NewsCovering Kentucky


New bill to reform unemployment insurance

Posted at 8:23 PM, Feb 09, 2021
and last updated 2021-02-09 20:23:52-05

FRANKFORT, Ky. (LEX 18) — When COVID-19 hit Kentucky, it became clear that the state's Unemployment Insurance system was not ready to handle the hundreds of thousands of claims coming in.

As of today, thousands of people are still waiting for the money that they are owed. So, Kentucky House Democrats are pushing for reform. They want to change the state's unemployment insurance program and make sure these failures don't happen again.

"These proposals give the General Assembly a blueprint to do its part in tackling longstanding problems that became all too evident when COVID-19 arrived last March," said Rep. McKenzie Cantrell. "Those issues made it tougher to quickly and accurately handle many changes such as those authorized in the federal CARES Act. Just as importantly, our plan also provides a stronger foundation so that the UI program will be much better prepared for any future economic downturns. Kentuckians deserve to know that unemployment insurance is there for them whenever they may need it."

Representatives Cantrell, Nima Kulkarni, and other House Democratic Caucus members say their plan will significantly modernize the UI program.

"We've learned a lot in this pandemic," said Cantrell. "Now is the time to implement the lessons we've learned and ensure this uncertainty never happens to Kentucky families again."

The legislative plan has five main goals:

  • Expand benefits in certain cases
  • Strengthen Kentucky's unemployment insurance trust fund
  • Maintain more in-person unemployment offices across the state
  • Make it easier for employers to reduce staff hours rather than lay people off
  • Allow new groups of people to qualify for unemployment insurance

All five of these goals are in House Bill 406.

"It's a win for business, for workers, and for our entire economy," said Jason Bailey, the executive director for the Kentucky Center for Economic Policy. "This bill - HB 406 - learns the lessons of a crisis built on decades of neglect of this vital system to create one that will be stable and strong going forward."

There are several stand-alone bills the democrats support in addition to HB 406. HB 78 and HB 240 focus on specific facets of the UI program.

According to a press release from the House Democrats, House Bill 78 would help victims of domestic and dating violence, stalking or sexual abuse qualify for unemployment insurance if they had to leave their job for those reasons. House Bill 240 would waive debts arising from overpayment of unemployment insurance benefits if that excess payment was due to administrative error or other reasons and was not due to fraud.

Under the five broad areas, House Bill 406 would include the following:


1.) Clarify that unemployed part-time workers can seek similar part-time work and still be eligible for benefits.
2.) Allow claimants to receive benefits while training for a new profession.
3.) Raise the floor for the lowest-possible UI payment from $39 to $100. That minimum would automatically increase in future years.
4.) Waive overpayment of benefits if it was administrative error and not due to fraud, as included in Rep. Kulkarni’s House Bill 240.
5.) Increase benefit amount by $25 for each dependent, starting in 2022.


1.) Employer contributions would be based on the unemployment insurance trust fund’s solvency and its history of paying out benefits, moving Kentucky closer to recommendations from the U.S. Department of Labor. Rep. Cantrell said this change would boost the trust fund during strong economic times and have it be better prepared for recessions, with less reliance on borrowing from the federal government to pay benefits.


1.) This legislation calls for the state to open Kentucky Career Centers at such density so that no Kentuckian is more than 50 driving miles away from a center.


1.) This encourages employers to consider a reduction in staff hours rather than lay-offs, a process known as work-sharing. Employers taking advantage of this would maintain employer benefits, and the employee would receive UI benefits while still working a reduced schedule.


1.) This legislation would add three new groups who could qualify for unemployment insurance.
a.) Those separated from employment due to domestic violence/abuse, dating violence, sexual assault or stalking, as included in Rep. Kulkarni’s House Bill 78.
b.) Those whose spouse’s employment is moved more than 100 miles away. This provision mirrors one already available for military spouses.
c.) Those who leave work due to a non-work related illness or injury that would keep the worker from doing his or her job, including COVID-19.

The democrats will need GOP support to pass the bill. House Speaker David Osborne said he has not read HB 406 yet but he's open to any good legislation.

"Certainly, we're always interested in good legislation," said Osborne. "So if it's a good piece of legislation, it certainly has a shot."