Federal-State Unemployment Compensation Program: Unemployment Insurance Program Letter Interpreting Federal Unemployment Insurance Law

DEPARTMENT OF LABOR

Employment and Training Administration

Federal-State Unemployment Compensation Program: Unemployment

Insurance Program Letter Interpreting Federal Unemployment Insurance

Law

The Employment and Training Administration interprets Federal law

requirements pertaining to unemployment compensation (UC) as part of

its role in the administration of the Federal-State UC program. These

interpretations are issued in Unemployment Insurance Program Letters

(UIPLs) to the State Employment Security Agencies. The UIPL described

below is published in the Federal Register in order to inform the

public.

UIPL No. 41-98

UIPL No. 41-98 provides guidance on the prevailing conditions of

work requirement found in Section 3304(a)(5)(B) of the Federal

Unemployment Tax Act. Since it has been 30 years since the Department's

last issuance on this provision, the Department is concerned that not

all States remain aware of or properly apply it. Therefore, UIPL No.

41-98 is being issued to advise States of the requirements of the

prevailing conditions of work provision and to provide additional

guidance. Except for the discussion of the contract of employment, UIPL

No. 41-98 does not modify the Department's previous issuances on this

matter, UCPL No. 130 and UIPL No. 984, which are also being published

as attachments to UIPL No. 41-98.

Dated: September 11, 1998.

Raymond L. Bramucci,

Assistant Secretary of Labor.

U. S. Department of Labor

Employment and Training Administration, Washington, D.C. 20210

CLASSIFICATION: UI

CORRESPONDENCE SYMBOL: TEUL

DATE: August 17, 1998.

DIRECTIVE : UNEMPLOYMENT INSURANCE PROGRAM LETTER NO. 41-98

TO: ALL STATE EMPLOYMENT SECURITY AGENCIES

FROM: GRACE A. KILBANE, Director, Unemployment Insurance Service

SUBJECT: Application of the Prevailing Conditions of Work

Requirement

RECISSIONS: None

EXPIRATION DATE: Continuing

1. Purpose. To remind States of the requirements of the

prevailing conditions of work provision of the Federal Unemployment

Tax Act (FUTA) and to provide additional guidance.

2. References. Section 3304(a)(5)(B), FUTA; Unemployment

Compensation Program Letter (UCPL) No. 130; and Unemployment

Insurance Program Letter (UIPL) No. 984.

3. Background. Section 3304(a)(5)(B), FUTA, requires, as a

condition of employers in a State receiving credit against the

Federal unemployment tax, that unemployment compensation (UC) shall

not be denied to any otherwise eligible individual for refusing to

accept new work--

If the wages, hours, or other conditions of the work offered are

substantially less favorable to the individual than those prevailing

for similar work in the locality; \1\

\1\ Two other requirements exist in Section 3304(b)(5), FUTA: UC

may not be denied for refusing new work if the position offered is

vacant due directly to a strike, lockout or other labor dispute or

if ``as a condition of being employed the individual would be

required to join a company union or to resign from or refrain from

joining any bona fide labor organization.''

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The Department previously issued guidance on the prevailing

conditions requirement in 1947 in UCPL 130 \2\ and in 1968 in UIPL

No. 984. Although both issuances remain in effect, the Department is

concerned that, because they were issued a long time ago, not all

States remain aware of them or properly apply them. This concern

arises from several training sessions and conferences where the

prevailing conditions requirement was discussed. The Department also

learned of a State-conducted survey on the prevailing conditions

requirement which indicated that many States were not examining

fringe benefits. When the Advisory Council on Unemployment

Compensation queried States on their eligibility provisions, it

notably did not ask about the prevailing conditions requirement

[[Page 50590]]

and only a few States mentioned that requirement in their responses.

Also, in the 30 years since the most recent UIPL was issued, the

labor market has undergone significant changes, notably in the

increase in temporary workers and the importance of fringe benefits.

Therefore, this UIPL is being issued.

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\2\ UCPL 130 was later incorporated in the Department's Benefit

Series, 1-BP-1, BSSUI, September 1950.

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Section 4 of this UIPL offers a brief summary of UCPL 130 and

UIPL 984 (both attached). It also emphasizes that the prevailing

conditions requirement applies to certain voluntary quits and

clarifies UIPL 984's discussion of a ``contract of employment.''

Section 5 discusses one aspect of adjudicating prevailing conditions

issues. Section 6 addresses a change in the labor market--the

increase in temporary work--and its relation to the prevailing

conditions requirement. Except for the discussion of the contract of

employment, this UIPL does not modify UCPL 130 or UIPL 984, both of

which remain in effect.

This UIPL contains the minimum requirements States must meet to

conform with the prevailing conditions requirement. Nothing

prohibits States from interpreting State law provisions implementing

the prevailing conditions requirement in a manner more favorable to

the individual worker.

4. Discussion.

a. In General. To determine if the offered work is suitable,

States conduct a two-tiered analysis. First, the work must be

suitable to the individual considering his or her previous wage and

skill levels. Whether the work is suitable under this test is

generally a matter of State law. \3\ Second, the work must meet the

requirements of Section 3304(a)(5)(B), including the ``prevailing

conditions of work'' requirement. As discussed below, the prevailing

conditions requirement applies not only to refusals of work, but

also to separations from employment involving a refusal of ``new

work.'' It does not matter why the individual refused new work not

meeting the prevailing conditions requirement; if the work does not

meet the prevailing conditions requirement, compensation may not be

denied.

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\3\ The exception is for extended benefits where ``suitable

work'' must meet the requirements of Section 202(a)(3)(C) of the

Federal-State Extended Unemployment Compensation Act.

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According to UIPL 984, the prevailing conditions requirement is

designed to assure that an individual cannot lose rights to

compensation because of a refusal of substandard work. Also

according to UIPL 984, the purpose of the requirement is to prevent,

among other things, depressing wage rates or other working

conditions to a point substantially below those prevailing for

similar work in the locality. The provision requires a liberal

construction to effectuate its purpose.

b. Definition of New Work. The prevailing conditions of work

requirement applies whenever an offer of ``new work'' is refused.

Under UIPL 984, ``new work'' includes:

(1) An offer of work to an individual by an employer with whom

the worker has never had a contract of employment,

(2) An offer of reemployment to an individual by a previous

employer with whom the individual does not have a contract of

employment at the time the offer is made, and

(3) An offer by an individual's present employer of:

(a) Different duties from those the individual has agreed to

perform in the existing contract of employment; or

(b) Different terms or conditions of employment from those in

the existing contract.\4\

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\4\ The basis for this position is discussed in UIPL 984.

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UIPL 984 further provides that ``an attempted change in the

duties, terms, or conditions of the work, not authorized by the

existing employment contract, is in effect a termination of the

existing contract and the offer of a new contract.'' (Emphasis

added.) UIPL 984 did not, however, recognize that, if an employer

requires a contract providing for constantly changing conditions,

then the prevailing conditions requirement would be nullified. A

common-sense understanding of the term ``new work'' includes

performing different work, even if the employment contract provides

for performing such different work. Further, by accepting this as a

condition of obtaining employment, the individual would, in effect,

be forced to waive the protections under the prevailing conditions

requirement as a condition of accepting a job. For these reasons,

UIPL 984 is supplemented by the following: No contract granting the

employer the right to change working conditions may act as a bar to

determining that ``new work'' exists.

A refusal of new work may occur when the individual is already

unemployed or it may be the cause of an individual's separation from

employment. When the refusal is the cause of an individual's

unemployment, States must assure that issues adjudicated as

``voluntary quits'' under State law are also adjudicated, when

appropriate, under the prevailing conditions of work requirement. An

individual may not be disqualified for voluntarily quitting or for

refusing an offer of otherwise suitable work when the new work does

not meet the prevailing conditions of work in the locality.

c. When States Must Investigate Prevailing Conditions. The State

has an affirmative duty to assure an offer of new work meets the

prevailing conditions requirement before denying UC if:

(1) The individual specifically raises the issue,

(2) The individual objects on any grounds to the suitability of

wages, hours, or other offered conditions of new work, or

(3) Facts appear at any stage of the administrative proceedings

which put the agency or hearing officer on notice that the

conditions of the new work might be substantially less favorable to

the individual than those prevailing for similar work in the

locality.

To conduct a prevailing conditions inquiry, States must

determine what constitutes ``similar work'' and ``prevailing wages,

hours, or other conditions,'' and whether the offered work is

``substantially less favorable'' to the particular claimant than the

prevailing wages, hours, or conditions of similar work in the

locality.

d. Similar Work. Under UCPL 130, similarity of work is

determined by examining the ``operations performed, the skill,

ability, and knowledge required, and responsibilities involved.''

States should not rely on job titles alone, which are sometimes

misleading. In some occupations the similarity of the work cuts

across industry lines. (For example, many accounting functions are

similar regardless of the industry.) The nature of the services

within an occupation may vary depending on the degree of skill and

knowledge required. UCPL 130 continues--

``[s]imilar work'' is basically a common sense test * * *. On

the one hand, the comparison should not be so broad as to result,

for example, in the finding of a prevailing wage which bears no

relation to those generally paid for some of the kinds of work being

compared. On the other hand, the distinctions should not be so fine

as to leave no basis for comparison with other work done in the

locality * * *.

The UCPL goes on to say that the question of what is similar

work should not be determined on the basis of what constitutes

conditions of work such as the hours of employment, the permanency

of the work, unionization, or benefits, since such factors beg the

question at issue: what is ``similar work?'' Rather, the

determination of what constitutes similar work will be made on the

basis of the similarity of the operations performed, the skill,

ability and knowledge required, and the responsibilities involved.

The determination of similar work applies to work performed in

the ``locality''. Under UCPL 130, the locality consists of work in

the competitive labor market area in which the conditions of work

offered by an employer affect the conditions offered for similar

work by other employers because they draw upon the same labor

supply. If no similar work exists in the locality, the State may,

but is not required to, examine work outside the competitive labor

market.

e. Prevailing Wages, Hours and Conditions of Employment. Once

similar work is identified for the locality, the State must focus on

what wages or hours are most prevalent and what conditions are most

common for similar work in the locality.

Under UCPL 130, the phrase ``conditions of work'' refers to the

express and implied provisions of the employment agreement and the

physical conditions under which the work is performed, as well as

conditions that arise at work as a result of laws and regulations,

such as coverage for workers' compensation. The phrase ``conditions

of work'' encompasses fringe benefits such as life and group health

insurance; paid sick, vacation, and annual leave; provisions for

leaves of absence and holiday leave; pensions, annuities and

retirement provisions; and severance pay. It also en-compasses job

security and reemployment rights; training and promotion policies;

wage guarantees; unionization; grievance procedures; work rules,

including health and safety rules; medical and welfare programs;

physical conditions such as heat, light and ventilation; shifts of

employment; and permanency of work.

States may not disregard any of these factors when investigating

a ``prevailing

[[Page 50591]]

conditions'' issue. An individual may not be denied UC for refusal

of work if the wages, hours, or any other material condition or

combination of conditions of the work offered is substantially less

favorable to the individual than those prevailing in the locality

for similar work.

f. Substantially Less Favorable to the Individual. UCPL 130

describes the language ``substantially less favorable to the

individual'' as presenting a definite but not inflexible standard

based on the conditions under which the greatest number of employees

in an occupation are working in the locality. It does not preclude

the denial of benefits because of the existence of minor or purely

technical differences that would not undermine the existing labor

market conditions or would not have an appreciable adverse effect on

the individual. In borderline cases where it is not clear whether

the difference is material or the facts cannot be precisely

determined, the general rule of liberal interpretation of remedial

legislation indicates that the claimant should be given the benefit

of the doubt.

In the prevailing conditions context, the question is whether

any material condition or combination of conditions render the work

substantially less favorable to the worker than similar work in the

locality. Factors to be considered are the actual conditions in

question, the extent of difference between the offered work and

similar work, and the effect such differences have on the worker.

When conditions can be converted into a monetary value, these can be

compared as part of the wage package or wage rate. The value to the

worker of health insurance, pension, paid vacations, and holidays,

for example, is readily ascertainable and provides an objective

basis for comparing the conditions of employment and determining the

prevailing labor standards and thus the suitability of the offered

work.

5. Adjudicating a Prevailing Conditions Issue. Before an

individual is disqualified from the receipt of UC due to a refusal

of suitable work, the State must determine:

(1) That there was a bona fide offer of work;

(2) That, under State law, the work is suitable to the

individual in terms of the individual's previous wage and skill

levels;

(3) That the wages, hours, and other conditions of the work were

not substantially less favorable to the individual than those

prevailing in the locality; and,

(4) That, under State law, there was not good cause for refusing

the offer.

The information needed to determine items (1), (2) and (4) is

usually readily available. As a result, the State may be able to

decide that an individual is eligible without adjudicating the often

time-consuming prevailing conditions issue. For example, if the job

offer was not bona fide, the work was not reasonably suitable to the

individual, or there was good cause for refusing work, then there is

no need to adjudicate prevailing conditions issues. Conversely, if

the State determines the individual would be ineligible under any of

items (1), (2) or (4), then it must adjudicate any prevailing

conditions issue before denying the individual.

Similarly, when the refusal of an offer of new work involves the

application of a State's voluntary quit provisions, there is no need

to adjudicate a prevailing conditions issue when the individual is

determined to be otherwise eligible. However, the State must

adjudicate any prevailing conditions issue before denying the

individual.

6. Temporary Work. Since UCPL 130 and UIPL 984 were issued, the

use of temporary or contingent workers has greatly expanded. One of

the incentives for employers to use temporary workers is that these

workers reduce employer costs since they often do not enjoy the

wages, hours, and other conditions enjoyed by their permanent

counterparts. Temporary workers may be ineligible for fringe

benefits and they may not be trained for higher-skilled jobs. By

avoiding the costs associated with permanent workers, employers

could be depressing precisely those factors considered ``prevailing

conditions'' within the FUTA labor standards: fringe benefits,

health insurance, promotion policies, etc.

Just as it applies to other refusals of work, the prevailing

conditions requirement applies to refusals of offers of temporary

work. The fact that the work is temporary should generally be

sufficient to trigger a prevailing conditions inquiry. Also, as

noted in item 4.b., ``new work'' may not be limited by an employment

contract which grants the employer the right to change employment

conditions. Therefore, a refusal of temporary work in the form of a

new assignment from a temporary help firm is also subject to the

prevailing conditions requirement.

As noted in item 4.d., what constitutes similar work is not

determined on the basis of the conditions of work such as the hours

of employment, the permanency of the work, or benefits. (These

factors are considered only after the question of similar work has

been decided.) Accordingly, temporary work should not be compared

only to similar temporary work. Instead, it must be compared with

all work, temporary and permanent, in a similar occupational

category.

Temporary work is not per se unsuitable under the prevailing

conditions requirement. If, for example, the norm for a particular

occupation in a locality is temporary work, then temporary work is

the prevailing condition of such work. As another example, when

temporary help firms are involved, an individual so desiring may

work continuously. The State must collect the necessary facts to

determine the specifics in each case.

Also, the short-term duration of temporary work may be a

voluntary or favorable condition for some individuals. If the State

establishes through fact finding that this is the case for an

individual, than the work offered is ``not less favorable to the

individual'' than the work prevailing in the locality.

7. Action. Appropriate staff, including higher and lower

appellate authorities, should be provided with copies of this UIPL.

Action should be taken to assure that the prevailing conditions

requirement is applied as described in this UIPL, UIPL 984 and UCPL

130.

8. Inquiries. Please direct inquiries to the appropriate

Regional Office.

In Reply Refer to File No. 13:AS:I

Federal Security Agency, Social Security Administration, Washington 25,

D.C.

Bureau of Employment Security

January 6, 1947.

Unemployment Compensation Program Letter No. 130

TO: ALL STATE EMPLOYMENT SECURITY AGENCIES

Principles Underlying the Prevailing Conditions of Work Standard

The attached statement of ``Principles Underlying the Prevailing

Conditions of Work Standard'' is an offshoot of the series of

statements on the principles underlying the major disqualifications

which the Bureau has issued. The most recent, ``Principles

Underlying Labor-Dispute Disqualification,'' was sent to you in

Unemployment Compensation Program Letter No. 124. The others were

sent with Unemployment Compensation Program Letters Nos. 101, 103,

and 107.

In ``Principles Underlying the Suitable-Work Disqualification''

there is a concise discussion of the prevailing wage standard, pages

7-11. The attached statement is a more extended exploration of the

same field. Throughout the discussion, the interpretations, the

applications of the law, and the suggested solutions to problems are

all based on labor-market patterns, common usage of terms by

employers and labor, and upon the administrative need for short,

simple methods. Whereas ``Principles Underlying the Suitable-Work

Disqualification'' stops short of suggesting definite practical

techniques, the present statement tries to reach solutions which

will be equally applicable at the local office and at the appeal

levels.

The great need in this field is for usable wage information. In

the attached statement, we have suggested a few sources. We should

like to pass on to other State agencies helpful techniques which you

might be able to send us for use in developing sources of data and

using such data. We are greatly interested in receiving not only

such devices and methods as you have found valuable, but any

comments, criticisms, and suggestions you may have concerning the

attached statement. We are here merely opening up a field that poses

both technical and administrative difficulties. It is only by

pooling our mutual thinking that we can hope to overcome those

difficulties.

We are sending extra copies of this letter and the attachment

for distribution to the appeals and claims personnel and to other

interested personnel. A limited number of additional copies are

available upon request.

Sincerely yours,

R. G. Wagenet,

Director.

[[Page 50592]]

Index entries:

Disqualifications

Refusal of suitable work

Prevailing conditions of work UC 130 1/6/47

standard.

Eligibility

Prevailing conditions of work standard... UC 130 1/6/47

Prevailaing conditions of work standard...... UC 130 1/6/47

Principles Underlying the Prevailing Conditions of Work Standard

Preface

The following study of the prevailing conditions of work

provisions in the State unemployment compensation acts was prepared

by the technical staff of the Bureau of Employment Security. It

discusses the interpretation of these provisions in the State Acts

and presents the views which the Interpretation Service Section of

the Bureau believes most reasonable.

In the final analysis, the interpretation of the prevailing

conditions of work provisions in the State Acts, if they are to be

consistent with the corresponding provisions in the Internal Revenue

Code, depends on the meaning of the requirement in section 1603

(a)(5)(B) of the Internal Revenue Code, as amended. The specific

meaning of the requirement in the Internal Revenue Code is for the

determination of the Federal Security Agency. This statement is an

effort by the Bureau of Employment Security to assist the State

agencies in their administration of the prevailing conditions of

work provisions, which have always presented many difficult

problems.

Principles Underlying the Prevailing Conditions of Work Standard

Table of Contents

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Page

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Introduction 1

General Benefit Provisions............................. 1

Mandatory Labor Standards.............................. 2

Relation to General Benefit Provisions................. 2

Purpose of the Standards............................... 3

Order of Discussion.................................... 3

Similar Work 4

Industry Relationships................................. 4

Skill Grade............................................ 4

Basis of Determination................................. 5

Sources of Information................................. 5

Locality 6

Arbitrary Definitions.................................. 6

Competitive Labor Market Area.......................... 7

Basic Considerations................................... 7

Urban Occupations...................................... 7

Interurban and Rural Occupations....................... 8

Distance to Work....................................... 8

Determination and Sources of Information............... 9

Prevailing 9

Meaning................................................ 9

Number of Employers vs. Number of Employees............ 10

Methods of Determination............................... 11

The Mode........................................... 11

The Average........................................ 12

The Use of Class Intervals......................... 12

Sources of Information................................. 13

Substantially Less Favorable 14

Purpose................................................ 14

Effect................................................. 14

Application............................................ 14

Substandard Employment................................. 15

Wages, Hours, or Other Conditions.......................... 16

Wages.................................................. 16

Wages vs. Wage Rates............................... 16

Factors Affecting Earnings......................... 16

Basis of Comparison................................ 16

Basis of Determination................................. 17

Other Considerations................................... 18

Customary Industrial Practices......................... 18

Temporary or Seasonal Fluctuations..................... 19

Progressive Wage Scales................................ 19

Method of Wage Payment................................. 20

Hours...................................................... 21

Weekly Hours of Work................................... 21

Temporary or Seasonal Fluctuations..................... 21

Arrangement of Hours................................... 22

Other Factors.......................................... 23

Other Conditions of Work................................... 23

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In General............................................. 23

In Particular Occupations.............................. 24

Varying Importance..................................... 24

Basis of Determination................................. 25

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Principles Underlying the Prevailing Conditions of Work Standard

Introduction

All of the State unemployment compensation acts provide that

benefits shall not be denied an otherwise eligible individual for

refusing to accept new work ``if the wages, hours, or other

conditions of the work are substantially less favorable to the

individual than those prevailing for similar work in the locality.''

This provision in the unemployment compensation acts is one of the

most difficult to administer. Its application can best be understood

in relation to the other benefit provisions in the State acts.

General Benefit Provisions

In order to be eligible for benefits under the State acts a

claimant must meet the requirements of the law. Among other things

he must be able to work and available for work; that is, he must be

currently in the labor market. If he does not stand ready, willing,

and able to accept suitable work during the week for which he has

filed claim, he is ineligible for benefits.

In addition, though eligible, the worker may be subject to

denial of benefits if his unemployment is due to a labor dispute, if

he was discharged for misconduct connected with the work, or if he

left his work voluntarily or has refused suitable work without good

cause. Denial of benefits in such cases follows on the theory that

the worker's unemployment is not due to a lack of suitable job

opportunities.

These disqualifying provisions are in the nature of exceptions

to the general remedial purpose of the acts. They deny benefits only

if the claimant's action falls directly within the limits of the

exception when all the facts and circumstances are considered. Under

most State laws, for example, the claimant is subject to denial of

benefits for refusing work only if the work was suitable and he

refused it without good cause. Moreover, in determining whether the

work was suitable for the claimant, most of the State acts

specifically provide for consideration of the degree of risk

involved to his health, safety, and morals; his physical fitness and

prior training; his experience and prior earnings; the length of his

unemployment and prospects of securing local work in his customary

occupation; and the distance of the work from his residence.

The law does not specify the exact weight to be given these and

any other considerations which may be relevant to the determination

because whether a job is suitable for a particular worker and

whether he had good cause for refusing it can only be determined on

the basis of the facts in the case. Thus, the actual determination

of whether a claimant is subject to disqualification for refusal of

suitable work without good cause is left to the discretion of those

charged with the administration of the act. The same is true of the

availability provision and the other general disqualification

provisions in the State acts.

Mandatory Labor Standards

As mandatory minimum standards, however, all of the State

unemployment compensation laws in conformity with section 1603(a)(5)

of the Internal Revenue Code, as amended, provide that an otherwise

eligible individual shall not be denied benefits for refusing new

work:

(A) If the position offered is vacant due directly to a strike,

lockout or other labor dispute;

(B) If the wages, hours, or other conditions of the work offered

are substantially less favorable to the individual than those

prevailing for similar work in the locality; or

(C) If as a condition of being employed the individual would be

required to join a company union or to resign or refrain from

joining any bona fide labor organization.

These requirements have been extended to all refusals of work in

most of the State acts by providing that ``notwithstanding any other

provisions of this Act, no work shall be deemed suitable and

benefits shall not be denied under this Act to any otherwise

eligible individual for refusing to accept new work'' unless it

meets these three conditions. Clearly, ``no work'' is broader than

``new work'' and claimants are not subject to denial of benefits for

refusing a job which does not meet any one of the three conditions

under such a provision. Under some laws, the three labor standards

requirements and the general criteria for determining whether work

is suitable also apply to the determination of whether the claimant

is subject to denial of benefits for voluntarily leaving work

without good cause.

Relation to General Benefit Provisions

Inasmuch as the labor standards provisions are mandatory, they

impose a duty on those administering the State act to assure

themselves that the work offered meets these minimum standards

before denying the claimant benefits for refusing work, regardless

of whether he raises the issue. Inasmuch as they are minimum

standards, they apply to all denials of benefits for refusal of

offers of or referrals to new work regardless of his reasons for

refusing the job.\1\ If the job is vacant as a direct result of a

labor dispute it does not matter, for example, whether the claimant

refused it on principle, because he was afraid of bodily harm in

crossing the picket line, or because the employer wanted him to

start work on Friday, the 13th. He is not subject to denial of

benefits under the suitable work disqualification in any case.

Neither may he be held ineligible for benefits because he is

unwilling to accept work which does not meet these three minimum

conditions. For example, a punch press operator who is unwilling to

accept less than $.80 an hour may not be held ineligible for that

reason if lower wages would be substantially less favorable than

those prevailing in the locality for such work.

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\1\ Similarly, as in most States, where they are not limited to

new work, the labor standards requirements apply to all denials of

benefits for refusal of offers or referrals to any work by an

otherwise eligible individual, regardless of whether he raises the

issue or of his reasons for refusing the job.

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The labor standards provisions relate primarily to the

conditions on the job as compared with conditions in like jobs and

the manner in which they would affect the claimant. The availability

and suitable work provisions, on the other hand, turn primarily on

the nature of the work and the claimant's qualifications,

circumstances, and prospects. Thus work which meets the labor

standards provisions may not satisfy the suitable work criteria and

may not be work which the claimant need stand ready to accept. For

example, a job as stenographer though it meets the labor standards

requirements is not suitable for a file clerk who cannot type and

take shorthand. Similarly, a job as a cook's helper which pays

prevailing wages for such work is not suitable for an assistant chef

who has been earning $60 a week and has prospects of earning as much

again. Unless the work satisfies both the suitable work criteria and

the labor standards requirements, the claimant is not subject to

disqualification for refusing it and is not ineligible for benefits

if he is available for a substantial amount of other work which is

suitable for him.

Purpose of the Standards

Of the three labor standards requirements, the first, which

prevents denial of benefits for refusal of work if the job offered

is vacant due directly to a labor dispute, was designed to preserve

the neutrality of the State agency in labor disputes. The third,

which prevents denial of benefits if the worker as a condition of

being employed is required to join a company union or resign from or

refrain from joining a bona fide labor organization, was designed to

deter any effort to use unemployment compensation to impede or

destroy labor organizations. The second, which prevents denial of

benefits if the wages, hours, or other conditions are substantially

less favorable to the individual than those prevailing for similar

work in the locality, was designed to prevent the unemployment

compensation system from

[[Page 50594]]

exerting downward pressure on existing labor standards. It was not

intended to increase wages or improve the conditions under which

workers are employed, but to prevent any compulsion upon workers,

through denial of benefits, to accept work under less favorable

conditions than those generally to be obtained in the locality for

such work.

Order of Discussion

It is with this second labor standard requirement that we are

concerned in the succeeding discussion. The key words and phrases in

this requirement are: ``similar work,'' ``locality,''

``prevailing,'' ``substantially less favorable to the individual,''

and ``wages, hours or other conditions of work.'' The interpretation

given these phrases and the manner in which they are applied in each

case determine whether the purpose intended will be achieved. Each

of these words and phrases will be discussed in turn. Inasmuch as

the requirement is intended to reflect labor market conditions,

their interpretation should be based on existing labor market

patterns and usage and they will be considered in that light.

Similar Work

Similarity of work can best be judged on the basis customarily

used by employers and employees as a result of industrial

experience: by occupation and grade of skill. As used in prior

legislation, ``similar work'' has in fact been held to mean work in

the same trade or occupation. Superficially this would seem to mean

that a job is to be compared with others known by the same title.

However, job titles are sometimes misleading. Different

occupation and grade designations are often used in different

establishments for the same work. Conversely, the same titles are

sometimes used for different kinds of work. The actual comparison of

jobs must therefore be made on the basis of the similarity of the

work done without regard to title: that is, the similarity of the

operations perforated, the skill, ability and knowledge required,

and the responsibilities involved.

Industry Relationships

In some occupations the similarity of work cuts across industry

lines and the differences in the manner in which the work is done

are relatively minor. Bookkeepers and boiler operators, for example,

are likely to do much the same kind of work whether employed by a

grain elevator company, a manufacturing concern or a retail clothing

establishment. Either would be hired by establishments in almost any

industry providing they had the necessary experience with the

particular bookkeeping system or the heating plant in use and the

required degree of skill. This essential similarity of work which

cuts across industrial lines is generally true of most office,

janitorial and clerical occupations and to some degree of unskilled

common labor.

In most occupations, on the other hand, there is likely to be

considerable variation in the work done in different industries, in

parts of industries or even in particular types of establishment

within an industry. There are marked differences, for example, in

the work of a glazier in the construction industry and one in the

automobile or the furniture industry; and within the furniture

industry between the work of a glazier on wooden furniture and one

who works on metal furniture. Similar differences exist in the

nature of the work done by a waiter in a ``greasy spoon'' and one in

a hotel dining room and between the work of a dress saleswoman in a

bargain basement and a sales person in a dress salon. Thus even

where there is an essential similarity, differences in the nature of

the tools used, in the size and quality of the material worked on,

or in the clientele to be served, may create characteristic

differences in the work which are important to both employers and

employees. Such differences are generally to be found in the mass-

production-process and service occupations.

Skill Grade

The nature of the services rendered may also be differentiated

within an occupational category by the degree of skill and knowledge

required. The work of a head bookkeeper in a large concern who sets

up the bookkeeping system and assumes responsibility for it, is

clearly different from that of a bookkeeper in charge of ``accounts

payable'' or a posting clerk in the department. These differences

are reflected in the wages and other conditions in their respective

employments. The work of a regular sales person who must have a

thorough knowledge of the merchandise and who assumes responsibility

for the stock is likewise to be distinguished from that of a rush-

hour or counter clerk who is not required to have any specialized

knowledge or who only accepts payment for articles selected by the

customer.

The degree of distinction made within an occupation requiring

the same basic skills depends to some extent on the degree to which

the occupation is concentrated in the area. Where there is a heavy

concentration, the workers become highly specialized and employers

seek such specialization. As a result, minor differences in the work

done are commonly recognized both on the job and in the hiring

process.

On the other hand, the fact that ``similar'' makes allowance for

some difference though it implies a marked resemblance must also be

given weight. Too fine a distinction is likely to result in a

comparison of identical rather than similar work. Generally,

distinctions should be made within an occupation only when important

differences in the performance of the job outweigh the essential

similarity of the work.

In skilled trades a number of long-established and commonly

recognized grades such as learners, apprentices, and journeymen will

usually be found. There may also be special groups such as

handicapped or superannuated workers which must be taken into

account where there are actual differences in the tasks performed

and the speed and skill required. However, the work should not be

distinguished on the basis of the kind of individual ordinarily

hired for the job, since it is the work and not the worker which is

to be compared under the law.

Basis of Determination

In conclusion, ``similar work'' is basically a common sense

test. The degree of similarity required in any particular instance

should be calculated to carry out the general purpose and spirit of

the proviso. On the one hand the comparison should not be so broad

as to result, for example, in the finding of a prevailing wage which

bears no relation to those generally paid for some of the kinds of

work being compared. On the other hand, the distinctions should not

be so fine as to leave no basis for comparison with other work done

in the locality and thus make meaningless the determination of the

``conditions prevailing'' for comparable work. Neither should the

question of what is similar work be determined on the basis of other

factors which are conditions of work within the meaning of the

provisions, as for example, the hours of employment, the permanency

of the work, unionization, or vacation, sickness, and retirement

benefits. These other factors must be considered, but only after the

question of what is similar work is decided. If they were considered

in determining what is similar work, such considerations would beg

the very question at issue: what conditions generally prevail for

similar work?

Sources of Information

The determination of what constitutes similar work is not

difficult in occupations which have long been subject to union

agreement. As a result of collective bargaining, the occupational

duties and skill grades covered by agreement are usually well

defined. Moreover, inasmuch as the definitions are based on

industrial experience and the customs of the trade, they are

applicable to nonunion as well as union work in the locality.

In occupations and localities where the work in question has not

been defined by mutual agreement between employers and employees, it

is necessary to look to other sources. Guidance may also be derived

from the job definitions and classification practices used by State

and Federal agencies responsible for wage and hour data or the

enforcement of minimum standards for various occupations, the

employment service, employer groups, labor organizations and the

claimant's own experience. In the absence of such guidance a good

general test of the similarity of the work is whether the duties and

the skills required are sufficiently the same so that the workers

employed in each of the jobs being compared could readily perform

any of the others.

Locality

``Locality'' like ``similar work'' is a somewhat indefinite

term. Apart from any special reference to a particular place it

means only a relatively limited geographic area. As used in the

labor standards provisions it is an integral part of the concept of

``the conditions prevailing for similar work.'' But while it is

clear from the context that the conditions offered are to be

compared with the conditions for similar work in the locality where

the work is to be done, the nature and size of the area are not

defined.

[[Page 50595]]

Arbitrary Definition

At first glance the use of arbitrary area limits such as city or

county lines may appear persuasive because it seems easy to

administer. Support for such interpretation is to be found in the

public construction statutes in which the area for comparison of

wages paid for similar work is generally defined as the State or

civil division in which the work is to be performed. The phrase

``immediate vicinity'' in the Congressional Act of 1862 governing

the wage rates of unclassified navy yard employees has likewise been

interpreted in terms of a 50-mile radius about the yard.

These definitions were adopted in large part to meet court

objections to the use of so indefinite a term as ``locality'' where

penal provisions are involved. This objection does not apply to the

unemployment compensation laws nor is the same usage applicable.

Unlike the public construction acts the unemployment compensation

laws are not penal statutes. Unlike the Navy Yard Act, they do not

deal with only one type of industry which is ordinarily concentrated

in urban districts. Unemployment compensation agencies have occasion

to deal with almost every kind of industry and with a variety of

occupations, skilled and unskilled, organized and unorganized, which

center in areas of varying size.

Defining ``locality'' by some arbitrary device such as city and

county lines or a 50-mile radius about the establishment, without

regard to the labor market pattern of the occupation, will in many

instances fail to effect the intent of the prevailing conditions

provisions. In some cases the area will be too large. In others, too

small. If it is too large, it is likely to include more than one

area of concentration for the same kind of work. In such cases,

generalization of the conditions prevailing in several different

areas of concentration is not likely to reflect the conditions

actually to be obtained in any one of them. Similarly, if the limits

are too narrow, the determination will reflect conditions prevailing

in only part of the area in which those attached to the occupation

ordinarily seek employment.

Competitive Labor Market Area

Results in better accord with the purpose of the labor standards

provisions can be achieved by interpreting ``locality'' in terms of

the area of immediate labor market competition for similar work. It

is the variation in wages and other conditions in their customary

occupation within the competitive labor market area in which they

normally expect to obtain employment which immediately affects

workers. Accordingly, ``locality'' as used in the labor standards

provisions in the Internal Revenue Code and the State unemployment

compensation acts may be defined as the competitive labor market

area in which the conditions of work offered by an establishment

affect the conditions offered for similar work by other

establishments because they draw upon the same labor supply. The

term ``area'' as used in section 103.50 of the Wisconsin statutes

which provides that the hours of work on public highway projects

shall be no longer than those prevailing for such work in the area

is similarly defined as the locality from which labor for any

project within such area would normally be secured. Definition of

locality in terms of the competitive labor market area is also in

accord with the practice of most unemployment compensation agencies

insofar as can be discerned from the administrative decisions.

Basic Considerations

In establishing the competitive labor market locality for an

occupation the dominant considerations are the location of the

establishments employing similar services, the area from which

(regardless of civil and political boundaries) workers are normally

drawn to supply the needs of these establishments, the commuting

practices and ease of transportation in the area, and the customary

migration pattern of the workers in the occupation.

Urban Occupations

Because most industries tend to cluster in towns and cities,

urban and metropolitan districts, including the suburbs and outlying

area within ordinary commuting distance, generally constitute the

locality for most industrial occupations. In some places two or

three nearby communities with similar industrial activities may

constitute a single locality for many occupations. Mill or mining

communities in which the companies draw their employees from the

surrounding territory in competition with each other are a good

example. Similarly, heavy industrialized urban districts such as the

San Francisco Bay area in which there are a number of communities

within easy transportation distance of each other may constitute a

single locality for occupations common to the entire area.

An extensive urban or metropolitan district may on the other

hand encompass several localities for occupations in which the

workers do not move freely from one community to another. The San

Francisco Bay area, for example, apparently encompasses several

different labor markets for domestic work in which different

conditions may prevail because there is no direct competition for

labor among employers or between those seeking such work in

different communities. The same situation probably exists in other

large urban districts such as the Chicago or New York Metropolitan

areas and in many other fields of employment. To take an extreme

example, the competitive labor market for pinboys in neighborhood

bowling alleys may be no wider than several square city blocks.

However, whether there is one or several labor market localities in

an urban district for an occupation will vary from one place to

another with the size of the district, the location of the

establishments employing such services, the nature and customs of

the industry and the commuting practices of the workers in the

occupation.

The difference between determining the extent of the competitive

labor market locality for similar work and determining whether the

job a claimant was offered is within reasonable travel distance from

his home is discussed below under the heading ``Distance to Work.''

Interurban and Rural Occupations

The competitive labor market for some kinds of work is not

limited to urban districts and may encompass more extensive areas.

In the logging occupations, for example, the entire lumbering region

in which an offer of better wages by one of the operating companies

at the beginning of a season would draw off workers from the other

camps or cause them to improve their conditions to meet the

competition--would constitute the competitive labor market area.

Similarly, the area in which structural steel workers or stone

cutters ordinarily move from job to job and from the contracting

companies ordinarily recruit such workers may be regional or even

Nationwide.

Like variations are to be found in agricultural occupations.

Thus, the immediate competitive labor market area for canning

occupations would usually be more limited than that for field hands,

while the customary migration pattern for the fruit and vegetable

pickers involved will usually be more extensive. To follow the

parallel further, while the competitive labor market area for

poultry farm hands may be smaller than that for dairy hands in some

places, the reverse may be true in other parts of the country where

the poultry industry is more widespread and dairy farms are not

clustered over large areas but scattered in small groups.

Distance to Work

The size of the labor market locality should not be confused

with the distance a claimant can reasonably be expected to travel to

work. The first turns on the nature of the occupation and the

economic character of the area. The second depends on where the

claimant lives, his circumstances and past work history. The two

have little relation to each other. In large labor market areas, for

example, the distance from one end to the other may be greater than

a claimant can reasonably be expected to travel to and from work.

Where the labor market area for the occupation is very small, on the

other hand, it may be reasonable in view of transportation

facilities to expect claimants to travel outside the labor market

area. Some claimants may live far from the locality in which the job

is offered. Some may have good cause for refusing jobs beyond the

immediate vicinity of their homes. Others can reasonably be expected

to commute a considerable distance in view of their past work

histories and present circumstances. Regardless of the claimant's

situation, however, the labor market locality in which offered work

is compared with similar work to determine the conditions prevailing

for the occupation remains the same.

Determination and Sources of Information

There are no hard and fast rules for determining the locality

for an occupation except that all of the factors which enter into

the labor market pattern for such work should be considered in

making the determination. A working knowledge of the nature of the

occupation and the industries and kinds of establishments which

employ such workers will usually be sufficient to indicate the

relative size and general outline of the area. Information available

from other

[[Page 50596]]

agencies and groups which have occasion to deal with the same

problems and the means to conduct a more complete study will also

prove useful. In cases where the inclusion or exclusion of

borderline districts or establishments would result in a

substantially different determination, expert opinion and more

thorough investigation may be necessary. Once the locality for the

occupation has been determined, however, it can be applied in all

future cases involving offers of similar work within the area,

unless substantial changes in the industrial pattern of the area or

the occupation become apparent.

Prevailing

Meaning

While the prevailing standard was not applied to all conditions

of work in earlier legislation, the standard has had long and

extensive statutory use. As applied to wage rates, its meaning was

relatively well settled by administrative practice and court

decisions prior to the enactment of the unemployment compensation

laws. It may be assumed that those who framed the unemployment

compensation acts were familiar with the legislative and court

history of the standard. In the absence of evidence to the contrary,

or of usage more appropriate to the intent of the provision, the

standard in the unemployment compensation laws may therefore be

construed on analogy to generally accepted usage under the

prevailing wage provisions in prior legislation.

Under the earlier public construction statutes it has generally

been accepted that the prevailing rate of wages means one specific

rate for a given occupation in a given locality and not a number of

rates all of which are prevailing. The prevailing minimum wage

requirement in the Walsh-Healey Act of 1936, though it presents a

somewhat different standard, has likewise been interpreted to mean a

single monetary figure in accordance with prior usage. It has also

been generally accepted that ``prevailing'' means the most

outstanding or commonly-paid rate, and that the prevailing rate of

wages for a given occupation and locality is a fact and its

ascertainment a matter of investigation.

It may therefore be said as to each of different conditions of

work to which the standard applies under the unemployment

compensation acts: (1) that a specific condition of work is implied

in each instance and not, for example, a range of wages or hours;

(2) that the prevailing condition is that which most commonly

obtains in the locality for similar work; and (3) that the

determination of the prevailing condition is a matter of

investigation.

Number of Employers vs. Number of Employees

From time to time there has been some question as to whether the

prevailing standard in the unemployment compensation acts is to be

applied in terms of the conditions under which the largest number of

workers are employed or in terms of the conditions offered by the

greatest number of employers. In some instances the conditions of

work offered by the greatest number of employers has apparently been

used because the information could more readily be obtained in that

form. Where all the establishments involved are about the same size

so that the greatest number of workers in the occupation are

necessarily employed by the greatest number of employers, the result

is much the same whichever test is used, if all the workers in the

same establishment are employed under the same conditions. However,

where the establishments are not the same size or the conditions

within the establishments vary, the results are likely to differ

widely depending on whether the test used is the conditions under

which the largest number of workers are employed or the conditions

offered by the greatest number of employers.

This issue has not apparently arisen under other laws. Under the

public construction statutes, for example, the prevailing standard

has customarily been applied in terms of the rate paid the largest

number of workers. Justification for this usage under the

unemployment compensation acts is also to be found in the

traditional use of the terms ``prevailing wages'' and ``prevailing

conditions of work'' by economists and other social scientists as

meaning the wages and other conditions under which the largest

number of workers are employed. The chief merit of using the largest

number of workers lies, however, in the fact that it sets up the

standard most consonant with the purpose of the prevailing

conditions of work provisions. This can best be illustrated in terms

of wages since that is generally the most important factor in the

employment relation.

The upward or downward pressure which an employer exercises on

the conditions offered for similar work in the competitive labor

market locality is directly related to the number of workers he

employs. An offer of better wages by a large establishment which

employs several hundred welders will draw such workers from almost

every establishment in the locality which pays less. Moreover, it

will force employers who pay less to increase their wages if they

wish to retain their employees and attract new workers. A similar

increase in the wages offered by a shop which employs two or three

welders will have little if any effect on the general level of wages

in the occupation. Conversely, a cut in wages by a large

establishment is likely to result in a reduction in the wages paid

by other employers, while a similar decrease by a single small

employer will have little effect on existing rates.

In other words, it is not the number of employers or how many

different rates are paid but the number of jobs at each rate and

level of wages which directly affects the individual worker's

position in the labor market. By establishing the prevailing wage on

the basis of the amount paid the largest number of workers, existing

conditions in the labor market are, therefore, more truly reflected.

Moreover, because each rate is weighted in proportion to the number

of workers employed at that rate, the cumulative effect of the wages

paid by numerous small employers is balanced against the wages paid

by larger establishments.

As a general rule it may therefore be said that the prevailing

wages, hours, and other conditions of work are those under which the

largest number of workers engaged in similar work in the locality

are employed.

Methods of Determination

Under the public construction acts, the rate paid a larger

number of workers than any other--that is the most common or modal

rate--has generally been recognized as that prevailing where a

majority of the workers in the occupation are employed at the same

rate. The mode is also generally used where less than a majority,

but as much as 30 percent or 40 percent of the workers are paid at

the same rate.

In the event that less than 30 percent or 40 percent are paid at

the same rate, the average of all the rates paid weighted by the

number of workers at each rate \2\ is generally used rather than the

mode. The New York Public Construction Act, for example, provides

that the average shall be used if less than 40 percent of the

workers in the occupation are paid at the same rate. Under the

Federal Davis-Bacon Act the average is used if less than 30 percent

are paid at the same rate.

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\2\ i.e., each rate is multiplied by the number of workers

employed at that rate, and the sum of the totals is then divided by

the total number employed in the occupation to obtain the average

rate.

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As applied to wages and hours and such other conditions as can

be measured in numbers, a combination formula of this kind best

carries out the intent of the prevailing conditions of work

provisions to prevent denial of benefits for refusal of work if the

conditions are substantially less favorable than those generally to

be obtained in the locality for similar work. This follows because

each of the two methods, the mode and the average, is used under the

circumstances to which it is most applicable.

The indented material below provides a more complete explanation

of the methods of determining the prevailing condition of work. It

may be skipped by those interested in the broader aspects of the

subject.

The mode is used so long as one condition of work clearly

prevails over all others and is therefore most representative of

those to be obtained in the locality. This method has the merit of

utilizing a condition of work which actually exists as the standard.

It also has the advantage of being relatively easy to use because it

requires no calculation beyond ascertaining which of the existing

conditions is most widespread.

The average, on the other hand, is used where the largest number

of workers employed at the same wages or hours or other condition of

work does not constitute a substantial proportion of the total

number in the occupation. Where this occurs, the condition under

which the largest number of workers are employed in the occupation

may not always be representative of those generally to be obtained.

In such cases results in better accord with the purpose of the

prevailing conditions of work provisions can usually be achieved by

using the weighted average. In the case of wages, for example, this

method, because it reflects the entire range of wages and the number

of workers employed at each level of earnings, usually

[[Page 50597]]

yields a wage which is more representative of those generally to be

obtained in the locality than that paid any relatively small

proportion of the workers in the occupation.

However, since conditions like seniority rights, which cannot be

measured in numbers, cannot be averaged, the mode must of necessity

be used in determining the prevailing condition of work where such

factors are involved, even though only a small percentage of the

workers in the occupation are employed under the same condition. The

mode also should be used in determining the wages or hours

prevailing for similar work even though there may be relatively few

employed under the same condition, if the information necessary to

calculate the average is not available. Conversely, where the

average is known, but the information necessary to obtain the mode

cannot be obtained, it may be necessary to use the average wage or

the average number of hours as the standard for comparison even

though a substantial number of workers may be employed at the same

wages or hours.

Use of Class Intervals.--In determining the mode it is often

simpler to divide the entire range of wages or hours or other

conditions existent in the locality into class intervals rather than

count the number of workers employed under each particular

condition. For example, the number of workers employed at different

wage rates may be ascertained on the basis of 2-cent or 5-cent or

10-cent class intervals depending on how great the amounts involved

are. That is, the number of workers employed at different rates may

be reported in terms of the number receiving 60 to 64.9 cents an

hour, the number receiving 65 to 69.9 cents an hour, and so forth

rather than the number receiving 60 cents an hour, the number

receiving 60.5 cents an hour, the number receiving 61 cents an hour

and so on. If the information is received in this form and the

actual mode is not known (1) the modal point in the most numerous

class may be determined through the use of one of the statistical

formulas designed for that purpose, or (2) the mid-point of the most

numerous class may be used with due allowance for the fact that it

is only an approximation.

The weighted average may also be derived on the basis of class

intervals (1) by multiplying the mid-point of each class interval by

the number in the class, adding the totals, and dividing the result

by the total number of workers involved or (2) by using one of the

shorter statistical formulas designed for the purpose.

Sources of Information

Ordinarily the factual information needed to ascertain the

conditions prevailing in the locality for similar work can be

obtained from labor and employer organizations, from representative

employers and employees, from the Employment Service, or from other

Government agencies which are responsible for the collection of data

on wages and hours, the enforcement of minimum labor standards in

various occupations, or the administration of industrial safety

codes and the like. If conditions in the occupation are fairly

stable, information once obtained may prove useful over a

considerable period. This is particularly true in the case of

occupational wage rates which, in normal times, are likely to remain

unchanged over long periods. It may therefore prove useful to

construct tables of occupational rates and keep them on hand for

ready reference. These should be amended from time to time as better

or more current information becomes available.

The determination of the conditions prevailing in the locality

for similar work is comparatively simple where most of the workers

in the occupation are employed under uniform collective bargaining

agreements or where the conditions are governed by custom or law.

More extensive investigation and more careful examination of the

data available is usually required where there are relatively few

workers employed at the same wages or hours or other conditions of

work. Even in such cases, though, sufficient information can

generally be obtained to enable a reasonably accurate approximation.

Thus where only the range of wages or hours is known a point

nearer the middle than the bottom of the range may be used as a

rough estimate since there are normally few workers at either

extreme. If there is reason to believe that a larger number than

usual are nearer the top or the bottom of the range the estimate may

be moved up or down accordingly.

Similarly, where the most complete and accurate information

available is not entirely current, allowance may need to be made for

any noticeable upward or downward trend which may have taken place

in the meantime. In other instances in which accurate information of

the conditions under which such workers are currently employed in

the locality is lacking, typical offers made through the Employment

Service or other channels may provide some guidance. The claimant,

if he is familiar with the conditions which generally obtain for

such work in the particular labor market locality, may also be able

to provide some information.

In each case, though, it is for the unemployment compensation

agency or tribunal to sift the data and to make the determination on

the basis of the best information available.

Substantially Less Favorable

Purpose

Many of the conditions of work to which the prevailing standard

is applied under the unemployment compensation acts, like seniority

and safety provisions, do not lend themselves to exact comparison.

In considering factors of this kind it cannot always be determined

whether one condition or combination of conditions is less favorable

than another. Even in the case of wages and hours which can be more

exactly compared, the wages or hours which in fact prevail cannot

always be definitely determined. Nor can the conditions of a job in

question always be foretold with certainty. The rate of earnings,

for example, will in many instances depend on the individual's

ability. Working hours may also be subject to variation under

different circumstances so that even the employer cannot say exactly

what they will be. Moreover, a condition which is important in one

occupation and locality may be relatively unimportant in another.

For example, the use of ventilators to draw off fumes is important

in a chemical plant and the height of a chamber to which he is

assigned may be important to a miner. Both are relatively

unimportant, however, in office work.

A certain amount of leeway has therefore been allowed in the

application of the prevailing standard under the unemployment

compensation acts by providing that benefits shall not be denied

otherwise eligible individuals for refusing work if the wages,

hours, or other conditions are substantially less favorable to the

individual than those prevailing.

Effect

The provision thus presents a definite but not an inflexible

standard. It does not preclude the denial of benefits for refusal of

work where only minor or purely technical differences are involved

which would neither undermine existing labor market standards nor

have any appreciably adverse effect on the worker. It also allows a

reasonable margin for error where the conditions prevailing in the

locality for similar work or the corresponding conditions of the

work offered cannot be exactly ascertained. But the basis of

comparison in each instance, insofar as they can be determined, is

still the conditions under which the greatest number of workers in

the occupation are employed in the locality.

Application

The meaning of the words ``not substantially less favorable to

the individual'' cannot be defined in terms of any fixed percentage,

amount or degree of difference. Both the actual condition in

question and the extent of the difference, as well as its effect on

the worker, must be considered in each case.

If the conditions of the work the claimant refused and those

prevailing are known, it is usually easy to determine whether the

difference is of a material or substantial nature or is of no real

consequence. In borderline cases where it is not clear whether the

difference is material, the general rule that remedial legislation

is to be liberally interpreted and applied in favor of those it was

intended to aid would indicate that the claimant be given the

benefit of the doubt. Similarly, when the facts cannot be precisely

determined, the claimant would not be subject to denial of benefits

for refusing work unless it is reasonably certain that the

conditions on the job are not substantially less favorable than

those prevailing.

Substandard Employment

There are some situations in which the prevailing standard

provisions are not directly applicable though the work is unsuitable

because the conditions of employment are substandard. Thus, though

the conditions prevailing for similar work in the locality will

ordinarily be better than the minimum standards set by State or

Federal law, investigation may occasionally reveal that the wages,

hours or other conditions prevailing in a particular occupation and

locality are below the applicable legal minimum. In such cases where

the

[[Page 50598]]

conditions of the work offered are in violation of law, even though

they are not substantially less favorable than those prevailing, the

claimant has good cause for refusing the job under the general

suitable work provisions in the State acts. It is well settled that

one law should not be so applied as to cause or result in the

violation of another.\3\

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\3\ From another point of view it might also be held (1) that

the conditions ``prevailing'' for similar work means those legally

prevailing, (2) that only conditions of work which meet the

applicable State and Federal statutory standards should be

considered in deterring the conditions prevailing for similar work,

and (3) that conditions which violate Statutory standards do not

meet the requirements of the prevailing conditions of work

provisions. Under such an interpretation, the prevailing conditions

of work provisions would also prevent denial of benefits to

claimants who refused work under conditions which were in violation

of the law.

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Similarly, the claimant generally has good cause for refusing a

job if the wages or other conditions are far less favorable than

those in most other kinds of work in the locality, for which he is

qualified, even though the job or the work in question is not

covered by State or Federal wage and hour legislation. In view of

the wages and other conditions generally to be obtained in the

locality in other employments which the claimant is able to perform,

such work would ordinarily be unsuitable and the claimant would have

good cause for refusing it under most State acts. Payment of

benefits in cases of this kind is also in accord with the intent of

the prevailing conditions of work provisions to prevent operation of

the unemployment compensation acts to depress the general level of

working conditions through denial of benefits for refusal of

substandard employment, though they may not come squarely within the

letter of the provisions.

Wages, Hours or Other Conditions--Wages

Wages vs. Wage Rates

In the public construction acts the prevailing standard has

generally been applied in terms of the prevailing ``rate of wages''

or the prevailing ``rate of per diem wages.'' It has been argued

that the word ``wages'' as used in the prevailing conditions of work

provisions in the unemployment compensation acts also means the wage

rate.

Support for this view is found in the fact that the hours of

work, which in conjunction with the wage rate largely determine the

earnings of most workers, are specifically set forth as a separate

consideration. Accordingly, the provisions that benefits shall not

be denied for refusal of work if the wages are substantially less

favorable than those prevailing have at times been taken to mean

that the hourly wage rate may not be substantially less than that

prevailing.

This usage may be appropriate for the purpose of establishing

the minimum rate which may be paid workers in various occupations

under government supply and construction contracts. However, it is

not the purpose of the prevailing conditions of work provisions in

the unemployment compensation acts to establish a minimum rate which

may be paid, but to prevent downward pressure on existing conditions

and to give the claimant the benefit of conditions which are not

substantially less favorable to him than those prevailing in the

locality for similar work. Comparison in terms of wage rates alone

is not always sufficient to accomplish this purpose.

Factors Affecting Earnings

Earnings are frequently affected not only by the wage rate and

the hours of work, but also by the method of payment, the overtime

practices and various extra bonuses and premiums. For this reason,

workers generally look to both the rate and the total weekly

earnings in determining whether they will accept a particular job or

continue to seek other work. Similarly, employers do not merely

announce the rate of pay but also emphasize total earnings. In

addition, all methods of payment do not lend themselves to

comparison in terms of wage rate. Though most workers are now paid

at hourly or piece rates, some are still paid a flat daily or weekly

wage regardless of the hours put in or the amount of work done. It

is only by taking all of the factors which would affect the

claimant's earnings and those of most workers in similar employment

in the locality into consideration that it can be determined whether

the wages offered are less favorable than those prevailing.

Basis of Comparison

Thus, where most of the workers in a particular occupation and

locality are not paid on the basis of the amount of production or

sales completed or the hours of work put in, but are paid a monthly

or yearly salary, as is frequently true in the case of managerial

and professional employees as well as farm hands, the wage

comparison must be made in terms of their total monthly or yearly

earnings including any remuneration received in addition to the base

salary. Similarly, if the hours in the occupation are irregular and

most of the workers are paid at hourly or piece rates or on a

percentage basis as in the case of longshoremen, home workers and

many taxicab drivers, the comparison must be made in terms of hourly

or piece rates or on a percentage basis. In such cases, the fact

that the hours are irregular and unscheduled prevents any further

comparison of earnings.

However, in the great majority of occupations in which the

workers are paid fixed or variable rates or commissions, so that

their earnings depend in large part on the actual hours of work,

both the wage rates and the weekly wages can be compared and both

need to be taken into consideration to determine whether the wages

offered are less favorable than those prevailing.

Where some of the workers are paid at other than time rates or

receive variable incentive wages in addition to the hourly base

rate, the various rates may be compared in terms of average straight

time hourly earnings. In such cases, the average straight time

hourly earnings may be derived by dividing the weekly wage minus

overtime earnings by the weekly hours of work less the overtime

hours. If other nonproduction bonuses or premiums are paid in

addition to overtime, these would also have to be subtracted from

the weekly wage before dividing.

Conversely, where the weekly wages are not directly comparable

because of differences in the hours of work, the prevailing weekly

wage may be derived by multiplying the prevailing hourly earnings by

the prevailing hours of work. If the hours usually include overtime,

the overtime earnings would also have to be taken into account in

determining the prevailing weekly wage. For this purpose prevailing

overtime earnings may be estimated on the basis of the usual

overtime rates and practices in the occupation and locality. Any

other nonproduction premiums or bonuses customarily paid workers in

the occupation would likewise have to be taken into consideration in

such cases in determining the prevailing weekly wage.

Basis of Determination

Implicit in the comparison of both the hourly rate and the

weekly wages is the general rule that the wages offered will

ordinarily be substantially less favorable to the worker than those

commonly to be obtained in the locality for similar work if either

the hourly or weekly earnings are substantially lower than those

prevailing. If, for example, the work in question is usually done on

a full-time basis, the wages entailed in an offer of part-time work

would usually be substantially less than those of most workers in

similar employment even if the hourly rates were the same. The wages

he would earn in part-time employment would therefore be

substantially less favorable than those prevailing in the occupation

for a worker who is seeking full-time work. Similarly, if the hourly

rate were substantially less than that prevailing, the wages would

generally be substantially less favorable than those of most workers

in similar employment. This would hold true even though the job paid

higher weekly wages than most such jobs because the hours of work

were longer.

In such cases, the conditions of the work offered would be

substantially less favorable than those prevailing both because the

hourly rate was lower and the weekly hours were longer than those

generally to be obtained. The claimant would not therefore be

subject to denial of benefits whether either or both factors were

taken into account.

Other Considerations

In some cases, however, a true comparison may require further

analysis. Other factors that affect the weekly and hourly wages may

also have to be taken into consideration. Thus the payment of

overtime or other nonproduction premiums and bonuses over and above

those ordinarily paid such workers in the locality may have a

bearing on whether the hourly rate of earnings is actually less

favorable than that prevailing. To illustrate: most of the workers

in the occupation may be paid at straight time rates with nothing

additional for overtime, and the prevailing hourly rate may be $.70

an hour, the prevailing weekly hours of work 48, and the prevailing

weekly wage $33.60. The job in

[[Page 50599]]

question, on the other hand, may pay only $.65 an hour. At straight

time rates this would amount to only $31.20 for a 48 hour week and

would be substantially less favorable than the wages prevailing for

similar work in the locality. However, the wages may not be less

favorable if other factors enter the picture. If, for example, the

job paid time and a half after 40 hours, the worker would earn

$33.80, which is somewhat more than the prevailing wage for the same

work week. In effect, he would be earning a bit more than the

prevailing rate of $.70 an hour.

In other instances, the provision of special benefits over and

above those received by most workers in similar employment in the

locality may make the wages as favorable as those prevailing. Thus

the fact that the worker would be paid for vacation and sick leave

has been taken into consideration in determining whether the wages

were substantially less favorable than those of most workers in the

occupation. It should be remembered, however, that such benefits may

not outweigh the difference in the money wages the worker would earn

the year around. In addition, while workers may appreciate benefits

of this kind if they are afforded in addition to the usual wage,

they may prefer to receive the difference between the wages paid and

the usual wages for such work in money rather than in other forms

because of the greater freedom it gives them to purchase the goods,

leisure or services they want.

Customary Industrial Practices

The question of differential payments for evening or night work

in the form of equal pay for shorter hours or a higher rate or

additional bonus may also arise. If such differentials are

ordinarily paid they need to be taken into account. Accordingly, a

claimant who refuses employment on the night shift at the wages

which are ordinarily paid for day work but which are substantially

less favorable than those prevailing for night work, would not be

subject to denial of benefits under the prevailing conditions of

work provision. A like result would be reached where there were

established differentials for jobs involving special risks to health

or safety beyond those ordinarily incurred in the occupation, as in

the case of mine operations carried on in water. In cases of this

kind, there may also be some question as to whether the work is

similar to the less dangerous or easier operations with which it is

being compared. But the same result as to payment or denial of

benefits should be reached whether the jobs are held to be different

with different wages prevailing for each, or whether the work is

considered similar and the practice of paying a differential rate is

taken into account.

Temporary or Seasonal Fluctuations

In some occupations it may also be necessary to allow for

temporary differences or seasonal fluctuations in hourly and weekly

earnings both in determining the prevailing wage and in determining

whether the wages offered are substantially less favorable than

those of most workers in similar employment. It is ordinarily

expected, for example, that the earnings of department store sales

workers who are paid a commission in addition to their hourly rate,

will reach a peak during the winter holidays and be relatively low

during the summer lull. Similar variations are to be found in the

garment trades and in many other occupations in which the hours of

work and consequently the weekly earnings are reduced during the off

season. Since all of the establishments involved will not be

affected simultaneously or to the same extent it is best to

determine the prevailing wage in such cases on the basis of a normal

period whenever possible, and to compare the wages offered with

those prevailing in terms of the normal earnings of other workers in

the establishment. If the experience of other workers in similar

employment offered in the establishment indicates that the earnings

in the job will average as much as those of most workers in the

occupation and that the fluctuations will be no more frequent and no

greater than is ordinarily to be expected in such employment in the

locality, due allowance may be made for such differences. If,

however, the wages do not average as much as those of most workers

or the fluctuations are so extreme as to render the earnings even

more uncertain than those of most such workers, the conditions of

the work offered may be substantially less favorable than those

generally to be obtained for similar work.

Progressive Wage Scales

A somewhat different problem is presented where most of the

workers in the occupation are paid on the basis of progressive wage

scales such as are frequently used by large establishments and

incorporated in union agreements. In certain industries and plants,

for example, inexperienced workers are hired at a minimum entrance

rate and their wages increased during the training period until they

are receiving as much as other workers in the department.

Experienced workers may likewise be hired at a minimum job rate and

their wages gradually increased up to the maximum rate paid by the

plant for such work. In some cases the increases may be based on

length of service with the employer; in some cases, on merit (i.e.,

usually skill and experience and speed); in others, on a combination

of both.

Where progressive wage scales prevail, workers cannot ordinarily

expect to be hired at the wages currently being paid the greater

number currently employed in the occupation because many of those

employed have received periodic increases based on the length of

time they have worked in the same establishment. Accordingly, where

progressive wage scales prevail, the determination of whether the

wages offered are substandard is generally made not on the basis of

the prevailing wage, but on the basis of the prevailing wage scale.

Determination of the prevailing wage scale involves consideration of

at least three factors: (1) the prevailing entrance rate; (2) the

basis on which the rates are increased; and (3) the amount and

frequency of the increases. The need for considering all three of

these factors when applying the prevailing wage standard where

progressive scales are involved can readily be illustrated.

One illustration may be found where the rate increases in a

particular occupation and locality are based on length of service

alone, and new employees are almost invariably hired at the entrance

rate. In such cases an offer of work at the prevailing entrance rate

for inexperienced workers, or the prevailing minimum job rate for

experienced workers, would not ordinarily be considered substandard

inasmuch as most of the workers in the occupation are hired on the

same basis and at the same rate. Nevertheless the wage scale offered

may still be substantially less favorable to the worker. For

example, if the greater number of workers in the occupation are

hired at $.70 an hour and move up to $1.10 within a year, an offer

of $.75 with increases up to a maximum of only $.90 after a year on

the job would be substantially less favorable than the prevailing

scale of rates.

On the other hand, where workers are not always hired at the

entrance rate, and rate increases depend at least in part on skill

and experience, it may be that a worker with prior experience in the

occupation can expect to be hired at more than the entrance rate. In

such cases an offer of work at the minimum rate might well be

substantially less favorable than that prevailing for a worker who

has formerly earned a rate above the minimum or the middle of the

range. Investigation will usually reveal the customary hiring

practice in regard to workers with varying degrees of prior

experience and skill and whether the entrance rate and the rate

scale are as favorable to the claimant as those prevailing.

Method of Wage Payment

Aside from its effect on the amount the worker earns, the method

of wage payment is itself an important condition of work. Workers

frequently have justified objections to employment under a different

method of payment than that to which they are accustomed and long

and bitter strikes have been fought over changes from time work to

piece work and the introduction of incentive wage systems. Even

though the wages offered equal those of most workers in similar

employment, it may therefore be necessary to determine whether the

method of payment is substantially less favorable than that

prevailing.

As a condition of work, the method of wage payment may be

substantially less favorable to the worker than that prevailing: (1)

if it would yield substantially lower earnings than the prevailing

method; (2) if the earnings would be more irregular or less certain

than under the prevailing method; or (3) if it would require the

worker to work faster or under greater tension than the prevailing

method of payment. Generally, however, the customary practice of the

trade in the locality in which the work offered will govern the

decision as to whether a system of payment found objectionable by

workers is substantially less favorable than that prevailing.

Hours

In occupations in which the hours are not scheduled by the

employer, either directly or indirectly, they are not a condition of

the work and do not enter into consideration in

[[Page 50600]]

determining whether any of the conditions of the work offered are

substantially less favorable than those prevailing in the locality

for similar work. Where the hours are regulated by the employer,

they are second in importance only to wages. Together with the wage

rate and the method of payment they largely determine the worker's

earnings. In themselves, they determine the time the worker must put

in on the job and the time he has for his own needs and leisure.

Aside from their effect on the worker's earnings, the hours of

the work offered may be substantially less favorable than those

prevailing in the locality for similar work, if they are

substantially longer, or less convenient. If ``wages'' as used in

the prevailing conditions of work provisions is deemed to mean only

wage rates and not weekly wages, it may also be held that

substantially shorter hours than those prevailing, which would

result in lower earnings, are substantially less favorable to a

claimant who is seeking full-time employment.

Weekly Hours of Work

Inasmuch as most workers are employed at regular hours which are

limited by industrial practice and custom, it is not usually

difficult to ascertain the hours prevailing in the locality for

similar work and to determine whether the hours of the work offered

are substantially longer than those prevailing. Generally it is not

necessary to consider the possibility of extra overtime in making

the determination. If, however, a considerable amount of extra time

beyond the regular weekly schedule is frequently required of workers

in the occupation or the evidence indicates that it would be

required on the job in question, that would also have to be taken

into account. In such cases the past experience of other workers in

the establishment may offer some guidance as to whether the hours

would average more than those of most workers in like employment or

be so much more irregular as to be substantially less favorable.

Temporary or Seasonal Fluctuations

As indicated in the discussion of wages, the hours of work in

some occupations are also subject to seasonal fluctuations. In the

needle trades, for example, the workers generally put in long hours

during the rush season, particularly in the fall. During dull

periods when work is slow, many are laid off and others work only a

short week; that is, less than the normal weekly schedule. In such

cases, it is generally best to compare the hours of the work offered

with those prevailing on the basis of the normal work schedule and

to make allowance for temporary or seasonal fluctuations. Again, the

experience of other workers in the establishment may offer some

guidance as to the extent of the fluctuations in the job offered as

compared with those ordinarily to be expected and whether the hours

would on the whole be no longer than those of most workers in

similar employment.

Some care may have to be exercised to distinguish between

temporary changes and fluctuations of this kind and permanent

increases or reductions in the hours of work. The distinction would

be especially important if the wage determination is made only in

terms of wage rates since an offer of work which regularly involves

shorter hours than those prevailing would ordinarily result in lower

earnings even if the rates were the same.

In addition, any general change in the regular hours of a

substantial number of workers in the occupation may also affect the

prevailing hours determination. Thus, if the hours of a considerable

number of workers are increased, reexamination may reveal, for

example, that a greater number are now employed on a 48-hour

schedule than any other, whereas a 44-hour week had previously

prevailed. Similarly, if the hours of most of the workers in the

occupation are reduced an offer of work at the hours which

previously prevailed may now be substantially less favorable than

those currently prevailing.

Arrangement of Hours

The hours of the work offered may also be substantially less

favorable if they are less convenient than those prevailing in the

locality for similar work. Thus, if most workers in the occupation

work a 40-hour week on the basis of 5 8-hour days with Saturday and

Sunday off, an arrangement whereby the worker would be required to

put in 5 7-hour days and 5 hours on Saturday may be substantially

less favorable to the individual than that prevailing because it

leaves him only 1 day a week free even though the total number of

hours is no longer than those of most workers.

Similarly, second or third shift work would generally be

substantially less favorable if most of the workers in the

occupation were employed on the first shift. It is because the

second and third shifts are recognized as less convenient by both

employers and employees that differentials are frequently paid for

such work. Special payments of this kind, like extra pay for evening

or holiday work, do not generally affect the hours deter-mination.

However, where the shift differential takes the form of shorter

hours for equal pay, longer hours than those prevailing for second

or third shift work might well be held substantially less favorable

to the claimant.

There would, of course, be no question under the prevailing

conditions of work provisions as to whether any shift was

substantially less favorable than another if a relatively equal

number of workers were employed on all shifts. In such circumstances

no one shift could be said to prevail. If, however, a fairly equal

number are employed on the first and second shift, an offer of work

on the third shift might well be deemed substantially less favorable

to the worker than the prevailing hours of work--unless such workers

are generally hired on the least desirable shift and earn the right

to move up to an earlier shift only as they acquire seniority. In

the latter instance, the fact that the right to work on an earlier

shift depends on the worker's seniority would itself be a condition

of work. In such cases, determination of the prevailing arrangement

of hours would be a matter of determining the shift on which the

workers in the occupation are customarily hired in the locality

rather than the shift on which the greater number are currently

employed.

Subject to the same exception, a split shift which involves

working at two different times of the day, or a swing shift which

involves changing over between two different shifts at stipulated

weekly intervals, would generally be substantially less favorable to

the worker than the prevailing arrangement of hours if a straight

shift prevailed; and a rotating three-shift arrangement would

generally be substantially less favorable if either a straight shift

or a swing shift prevailed. Other factors such as the hours involved

and the claimant's circumstances may also enter into the

determination, however. Thus, if the workers in the occupation are

generally hired on the third shift, a rotating shift involving

change over between the third, second and first shifts might not be

substantially less favorable to the individual provided he was able

to work on all three shifts and the constant change in hours would

not affect him adversely.

Other Factors

Whether lesser differences such as the time a shift begins and

ends or in the length of the lunch hour, etc., render the hours of

work substantially less favorable to the individual also depends on

the nature and extent of the difference and on the claimant's

circumstances. Thus, if the claimant would be required to report to

work at 6:30 a.m. whereas most workers in like employment did not

begin to work until 9:00 a.m., the hours might well be held

substantially less favorable than those prevailing. But a difference

of a half hour or three-quarters of an hour in the time the shift

started might not be material if it would adversely affect the

claimant. In other cases the omission of rest periods granted most

workers in like employment and differences in the length of the

lunch hour or the starting hour may be compensated by other

circumstances such as the fact that the workers are seated on the

job or the existence of lunchroom facilities on the premises.

Generally, though, it will not be necessary to go into questions

of this kind. The hours characteristic of the occupation in the

particular locality will usually govern the decision as to whether

an inconvenient shift or arrangement of hours is substantially less

favorable to the individual.

Other Conditions of Work

As ordinarily used, the phrase ``conditions of work'' refers to

the provisions of the employment agreement, both express and

implied, and the physical conditions under which the work is done

pursuant to the agreement. It is also applied at times to conditions

which arise from actual work on the job as a result of laws and

regulations which are not within the employer's control. So

interpreted, the phrase ``conditions of work'' includes such factors

as coverage by the State workman's compensation and unemployment

compensation acts and the Federal old-age and survivors insurance

provisions.

[[Page 50601]]

In General

Under either interpretation, the phrase encompasses not only

wages and hours but such other factors as:

1. Group insurance against industrial accident, sickness or

death;

2. Paid sick and annual leave, and paid vacations;

3. Provisions for unpaid leave of absence and for holiday leave

or payment;

4. Pensions, annuities and other retirement provisions;

5. Severance pay;

6. Job seniority and reemployment rights;

7. Training, transfer and promotion policies;

8. Minimum wage guarantees;

9. Union membership provisions, representation and coverage;

10. Grievance procedures and machinery;

11. Work rules and regulations;

12. Health and safety rules, devices and precautions;

13. Medical and welfare programs;

14. Sanitation; and

15. Heat and light and ventilation.

Moreover, while the list set forth above by way of illustration

of the more common factors which may be important in various

occupations and localities is extensive, it is by no means all

inclusive. There are many other factors which may be important in

certain occupations and localities.

In Particular Occupations

Thus in outdoor employments, if it appears that the claimant

would be required to work in all kinds of weather, it may be

important to ascertain if most workers in like employment in the

locality are required to be on the job regardless of the weather and

if some shelter or protection is generally provided. In inspection

jobs and in the case of stock chasers and many other employments,

the weight of the parts or materials the worker may have to lift

without mechanical aid may be important. In longshoreman's work and

in the case of deliverymen and movers the size of the crew is often

a matter of negotiation.

In the needle trades, questions may arise as to the state of

repair in which machines are kept or whether the worker would be

required to fix his own machine, since a poorly adjusted machine

results in spoilage and lower earnings at piece rates and the time

spent repairing the machine is lost to the worker. In the textile

industry, the number of machines or bobbins the worker is required

to tend is frequently an issue. In coal mining the height of the

chamber in which the work is done, the presence of water or gas, the

frequency with which the mine is inspected, and the amount of

timbering or other nonproductive work required may be important.

Varying Importance

Because of the innumerable variations in the conditions under

which workers are employed in various occupations and localities,

and because many of the conditions other than wages and hours are so

closely interrelated with the nature of the work, it is not possible

to discuss them without going into the details of particular trades

and industries. Nor can any generalization be made about the

relative importance of many of these conditions without considering

them in relation to each other. Thus the lack of a guaranteed

minimum weekly wage may be a technical rather than a material

difference if the worker would in all probability regularly earn as

much or more than the amount guaranteed to most workers in like

employment in the locality. Similarly, the importance of a seniority

provision would depend on whether it only dictated the order in

which workers in the occupation would be laid off or also determined

promotions and transfers from one department or shift to another.

Basis of Determination

In general, however, the question under the prevailing

conditions or work provisions as to conditions other than wages or

hours is whether the conditions of the work offered are

substantially less favorable to the claimant than those prevailing

in any important respect. The claimant is not subject to denial of

benefits for refusal of work if the wages, hours, or any other

material condition or combination of conditions of the work offered

is substantially less favorable to him than those prevailing in the

locality for similar work.

If there is reason to believe that the conditions of the work

offered are less favorable than those prevailing for similar work in

the locality in any important respect, it is for the agency to

investigate. The issue in each case must be decided on the basis of

all the relevant facts and the best information available.

In reply refer to UODA.

U.S. DEPARTMENT OF LABOR

Manpower Administration

Bureau of Employment Security

Unemployment Insurance Program Letter No. 984, September 20, 1968

TO: ALL STATE EMPLOYMENT SECURITY AGENCIES

SUBJECT: Benefit Determinations and Appeals Decisions Which Require

Determination of Prevailing Wages, Hours, or Other Conditions of

Work

REFERENCES: Section 3304(a)(5)(B) of the Federal Unemployment Tax

Act; Principles Underlying the Prevailing Conditions of Work

Standard, September 1950, BSSUI (originally issued January 6, 1947

as Unemployment Compensation Program Letter No. 130)

Purpose and Scope

To advise State agencies and appeal authorities of the

interpretation of the phrase ``new work'' for the purpose of

applying the prevailing wage and conditions-of-work standard in

section 3304(a)(5)(B) of the Federal Unemployment Tax Act,

particularly in relation to an offer of work made by an employer for

whom the individual is working at the time the offer is made.

This letter is prompted primarily by a current problem arising

from a number of recent cases in which findings were not made with

respect to the prevailing wages, hours, or other conditions of the

work, because apparently it was not considered that ``new work'' was

involved.

Federal Statutory Provision Involved

Section 3304(a)(5) of the Federal Unemployment Tax Act, the so-

called labor standards provision, requires State unemployment

insurance laws, as a condition of approval for tax credit, to

provide that:

``compensation shall not be denied in such State to any

otherwise eligible individual for refusing to accept new work under

any of the following conditions:

* * * * *

``(B) If the wages, hours, or other conditions of the work

offered are substantially less favorable to the individual than

those prevailing for similar work in the locality;''

Legislative History

The prevailing wage and conditions-of-work standard, originally

in section 903(a)(5)(B) of the Social Security Act and since 1939 in

section 3304(a)(5)(B) of the Federal Unemployment Tax Act applies

only to offers of ``new work.''\1\ The hearings before Congressional

committees and the reports of these committees furnish little aid in

construing the term.\2\ The Congressional debates, however, clearly

indicate that the labor standards provision was included in the bill

for the protection of workers.\3\ The objectives of the provision

are clearly set forth by the Director of the Committee on Economic

Security, which prepared the legislation:

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\1\ Many State laws extend its application by specifying that

``no work shall be deemed suitable'' which fails to satisfy the

standard.

\2\ The Report of the Committee on Ways and Means on the Social

Security Bill (H.R. 7260), House Report No. 615, 74th Cong., 1st

Session, page 35, uses the term ``new job'' and this is copied in

the Report of the Senate Committee on Finance, Senate Report No.

628, 74th Cong., 1st Session, page 47, but the term ``new job'' is

itself ambiguous and there is no indication that it was used by

either committee in a narrow or exclusive sense.

\3\ See statement of Senator Harrison, Congressional Record,

Vol. 79, p.9271.

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``* * * compensation cannot be denied if the wages, hours or

other conditions of work offered are substantially less favorable to

the employee than those prevailing for similar work in the locality.

The employee cannot lose his compensation rights because he refuses

to accept substandard work. That does not mean that he cannot be

required to accept work other than that in which he has been

engaged; but if the conditions are such that they are substandard,

that they are lower than those prevailing for similar work in the

locality, the employee cannot be denied compensation.''\4\

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\4\ HEARINGS BEFORE THE COMMITTEE OF WAYS AND MEANS, HOUSE OF

REPRESENTATIVES, 74th Cong., 1st Sess., on H.R. 4120, pp. 137-38.

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It is plain that the purpose of section 3304(a)(5)(B) is to

prevent the tax credit from being available in support of State

unemployment compensation laws which are used, among other things,

to depress wage rates or other working conditions to a point

substantially below those prevailing for

[[Page 50602]]

similar work in the locality. The provision, therefore, requires a

liberal construction in order to carry out the Congressional intent

and the public policy embodied therein. Interpretation is required,

for the term ``new work'' is by no means unambiguous. But any

ambiguity should be resolved in the light of such intent and public

policy.

Interpretation of ``New Work''

For the purpose of applying the prevailing conditions-of-work

standard in section 3304(a)(5)(B) of the Federal Unemployment Tax

Act, an offer of new work includes (1) an offer of work to an

unemployed individual by an employer with whom he has never had a

contract of employment; (2) an offer of re-employment to an

unemployed individual by his last (or any other) employer with whom

he does not have a contract of employment at the time the offer is

made; and (3) an offer by an individual's present employer of (a)

different duties from those he has agreed to perform in his existing

contract of employment, or (b) different terms or conditions of

employment from those in his existing contract.\5\

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\5\ The ``group attachment'' concept is outside the scope of

this letter. ``Group attachment'' arises under the provisions of an

industry-wide collective bargaining agreement between a group of

workers and a group of employers whereby workers cannot be hired

directly by individual employers but are referred to employers by a

hiring hall on a rotational basis and under which each worker has a

legally enforceable right to his equal share of the available work

with such employers. See Matson Terminals Inc. v. California

Employment Commission, 151 P. 2d 202, discussed in the Secretary's

decision with respect to Washington dated December 28, 1949, and the

Secretary's decision in the California conformity case. Benefit

Series, FSLS 315.05.1.

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This definition makes the determination of whether an offer is

of ``new work'' depend on whether the offer is of a new contract of

employment. This we believe is sound.

All work is performed under a contract of employment between a

worker and his employer. The contract describes the duties the

parties have agreed the worker is to perform, and the terms and

conditions under which the worker is to perform them. If the duties,

terms, or conditions of the work offered by an employer are covered

by an existing contract between him and the worker, the offer is not

of new work. On the other hand, if the duties, terms, or conditions

of the work offered by an employer are not covered by an existing

contract between him and the worker, the offer is of a new contract

of employment and is, therefore, new work.

It is not difficult to agree that ``new work'' clearly includes

an offer of work to an unemployed individual by an employer with

whom he has never had a contract of employment; that is, an employer

for whom he has never worked before. If the worker has never had a

contract of employment with the offering employer, the fact-finding

and the application of the test are simple.

But if the phrase ``new work'' were limited to work with an

employer for whom the individual has never worked, it is plain that

the purpose of section 3304(a)(5)(B) would be largely nullified. It

can make no difference, insofar as that purpose is concerned, that

the unemployed worker is offered re-employ ment by his former

employer rather than employment by one in whose employ he has never

been. It can make no difference either in the application of the

test. The question is whether the offer of re-employment is an offer

of a new contract of employment. If the worker quit his job with the

employer, or was discharged or laid off indefinitely, the existing

contract of employment was thereby terminated. An indefinite layoff,

that is, a layoff for an indefinite period with no fixed or

determined date of recall, is the equivalent of a discharge. The

existence of a seniority right to recall does not continue the

contract of employment beyond the date of layoff. Such a seniority

right is the worker's right; it does not obligate the worker to

accept the recall and does not require the employer to recall the

worker. It only requires the employer to offer work to the holder of

the right, before offering it to individuals with less seniority.

Any offer made after the termination is of a new contract of

employment, whether the duties offered to the worker are the same or

different from those he had performed under his prior contract, or

are under the same or different terms or conditions from those which

governed his last employment. There is not, however, a termination

of the existing contract when the worker is given a vacation, with

or without pay, or a short-term layoff for a definite period. When

the job offer is from an employer for whom the individual had

previously worked, inquiry must be made as to whether the contract

with the employer was terminated, and if so, how?

Although it has been more difficult for some to see, the

situation is no different when an individual's present employer

tells him that he must either accept a transfer to other duties or a

change in the terms and conditions of his employment, or lose his

job. Applying the test, it is clear that an attempted change in the

duties, terms, or conditions of the work, not authorized by the

existing employment contract, is in effect a termination of the

existing contract and the offer of a new contract. Not only is this

a sound application of legal principles, but it is thoroughly in

harmony with the underlying purpose of the prevailing conditions of

work provision. That purpose would be largely frustrated if benefits

were denied for unemployment resulting from the worker's refusal to

submit to a change in working conditions which would cause these

conditions to be substantially less favorable to a claimant than

those prevailing for similar work in the locality. The denial of

benefits in such circumstances would tend to depress wages and

working conditions just as much as a denial of benefits for a

refusal by an unemployed worker to accept work under substandard

conditions. If a proposed change in the duties, terms, or

conditions-of-work not authorized by the existing employment

contract were not ``new work,'' prevailing wage and conditions-of-

work standard could be substantially impaired by employers who hired

workers at prevailing wages and conditions, and thereafter reduced

the wages or changed the conditions, thereby depriving workers of

the protection intended to be given them by the prevailing wage and

conditions-of-work standard. The terms of the existing contract, so

important in this situation, are questions of fact to be ascertained

as are other questions of fact.

The following are examples of offers of new work by the employer

for whom the individual is working at the time of the offer:

a. A worker employed as a carpenter is offered work as a

carpenter's helper as an alternative to a layoff.

b. A bookkeeper is transferred to a job as a typist.

c. The hours of work of a factory worker employed for an 8-hour

day are changed to 10 hours a day.

d. A worker employed with substantial fringe benefits is

informed that he will no longer receive such benefits.

e. A worker employed at a wage of $3 an hour is informed that he

will thereafter receive only $2 an hour.

In each of these cases either the offered duties are not those

which the worker is to perform for the employer under his existing

contract of employment, or the offered conditions are different from

those provided in the existing contract.

Applying the Prevailing Conditions-of-Work Standard

The prevailing wage and conditions-of-work standard does not

require a claims deputy or a hearing officer to inquire into

prevailing wages, hours, or working conditions in every case of

refusal of new work, or to determine in every such case in which he

denies benefits whether the wages, hours, or other conditions of

offered work are substandard. This would be unnecessarily

burdensome. However, a determination must be made as to prevailing

conditions of work when (1) the claimant specifically raises the

issue, (2) the claimant objects on any ground to the suitability of

wages, hours, or other offered conditions, or (3) facts appear at

any stage of the administrative proceedings which put the agency or

hearing officer on notice that the wages, hours, or other conditions

of offered work might be substantially less favorable to the

claimant than those prevailing for similar work in the locality.

State agency determinations and decisions at all levels of

adjudication must reflect the State agency's consideration of

prevailing conditions of work factors when pertinent. In particular,

referees' decisions as to benefit claims must contain, in cases

where issues arise as indicated above, appropriate findings of fact

and conclusions of law with respect to the prevailing conditions-of-

work standard. This is so whether the State ultimately determines

the worker's right to benefits under the refusal-of-work provision

of the State law or some other provision, as, for example, under the

voluntary quit provision. Since the Federal law requires, for

conformity, that State laws include a provision prohibiting denial

of benefits for refusal of new work where the conditions of the

offered work are substantially less favorable to the individual than

the conditions prevailing for similar work, there cannot be, under

the State law, a denial in such circumstances regardless of the

provision of State law under which the ultimate determination is

made.

[[Page 50603]]

In applying the labor standards, the State agency must determine

first whether the offered work is ``new work.'' If it is ``new

work'' a determination must be made as to (1) what is similar work

to the offered work, and (2) what are the prevailing wages, hours,

or other conditions for similar work in the locality, and (3)

whether the offered work is substantially less favorable to the

particular claimant than the prevailing wages, hours, or other

conditions. The key words and phrases in this standard (``similar

work,'' ``locality,'' ``substantially less favorable to the

individual,'' and ``wages, hours, and other conditions of work'')

are discussed in detail in the Bureau's statement, Principles

Underlying the Prevailing Conditions of Work Standard, Benefit

Series, September 1950, 1-BP-1, BSSUI (originally issued January 6,

1947 as Unemployment Compensation Program Letter No. 130).

Please bring this letter to the attention of State agency and

Appeal Board personnel engaged in benefit claim adjudication at all

levels.

RESCISSIONS: None.

Sincerely yours,

Robert C. Goodwin,

Administrator.

[FR Doc. 98-25257 Filed 9-21-98; 8:45 am]

BILLING CODE 4510-30-P