AUGUSTA — Republicans on the Legislature's Labor Committee approved a controversial bill that would increase the penalties for unemployment compensation fraud and the qualifications to receive out-of-work benefits.
The bill, LD 1725, had been presented by the Department of Labor, which argued that an increase in unemployment claims has been accompanied by an increased possibility of fraud. The measure, which passed along party lines, includes a provision that would remove an exemption that allows a claimant to receive benefits while collecting unused vacation pay.
A third provision would ratchet up work-search mandates by decreasing the length of time an unemployed worker can receive benefits while looking for a job of comparable skill and wage level to the one lost. The original bill would have cut in half the so-called suitable work provision, from the current 12 weeks to six weeks.
However, Republicans amended the bill to set the suitable work provision at 10 weeks, after which a worker must take a job of lesser qualifications and wages if available.
Despite the GOP work-search concession, Democrats on the committee still opposed the bill. Their opposition centered on the vacation-pay provision, which effectively reverses a law passed by the Legislature in 2010 that allowed a laid-off worker to receive vacation pay and other earned-time benefits from their previous job while collecting unemployment benefits.
The 2010 change was fiercely opposed by business advocates such as the Maine State Chamber of Commerce, which argued that it increased the costs of maintaining the Unemployment Insurance Fund.
The fund is supported by Maine employers, who pay taxes to keep it solvent. According to the Maine Department of Labor, the state has one of the healthiest unemployment funds in the country. However, business groups worry that increased use could threaten the program.
The bill is supported by Gov. Paul LePage, who touted it last year as a crackdown on fraud.
According to the U.S. Department of Labor, Maine has the fifth-lowest rate of unemployment fraud in the country and the lowest in New England. Its fraud rate is almost five times lower than the national average.
Maine labor statistics show that fraud represents less than half of 1 percent of unemployment claims.
If it passes, the bill would create a new fraud penalty ranging from less than a year in jail to up to 10 years if the fraud is in excess of $10,000.
The Maine State Chamber of Commerce has argued that employers valued the strengthening of fraud laws because employers ultimately funded the unemployment insurance fund. The chamber also noted that in 2010, employers saw a 68 percent increase in their unemployment insurance taxes — about $54 million.
Opponents of the bill have countered that the real problem is a lack of jobs, not Maine's unemployed workers.
Matt Schlobohm, executive director of the Maine AFL-CIO, said workers shouldn't be penalized just because they lost their jobs when they had earned vacation time on the books.
"The Legislature fixed this problem two years ago and it is senseless to go backward, especially while so many Maine workers are currently facing the uncertainty and stress of unemployment," Schlobohm said in a statement.
Labor unions oppose the bill altogether but the vacation-time provision in particular, which could have an impact at organized workplaces like Bath Iron Works, where workers are often laid off during down cycles.
Other worker advocates were critical of the proposed changes to work-search provisions.
"We all know that Maine people searching for jobs are already having a tough time finding work," said Robyn Merrill of Maine Equal Justice Partners. "Why would we want to make unemployed workers take jobs they’re not suited for instead of utilizing their skills for the benefit of themselves and the economy?"
Merrill added, "Lawmakers should be focused on job creation instead of making things harder for unemployed workers."
The bill will move to the state Senate for a preliminary vote.