Why Lawmakers Must Remove the Labor Dispute Disqualification from Unemployment Insurance

Summary

The labor dispute disqualification provision that exists in nearly every state’s unemployment insurance (UI) law is confusing, ill-defined, and irrationally broad. The provision excludes workers unemployed due to “labor disputes,” which although often undefined in state law, may include strikes, lockouts, and other controversies between employers and workers that result in unemployment.¹ Where a labor dispute is the cause of a worker’s unemployment, the muddled language of the provision acts to broadly disqualify workers, often even if the worker had no role in the dispute, no knowledge of the dispute, and no say in the dispute.

UI should widely cover workers to provide security for both workers and the economy during periods of unemployment.

This broad and convoluted disqualification of workers is antithetical to the purpose of UI. UI should widely cover workers to provide security for both workers and the economy during periods of unemployment. As the Wisconsin Supreme Court explained, “the [UI] statute is remedial in nature and should be liberally construed to effect unemployment compensation for workers who are economically dependent upon others in respect to their wage-earning status.”² Yet, in most states, the labor dispute disqualification not only liberally excludes workers from UI, but it does so when workers consort to improve the terms of their employment. Workers’ lawful engagement in collective bargaining and related protected concerted activities can ensure a good-jobs economy with fair wages and safe working conditions. Yet, the labor dispute disqualification does not merely punish these lawfully sacrificing workers. It goes a step further to render “guilty by association” workers who had no direct role in the dispute.

Making matters worse, justifications used for the disqualification are unfounded.

• Proponents claim the disqualification preserves UI for only the involuntary But every state already extends UI to workers who are voluntarily unemployed. Moreover, workers can be disqualified under the labor dispute disqualification provision even if they had no knowledge of or say in the dispute.
• Proponents assert the disqualification provision ensures the state remains neutral in disputes, but policies like disqualifying workers because of their union membership alone could scarcely be deemed neutral.
• Proponents say the disqualification provision is necessary to comply with federal law. But the very architects of the federal law establishing UI could have preempted UI for workers during labor disputes and did not.
• Finally, proponents argue removing the disqualification will burden states. Last year, only 0.17% of the labor force was on strike or locked out.³But the labor dispute disqualification is frequently litigated.⁴Its removal could actually unburden states.

Given the lack of justification for this overly broad provision that excludes workers and state economies from the benefits of UI, it is no wonder that it has long been contested as “an exception to the overall basic purpose of [UI law].⁵  The disqualification is a consistent subject of confusion, consternation, and litigation.⁶This brief reviews how the disqualification came about, what it does, who it harms, how proponents attempt to justify it, and why it must go.

Introduction

Consider if you accept a new job. You report on your first day of work and your employer sends you home. The facility is closed due to a strike by the employee union to bring about changes that could benefit all workers. You apply for UI compensation and are denied. The state considers you to be unemployed due to a labor dispute even though you are not on strike and you are not yet eligible to join the union. This is exactly what happened to a worker in Rhode Island. The Court held, “[the legislature] intended to bar those employees not members of the involved union who nevertheless have a direct interest in the outcome of the dispute.”⁷

Rhode Island’s approach exemplifies the labor dispute disqualification. The disqualification is an overly broad, ill-defined, and poorly justified provision that widely excludes workers from a social insurance program that best protects workers and the economy when it covers most workers. This brief starts by reviewing how this disqualification came to be, particularly since the provision was born at the same time as the federal-state UI program and modern labor law. Next, the brief reviews the labor dispute disqualification provisions that continue to pervade state law. Then the brief analyzes justifications used for the provision, finding neither authority nor need for the provision. Finally, the brief concludes that the only solution is to remove or bar the labor dispute disqualification.

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