Archive for July, 2013

Advocates Improve Unemployment Compensation Bill for Ohio Workers

The Ohio General Assembly has passed new unemployment compensation legislation, House Bill 2 (HB 2), and Governor Kasich signed HB 2 on July 11, 2013.  It becomes law 90 days after the Governor’s signature, but certain requirements take effect at a later date. As a result of advocacy by Mike Smalz (Ohio Poverty Law center), Hannah Halbert (Policy Matters) and the Ohio Employment Lawyers Association (OELA), the final version of HB 2 represents a huge improvement over the bill as it was introduced.

 As introduced, HB 2—sponsored by Representative Tim Derickson—required all unemployment compensation applicants to personally “register” on the OhioMeansJobs website as a precondition to receiving any unemployment benefits. (OhioMeansJobs is the exclusive job placement service for Ohio’s “one stop” employment assistance centers.)  “Registration” involved posting a complete résumé.  In addition, every week unemployment claimants would receive an email from OhioMeansJobs listing appropriate job matches.  The bill also required everyone to “report” to their local One Stop office beginning in their eighth consecutive week of claiming unemployment benefits.

 Mike Smalz and Hannah Halbert met several times with the bill’s sponsor, the Ohio Department of Job and Family Services (ODJFS),  and the Governor’s Office to discuss a number of issues of concern.  Mike and Hannah pointed out that some low-income unemployed individuals do not have a computer or reasonable access to the Internet, or are computer-illiterate.  Other individuals face disability- or language-related barriers.  Mike also cited an April 6, 2013 U.S. Department of Labor Finding determining that Florida’s  unemployment compensation online application, registration and reporting requirements violated the Americans with Disabilities Act (ADA), Title VI (language discrimination) and other federal civil rights laws.

Representative Derickson, ODJFS and Senate Republicans agreed to amend several key provisions of the bill.  As a result, final Sub. HB 2 provides:

 —  Individuals may register either online or by phone.  People who file their unemployment compensation applications by phone will also “register” by phone: the information they provide over the phone will generate a basic résumé that will be automatically be posted on the OhioMeansJobs website, although claimants may later be required to update or expand their résumé.

—  Individuals who lack a personal email account will receive telephone calls from ODJFS informing them of their weekly OhioMeansJobs job matches.  Claimants will not be required to pursue those specific job matches so long as they make the required number of weekly job searches.

—  The following categories of persons who have significant “barriers” are exempt from the registration requirement: individuals who are legally or physically unable to use a computer or who have a limited ability to read, write, speak, or understand a language in which OhioMeansJobs is available.

—  Individuals who are temporarily laid off as part of a mass lay-off or plant closing, or who are attending an ODJFS-approved training course, or who are a member of a union that refers members to jobs through its labor referral or placement system are also exempt from the “actively seeking work” and registration requirements.

—  Finally, the requirement that claimants “report” to their local One Stop office beginning in their eighth week after first filing for unemployment benefits may be accomplished by in-person, online, or telephone contacts, depending on ODJFS policies and the claimant’s particular circumstances.

 Sub. HB 2, in its final version, is a victory for Ohio’s unemployed workers and a far better outcome than what has happened in other states where conservative governors and legislators have pushed through legislation creating major hurdles to getting unemployment benefits or reducing the amount or duration of unemployment benefits.

written by Mike Smalz

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Ohio’s Proposed Debt Settlement Legislation Bad Policy for Ohio’s Consumers

Recently, Representative Lou Terhar introduced HB 173 in the Ohio House. The bill purports “to regulate the for-profit debt settlement industry in Ohio.” Although this industry needs significant regulatory reforms, the proposed modifications of state law would offer mostly redundant regulation while removing fees caps that protect Ohio’ s citizens. The bill that would emerge is bad for Ohio consumers and bad public policy for Ohio, and Ohioans should urge their representatives to just say “no” to HB 173.

Debt settlement companies attract customers through marketing campaigns designed to give debt-burdened consumers the false impression that their services will allow individuals to settle their outstanding debts at substantial discounts.

In practice, however, these companies can leave consumers with higher debt loads and adverse court judgments, while charging exorbitant fees. In doing so, debt settlement companies prey on Ohio’s impoverished citizens, many of whom have been forced to  rely on their credit cards as a bridge between their income and needs in desperate economic times.  The typical for-profit debt settlement business model advises debtors who enroll in a plan to stop paying their credit card bills and instead set aside money before negotiations with creditors begin.  Late fees and penalty interest rates mount as a result, leaving the consumer with a larger debt than when they started.  Additionally, entering a plan is no guarantee that collection activities will stop; often creditor harassment and law suits continue.

Studies show that only a small minority of debts are actually settled by the companies in this industry. Even the American Fair Credit Council, the debt settlement industry’s trade association, has admitted that 66% of clients will not see even 75% of their debts settled. Additionally, the industry fails to include fees and the tax consequences of debt forgiveness in the analysis of debtor savings, giving an incomplete picture of the “benefits” of for-profit debt settlement plans.  Because of these issues, it is unsurprising that the Better Business Bureau has called the industry “inherently problematic,” and the Office of the Comptroller of the currency has charged that “this is not a legitimate method of satisfying debts.”

Currently, Federal Trade Commission rules ban the most abusive practice common to the debt settlement industry: charging advance fees. Additionally, certain disclosures must be made to potential customers regarding the nature of the debt settlement company’s business practices and the consequences of entering a plan. Existing Ohio law puts fee caps on what this industry can charge for its services, and gives debtors who are victimized by abusive practices claims for relief under the Consumer Sales Practices Act.

HB 173, if enacted, will codify many of the FTC’s restrictions into Ohio law. However, caps on fees are abolished by the proposed bill.  With such provisions, HB 173 is an example of “faux reform” for the citizens of Ohio. The proposed regulations are already in place, and the debt settlement industry will have greater freedom to charge astronomical fees.  This should come as no surprise, given that the bill is backed by the American Fair Credit Council, the debt settlement industry’s trade association. The support of this organization should be telling for Ohio citizens who seek to restrain the harmful practices of debt settlement companies. For these reasons, Ohioans should urge their representatives to vote “no” on HB 173.

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