Background: In 1995, the U.S. Department of Labor issued Unemployment Insurance Program Letter 25-95, which concluded that participants in the AmeriCorps Program were not “employees” of the entity for which they performed services and that such participants were therefore not entitled to unemployment benefits based on the performance of such services. The U.S. Department of Labor has concluded, based on the opinion of the Federal Counsel for Corporation for National Services that there is no employer-employee relationship and the required coverage provisions of Section 3304(a)(6)(A), of the Federal Unemployment Tax Act do not apply. Whether such services are covered is a matter to be determined by each State law.

The Michigan Court of Appeals in its June 24, 2003 decision in Candice Dana v American Youth Foundation and CIS/BWUC concluded that services of AmeriCorps participants are in covered employment. The sole issue on appeal was whether the services of AmeriCorps participants were covered or excluded under Section 43(o)(v) of the Michigan Employment Security Act, which excludes from coverage services performed as part of an “unemployment work-relief or work-training program.” The Court concluded that the primary objective in the AmeriCorps Program is to encourage service to one’s community, not to provide work-training or work-relief. This ruling resulted in adjudications dated after June 24, 2003, finding that AmeriCorps participants are in covered employment and entitled to unemployment compensation based on such services.

Description of Bill: Amends Section 43 of the Michigan Employment Security Act by providing for the exclusion from “employment” services performed in an AmeriCorps program, as long as, the individual performed the services under a contract wherein a guaranteed stipend is provided and the full amount of the guaranteed stipend is received before the end of such contract.

Summary of Arguments

Pro: The Corporation for National Service would argue that participants in AmeriCorps grantee programs perform full-time or part-time public service in exchange for post-service educational benefits and that there is not a traditional employee-employer relationship. The AmeriCorps program in Michigan has indicated the proposed language excluding these services from coverage is necessary for community service programs to continue providing essential services to those in need. If such programs were required to pay the costs of providing unemployment compensation to participants, the level of services to participants would be substantially reduced.

Con: AmeriCorps participants would argue there is an employee-employer relationship and, therefore, their services should be included as covered employment just like services of most other workers.

Fiscal/Economic Impact

(a) Department

Budgetary: None.

Revenue: None.

Comments: None.

(b)State of Michigan

Budgetary: None.

Revenue: None.

Comments: None.

(c)Local Government

Comments: None.

Other State Departments:
None known.

Any Other Pertinent Information:
None.

Administrative Rules Impact:
None known.