Total and Partial Unemployment TPU 40
Attendance at School or Training Course
This minor category discusses impact upon unemployment insurance eligibility when the claimant is attending a school or training course.
A. Student Work
Services performed by a student who is enrolled or regularly attending classes at a school, college, or university do not constitute "employment" for purposes of UI coverage under the provisions of Section 642 of the UI Code, which provides:
‘Employment' does not include service performed in the employ of a school, college, or university, if such service is performed:
(a) By a student who is enrolled and is regularly attending classes at such school, college, or university, or
(b) By the spouse of such a student, if such spouse is advised, at the time such spouse commences to perform such service, that:
(1) The employment of such spouse to perform such service is provided under a program to provide financial assistance to such student by such school, college, or university, and
(2) Such employment will not be covered by any program of unemployment insurance or disability insurance"
Even though such services are not determined to be "employment" for purposes of UI coverage, an employer-employee relationship is established. The establishment of an employer-employee relationship requires that the wages paid for such services be deductible from the weekly benefit amount under provisions of UI Code Section 1279(c), which states:
"For the purpose of this section only ‘wages’ includes any and all compensation for personal services whether performed as an employee or an independent contractor."
These wages are usable for purge and lag period computation purposes, but are not usable for the establishment of a new claim.
B. Employer-Sponsored Training Classes
Frequently, a claimant will attend a training course given by an employer which may lead to a job; or secure a job which is contingent on the successful completion of a training course. This is particularly true in the training of commission salesmen, insurance agents, and real estate salesmen. No service, in the form of attempted sales, is being performed by the claimant for the employer during the course of this training session. Usually such courses require full days in attendance. If the claimant receives wages, there is a contract of hire and an employer-employee relationship exists. If wages are not XE and he/she is in training less than a normal workweek, the claimant is unemployed for benefit purposes.
Employment does not include unpaid training periods such as training conferences for prospective salesmen unless there is an actual contract of hire. Generally, in such situations the individual is training on a trial basis and there is no contract of hire.
Sometimes, however, a claimant may enter an employment relationship with a contract of hire even though he receives no pay for a required training period. Attending a training course given by an employer constitutes services. Therefore, if the existence of a contract of hire can be established, the claimant is employed if he attends a training course for a full week but he is unemployed if he attends less than a full normal week.
See AA 40, Attendance at Employer-Sponsored Training.
C. "Tryout" Employment Under the Workforce Investment Act
Claimants participating in programs under the Workforce Investment Act (WIA) may be in "tryout" positions, either training or employment. The Local Workforce Investment Areas (LWIAs) will determine if the claimant is an employee or a trainee.
- Training: A claimant is determined to be in training if all of the following conditions exist:
- The training, even though it includes actual operation of the facilities of the employer, is similar to that which would be given at a vocational school;
- The training is for the benefit of the trainees or students;
- The trainees or students do not displace regular employees, but work under their close supervision;
- The employer who provides the training derives no immediate advantage from the activities of the trainees or students, and on occasion, his operations may actually be impeded;
- The trainees or students are not necessarily entitled to a job at the conclusion of the training period; and
- The employer and the trainees or students understand that the trainees or students are not entitled to wages for the time spent in training.
Source: Department of Labor, Employment Standards Administration, Wage and Hour Division.
- Employment: A claimant who does not meet all six of the requirements listed above will be considered to be in a tryout employment position. The provisions of the Fair Labor Standards Act, including provisions for minimum wages and overtime compensation, will apply to the claimant. Any income received from this employment will be considered to be wages for purge or Section 1277 purposes, but not for the establishment of a new claim.
- Training Benefits, Allowances, or Stipends
"Notwithstanding any other provision of this article, no payment of benefits during a period of training or retraining as described in this article shall be made to any individual for any week or part of any week with respect to which he or she receives training or retraining benefits, allowances, or stipends . . . but excluding costs of training paid pursuant to the federal Trade Act . . .
‘Training or retraining benefits, allowances, or stipends’, as used in this section, means discretionary use, cash-in-hand payments available to the individual to be used as he or she sees fit. Direct and indirect compensation for training costs, such as tuition, books, and supplies, is excluded as a condition of approval."
Examples of discretionary income are VA Educational Benefits and Basic Education student grants as well as WIA training allowances over which the claimant has discretionary control. Direct and indirect reimbursements, such as for tuition, books, and supplies, and per diem allowances for parking or transportation, are not considered discretionary and are not disqualifying for UI purposes. Other income, such as TANF, is not considered discretionary income under Section 1273 as it is not intended to provide for training-incurred costs.
For example: A weekly needs-based payment, provided regardless of individual need and/or without designating a specific purpose, is disqualifying for UI purposes. Funds to purchase designated items, but which are not paid directly to the vendor and which are issued in excess of the amount required to purchase those items, are disqualifying for UI purposes. Local Workforce Investment Areas have been advised to explain the effects of a needs based payment upon a claimant, and to allow the claimant to waive the needs-based payment in order to retain the UI weekly benefit.