From the February 2001 issue of Entrepreneur

If the Department of Labor (DOL) has its way, new parents will soon get a slice of state unemployment insurance (UI) money. The "Birth and Adoption Unemployment Compensation" proposal went into effect in August 2000 and allows states to initiate programs using their UI funds to pay out birth and adoption benefits.

Not surprisingly, business groups are crying foul. The U.S. Chamber of Commerce, the Society of Human Resource Management and labor policy organization LPA responded to the proposal by filing a civil suit to fight it. "This opens up [benefits] to a whole new class of workers, not ones who are unemployed and looking for work, which is the premise the program is built on. It's an inappropriate use of UI funds," says Randel Johnson, U.S. Chamber vice president for labor and employee benefits. The U.S. Chamber asserts that the proposal hurts the safety net for the unemployed, and employers will eventually have to pay higher UI taxes. Sally Paxton, a deputy solicitor at the DOL, contends the heart of the case is whether the DOL has the right to change the rules. "We enforce and interpret the [UI] statutes, and we are confident we have the authority to do this."

Both sides expect to have their day in court, and, at press time, no states had implemented the programs.


Ellen Paris is a Washington, DC, writer and former Forbes magazine staff writer.


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