article: SECTION 1. SHORT TITLE; TABLE OF CONTENTS. (a) Short Title.--This Act may be cited as the ``Preventing Unemployment Act of 2010''. (b) Table of Contents.--The table of contents of this Act is as follows: Sec. 1. Short title; table of contents. Sec. 2. Treatment of short-time compensation programs. Sec. 3. Temporary financing of certain short-time compensation payments. Sec. 4. Temporary Federal short-time compensation. Sec. 5. Grants for implementation of State short-time compensation programs. Sec. 6. Assistance and guidance in implementing programs. Sec. 7. Reports. SEC. 2. TREATMENT OF SHORT-TIME COMPENSATION PROGRAMS. (a) Definition.-- (1) In general.--Section 3306 of the Internal Revenue Code of 1986 (26 U.S.C. 3306) is amended by adding at the end the following new subsection: ``(v) Short-Time Compensation Program.--For purposes of this chapter, the term `short-time compensation program' means a program under which-- ``(1) the participation of an employer is voluntary; ``(2) an employer reduces the number of hours worked by employees in lieu of temporary layoffs; ``(3) such employees whose workweeks have been reduced by at least 10 percent, and by not more than the percentage, if any, that is determined by the State to be appropriate, are eligible for unemployment compensation; ``(4) the amount of unemployment compensation payable to any such employee is a pro rata portion of the unemployment compensation which would be payable to the employee if such employee were totally unemployed; ``(5) such employees are not expected to meet the availability for work or work search test requirements while collecting short-time compensation benefits, but are required to be available for their normal workweek; ``(6) eligible employees may participate, as appropriate, in an employer-sponsored training program to enhance job skills if such program has been approved by the State agency; ``(7) the State agency shall require an employer to certify that the employer will continue to provide health benefits and retirement benefits under a defined benefit plan (as defined in section 414(j)) and contributions under a defined contribution plan (as defined in section 414(i)) to any employee whose workweek is reduced under the program under the same terms and conditions as though the workweek of such employee had not been reduced; ``(8) the State agency shall require an employer (or an employer's association which is party to a collective bargaining agreement) to submit a written plan describing the manner in which the requirements of this subsection will be implemented and containing such other information as the Secretary of Labor determines is appropriate; ``(9) in the case of employees represented by a union, the appropriate official of the union has agreed to the terms of the employer's written plan and implementation is consistent with employer obligations under the National Labor Relations Act; and ``(10) only such other provisions are included in the State law as the Secretary of Labor determines appropriate for purposes of a short-term compensation program.''. (2) Effective date.-- (A) In general.--Except as provided in subparagraph (B), the amendment made by paragraph (1) shall take effect on the date of the enactment of this Act. (B) Delay permitted.--In the case of a State that is administering a short-time compensation program as of the date of the enactment of this Act and the State law cannot be administered consistent with the amendment made by paragraph (1), such amendment shall take effect on the earlier of-- (i) the date the State changes its State law in order to be consistent with such amendment; or (ii) the date that is 2 years after the date of the enactment of this Act. (b) Conforming Amendments.-- (1) Internal revenue code of 1986.-- (A) Subparagraph (E) of section 3304(a)(4) of the Internal Revenue Code of 1986 is amended to read as follows: ``(E) amounts may be withdrawn for the payment of short-time compensation under a short-time compensation program (as defined under section 3306(v));''. (B) Subsection (f) of section 3306 of the Internal Revenue Code of 1986 is amended-- (i) by striking paragraph (5) (relating to short-term compensation) and inserting the following new paragraph: ``(5) amounts may be withdrawn for the payment of short- time compensation under a short-time compensation program (as defined in subsection (v)); and''; and (ii) by redesignating paragraph (5) (relating to self-employment assistance program) as paragraph (6). (2) Social security act.--Section 303(a)(5) of the Social Security Act is amended by striking ``the payment of short-time compensation under a plan approved by the Secretary of Labor'' and inserting ``the payment of short-time compensation under a short-time compensation program (as defined in section 3306(v) of the Internal Revenue Code of 1986)''. (3) Unemployment compensation amendments of 1992.-- Subsections (b) through (d) of section 401 of the Unemployment Compensation Amendments of 1992 (26 U.S.C. 3304 note) are repealed. SEC. 3. TEMPORARY FINANCING OF CERTAIN SHORT-TIME COMPENSATION PAYMENTS. (a) Payments to States.-- (1) In general.--Subject to paragraph (3), there shall be paid to a State an amount equal to 100 percent of the amount of short-time compensation paid under a short-time compensation program (as defined in section 3306(v) of the Internal Revenue Code of 1986, as added by section 2(a)) under the provisions of the State law. Notwithstanding section 2(a)(2), a State administering a short-term compensation program as of the date of the enactment of this Act shall not be eligible to receive payments under this section until the program administered by such State meets the requirements of section 3306(v) of the Internal Revenue Code of 1986 (as so added). Payments shall also be made for additional State administrative expenses incurred (as determined by the Secretary). (2) Terms of payments.--Payments made to a State under paragraph (1) shall be payable by way of reimbursement in such amounts as the Secretary estimates the State will be entitled to receive under this section for each calendar month, reduced or increased, as the case may be, by any amount by which the Secretary finds that the Secretary's estimates for any prior calendar month were greater or less than the amounts which should have been paid to the State. Such estimates may be made on the basis of such statistical, sampling, or other method as may be agreed upon by the Secretary and the State agency of the State involved. (3) Limitations on payments.-- (A) General payment limitations.--No payments shall be made to a State under this section for benefits paid to an individual by the State in excess of 26 weeks of benefits. (B) Employer limitations.--No payments shall be made to a State under this section for benefits paid to an individual by the State under a short-time compensation program if such individual is employed by an employer-- (i) whose workforce during the 3 months preceding the date of the submission of the employer's short-time compensation plan has been reduced by temporary layoffs of more than 20 percent; or (ii) on a seasonal, temporary, or intermittent basis. (b) Applicability.--Payments to a State under subsection (a) shall be available for weeks of unemployment-- (1) beginning on or after the date of the enactment of this Act; and (2) ending on or before the date that is 3 years after the date of the enactment of this Act. (c) Funding and Certifications.-- (1) Funding.--There are appropriated, out of moneys in the Treasury not otherwise appropriated, such sums as may be necessary for purposes of carrying out this section. (2) Certifications.--The Secretary shall from time to time certify to the Secretary of the Treasury for payment to each State the sums payable to such State under this section. (d) Definitions.--In this section: (1) Secretary.--The term ``Secretary'' means the Secretary of Labor. (2) State; state agency; state law.--The terms ``State'', ``State agency'', and ``State law'' have the meanings given those terms in section 205 of the Federal-State Extended Unemployment Compensation Act of 1970 (26 U.S.C. 3304 note). SEC. 4. TEMPORARY FEDERAL SHORT-TIME COMPENSATION. (a) Federal-State Agreements.-- (1) In general.--Any State which desires to do so may enter into, and participate in, an agreement under this section with the Secretary provided that such State's law does not provide for the payment of short-time compensation under-- (A) a short-time compensation program (as defined in section 3306(v) of the Internal Revenue Code of 1986, as added by section 2(a)); or (B) subsections (b) through (d) of section 401 of the Unemployment Compensation Amendments Act of 1992, as in effect on the day before the date of the enactment of this Act. (2) Ability to terminate.--Any State which is a party to an agreement under this section may, upon providing 30 days' written notice to the Secretary, terminate such agreement. (b) Provisions of Federal-State Agreement.-- (1) In general.--Any agreement under this section shall provide that the State agency of the State will make payments of short-time compensation under a plan approved by the State. Such plan shall provide that payments are made in accordance with the requirements under section 3306(v) of the Internal Revenue Code of 1986, as added by section 2(a). (2) Limitations on plans.-- (A) General payment limitations.--A short-time compensation plan approved by a State shall not permit the payment of short-time compensation in excess of 26 weeks. (B) Employer limitations.--A short-time compensation plan approved by a State shall not provide payments to an individual if such individual is employed by an employer-- (i) whose workforce during the 3 months preceding the date of the submission of the employer's short-time compensation plan has been reduced by temporary layoffs of more than 20 percent; or (ii) on a seasonal, temporary, or intermittent basis. (3) Employer payment of costs.--Any short-time compensation plan entered into by an employer must provide that the employer will pay the State an amount equal to one-half of the amount of short-time compensation paid under such plan. Such amount shall be deposited in the State's unemployment fund and shall not be used for purposes of calculating an employer's contribution rate under section 3303(a)(1) of the Internal Revenue Code of 1986. (c) Payments to States.-- (1) In general.--There shall be paid to each State with an agreement under this section an amount equal to-- (A) one-half of the amount of short-time compensation paid to individuals by the State pursuant to such agreement; and (B) any additional administrative expenses incurred by the State by reason of such agreement (as determined by the Secretary). (2) Terms of payments.--Payments made to a State under paragraph (1) shall be payable by way of reimbursement in such amounts as the Secretary estimates the State will be entitled to receive under this section for each calendar month, reduced or increased, as the case may be, by any amount by which the Secretary finds that the Secretary's estimates for any prior calendar month were greater or less than the amounts which should have been paid to the State. Such estimates may be made on the basis of such statistical, sampling, or other method as may be agreed upon by the Secretary and the State agency of the State involved. (3) Funding.--There are appropriated, out of moneys in the Treasury not otherwise appropriated, such sums as may be necessary for purposes of carrying out this section. (4) Certifications.--The Secretary shall from time to time certify to the Secretary of the Treasury for payment to each State the sums payable to such State under this section. (d) Applicability.--An agreement entered into under this section shall apply to weeks of unemployment-- (1) beginning on or after the date on which such agreement is entered into; and (2) ending on or before the date that is 2 years after the date of the enactment of this Act. (e) Transition Rule.--If a State has entered into an agreement under this section and subsequently enacts a State law providing for the payment of short-time compensation under a short-time compensation program (as defined in section 3306(v) of the Internal Revenue Code of 1986, as added by section 2(a)), the State shall not be eligible for payments under this section for weeks of unemployment beginning after the effective date of such State law. (f) Definitions.--In this section: (1) Secretary.--The term ``Secretary'' means the Secretary of Labor. (2) State; state agency; state law.--The terms ``State'', ``State agency'', and ``State law'' have the meanings given those terms in section 205 of the Federal-State Extended Unemployment Compensation Act of 1970 (26 U.S.C. 3304 note). SEC. 5. GRANTS FOR IMPLEMENTATION OF STATE SHORT-TIME COMPENSATION PROGRAMS. (a) Grants.-- (1) In general.--The Secretary shall award start-up grants to State agencies-- (A) in States that enact short-time compensation programs (as defined in section 3306(v) of the Internal Revenue Code of 1986, as added by section 2(a)) on or after May 1, 2010, for the purpose of creating such programs; and (B) that apply for such grants not later than September 30, 2012. (2) Amount.--The amount of a grant awarded under paragraph (1) shall be an amount determined by the Secretary based on the costs of implementing a short-time compensation program. (3) Only 1 grant per state.--A State agency is only eligible to receive 1 grant under this section. (b) Funding.--There are appropriated, out of moneys in the Treasury not otherwise appropriated, such sums as may be necessary for purposes of carrying out this section. (c) Reporting.--The Secretary may establish reporting requirements for State agencies receiving a grant under this section in order to provide oversight of grant funds used by States for the creation of the short-time compensation programs. (d) Definitions.--In this section: (1) Secretary.--The term ``Secretary'' means the Secretary of Labor. (2) State; state agency.--The terms ``State'' and ``State agency'' have the meanings given those terms in section 205 of the Federal-State Extended Unemployment Compensation Act of 1970 (26 U.S.C. 3304 note). SEC. 6. ASSISTANCE AND GUIDANCE IN IMPLEMENTING PROGRAMS. In order to assist States in establishing, qualifying, and implementing short-time compensation programs (as defined in section 3306(v) of the Internal Revenue Code of 1986, as added by section 2(a)), the Secretary of Labor shall-- (1) develop model legislative language which may be used by States in developing and enacting such programs and periodically review and revise such model legislative language; (2) provide technical assistance and guidance in developing, enacting, and implementing such programs; (3) establish reporting requirements for States, including reporting on-- (A) the number of averted layoffs; (B) the number of participating companies and workers; and (C) such other items as the Secretary of Labor determines are appropriate. SEC. 7. REPORTS. (a) Initial Report.--Not later than 4 years after the date of the enactment of this Act, the Secretary of Labor shall submit to Congress and to the President a report or reports on the implementation of the provisions of this Act, including an analysis of the significant impediments to State enactment and implementation of short-time compensation programs (as defined in section 3306(v) of the Internal Revenue Code of 1986, as added by section 2(a)). (b) Subsequent Reports.--After the submission of the report under subsection (a), the Secretary of Labor may submit such additional reports on the implementation of short-time compensation programs as the Secretary deems appropriate. (c) Funding.--There are appropriated, out of any moneys in the Treasury not otherwise appropriated, to the Secretary of Labor, $1,500,000 to carry out this section, to remain available without fiscal year limitation.
summary: Preventing Unemployment Act of 2010 - Amends the Federal Unemployment Tax Act (FUTA), the Internal Revenue Code, and the Unemployment Compensation Amendments of 1992 to prescribe requirements for the treatment and temporary financing of voluntary short-time compensation (STC) programs, under which: (1) an employer reduces the number of hours worked by employees in lieu of temporary layoffs; and (2) such employees are eligible for pro-rata unemployment compensation if their workweeks are reduced by between 10% and an appropriate state-determined percentage. Requires payments to states meeting the requirements of this Act in an amount equal to 100% of the STC paid to individuals. Prohibits such STC payments: (1) for more than 26 weeks; or (2) for an employee whose employer's workforce during the three months preceding submission of the employer's STC plan has been reduced by temporary layoffs of more than 20%, or on a seasonal, temporary, or intermittent basis. Authorizes temporary federal-state agreements for STC programs if a state does not currently provide for STC payments under an existing program. Requires employers under an STC plan to pay the state one-half of the amount of STC paid under the plan. Requires federal payments to states in an amount equal to: (1) one-half of the amount of STC paid to individuals by the state; and (2) any additional related administrative expenses incurred by the state. Requires the Secretary of Labor to award one start-up grant to state agencies: (1) in states that enact STC programs on or after May 1, 2010; and (2) that apply for such grants before FY2013. Specifies assistance and guidance the Secretary shall give states in establishing and implementing STC programs.