Payroll Tax-Cut Bill Introduces More than just a Tax Cut Extension

The new payroll mandates recently passed by Congress extend a 2 percent payroll cut but also include several other features that fill out the so-called Middle Class Tax Relief and Job Creation Act of 2012. In addition to the Bush-era tax cut extension, the Act also works to augment the work-sharing program. Employees having had their hours cut will now be allowed to receive unemployment benefits equal to 50 percent of the pay reduction. This is included in the act because the current system has been found to promote layoffs and the provision is intended to help workers remain on the job.

An additional provision included in the legislation gives a boost to the amount of federal funds used to support programs that allow the unemployed to collect benefits while completing a job-training program. The Act also provides benefits for the self-employed. Entrepreneurs and others who are independently employed will have access to unemployment benefits.

A fourth provision changes the unemployment insurance application process to allow for state-administered drug testing if the tested individuals were laid off for drug use or if they jobs for which they are applying require drug testing. Finally, the unemployment benefits period will be once again extended, but the maximum duration that benefits may be received is shortened to 73 weeks, reduced from the previous 99 week cap.

Congress has not yet passed the bill to the president for his signature but he has stated that he will sign it as soon as it is received.