretary of HHS and defined in
42 CFR 435.960. This section would require state UC agencies to
disclose only wage and claim information contained in the agency's UC
records.
Section 603.23, Crossmatch of Wage and Benefit Information
This section would require that states UC agencies obtain
information from the Social Security Administration and any requesting
agency that is needed in verifying eligibility for, and the amount of,
compensation payable under the state UC law. It would also require
state UC agencies to crossmatch quarterly wage information with UC
payment information to the extent such information is likely, as
determined by the Secretary of Labor, to be productive in identifying
ineligibility for benefits and preventing or discovering incorrect
payments.
Executive Order 12866
This proposed rule is a ``significant regulatory action'' within
the meaning of Executive Order 12866 because it meets the criteria of
Section 3(f)(4) of that Order in that it raises novel or legal policy
issues arising out of legal mandates, the President's priorities, or
the principles set forth in the Executive Order. Accordingly, the
proposed rule has been submitted to, and reviewed by, the Office of
Management and Budget (OMB).
However, the proposed rule is not ``economically significant''
because it would not have an annual effect on the economy of $100
million or more. We have also determined that the proposed rule would
have no adverse material impact upon the economy and that it would not
materially alter the budgeting impact of entitlement, grants, user fees
or loan programs, or the rights and obligations of recipients thereof.
Further, we have evaluated the proposed rule and found it
consistent with the regulatory philosophy and principles set forth in
Executive Order 12866, which governs agency rulemaking. Although the
proposed rule would impact states and state UC agencies, it would not
adversely affect them in a material way. The proposed rule would
protect state UC agencies from becoming clearinghouses of confidential
UC information and preserve UC grant funds for program purposes. In
addition, the proposed rule would maintain state flexibility in
deciding whether to permit certain disclosures of confidential UC
information for purposes other than the administration of the UC
program so long as certain safeguards are followed.
Executive Order 13132
We have reviewed this proposed rule in accordance with Executive
Order 13132 and have determined that it may have federalism
implications. We intend to consult with organizations representing
state elected officials about this rule in the upcoming weeks. We held
a previous federalism consultation with organizations representing
state elected officials at the Department of Labor on October 19, 2000,
during an earlier stage in this rulemaking process. These organizations
expressed no concerns at that time, or in the following months.
However, we invite these organizations and states to submit comments on
this proposed rule. Twenty-five states submitted comments on the 1992
proposed regulation. We believe this proposed rule addresses the
concerns expressed in those comments.
[[Page 50034]]
Executive Order 12988
We drafted and reviewed this proposed regulation in accordance with
Executive Order 12988, Civil Justice Reform, and it would not unduly
burden the Federal court system. The proposed rule was written to
minimize litigation and provide a clear legal standard for affected
conduct, and was reviewed carefully to eliminate drafting errors and
ambiguities.
Unfunded Mandates Reform Act of 1995 and Executive Order 12875
This proposed rule was reviewed in accordance with the Unfunded
Mandates Reform Act of 1995 (UMRA) (2 U.S.C. 1501 et seq.) and
Executive Order 12875. We have determined that this proposed rule does
not include any Federal mandate that may result in increased
expenditures by state, local, or tribal governments, in the aggregate,
or by the private sector, of $100 million or more in any one year.
Accordingly, we have not prepared a budgetary impact statement.
Paperwork Reduction Act
The following sections of this proposed rule contain information
collection requirements or would revise information collection
requirements in current 20 CFR part 603: Sec. Sec. 603.5, 603.6,
603.7, 603.8, 603.9, 603.10, 603.11, 603.22, and 603.23. As required by
the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)), we have
submitted the information collection requirements in this proposed rule
to the OMB for approval under OMB control number 1205-0238.
The annual burden associated with this proposed rule for all states
combined is estimated at approximately 25,810 hours.
We invite public comment on all of the information collection
requirements in this proposed rule. These comments should be submitted
to: Office of Information and Regulatory Affairs, Office of Management
and Budget, Attention: Desk Officer for the Department of Labor,
Employment and Training Administration, 725 17th Street, NW., Room
10235, Washington, DC 20503.
Regulatory Flexibility Act
This proposed rule would not have a ``significant economic impact
on a substantial number of small entities.'' The proposed rule affects
states and state agencies, which are not within the definition of
``small entity'' under 5 U.S.C. 601(6). Under 5 U.S.C. 605(b), the
Secretary has certified to the Chief Counsel for Advocacy of the Small
Business Administration to this effect. Accordingly, no regulatory
flexibility analysis is required.
Congressional Review Act
This proposed rule is not a ``major rule'' as defined by Section
804 of the Small Business Regulatory Enforcement Fairness Act of 1996.
This proposed rule would not result in an annual effect on the economy
of $100 million or more; a major increase in costs or prices; or
significant adverse effects on competition, employment, investment,
productivity, innovation, or the ability of United States-based
companies to compete with foreign-based companies in domestic and
export markets.
Effect on Family Life
We certify that this proposed rule was assessed in accordance with
Public Law 105-277, 112 Stat. 2681, and that the proposed rule would
not adversely affect the well-being of the nation's families.
List of Subjects in 20 CFR Part 603
Employment and Training Administration, Labor, Unemployment
Compensation.
Catalogue of Federal Domestic Assistance Number
This program is listed in the Catalogue of Federal Domestic
Assistance at No. 17.225, Unemployment Insurance.
Signed in Washington, DC on August 5, 2004.
Emily Stover DeRocco,
Assistant Secretary of Labor, Employment and Training Administration.
Words of Issuance
For the reasons set forth in the preamble, part 603 of Title 20,
Code of Federal Regulations is proposed to be revised as set forth
below:
PART 603--FEDERAL-STATE UNEMPLOYMENT COMPENSATION (UC) PROGRAM;
CONFIDENTIALITY AND DISCLOSURE OF STATE UC INFORMATION
Sec.
Subpart A--In General
603.1 What is the purpose and scope of this part?
603.2 What definitions apply to this part?
Subpart B--Confidentiality and Disclosure Requirements
603.3 What is the purpose and scope of this subpart?
603.4 What is the confidentiality requirement of Federal UC law?
603.5 What are the exceptions to the confidentiality requirement?
603.6 What disclosures are required by Federal UC law?
603.7 What requirements apply to subpoenas, other compulsory
process, and disclosure to officials with subpoena authority?
603.8 What are the requirements for payment of costs and program
income?
603.9 What safeguards and security requirements apply to disclosed
information?
603.10 What are the requirements for agreements?
603.11 How do states notify claimants and employers about the uses
of their information?
603.12 How are the requirements of this subpart enforced?
Subpart C--Mandatory Disclosure for Income and Eligibility Verification
System (IEVS)
603.20 What is the purpose and scope of this subpart?
603.21 What definitions apply to this subpart?
603.22 What information must state UC agencies disclose for purposes
of an IEVS?
603.23 What information must state UC agencies obtain from other
agencies, and crossmatch with wage information, for purposes of an
IEVS?
Authority: 42 U.S.C. 1302(a); Secretary's Order No. 4-75 (40 FR
18515) and Secretary's Order No. 14-75 (November 12, 1975).
Subpart A--In General
Sec. 603.1 What is the purpose and scope of this part?
The purpose of this part is to implement the requirements of
Federal UC law concerning confidentiality and disclosure of UC
information. This part applies to states and state UC agencies, as
defined in Sec. 603.2(f) and (g).
Sec. 603.2 What definitions apply to this part?
For the purposes of this part:
(a)(1) Claim information means information about:
(i) Whether an individual is receiving, has received, or has
applied for UC;
(ii) The amount of compensation the individual is receiving or is
entitled to receive; and
(iii) The individual's current (or most recent) home address.
(2) For purposes of subpart C (IEVS), claim information also
includes:
(i) Whether the individual has refused an offer of work and, if so,
a description of the job offered including the terms, conditions, and
rate of pay; and
(ii) Any other information contained in the records of the state UC
agency that is needed by the requesting agency to verify eligibility
for, and the amount of, benefits.
(b) Confidential UC information and confidential information mean
any UC information, as defined in paragraph (j) of this section,
required to be kept confidential under Sec. 603.4.
[[Page 50035]]
(c) Public domain information means--
(1) Information about the organization of the state and the state
UC agency and appellate authorities, including the names and positions
of officials and employees thereof;
(2) Information about the state UC law (and applicable Federal law)
provisions, rules, regulations, and interpretations thereof, including
statements of general policy and interpretations of general
applicability, appeals records and decisions, and precedential
determinations on coverage of employers, employment, and wages; and
(3) Any agreement of whatever kind or nature, including interstate
arrangements and reciprocal agreements and any agreement with the
Department of Labor or the Secretary, relating to the administration of
the state UC law.
(d) Public official means an official, agency, or public entity
within the executive branch of Federal, state, or local government who
(or which) has responsibility for administering or enforcing a law, or
a legislator in the Federal, state, or local government with oversight
responsibility for the UC program.
(e) Secretary and Secretary of Labor mean the cabinet officer
heading the United States Department of Labor, or his or her designee.
(f) State means a state of the United States of America, the
District of Columbia, the Commonwealth of Puerto Rico, and the United
States Virgin Islands.
(g) State UC agency means an agency charged with the administration
of the state UC law.
(h) State UC law means the law of a state approved under Section
3304(a) of the Internal Revenue Code of 1986 (26 U.S.C. 3304(a)).
(i) Unemployment compensation (UC) means cash benefits to
individuals with respect to their unemployment.
(j) UC information and state UC information means information in
the records of a state or state UC agency that pertains to the
administration of the state UC law. This term includes those state wage
reports collected under the Income and Eligibility Verification System
(IEVS) (Section 1137 of the Social Security Act (SSA)) that are
obtained by the state UC agency for determining UC monetary eligibility
or are downloaded to the state UC agency's files as a result of a
crossmatch but does not otherwise include those wage reports. It does
not include information in a state's Directory of New Hires, but does
include any such information that has been disclosed to the state UC
agency for use in the UC program. It also does not include the
personnel or fiscal information of a state UC agency.
(k) Wage information means information in the records of a state UC
agency (and, for purposes of Sec. 603.23 (IEVS)), information reported
under provisions of state law which fulfill the requirements of Section
1137 of the SSA) about the--
(1) Wages paid to an individual,
(2) Social security account number (or numbers, if more than one)
of such individual, and
(3) Name, address, state, and the Federal employer identification
number of the employer who paid such wages to such individual.
Subpart B--Confidentiality and Disclosure Requirements
Sec. 603.3 What is the purpose and scope of this subpart?
This subpart implements the basic confidentiality requirement
derived from Section 303(a)(1), SSA, and the disclosure requirements of
Sections 303(a)(7), (c)(1), (d), (e), (h), and (i), Social Security Act
(SSA), and Section 3304(a)(16), Federal Unemployment Tax Act (FUTA).
This subpart also establishes uniform minimum requirements for the
payment of costs, safeguards, and data-sharing agreements when UC
information is disclosed, and for conformity and substantial compliance
with this proposed rule. This subpart applies to states and state UC
agencies, as defined in Sec. 603.2(f) and (g).
Sec. 603.4 What is the confidentiality requirement of Federal UC law?
(a) Statute. Section 303(a)(1) of the SSA (42 U.S.C. 503(a)(1))
provides that, for the purposes of certification of payment of granted
funds to a state under Section 302(a) (42 U.S.C. 502(a)), state law
must include provision for ``(s)uch methods of administration * * * as
are found by the Secretary of Labor to be reasonably calculated to
insure full payment of unemployment compensation when due * * *''.
(b) Interpretation. The Department of Labor interprets Section
303(a)(1), SSA, to mean that ``methods of administration'' that are
reasonably calculated to insure the full payment of UC when due must
include provision for maintaining the confidentiality of any UC
information which reveals the name or any identifying particular about
any individual or any past or present employer or employing unit, or
which could foreseeably be combined with other publicly available
information to reveal any such particulars, and must include provision
for barring the disclosure of any such information, except as provided
in this part.
(c) Application. Each state law must contain provisions that are
interpreted and applied consistently with the interpretation at
paragraph (b) of this section and with this subpart, and must provide
penalties for any disclosure of confidential UC information that is
inconsistent with any provision of this subpart.
Sec. 603.5 What are the exceptions to the confidentiality
requirement?
The following are exceptions to the confidentiality requirement.
Disclosure is permissible under exceptions at paragraphs (a) through
(g) of this section only if authorized by state law and if such
disclosure does not interfere with the efficient administration of the
state UC law. Disclosure is permissible under exceptions at paragraphs
(h) and (i) of this section without such restrictions.
(a) Public domain information. The confidentiality requirement of
Sec. 603.4 does not apply to public domain information, as defined at
Sec. 603.2(c).
(b) Administration of the UC program. The confidentiality
requirement of Sec. 603.4 does not apply when disclosure is necessary
for the proper administration of the UC program.
(c) Individual or employer. Disclosure of UC information about an
individual to that individual, or of UC information about an employer
disclosed to that employer is permissible.
(d) Informed consent. Disclosure of UC information on the basis of
informed consent is permissible in the following circumstances--
(1) Agent or attorney--to an agent or attorney of an individual, of
information that pertains to that individual, or to an agent or
attorney of an employer, of information that pertains to that employer,
if --
(i) The agent or attorney presents a written release from the
individual or employer being represented, or
(ii) If a written release is impossible or impracticable to obtain,
the agent or attorney presents such other form of consent as is
permitted by the state UC agency in accordance with state law;
(2) Third party--to a third party only if that entity obtains a
written release from the individual or employer to whom the information
pertains.
(i) The release must be signed and must include a statement--
(A) Specifically identifying the information that is to be
disclosed;
(B) That state government files will be accessed to obtain that
information;
(C) Of the specific purpose or purposes for which the information
is sought and a statement that information
[[Page 50036]]
obtained under the release will only be used for that purpose or
purposes; and
(D) Indicating all the parties who may receive the information
released.
(ii) The purpose specified in the release must be limited to--
(A) Providing a service or benefit to the individual signing the
release that such individual expects to receive as a result of signing
the release; or
(B) Carrying out administration or evaluation of a public program
to which the release pertains.
(Note to paragraph (d)(2): The Electronic Signatures in Global
and National Commerce Act of 2000 (E-Sign), Public Law 106-229, may
apply where a party wishes to effectuate electronically an informed
consent release (paragraph(d)(2) of this section) or a disclosure
agreement (Sec. 603.10(a)) with an entity that uses informed
consent releases. E-Sign, among other things, sets forth the
circumstances under which electronic signatures, contracts, and
other records relating to such transactions (in lieu of paper
documents) are legally binding. Thus, an electronic communication
may suffice under E-Sign to establish a legally binding contract.
The states will need to consider E-Sign's application to these
informed consent releases and disclosure agreements. In particular,
a state must, to conform and substantially comply with this part,
assure that these informed consent releases and disclosure
agreements are legally enforceable. If an informed consent release
or disclosure agreement is to be effectuated electronically, the
state must determine whether E-Sign applies to that transaction,
and, if so, make certain that the transaction satisfies the
conditions imposed by E-Sign. The state must also make certain that
the electronic transaction complies with every other condition
necessary to make it legally enforceable.)
(e) Public official. Disclosure of UC information to a public
official for use in the performance of his or her official duties is
permissible. ``Performance of official duties'' means administration or
enforcement of law, or, in the case of a state or Federal legislative
branch, oversight of UC law.
(f) Agent or contractor of public official. Disclosure of UC
information to an agent or contractor of a public official to whom
disclosure is permissible under paragraph (e) of this section.
(g) Bureau of Labor Statistics. The confidentiality requirement
does not apply to information collected exclusively for statistical
purposes under a cooperative agreement with the Bureau of Labor
Statistics (BLS). Further, this part does not restrict or impose any
condition on the transfer of any other information to the BLS under an
agreement, or the BLS's disclosure or use of such information.
(h) Court order; official with subpoena authority. Disclosure of UC
information in response to a court order or to an official with
subpoena authority is permissible as specified in Sec. 603.7(b).
(i) As required by Federal law. Disclosure as required by Federal
law is permissible.
Sec. 603.6 What disclosures are required by Federal UC law?
(a) The Department of Labor interprets Section 303(a)(1) of the SSA
as requiring disclosure of all information necessary for the proper
administration of the UC program.
(b) In addition to Section 303(f), SSA (concerning an IEVS), which
is addressed in subpart C, the following provisions of Federal UC law
also specifically require disclosure of state UC information and state-
held information pertaining to the Federal UC and benefit programs of
UCFE, UCX, TAA (except for confidential business information collected
by states), DUA, and any Federal UC benefit extension program:
(1) Section 303(a)(7), SSA, requires state law to provide for
making available, upon request, to any agency of the United States
charged with the administration of public works or assistance through
public employment, disclosure of the following information with respect
to each recipient of UC--
(i) Name;
(ii) Address;
(iii) Ordinary occupation;
(iv) Employment status; and
(v) A statement of such recipient's rights to further compensation
under the state law.
(2) Section 303(c)(1), SSA, requires each state to make its UC
records available to the Railroad Retirement Board, and to furnish such
copies of its UC records to the Railroad Retirement Board as the Board
deems necessary for its purposes.
(3) Section 303(d)(1), SSA, requires each state UC agency, for
purposes of determining an individual's eligibility benefits, or the
amount of benefits, under a food stamp program established under the
Food Stamp Act of 1977, to disclose, upon request, to officers and
employees of the Department of Agriculture, and to officers or
employees of any state food stamp agency, any of the following
information contained in the records of the state UC agency--
(i) Wage information,
(ii) Whether an individual is receiving, has received, or has made
application for, UC, and the amount of any such compensation being
received, or to be received, by such individual,
(iii) The current (or most recent) home address of such individual,
and
(iv) Whether an individual has refused an offer of employment and,
if so, a description of the employment so offered and the terms,
conditions, and rate of pay therefore.
(4) Section 303(e)(1), SSA, requires each state UC agency to
disclose, upon request, directly to officers or employees of any state
or local child support enforcement agency, any wage information
contained in the records of the state UC agency for purposes of
establishing and collecting child support obligations (not to include
custodial parent support obligations) from, and locating, individuals
owing such obligations.
(5) Section 303(h), SSA, requires each state UC agency to disclose
quarterly, to the Secretary of Health and Human Services (HHS), wage
information and claim information as required under Section 453(i)(1)
of the SSA (establishing the National Directory of New Hires),
contained in the records of such agency, for purposes of Subsections
(i)(1), (i)(3), and (j) of Section 453, SSA (establishing the National
Directory of New Hires and its uses for purposes of child support
enforcement, Temporary Assistance to Needy Families (TANF), TANF
research, administration of the earned income tax credit, and use by
the Social Security Administration).
(6) Section 303(i), SSA, requires each state UC agency to disclose,
upon request, to officers or employees of the Department of Housing and
Urban Development (HUD) and to representatives of a public housing
agency, for purposes of determining an individual's eligibility for
benefits, or the amount of benefits, under a housing assistance program
of HUD, any of the following information contained in the records of
such state agency about any individual applying for or participating in
any housing assistance program administered by HUD who has signed a
consent form approved by the Secretary of HUD--
(i) Wage information, and
(ii) Whether the individual is receiving, has received, or has made
application for, UC, and the amount of any such compensation being
received (or to be received) by such individual.
(7) Section 3304(a)(16), Federal Unemployment Tax Act (FUTA)
requires each state UC agency--
(i) To disclose, upon request, to any state or political
subdivision thereof administering a TANF program funded under part A of
Title IV of the SSA, wage information contained in the records of the
state UC agency which is necessary (as determined by the Secretary of
HHS in regulations), for
[[Page 50037]]
purposes of determining an individual's eligibility for TANF assistance
or the amount of TANF assistance; and
(ii) To furnish to the Secretary of HHS, in accordance with that
Secretary's regulations at 45 CFR 303.108, wage information (as defined
at 45 CFR 303.108(a)(2)) and UC information (as defined at 45 CFR
303.108(a)(3)) contained in the records of such agency for the purposes
of the National Directory of New Hires established under Section 453(i)
of the SSA.
(c) Each state law must contain provisions that are interpreted and
applied consistently with the requirements listed in this section.
Sec. 603.7 What requirements apply to subpoenas, other compulsory
process, and disclosure to officials with subpoena authority?
(a) In general. Except as provided in paragraph (b) of this
section, when a subpoena or other compulsory process is served upon a
state UC agency or the state, any official or employee thereof, or any
recipient of confidential UC information, which requires the production
of confidential UC information or appearance for testimony upon any
matter concerning such information, the state or state UC agency or
recipient must file and diligently pursue a motion to quash the
subpoena or other compulsory process. Only if such motion is denied by
the court or other forum may the requested confidential information be
disclosed, and only upon such terms as the court or forum may order,
such as that the recipient protect the disclosed information and pay
the state's or state UC agency's costs of disclosure.
(b) Exceptions. The requirement of paragraph (a) of this section to
move to quash subpoenas shall not be applicable, so that disclosure is
permissible, where--
(1) Court Decision--a subpoena or other compulsory legal process
has been served and a court has previously issued a binding
precedential decision that requires disclosures of this type, or
(2) Public Official with Subpoena Authority--UC information has
been requested, with or without a subpoena, by a state or Federal
government official, other than a clerk of court on behalf of a
litigant, with authority to obtain such information by subpoena under
state or Federal law.
Sec. 603.8 What are the requirements for payment of costs and program
income?
(a) In general. Except as provided in paragraph (b) of this
section, grant funds must not be used to pay any of the costs of making
any disclosure. Grant funds may not be used to pay any of the costs of
making any disclosures under Sec. 603.5(e) (optional disclosure to a
public official), Sec. 603.5(f) (optional disclosure to an agent or
contractor of a public official), Sec. 603.5(g) (optional disclosure to
BLS), or Sec. 603.5(h) (disclosure to the IRS for HCTC purposes), Sec.
603.6(b) (mandatory disclosures for non-UC purposes), or Sec. 603.22
(mandatory disclosure for purposes of an IEVS).
(b) Use of grant funds permitted. Grant funds paid to a state under
Section 302(a) of the SSA may be used to pay the costs of only those
disclosures necessary for proper administration of the UC program.
(This may include some disclosures under Sec. 603.5(a) (concerning
public domain information), Sec. 603.5(c) (to an individual or
employer), or Sec. 603.5(d) (on the basis of informed consent)). In
addition, grant funds may be used to pay costs associated with a
request for disclosure of UC information if not more than an incidental
amount of staff time and no more than nominal processing costs are
involved in making the disclosure. Finally, grant funds may be used to
pay costs associated with disclosures under Sec. 603.7(b)(1)
(concerning court-ordered compliance with subpoenas) if a court has
denied recovery of costs, or to pay costs associated with disclosures
under Sec. 603.7(b)(2) (to officials with subpoena authority) if the
state UC agency has attempted but not been successful in obtaining
reimbursement of costs.
(c) Calculation of costs. The costs to a state or state UC agency
of processing and handling a request for disclosure of information must
be calculated in accordance with the cost principles and administrative
requirements of 29 CFR part 97 and Office of Management and Budget
Circular No. A-87 (Revised). For the purpose of calculating such costs,
any initial start-up costs incurred by the state UC agency in
preparation for making the requested disclosure(s), such as computer
reprogramming necessary to respond to the request, and the costs of
implementing safeguards and agreements required by Sec. Sec. 603.9 and
603.10, must be charged to and paid by the recipient. (Start-up costs
do not include the costs to the state UC agency of obtaining,
compiling, or maintaining information for its own purposes.) Postage or
other delivery costs incurred in making any disclosure are part of the
costs of making the disclosure. Penalty mail, as defined in 39 U.S.C.
3201(1), must not be used to transmit information being disclosed,
except information disclosed for purposes of administration of state UC
law. As provided in Sections 453(e)(2) and 453(g) of the SSA, the
Secretary of HHS has the authority to determine what constitutes a
reasonable amount for the reimbursement for disclosures under Section
303(h), SSA, and Section 3304(a)(16)(B), FUTA.
(d) Payment of costs. The costs to a state or state UC agency of
making a disclosure of information, calculated in accordance with
paragraph (c) of this section, must be paid by and collected from the
recipient of the information either in advance or by way of
reimbursement. If the recipient is not a public official, such costs,
except for good reason (such as when the disclosure involves minimal
cost) must be paid and collected in advance. For the purposes of this
paragraph (d), payment in advance means full payment of all costs
before or at the time the disclosed information is given in hand or
sent to the recipient. The requirement of payment of costs in this
paragraph is met when a state UC agency has in place a reciprocal cost
agreement or arrangement with the recipient. As used in this section,
``reciprocal'' means that the relative benefits received by each are
approximately equal. Payment or reimbursement of costs must include any
initial start-up costs associated with making the disclosure.
(e) Program income. Costs paid as required by this section, and any
funds generated by the disclosure of information under this part, are
program income and may be used only as permitted by 29 CFR 97.25(g) (on
program income). Such income may not be used to benefit a state's
general fund or other program.
Sec. 603.9 What safeguards and security requirements apply to
disclosed information?
(a) In general. For disclosures of confidential UC information
under Sec. 603.5(d)(2) (to a third party on the basis of informed
consent); Sec. 603.5(e) (to a public official), except as provided in
paragraph (d) of this section; and Sec. 603.5(f) (to an agent or
contractor of a public official); or, Sec. 603.6(b)(1) through (4),
(6), and (7)(i) (as required by Federal UC law, except for disclosures
to HHS under Sections 303(h), SSA, and 3304(a)(16)(B), FUTA); or Sec.
603.22 (to a requesting agency for purposes of an IEVS), a state or
state UC agency must require the recipient to safeguard the information
disclosed against unauthorized access or redisclosure, as provided in
paragraphs (b) and (c) of this section, and must subject the recipient
to penalties provided by the state law for unauthorized disclosure of
confidential information.
[[Page 50038]]
(b) Safeguards to be required of recipients. (1) The state or state
UC agency must:
(i) Require the recipient to use the disclosed information only for
purposes authorized by law and consistent with an agreement that meets
the requirements of Sec. 603.10;
(ii) Require the recipient to store the disclosed information in a
place physically secure from access by unauthorized persons;
(iii) Require the recipient to store and process disclosed
information maintained in electronic format, such as magnetic tapes or
discs, in such a way that unauthorized persons cannot obtain the
information by any means;
(iv) Require the recipient to undertake precautions to ensure that
only authorized personnel are given access to disclosed information
stored in computer systems;
(v) Require each recipient agency or entity to
(A) Instruct all personnel having access to the disclosed
information about confidentiality requirements, the requirements of
this subpart B, and the sanctions specified in the state law for
unauthorized disclosure of information, and
(B) Sign an acknowledgment that all personnel having access to the
disclosed information have been instructed in accordance with paragraph
(b)(1)(v)(A) of this section and will adhere to the state's or state UC
agency's confidentiality requirements and procedures which are
consistent with this subpart B and the agreement required by Sec.
603.10, and agreeing to report any infraction of these rules to the
state UC agency fully and promptly,
(vi) Require the recipient to dispose of information disclosed or
obtained, and any copies thereof made by the recipient agency, entity,
or contractor, after the purpose for which the information is disclosed
is served, except for disclosed information possessed by any court.
Disposal means return of the information to the disclosing state or
state UC agency or destruction of the information, as directed by the
state or state UC agency. Disposal includes deletion of personal
identifiers by the state or state UC agency in lieu of destruction. In
any case, the information disclosed must not be retained with personal
identifiers for longer than such period of time as the state or state
UC agency deems appropriate on a case-by-case basis; and
(vii) Maintain a tracking system sufficient to allow an audit of
compliance with the requirements of this part.
(2) In the case of disclosures made under Sec. 603.5(d)(2)
(disclosure of confidential information to a third party on the basis
of informed consent), the state or state UC agency must also--
(i) Periodically audit a sample of transactions accessing
information disclosed under that section to assure that the entity
receiving disclosed information has on file a written release
authorizing each access. The audit must ensure that the information is
not being used for any unauthorized purpose;
(ii) Ensure that all employees of entities receiving access to
information disclosed under Sec. 603.5(d)(2) are subject to the same
confidentiality requirements, and state criminal penalties for
violation of those requirements, as are employees of the state UC
agency.
(c) Redisclosure of confidential UC information. (1) A state or
state UC agency may authorize any recipient of confidential UC
information under paragraph (a) of this section (which applies to
optional disclosures to public officials, to agents or contractors of a
public official, and to other entities on the basis of informed
consent) to redisclose information only as follows:
(i) To the individual or employer who is the subject of the
information;
(ii) To an attorney or other duly authorized agent representing the
individual or employer;
(iii) In any civil or criminal proceedings for or on behalf of a
recipient agency or entity;
(iv) In response to a subpoena only as provided in Sec. 603.7;
(v) To an agent or contractor of a public official only if the
person redisclosing is a public official, if the redisclosure is
authorized by the state law, and if the public official retains
responsibility for the uses of the confidential UC information by the
agent or contractor;
(vi) From one public official to another if the redisclosure is
authorized by the state law;
(vii) When so authorized by Section 303(e)(5) of the SSA
(redisclosure of wage information by a state or local child support
enforcement agency to an agent under contract with such agency for
purposes of carrying out child support enforcement) and by state law;
or
(viii) When specifically authorized by a written release that meets
the requirements of Sec. 603.5(d) (permitting optional disclosure to
other entities on the basis of informed consent).
(2) Information redisclosed under paragraphs (c)(1)(v) and (vi) of
this section must be subject to the safeguards in paragraph (b) of this
section.
(d) The requirements of this section do not apply to disclosures of
UC information to a Federal agency which the Department has determined,
by notice published in the Federal Register, to have in place
safeguards adequate to satisfy the confidentiality requirement of
Section 303(a)(1), SSA.
Sec. 603.10 What are the requirements for agreements?
(a) Requirements. (1) For any disclosure of confidential
information under Sec. 603.5(d)(2) (to a third party on the basis of
informed consent); Sec. 603.5(e) (to a public official), except as
provided in paragraph (d) of this section; Sec. 603.5(f) (to an agent
or contractor of a public official); Sec. 603.6(b)(1) through (4),
(6), and (7)(i) (as required by Federal UC law, except to HHS under
Sections 303(h), SSA, and 3304(a)(16)(B), FUTA); and Sec. 603.22 (to a
requesting agency for purposes of an IEVS), a state or state UC agency
must enter into a written, enforceable agreement with any agency or
entity requesting disclosure(s) of such information. The agreement must
be terminable if the state or state UC agency determines that the
safeguards in the agreement are not adhered to.
(2) For disclosures referred to in Sec. 603.5(f) (to an agent or
contractor of a public official), the state or state UC agency must
enter into a written, enforceable agreement with the public official on
whose behalf the agent or contractor will obtain information. The
agreement must hold the public official responsible for ensuring that
the agent or contractor complies with the safeguards of Sec. 603.9.
The agreement must be terminable if the state or state UC agency
determines that the safeguards in the agreement are not adhered to.
(b) Contents of agreement--(1) In general. Any agreement required
by paragraph (a) of this section must include, but need not be limited
to, the following terms and conditions:
(i) A description of the specific information to be furnished and
the purposes for which the information is sought;
(ii) A statement that those who request or receive information
under the agreement will be limited to those with a need to access it
for purposes listed in the agreement;
(iii) The methods and timing of requests for information and
responses to those requests, including the format to be used;
(iv) Provision for paying the state or state UC agency for any
costs of furnishing information, as required by Sec. 603.8 (on costs);
[[Page 50039]]
(v) Provision for safeguarding the information disclosed, as
required by Sec. 603.9 (on safeguards); and
(vi) Provision for on-site inspections of the agency, entity, or
contractor, to assure that the requirements of the state's law and the
agreement or contract required by this section are being met.
(2) In the case of disclosures under Sec. 603.5(d)(2) (to a third
party on the basis of informed consent), the agreement required by
paragraph (a) of this section must assure that the information will be
accessed by only those entities with authorization under the
individual's or employer's release, and that it may be used only for
the specific purposes authorized in that release.
(c) Breach of agreement--(1) In general. If an agency, entity, or
contractor, or any official, employee, or agent thereof, fails to
comply with any provision of an agreement required by this section,
including timely payment of the state's or state UC agency's costs
billed to the agency, entity, or contractor, the agreement must be
suspended, and further disclosure of information (including any
disclosure being processed) to such agency, entity, or contractor is
prohibited, until the state or state UC agency is satisfied that
corrective action has been taken and there will be no further breach.
In the absence of prompt and satisfactory corrective action, the
agreement must be canceled, and the agency, entity, or contractor must
be required to surrender to the state or state UC agency all
confidential information (and copies thereof) obtained under the
agreement which has not previously been returned to the state or state
UC agency, and any other information relevant to the agreement.
(2) Enforcement. In addition to the actions required to be taken by
paragraph (c)(1) of this section, the state or state UC agency must
undertake any other action under the agreement, or under any law of the
state or of the United States, to enforce the agreement and secure
satisfactory corrective action or surrender of the information, and
must take other remedial actions permitted under state or Federal law
to effect adherence to the requirements of this subpart B, including
seeking damages, penalties, and restitution as permitted under such law
for any charges to granted funds and all costs incurred by the state or
the state UC agency in pursuing the breach of the agreement and
enforcement as required by this paragraph (c).
(d) The requirements of this section do not apply to disclosures of
UC information to a Federal agency which the Department has determined,
by notice published in the Federal Register, to have in place
safeguards adequate to satisfy the confidentiality requirement of
Section 303(a)(1), SSA, and an appropriate method of paying or
reimbursing the state UC agency (which may involve a reciprocal cost
arrangement) for costs involved in such disclosures. These
determinations will be published in the Federal Register.
Sec. 603.11 How do states notify claimants and employers about the
uses of their information?
(a) Claimants. Every claimant for compensation must be notified, at
the time of application, and periodically thereafter, in what
situations confidential UC information pertaining to the claimant may
be requested and utilized. Notice on or attached to subsequent
additional claims will satisfy the requirement for periodic notice
thereafter.
(b) Employers. Every employer subject to a state's law must be
notified in what situations wage information and other confidential
information about the employer may be requested and utilized.
Sec. 603.12 How are the requirements of this subpart enforced?
(a) Resolving conformity and compliance issues. For the purposes of
resolving issues of conformity and substantial compliance with the
requirements set forth in subparts B and C, the provisions of
paragraphs (b) (informal discussions with the Department of Labor to
resolve conformity and substantial compliance issues), and (d)
(Secretary of Labor's hearing and decision on conformity and
substantial compliance) of 20 CFR 601.5 apply.
(b) Conformity and substantial compliance. Whenever the Secretary
of Labor, after reasonable notice and opportunity for a hearing to the
state UC agency of a state, finds that the state law fails to conform,
or that the state or state UC agency fails to comply substantially,
with:
(1) The requirements of Title III, SSA, implemented in subparts B
and C, the Secretary of Labor shall notify the Governor of the state
and such state UC agency that further payments for the administration
of the state UC law will not be made to the state until the Secretary
of Labor is satisfied that there is no longer any such failure. Until
the Secretary of Labor is so satisfied, the Department of Labor shall
make no further payments to such state.
(2) The FUTA requirements implemented in this subpart B, the
Secretary of Labor shall make no certification under that section to
the Secretary of the Treasury for such state as of October 31 of the
12-month period for which such finding is made.
Subpart C--Mandatory Disclosure for Income and Eligibility
Verification System (IEVS)
Sec. 603.20 What is the purpose and scope of this subpart?
(a) Purpose. Subpart C implements Section 303(f) of the SSA.
Section 303(f) requires states to have in effect an income and
eligibility verification system, which meets the requirements of
Section 1137 of the SSA, under which information is requested and
exchanged for the purpose of verifying eligibility for, and the amount
of, benefits available under several federally assisted programs,
including the federal-state UC program.
(b) Scope. This subpart C applies only to a state UC agency.
(Note to Sec. 603.20: Although not implemented in this part,
Section 1137(a)(1) of the SSA provides that each state must require
claimants for compensation to furnish to the state UC agency their
Social Security account numbers, as a condition of eligibility for
compensation, and further requires states to utilize such account
numbers in the administration of the state UC laws. Section
1137(a)(3) of the SSA further provides that employers must make
quarterly wage reports to a state UC agency, or an alternative
agency, for use in verifying eligibility for, and the amount of,
benefits. Section 1137(d)(1) of the SSA provides that each state
must require claimants for compensation, as a condition of
eligibility, to declare in writing, under penalty of perjury,
whether the individual is a citizen or national of the United
States, and, if not, that the individual is in a satisfactory
immigration status. Other provisions of Section 1137(d) of the SSA
not implemented in this part require the states to obtain, and
individuals to furnish, information which shows immigration status,
and require the states to verify immigration status with the Bureau
of Citizenship and Immigration Services (formerly the Immigration
and Naturalization Service).
Sec. 603.21 What definitions apply to this subpart?
For the purposes of this subpart C, requesting agency means:
(a) Temporary Assistance to Needy Families Agency--Any state or
local agency charged with the responsibility of administering a program
funded under part A of Title IV of the SSA.
(b) Medicaid Agency--Any state or local agency charged with the
responsibility of administering the provisions of the Medicaid program
under a state plan approved under Title XIX of the SSA.
[[Page 50040]]
(c) Food Stamp Agency--Any state or local agency charged with the
responsibility of administering the provisions of the Food Stamp
Program under the Food Stamp Act of 1977.
(d) Other SSA Programs Agency--Any state or local agency charged
with the responsibility of administering a program under a state plan
approved under Title I, X, XIV, or XVI (Supplemental Security Income
for the Aged, Blind, and Disabled) of the SSA.
(e) Child Support Enforcement Agency--Any state or local child
support enforcement agency charged with the responsibility of enforcing
child support obligations under a plan approved under part D of Title
IV of the SSA.
(f) HHS--The Secretary of HHS in establishing or verifying
eligibility or benefit amounts under Titles II (Old-Age, Survivors, and
Disability Insurance Benefits) and XVI (Supplemental Security Income
for the Aged, Blind, and Disabled) of the SSA.
Sec. 603.22 What information must state UC agencies disclose for
purposes of an IEVS?
(a) Disclosure of information. Each state UC agency must disclose,
upon request, to any requesting agency, as defined in Sec. 603.21,
that has entered into an agreement required by Sec. 603.10, wage
information (as defined at Sec. 603.2(k)) and claim information (as
defined at Sec. 603.2(a)) contained in the records of such state UC
agency.
(b) Format. The state UC agency must adhere to standardized formats
established by the Secretary of HHS (in consultation with the Secretary
of Agriculture) and set forth in 42 CFR 435.960 (concerning
standardized formats for furnishing and obtaining information to verify
income and eligibility).
Sec. 603.23 What information must state UC agencies obtain from other
agencies, and crossmatch with wage information, for purposes of an
IEVS?
(a) Crossmatch with information from requesting agencies. Each
state UC agency must obtain such information from the Social Security
Administration and any requesting agency as may be needed in verifying
eligibility for, and the amount of, compensation payable under the
state UC law.
(b) Crossmatch of wage and benefit information. The state UC agency
must crossmatch quarterly wage information with UC payment information
to the extent that such information is likely, as determined by the
Secretary of Labor, to be productive in identifying ineligibility for
benefits and preventing or discovering incorrect payments.
[FR Doc. 04-18333 Filed 8-11-04; 8:45 am]
BILLING CODE 4510-30-P