Part 20. TEXAS WORKFORCE COMMISSION

Chapter 809. CHILD CARE SERVICES

The Texas Workforce Commission (Commission) proposes amendments to the following sections of Chapter 809, relating to Child Care Services:

Subchapter B. General Management, §§809.13, 809.19, and 809.20

The Commission proposes amendments to the following sections of Chapter 809, relating to Child Care Services:

Subchapter C. Eligibility for Child Care Services, §§809.43, 809.44, 809.46, and 809.48

The Commission proposes the following new sections to Chapter 809, relating to Child Care Services:

Subchapter C. Eligibility for Child Care Services, §809.50 and §809.51

The Commission proposes the repeal of the following sections of Chapter 809, relating to Child Care Services:

Subchapter C. Eligibility for Child Care Services, §§809.50 - 809.52

The Commission proposes amendments to the following sections of Chapter 809, relating to Child Care Services:

Subchapter D. Parent Rights and Responsibilities, §809.74 and §809.75

PART I. PURPOSE, BACKGROUND, AND AUTHORITY

PART II. EXPLANATION OF INDIVIDUAL PROVISIONS

PART III. IMPACT STATEMENTS

PART IV. COORDINATION ACTIVITIES

PART I. PURPOSE, BACKGROUND, AND AUTHORITY

The Commission proposes to amend Child Care Services rules, Chapter 809, to address:

- a legislatively mandated increase in reimbursement rates for child care providers that obtain Texas School Ready!™ certification (TSRC) or meet the Texas Rising Star Provider criteria;

- child care for a parent's extended temporary medical incapacitation or temporary cessation of work, education, or training; and

- continued eligibility for wraparound child care--i.e., care provided before and after a child care program's designated hours--for children who are receiving Commission-funded child care and are enrolled in Head Start, public prekindergarten (pre-K), or a school-readiness integration program.

The Commission also proposes to make several technical corrections and clarifications to Chapter 809 by:

- changing incorrect citations;

- using common phrases and language throughout the rules; and

- providing clarifying language that aligns the rules with Commission intent and current practice.

PART II. EXPLANATION OF INDIVIDUAL PROVISIONS

(Note: Minor editorial changes are made that do not change the meaning of the rules and, therefore, are not discussed in the Explanation of Individual Provisions.)

SUBCHAPTER B. GENERAL MANAGEMENT

The Commission proposes the following amendments to Subchapter B:

§809.13. Board Policies for Child Care Services

Section 809.13, relating to Local Workforce Development Board (Board) policies for child care services, requires Boards to:

- conduct fraud fact-finding; and

- establish policies regarding personal responsibility agreement (PRA) sanctions.

Section 809.13(d)(7) changes the reference from §§809.48, 809.50, and 809.51 to §809.48 and §809.50 to reflect the correct provisions setting forth the minimum activity requirements for parents.

Section 809.13(d)(11) changes the reference from §809.71(b)(2) to §809.71(3) to reflect the correct provision for transferring a child from one provider to another.

Section 809.13(d)(13) changes the reference from §809.92(b)(3) to §809.92(b)(4) to reflect the correct provision for attendance standards and procedures.

Section 809.13(d)(15) is amended to clarify that Boards are required to develop procedures for fraud fact-finding--not to investigate fraud-by replacing the term "investigating" with the term "fact-finding" to reflect the language used in §809.111. This change also aligns with current practices and principles from the January 2007 rule amendment, which states that it is the Commission's responsibility-not the Boards' responsibility-to determine if a person has committed fraud, and it is the Boards' role to research facts, not to investigate whether fraud has occurred. This policy is contained in WD Letter 59-06, Change 1, issued February 2, 2007, and entitled "Requirements for Reporting, Fact-Finding, and Prosecution of Fraud, Waste, Theft, and Program Abuse Cases, and Collection of Overpayments: Update."

New §809.13(d)(16) requires Boards to establish policies regarding sanctions imposed when a parent fails to comply with the provisions of the PRA as referenced in §809.76(c). Because a Board has the flexibility to terminate child care when a parent fails to comply with the provisions of the PRA, this sanction policy could affect the provision of workforce services and, therefore, as required by Commission rule §801.51(f) and as detailed in WD Letter 10-07, issued February 2, 2007, and entitled "Adoption of Local Workforce Development Board Policies in Open Meetings," Board members must adopt such policies in an open meeting.

New §809.13(d)(17) requires Boards to establish a policy concerning continued child care for children enrolled in Head Start, Early Head Start, or a public pre-K program as provided in §809.50(g). The decision to allow continued child care for children enrolled in early education programs is left with the Boards based on local workforce needs and circumstances. To facilitate local public input regarding this decision, Board members must adopt such policies in an open meeting as required by Commission rule §801.51(f) and as detailed in WD Letter 10-07.

§809.19. Assessing the Parent Share of Cost

Section 809.19(a)(2)(C) is amended to allow parents who have children receiving protective services child care pursuant to §809.49 and §809.54(c)(1), to be exempt from the parent share of cost--unless the Texas Department of Family and Protective Services (DFPS) authorizes a parent share of cost.

This paragraph clarifies that a parent's exemption from the parent share of cost is applicable when a child's eligibility for child care is determined by DFPS for a child currently or formerly receiving protective services. The exemption from the parent share of cost applies to children receiving DFPS protective services as well as children formerly receiving protective services for whom DFPS has determined that child care is integral to that service need as provided by §809.54(c)(1). The current rule language does not specify that a parent of a child who formerly received protective services is exempt, but it is current practice and the intent of the Commission.

§809.20. Maximum Provider Reimbursement Rates

Section 809.20(b) replaces the term "graduated" reimbursement rates with the term "enhanced" reimbursement rates to describe the minimum five percent increase in rates for certain providers. The term enhanced is intended to mean higher. Enhanced rates may also be graduated, but this is not a requirement. Use of the term enhanced aligns with language used in Article IX, §19.111 of the General Appropriations Act, 80th Texas Legislature, Regular Session (2007), which requires the enhancement of reimbursement rates for child care providers that obtain certification under the TSRC system or meet Texas Rising Star Provider criteria.

New §809.20(b)(3) requires Boards to establish enhanced reimbursement rates for child care providers that obtain certification under the TSRC system. This new paragraph implements the direction of the Texas Legislature as provided in Article IX, §19.111 of the General Appropriations Act, 80th Texas Legislature, Regular Session (2007).

The Commission emphasizes that although Boards must establish enhanced reimbursement rates for infants, toddlers, and preschool children attending a certified Texas School Ready!™ facility, Boards have the flexibility to establish enhanced reimbursement rates for school-age children enrolled in such facilities.

However, an enhanced reimbursement rate must be applied to all age groups and classrooms for Texas Rising Star Providers and child care providers participating in a Texas Early Education Model (TEEM) school readiness integration project developed by the State Center for Early Childhood Development at the University of Texas Health Science Center (State Center). School-age children or other TWC-subsidized children in the TEEM facility are not excluded from the enhanced reimbursement rates.

SUBCHAPTER C. ELIGIBILITY FOR CHILD CARE SERVICES

The Commission proposes the following amendments to Subchapter C:

§809.43. Priority for Child Care Services

Section 809.43(a)(2)(B) clarifies that a child is included in the second priority group if the parent is a qualified veteran "or qualified spouse." The phrase "or qualified spouse" is added to align with the definition in §801.23 of the Commission's Local Workforce Development Boards rules.

§809.44. Calculating Family Income

Section 809.44 clarifies that income sources listed are used for determining both eligibility and parent share of cost. The section also states that family income does not include any income sources specifically excluded by federal law or regulation.

Section 809.44(a) adds the phrase "and the parent share of cost" to make the list of income items also applicable to determining parent share of cost. This change aligns with Boards' longstanding practice of using the income inclusions and exclusions both for determining eligibility and for determining parent share of cost.

New §809.44(b)(11) adds a comprehensive exclusion to cover any income sources specifically excluded by federal law or regulation. Allowing a comprehensive exclusion for family income sources that are specifically excluded by federal law or regulation forgoes the need for a Commission rule change any time federal legislation or regulation is amended to exclude a specific income source from being counted toward eligibility for a federally funded program.

§809.46. Temporary Assistance for Needy Families Applicant Child Care

Section 809.46(c) changes the reference from §§809.50 - 809.52 to §809.50 resulting from the repeal of §§809.50 - 809.52 and the proposal of new §809.50.

Section 809.46(e) changes the reference from §§809.50 - 809.52 to §809.50 resulting from the repeal of §§809.50 - 809.52 and the proposal of new §809.50.

§809.48. Transitional Child Care

Section 809.48 is amended to incorporate the allowable reduction of work and education requirements for At-Risk child care into Transitional child care.

Section 809.48(b) replaces the phrase "children in families at risk of becoming dependent on public assistance" with "At-Risk child care" as set forth in new §809.50.

New §809.48(f) allows a Board to reduce the work, education, and job training activity requirements if a parent's documented medical disability or need to care for a physically or mentally disabled family member prevents the parent from participating in the activities for the required hours per week.

New §809.48(g) specifies the education credit-hour equivalences for meeting the required education activity hours per week, specifically:

- §809.48(g)(1) states that each credit hour of postsecondary education counts as three hours of education activity per week; and

- §809.48(g)(2) states that each credit hour of a condensed postsecondary education course counts as six hours of education activity per week.

§809.50. Child Care for Children Living at Low Incomes

Section 809.50 is repealed and the common provisions of §§809.50 - 809.52 are consolidated into new §809.50, At-Risk Child Care.

§809.51. Child Care for Children with Disabilities

Section 809.51 is repealed and the common provisions of §§809.50 - 809.52 are consolidated into new §809.50, At-Risk Child Care.

§809.52. Child Care for Children of Teen Parents

Section 809.52 is repealed and the common provisions of §§809.50 - 809.52 are consolidated into new §809.50, At-Risk Child Care.

§809.50. At-Risk Child Care

New §809.50 consolidates and streamlines the rule language contained in repealed §§809.50 - 809.52 by combining similar provisions into one section rather than three.

New §809.50 also addresses eligibility for wraparound child care--i.e., child care provided before and after a child care provider's designated hours--for children who are receiving Commission-funded child care and enrolled in Head Start, public pre-K, or a school-readiness integration program.

Regarding wraparound child care for children receiving Commission-funded child care and who are enrolled in Head Start, which includes Early Head Start or public pre-K, the Texas Legislature--as provided in Texas Human Resources Code §72.003, Texas Government Code §2308.3165, and Texas Education Code, Chapter 29--has placed increased emphasis on local coordination among early childhood education programs in order to support integration across these programs. The continued provision of child care services assists in the extension of early childhood education program hours to full day and full year.

However, the varying eligibility periods among Commission-funded child care services, Head Start, and public pre-K have been identified as barriers that may prevent a child in Commission-funded child care from completing a Head Start or public pre-K program during the school year. Head Start and public pre-K eligibility are determined prior to the school or program year. Children are deemed eligible to remain in these programs regardless of changes in a family's work or income status. However, children in Commission-funded child care who are receiving wraparound care while enrolled in a Head Start or public pre-K program lose eligibility for Commission-funded child care during the school year when a family's income or work hours change. These early education programs have identified the Child Care and Development Fund (CCDF) eligibility period as a barrier to a child's ability to continue participating in the early education program.

The Commission proposes this amendment with the intent of removing this barrier and to further the intent of the Texas Legislature in Texas Human Resources Code §72.003, Texas Government Code §2308.3165, and Texas Education Code, Chapter 29.

New §809.50(a) establishes the eligibility requirements for At-Risk child care. Section 809.50(a)(1) sets income limits--as established by the Board, and §809.50(a)(2) sets forth the work, education, and job training requirements for a parent to be determined eligible for child care.

New §809.50(b) allows Boards to reduce the work, education, and job training activity requirements if a parent's documented medical disability or need to care for a physically or mentally disabled family member prevents the parent from participating in the activities for the required hours per week.

New §809.50(c) specifies the education credit hour equivalences for meeting the required education activity hours per week and states that teen parents attending high school or the equivalent shall be considered as meeting the education requirements.

New §809.50(d) states that when calculating income eligibility for a child with disabilities, a Board must deduct the cost of the child's ongoing medical expenses from the family income.

New §809.50(e) allows Boards to establish a higher income eligibility limit for teen parents than those specified in §809.41(a)(2)(A).

New §809.50(f) states that a teen parent's income is based solely on the teen parent's income and size of the teen's family as defined in §809.2(8).

New §809.50(g) states that a child receiving child care services under the Board's initial eligibility requirements in §809.41(a)(2)(A) who is enrolled in Head Start, Early Head Start, or public pre-K is eligible to continue receiving child care until the end of the school year as long as:

- the family's income does not exceed 85% of the state median income (SMI) for a family of the same size;

- child care is required for the parent to work or attend a job training or educational program for a minimum of 25 hours per week for a single-parent family or 50 hours per week for a two-parent family; and

- the parents continue to comply with the parent responsibilities described in Subchapter D.

Allowing child care to continue for a child enrolled in Head Start, Early Head Start, or public pre-K assists in the availability of full-day child care pursuant to §809.14(b). The continuation of child care under these provisions is allowed on the basis of the child meeting the federal requirements described in §809.42(c)(2) as long as the parent is able to meet the Board's initial eligibility requirements. With the federal requirements establishing the eligibility income limit at 85% SMI, this rule only affects Boards whose initial income limits are below 85% SMI and whose work requirements are set higher than those set forth in §809.50(a)(2).

§809.51. Child Care during Temporary Interruptions in Work, Education, or Training

New §809.51 addresses child care during a parent's:

- extended temporary medical incapacitation; and

- temporary cessation of work, education, or job training activities.

Extended temporary medical incapacitation and temporary cessation of work, education, or training are not addressed in current rules. In both circumstances, a parent remains employed, in school, or in training but is temporarily unable to meet the weekly work or attendance hour requirements, thereby causing the parent to become ineligible for child care.

New §809.51(a) applies to the temporary cessation of work, education, or job training activities. This situation may occur when an individual remains employed but is temporarily not working, such as with public school employees and students who may no longer be meeting the hourly work, education, or job training requirements during semester or summer breaks. Section 809.51(a) states that if a parent has a temporary cessation of work, education, or job training activities and is unable to meet the requirements described in §809.50(a)(2), child care may be suspended for no more than 90 calendar days from the documented effective date of the cessation of these activities. During the suspension of child care based on the temporary cessation of work, the parent will not be receiving subsidized child care, but the parent will also not be required to reapply for child care services or be subject to the child care waiting list when they return to their work, education or job training activities pursuant to their work and attendance hour requirements described in §809.50(a)(2).

New §809.51(b) applies to temporary medical incapacitation. This situation may result from a health impairment that necessitates an employed parent, or a parent in education or job training, to have an extended temporary cessation or reduction in work or attendance hours causing them to be unable to meet the requirements described in §809.50(a)(2). The parent remains employed, in school or in training, but cannot work, attend school or training for an extended period of time, though the parent intends to return to their employment, education or job training following their temporary incapacitation. Section 809.51(b) states that if a parent has a documented temporary medical incapacitation and is unable to meet the work, education, or job training requirements described in §809.50(a)(2), the following shall apply:

- Child care may be allowed to continue for no more than 30 calendar days from the documented effective date of the temporary medical incapacitation; and

- Child care may be suspended for no more than 60 calendar days after the end of the 30-day calendar period following the documented temporary medical incapacitation.

The following new provisions apply to both the temporary cessation of work, education, or job training activities and medical incapacitation:

New §809.51(c) states that upon the parent's return to work, education, or job training activities, a Board is not required to resume child care at the same provider used prior to the documented temporary cessation of these activities or medical incapacitation. The Commission believes that requiring the provider to hold the slot open for the child places an undue financial burden on the child care provider. Additionally, the parent is not required to reapply for child care services or return to the child care wait list.

New §809.51(d) states that prior to any suspension of child care a parent must provide documentation from the employer, educational institution, or training provider stating that the parent will be returning to work, education, or job training activities following the temporary cessation of these activities or medical incapacitation. Even if a parent becomes incapacitated because of a sudden illness or medical emergency, the 30-day maximum period where child care services may continue allows the parent adequate time to provide the documentation. The Board may determine what is considered acceptable documentation which for example could include registration documents or a signed note from the school indicating that the parent will be returning after the break.

SUBCHAPTER D. PARENT RIGHTS AND RESPONSIBILITIES

The Commission proposes the following amendments to Subchapter D:

§809.74. Parent Appeal Rights

Section 809.74(a) is amended to include Choices caseworkers and FSE&T caseworkers and to add the suspension of child care as an action for which a parent has the right to request a hearing pursuant to Chapter 823 of the Commission's rules. The Commission believes the suspension of care as described under new §809.51 is an adverse action, pursuant to §823.2(2), similar to the currently appealable denial, delay, termination or reduction in child care services and, therefore, it is eligible for appeal by the parent. However, as described in the following section--§809.75(b)--child care must not continue during the appeal.

Sections 809.74(d) and (e) are removed because the information is contained in §809.74(a).

§809.75. Child Care during Appeal

Section 809.75(b)(7) removes the term "parent fees" and replaces it with the term "parent share of cost" to align with terminology used throughout this chapter.

New §809.75(b)(9) states that child care shall not continue during the appeal if the appeal is due to the suspension of child care services pursuant to §809.51 (related to Child Care during Temporary Interruptions in Work, Education, or Training). If for example the Board's child care contractor determines that the length of the suspension period for temporary work cessation or medical incapacitation should be 30 days rather than the maximum allowable 60 or 90 days, parents may appeal the length of the suspension period. However, because child care services will be suspended for only a limited amount of time with the understanding that services will continue following the brief suspension period, allowing child care to continue during any appeal would essentially nullify the suspension period.

PART III. IMPACT STATEMENTS

Randy Townsend, Chief Financial Officer, has determined that for each year of the first five years the rules will be in effect, the following statements will apply:

There are no additional estimated costs to the state and local governments expected as a result of enforcing or administering the rules.

There are no estimated reductions in costs to the state and to local governments as a result of enforcing or administering the rules.

There are no estimated losses or increases in revenue to the state or to local governments as a result of enforcing or administering the rules.

There are no foreseeable implications relating to costs or revenue of the state or local governments as a result of enforcing or administering the rules.

There are no anticipated economic costs to persons required to comply with the rules.

There is no anticipated adverse economic impact on small or microbusinesses as a result of enforcing or administering the rules.

Economic Impact Statement and Regulatory Flexibility Analysis

The Agency has determined that the proposed rules will not have an adverse economic impact on small businesses as these proposed rules place no requirements on small businesses, including child care providers.

Mark Hughes, Director of Labor Market Information, has determined that there is no significant negative impact upon employment conditions in the state as a result of the rules.

Laurence M. Jones, Director, Workforce Development Division, has determined that for each year of the first five years the rules are in effect, the public benefit anticipated as a result of enforcing the proposed rules will be to:

- meet the requirements of the 80th Texas Legislature regarding enhanced reimbursement rates for child care providers;

- allow greater flexibility for Boards to design child care services to meet the needs of the local workforce development area; and

- allow greater flexibility for parents to continue receiving child care services.

The Agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the Agency's legal authority to adopt.

PART IV. COORDINATION ACTIVITIES

In the development of these rules for publication and public comment, the Commission sought the involvement of Texas' 28 Boards. The Commission provided the concept paper regarding these rule amendments to the Boards for consideration and review on December 18, 2007. The Commission also conducted a conference call with Board executive directors and Board staff on January 4, 2008, to discuss the concept paper. During the rulemaking process, the Commission considered all information gathered in order to develop rules that provide clear and concise direction to all parties involved.

Comments on the proposed rules may be submitted to TWC Policy Comments, Workforce Policy and Service Delivery, attn: Workforce Editing, 101 East 15th Street, Room 440T, Austin, Texas 78778; faxed to (512) 475-3577; or e-mailed to TWCPolicyComments@twc.state.tx.us. The Commission must receive comments postmarked no later than 30 days from the date this proposal is published in the Texas Register.

Subchapter B. GENERAL MANAGEMENT

40 TAC §§809.13, 809.19, 809.20

The rules are proposed under Texas Labor Code §301.0015 and §302.002(d), which provide the Commission with the authority to adopt, amend, or repeal such rules as it deems necessary for the effective administration of Agency services and activities, and the Texas Human Resources Code §44.002, regarding Administrative Rules.

The proposed rules will affect Texas Labor Code, Title 4, particularly Chapters 301 and 302, as well as Texas Government Code, Chapter 2308.

§809.13.Board Policies for Child Care Services.

(a) A Board shall develop, adopt, and modify its policies for the design and management of the delivery of child care services in a public process in accordance with Chapter 801 of this title.

(b) A Board shall maintain written copies of the policies that are required by federal and state law, or as requested by the Commission, and make such policies available to the Commission and the public upon request.

(c) A Board shall also submit any modifications, amendments, or new policies to the Commission no later than two weeks after adoption of the policy by the Board.

(d) At a minimum, a Board shall develop policies related to:

(1) how the Board determines that the parent is making progress toward successful completion of a job training or educational program as described in §809.2(1);

(2) maintenance of a waiting list as described in §809.18(b);

(3) assessment of a parent share of cost as described in §809.19, including the reimbursement of providers when a parent fails to pay the parent share of cost;

(4) maximum reimbursement rates as provided in §809.20, including policies related to reimbursement of providers that [who] offer transportation;

(5) family income limits as described in Subchapter C of this chapter (relating to Eligibility for Child Care Services);

(6) provision of child care services to a child with disabilities up to the age of 19 as described in §809.41(a)(1)(B);

(7) minimum activity requirements for parents as described in §809.48 and §809.50 [§§809.48, 809.50, and 809.51];

(8) time limits for the provision of child care while the parent is attending an educational program as described in §809.41(b);

(9) frequency of eligibility redetermination as described in §809.42(b)(2);

(10) Board priority groups as described in §809.43(a);

(11) transfer of a child from one provider to another as described in §809.71(3) [§809.71(b)(2)];

(12) provider eligibility for listed family homes as provided in §809.91(b), if the Board chooses to include listed family homes as eligible providers;

(13) attendance standards and procedures as provided in §809.92(b)(4) [§809.92(b)(3)], including provisions consistent with §809.54(f) (relating to Continuity of Care for custody and visitation arrangements);

(14) providers charging the difference between their published rate and the Board's reimbursement rate as provided in §809.92(d); [and]

(15) procedures for [investigating] fraud fact-finding as provided in §809.111;[.]

(16) procedures for imposing sanctions when a parent fails to comply with the provisions of the parent responsibility agreement (PRA) as described in §809.76(c); and

(17) continued child care for children enrolled in Head Start, Early Head Start, or a public pre-kindergarten program pursuant to §809.50(g).

§809.19.Assessing the Parent Share of Cost.

(a) For child care funds allocated by the Commission pursuant to its allocation rules (generally, Chapter 800, General Administration, Subchapter B, Allocation and Funding, and specifically, §800.58, Child Care), including local public transferred funds and local private donated funds, as provided in §809.17, the following shall apply.

(1) A Board shall set a parent share of cost policy that assesses the parent share of cost in a manner that results in the parent share of cost:

(A) being assessed to all parents, except in instances when an exemption under paragraph (2) of this subsection applies;

(B) being an amount determined by a sliding fee scale based on the family's size and gross monthly income, and also may consider the number of children in care; and

(C) not exceeding the cost of care.

(2) Parents who are one or more of the following are exempt from paying the parent share of cost:

(A) Parents who are participating in Choices;

(B) Parents who are participating in FSE&T services; or

(C) Parents who have children who are receiving protective services child care pursuant to §809.49 and §809.54(c)(1), unless DFPS assesses the parent share of cost.

(3) Teen parents who are not covered under exemptions listed in paragraph (2) of this subsection shall be assessed a parent share of cost. The teen parent's share of cost is based solely on the teen parent's income and size of the teen's family as defined in §809.2(8).

(b) For child care services funded from sources other than those specified in subsection (a) of this section, a Board shall set a parent share of cost policy based on a sliding fee scale. The sliding fee scale may be the same as or different from the provisions contained in subsection (a) of this section.

(c) A Board shall establish a policy regarding reimbursement of providers when parents fail to pay the parent share of cost.

(d) The Board or its child care contractor may review the assessed parent share of cost for possible reduction if there are extenuating circumstances that jeopardize a family's self-sufficiency. The Board or its child care contractor may reduce the assessed parent share of cost if warranted by these circumstances.

(e) If the parent is not covered by an exemption as specified in subsection (a)(2) of this section, then the Board or its child care contractor shall not waive the assessed parent share of cost under any circumstances.

(f) If the parent share of cost, based on family income and family size, is calculated to be zero, then the Board or its child care contractor shall not charge the parent a minimum share of cost amount.

§809.20.Maximum Provider Reimbursement Rates.

(a) Based on local factors, including a market rate survey provided by the Commission, a Board shall establish maximum reimbursement rates for child care subsidies to ensure that the rates provide equal access to child care in the local market and in a manner consistent with state and federal statutes and regulations governing child care.

(b) A Board shall establish enhanced [graduated ] reimbursement rates for:

(1) child care providers participating in integrated school readiness models developed by the State Center; [ and]

(2) Texas Rising Star Providers pursuant to Texas Government Code §2308.315; and[.]

(3) child care providers that obtain Texas School Ready!™ certification pursuant to Texas Education Code §29.161.

(c) The minimum reimbursement rates established under subsection (b) of this section shall be at least five percent greater than the maximum rate established for providers not meeting the requirements of subsection (b) of this section for the same category of care up to, but not to exceed, the provider's published rate.

(d) A Board or its child care contractor shall ensure that providers that [who] are reimbursed for additional staff or equipment needed to assist in the care of a child with disabilities are paid a rate up to 190% of the provider's reimbursement rate for a child of that same age. The higher rate shall take into consideration the estimated cost of the additional staff needed by a child with disabilities. The Board shall ensure that a professional, who is familiar with assessing the needs of children with disabilities, certifies the need for the higher reimbursement rate described in subsection (b) of this section.

(e) The Board shall determine whether to reimburse providers that [who ] offer transportation as long as the combined total of the provider's published rate, plus the transportation rate, is subject to the maximum reimbursement rate established in subsection (a) of this section.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on April 29, 2008.

TRD-200802258

Reagan Miller

Deputy Division Director, Workforce Policy and Service Delivery

Texas Workforce Commission

Earliest possible date of adoption: June 15, 2008

For further information, please call: (512) 475-0829

40 TAC §§809.43, 809.44, 809.46, 809.48, 809.50, 809.51

The rules are proposed under Texas Labor Code §301.0015 and §302.002(d), which provide the Commission with the authority to adopt, amend, or repeal such rules as it deems necessary for the effective administration of Agency services and activities, and the Texas Human Resources Code §44.002, regarding Administrative Rules.

The proposed rules will affect Texas Labor Code, Title 4, particularly Chapters 301 and 302, as well as Texas Government Code, Chapter 2308.

§809.43.Priority for Child Care Services.

(a) A Board shall ensure that child care services are prioritized among the following three priority groups:

(1) The first priority group is assured child care services and includes children of parents eligible for the following:

(A) Choices child care as referenced in §809.45;

(B) Temporary Assistance for Needy Families (TANF) Applicant child care as referenced in §809.46;

(C) FSE&T child care as referenced in §809.47; and

(D) Transitional child care as referenced in §809.48.

(2) The second priority group is served subject to the availability of funds and includes, in the order of priority:

(A) children who need to receive protective services child care as referenced in §809.49;

(B) children of a qualified veteran or qualified spouse as defined in §801.23 of this title;

(C) children of a foster youth as defined in §801.23 of this title;

(D) children of teen parents as defined in §809.2; and

(E) children with disabilities as defined in §809.2.

(3) The third priority group includes any other priority adopted by the Board.

(b) A Board shall not establish a priority group under subsection (a)(3) of this section based on the parent's choice of an individual provider or provider type.

§809.44.Calculating Family Income.

(a) Unless otherwise required by federal or state law, the family income for purposes of determining eligibility and the parent share of cost means the monthly total of the following items for each member of the family (as defined in §809.2(8)):

(1) Total gross earnings. These earnings include wages, salaries, commissions, tips, piece-rate payments, and cash bonuses earned.

(2) Net income from self-employment. Net income includes gross receipts minus business-related expenses from a person's own business, professional enterprise, or partnership, which result in the person's net income. Net income also includes gross receipts minus operating expenses from the operation of a farm.

(3) Pensions, annuities, life insurance, and retirement income. This includes Social Security pensions, veteran's pensions and survivor's benefits and any cash benefit paid to retirees or their survivors by a former employer, or by a union, either directly or through an insurance company. This also includes payments from annuities and life insurance.

(4) Taxable capital gains, dividends, and interest. These earnings include capital gains from the sale of property and earnings from dividends from stock holdings, and interest on savings or bonds.

(5) Rental income. This includes net income from rental of a house, homestead, store, or other property, or rental income from boarders or lodgers.

(6) Public assistance payments. These payments include TANF as authorized under Chapters 31 or 34 of the Texas Human Resources Code, refugee assistance, Social Security Disability Insurance, Supplemental Security Income, and general assistance (such as cash payments from a county or city).

(7) Income from estate and trust funds. These payments include income from estates, trust funds, inheritances, or royalties.

(8) Unemployment compensation. This includes unemployment payments from governmental unemployment insurance agencies or private companies and strike benefits while a person is unemployed or on strike.

(9) Workers' compensation income, death benefit payments and other disability payments. These payments include compensation received periodically from private or public sources for on-the-job injuries.

(10) Spousal maintenance or alimony. This includes any payment made to a spouse or former spouse under a separation or divorce agreement.

(11) Child support. These payments include court-ordered child support, any maintenance or allowance used for current living costs provided by parents to a minor child who is a student, or any informal child support cash payments made by an absent parent for the maintenance of a minor.

(12) Court settlements or judgments. This includes awards for exemplary or punitive damages, noneconomic damages, and compensation for lost wages or profits, if the court settlement or judgment clearly allocates damages among these categories.

(b) Income to the family that is not included in subsection (a) of this section is excluded in determining the total family income. Specifically, family income does not include:

(1) Food stamps;

(2) Monthly monetary allowances provided to or for children of Vietnam veterans born with certain birth defects;

(3) Educational scholarships, grants, and loans;

(4) Earned Income Tax Credit (EITC) and the Advanced EITC;

(5) Individual Development Account (IDA) withdrawals;

(6) Tax refunds;

(7) VISTA and AmeriCorps living allowances and stipends;

(8) Noncash or in-kind benefits received in lieu of wages;

(9) Foster care payments; [and]

(10) Special military pay or allowances, which include subsistence allowances, housing allowances, family separation allowances, or special allowances for duty subject to hostile fire or imminent danger; and[.]

(11) Any income sources specifically excluded by federal law or regulation.

§809.46.Temporary Assistance for Needy Families Applicant Child Care.

(a) A parent is eligible for TANF Applicant child care if the parent:

(1) receives a referral from the Health and Human Services Commission (HHSC) to attend a Workforce Orientation for Applicants (WOA);

(2) locates employment or has increased earnings prior to TANF certification; and

(3) needs child care to accept or retain employment.

(b) To receive TANF Applicant child care, the parent shall be working and not have voluntarily terminated paid employment of at least 25 hours a week within 30 days prior to receiving the referral from HHSC to attend a WOA, unless the voluntary termination was for good cause connected with the parent's work.

(c) Subject to the availability of funds and the continued employment of the parent, TANF Applicant child care shall be provided for up to 12 months or until the family reaches the Board's income limit for eligibility under any provision contained in §809.50 [§§809.50 - 809.52 ], whichever occurs first.

(d) Parents who are employed fewer than 25 hours a week at the time they apply for temporary cash assistance are limited to 90 days of TANF Applicant child care. Applicant child care may be extended to a total of 12 months, inclusive of the 90 days, if before the end of the 90-day period, the applicant increases the hours of employment to a minimum of 25 hours a week.

(e) Subject to the availability of funds, a parent whose time limit for TANF Applicant child care has expired may continue to be eligible for child care services provided the parent and child are otherwise eligible under any provision contained in §809.50 [§§809.50 - 809.52].

§809.48.Transitional Child Care.

(a) A parent is eligible for Transitional child care services if the parent:

(1) has been denied TANF because of increased earnings; or

(2) has been denied temporary cash assistance within 30 days because of expiration of TANF time limits; and

(3) requires child care to work or attend a job training or educational program for a combination of at least 25 hours per week for a single-parent family or 50 hours per week for a two-parent family, or a higher number of hours per week as established by a Board.

(b) Boards may establish an income eligibility limit for Transitional child care that is higher than the eligibility limit for At-Risk child care, pursuant to §809.50 [children in families at risk of becoming dependent on public assistance], provided that the higher income limit does not exceed 85% of the state median income for a family of the same size.

(c) Transitional child care shall be available for:

(1) a period of up to 12 months from the effective date of the TANF denial; or

(2) a period of up to 18 months from the effective date of the TANF denial in the case of a former TANF recipient who was eligible for child caretaker exemptions pursuant to Texas Human Resources Code §31.012(c) and voluntarily participates in the Choices program.

(d) Former TANF recipients who are not employed when TANF expires, including recipients who are engaged in a Choices activity except as provided under subsection (e) of this section, shall receive up to four weeks of Transitional child care in order to allow these individuals to search for work as needed.

(e) Former TANF recipients who are engaged in a Choices activity, are meeting the requirements of Chapter 811 of this title, and are denied TANF because of receipt of child support shall be eligible to receive Transitional child care services until the date on which the individual completes the activity, as defined by the Board.

(f) A Board may allow a reduction to the requirement in subsection (a)(3) of this section if a parent's documented medical disability or need to care for a physically or mentally disabled family member prevents the parent from participating in work, education, or job training activities for the required hours per week.

(g) For purposes of meeting the education requirements stipulated in subsection (a)(3) of this section, the following shall apply:

(1) each credit hour of postsecondary education counts as three hours of education activity per week; and

(2) each credit hour of a condensed postsecondary education course counts as six education activity hours per week.

§809.50.At-Risk Child Care.

(a) A parent is eligible for child care services under this section if:

(1) the family income does not exceed the income limit established by the Board pursuant to §809.41(a)(2)(A); and

(2) child care is required for the parent to work or attend a job training or educational program for a minimum of 25 hours per week for a single-parent family or 50 hours per week for a two-parent family, or a higher number of hours per week as established by the Board.

(b) A Board may allow a reduction to the work, education, or job training activity requirements in subsection (a)(2) of this section if a parent's documented medical disability or need to care for a physically or mentally disabled family member prevents the parent from participating in these activities for the required hours per week.

(c) For purposes of meeting the education requirements stipulated in subsection (a)(2) of this section, the following shall apply:

(1) each credit hour of postsecondary education counts as three hours of education activity per week;

(2) each credit hour of a condensed postsecondary education course counts as six education activity hours per week; and

(3) teen parents attending high school or the equivalent shall be considered as meeting the education requirements in subsection (a)(2) of this section.

(d) When calculating income eligibility for a child with disabilities, a Board shall deduct the cost of the child's ongoing medical expenses from the family income.

(e) Boards may establish a higher income eligibility limit for teen parents than the eligibility limit established pursuant to §809.41(a)(2)(A) provided that the higher income limit does not exceed 85% of the state median income for a family of the same size.

(f) A teen parent's family income is based solely on the teen parent's income and size of the teen's family as defined in §809.2(8).

(g) To assist in the availability of full-day child care as referenced in §809.14(b), a child receiving child care services under the Board's initial eligibility requirements pursuant to §809.41(a)(2)(A) who is enrolled in Head Start, Early Head Start, or public pre-K may remain eligible to continue receiving child care services until the end of the program's enrollment period as long as:

(1) the family's income does not exceed 85% of the state median income for a family of the same size;

(2) child care is required for the parent to work or attend a job training or educational program for a minimum of 25 hours per week for a single-parent family or 50 hours per week for a two-parent family; and

(3) the parents continue to meet the requirements of Subchapter D (regarding Parent Rights and Responsibilities).

§809.51.Child Care during Temporary Interruptions in Work, Education, or Job Training.

(a) If a parent has a temporary cessation of work, education, or job training activities and is unable to meet the requirements described in §809.50(a)(2), child care may be suspended for no more than 90 calendar days from the documented effective date of the cessation of these activities.

(b) If a parent has a documented temporary medical incapacitation and is unable to meet the work, education, or job training requirements described in §809.50(a)(2), the following shall apply:

(1) Child care may be allowed to continue for no more than 30 calendar days from the documented effective date of the temporary medical incapacitation; and

(2) Child care may be suspended for no more than 60 calendar days after the end of the 30-day calendar period following the documented temporary medical incapacitation, as described in subsection (b)(1) of this section.

(c) Upon the parent's return to work, education, or job training activities, a Board is not required to resume child care at the same provider used prior to the documented temporary cessation of these activities or medical incapacitation.

(d) Prior to any suspension of child care as described in this section, a parent must provide documentation from the employer, educational institution, or training provider stating that the parent will be returning to work, school, or job training activities following the temporary cessation of these activities or medical incapacitation.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on April 29, 2008.

TRD-200802259

Reagan Miller

Deputy Division Director, Workforce Policy and Service Delivery

Texas Workforce Commission

Earliest possible date of adoption: June 15, 2008

For further information, please call: (512) 475-0829

40 TAC §§809.50 - 809.52

(Editor's note: The text of the following sections proposed for repeal will not be published. The sections may be examined in the offices of the Texas Workforce Commission or in the Texas Register office, Room 245, James Earl Rudder Building, 1019 Brazos Street, Austin.)

The repeals are proposed under Texas Labor Code §301.0015 and §302.002(d), which provide the Commission with the authority to adopt, amend, or repeal such rules as it deems necessary for the effective administration of Agency services and activities, and the Texas Human Resources Code §44.002, regarding Administrative Rules.

The proposed repeals will affect Texas Labor Code, Title 4, particularly Chapters 301 and 302, as well as Texas Government Code, Chapter 2308.

§809.50.Child Care for Children Living at Low Incomes.

§809.51.Child Care for Children with Disabilities.

§809.52.Child Care for Children of Teen Parents.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on April 29, 2008.

TRD-200802260

Reagan Miller

Deputy Division Director, Workforce Policy and Service Delivery

Texas Workforce Commission

Earliest possible date of adoption: June 15, 2008

For further information, please call: (512) 475-0829

40 TAC §809.74, §809.75

The rules are proposed under Texas Labor Code §301.0015 and §302.002(d), which provide the Commission with the authority to adopt, amend, or repeal such rules as it deems necessary for the effective administration of Agency services and activities, and the Texas Human Resources Code §44.002, regarding Administrative Rules.

The proposed rules will affect Texas Labor Code, Title 4, particularly Chapters 301 and 302, as well as Texas Government Code, Chapter 2308.

§809.74.Parent Appeal Rights.

(a) Unless otherwise stated in this section, a parent may request a hearing pursuant to Chapter 823 of this title, if the parent's eligibility or child's enrollment is denied, delayed, reduced, suspended, or terminated by the Board's child care contractor, Choices caseworker, or FSE&T caseworker.

(b) A parent may have an individual represent him or her during this process.

(c) A parent of a child in protective services may not appeal pursuant to Chapter 823 of this title, but shall follow the procedures established by DFPS.

[(d) If the parent's eligibility or child's enrollment is denied, delayed, reduced, or terminated by a Choices caseworker, the parent may appeal pursuant to Chapter 823 of this title.]

[(e) If the parent's eligibility or child's enrollment is denied, delayed, reduced, or terminated by an FSE&T caseworker, the parent may appeal pursuant to Chapter 823 of this title.]

§809.75. Child Care during Appeal.

(a) For a child currently enrolled in child care, a Board shall ensure that child care services continue during the appeal process until a decision is reached, if the parent requests a hearing.

(b) A Board shall ensure that child care does not continue during the appeal process if the parent's eligibility or child's enrollment is denied, delayed, reduced, suspended, or terminated because of:

(1) excessive absences;

(2) voluntary withdrawal from child care;

(3) change in federal or state laws or regulations that affect the parent's eligibility;

(4) lack of funding because of increases in the number of enrolled children in state and Board priority groups;

(5) a sanctions finding against the parent participating in the Choices program;

(6) voluntary withdrawal of a parent from the Choices program;

(7) nonpayment of parent share of cost [fees]; [ or]

(8) a parent's failure to report, within 10 days of occurrence, any change in the family's circumstances that would have rendered the family ineligible for subsidized child care ; or[.]

(9) a suspension of child care services pursuant to §809.51 (related to Child Care during Temporary Interruptions in Work, Education, or Training).

(c) The cost of providing services during the appeal process is subject to recovery from the parent by the Board, if the appeal decision is rendered against the parent.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on April 29, 2008.

TRD-200802261

Reagan Miller

Deputy Division Director, Workforce Policy and Service Delivery

Texas Workforce Commission

Earliest possible date of adoption: June 15, 2008

For further information, please call: (512) 475-0829

The Texas Workforce Commission (Commission) proposes amendments to the following section of Chapter 815, relating to Unemployment Insurance:

Subchapter B. Benefits, Claims and Appeals, §815.18

The Commission proposes the following new subchapter to Chapter 815 relating to Unemployment Insurance:

Subchapter E. Confidentiality and Disclosure of State Unemployment Compensation Information, §§815.161 - 815.168

PART I. PURPOSE, BACKGROUND, AND AUTHORITY

PART II. EXPLANATION OF INDIVIDUAL PROVISIONS

PART III. IMPACT STATEMENTS

PART IV. COORDINATION ACTIVITIES

PART I. PURPOSE, BACKGROUND, AND AUTHORITY

The purpose of the proposed Chapter 815 rules change is to:

- comply with final rules setting forth the statutory confidentiality and disclosure requirements of Title III of the Social Security Act (SSA) and the Federal Unemployment Tax Act (FUTA) concerning unemployment compensation (UC) information issued by the U.S. Department of Labor (DOL) on September 27, 2006, in 20 Code of Federal Regulations (C.F.R.) Part 603; and

- implement House Bill (HB) 2120 and Senate Bill (SB) 1619, enacted by the 80th Texas Legislature, Regular Session (2007), which address certain federal requirements, as enumerated in 20 C.F.R. Part 603.

The federal rules relating to confidentiality of UC information require state law to:

- contain provisions that are interpreted and applied consistent with federal definitions of "identifying information";

- provide penalties for disclosure of confidential UC information; and

- define "public domain information" to clarify how such information is held in Texas.

By amending Texas Labor Code §301.081 and adding new §301.085, HB 2120 and SB 1619:

- mirror the federal interpretation of identifying information under 20 C.F.R. §603.4;

- make unauthorized disclosure of such information a Class A misdemeanor; and

- establish that UC information is not public information for purposes of Chapter 552, Texas Government Code, thereby making UC information not subject to the Texas Public Information Act.

Federal regulations authorize states to implement specific details and to adopt state law with more stringent confidentiality provisions than those imposed by the final regulations. HB 2120 and SB 1619 direct the Commission to adopt rules regarding confidentiality of UC information.

The federal regulations generally provide that all employment and/or wage information is confidential and must not be disclosed. However, because sharing UC information is necessary for the proper administration of the UC program, disclosure to certain entities has been deemed mandatory. These entities include claimants and employers, the Internal Revenue Service (for purposes of UC tax administration), and U.S. Citizenship and Immigration Services (for purposes of identifying a claimant's immigration status). In addition, federal UC law also requires disclosure of state UC information to certain federal UC and benefits programs. SSA also requires disclosure of specific information to various specified state and federal agencies in administration of the agencies' programs. The confidentiality and disclosure requirements in SSA Title III relating to UC information are conditions for receipt of grants by the states for UC administration. The disclosure requirements in FUTA are conditions required of a state in order for employers in that state to receive credit against the federal unemployment tax under 26 United States Code §3302.

There are certain circumstances under which otherwise confidential UC information can be disclosed, but only if such disclosure is authorized by state law and does not interfere with the efficient administration of the state's UC program. Federal regulations specifically provide that the confidentiality requirement of 20 C.F.R. §603.4 does not apply to public domain information as that term is defined at §603.2(c). The federal regulations allow for disclosure of UC information only if state law provides sufficient protections regarding the payment of costs, safeguards, and data-sharing agreements. For example, provided sufficient protections are in place, states are permitted to disclose UC information:

- to public officials in the performance of their duties;

- to agents or contractors of public officials; or

- on the basis of informed consent.

Notwithstanding the general rule that all UC information is confidential and barred from disclosure, federal regulations make disclosure mandatory to a number of entities--primarily governmental--beyond the obvious claimants and employers, because it is either necessary for the proper administration of the UC program or SSA mandates that certain specified information be disclosed to these other entities. Beyond these mandatory disclosures, states have significant latitude above the federal floor and may have more stringent confidentiality provisions than imposed by federal regulations.

Several factors are key in weighing options related to disclosure of this information. As DOL notes in the regulations' preamble, "Confidentiality is necessary to avoid deterring individuals from claiming benefits or exercising their rights, to encourage employers to provide information necessary for program operations, to avoid interference with the administration of the UC program, and to avoid notoriety for the program if program information were misused."

Historically, the Agency's practices have provided the greatest level of confidentiality to UC information in order to ensure a fair system in which all parties are willing and able to participate. Retaining policies that reflect this conservative approach ensures consistency with federal regulations. Without reasonable and effective confidentiality of this information, a chilling effect may result at all stages of UC proceedings if participants believe the Agency cannot effectively maintain as confidential the often highly personal information divulged. Accordingly, maintaining the status quo retains the guiding principles of federal law, including treating all appeals records as confidential.

Another increasingly important factor in deciding how to treat confidential UC information is the potential for identity theft and the considerable harm (financial and otherwise) the release of such information could cause UC program participants. In deciding what type of UC information to release, the Commission has weighed these benefits and risks, including:

- public access to open administrative hearings and related information;

- chilling effect on individuals and employers exercising appeal rights under UC law;

- staff time and costs necessary to redact the requested records given the broad definition of "identifying information";

- significant risk of inadvertent errors in redaction; and

- potential for identity theft if UC records are released.

In recognition of these factors, and consistent with current practices, the Commission has determined that only UC information considered public domain or otherwise expressly exempted may be released.

Public domain information is generally considered exempt from the UC confidentiality requirements. The final federal rules offer states some flexibility in defining the term public domain information. According to the federal regulations, public domain information includes:

- information about the organization of the state, the state UC Agency, and appellate authorities, including the names and positions of officials and employees;

- information about the state UC law (and applicable federal law), provisions, rules, regulations, and interpretations thereof, including statements of general policy and interpretations of general applicability; and

- any agreement, including interstate arrangements and reciprocal agreements and any agreements with DOL related to the administration of the state UC law.

In the proposed federal rules, the possibility existed that appellate records and decisions could qualify as "statements of general policy" within the definition of public domain information set out in 20 C.F.R. §603.2. The Commission commented on these proposed federal rules, concerned that DOL would interpret these regulations to require a state to treat entire appeals records and decisions as public domain information. Such a practice would be at odds with current policy. The Commission determines certain cases to be of precedential value and includes a digest of each selected case in the Commission Appeals Policy and Precedent Manual. Thereafter, only the de-identified digests of Commission-approved precedents are treated as public domain information, while appeals records and fact-specific decisions are withheld. These digests have traditionally been available to the public and may be accessed on the Agency's Web site at www.texasworkforce.org.

In 20 C.F.R. §603.2, DOL removed appeals records and decisions from the definition of public domain information, establishing that the public does not necessarily have a right of access to appeals records and decisions, and ensuring that some appeals information such as Social Security numbers remains confidential. In fact, DOL noted in its preamble to the final rules that, "States may keep appellate records confidential even though the rule does not require it." As a result, the Commission has opted to deem entire appellate records as confidential and will continue to release de-identified digests of Commission-approved precedents.

This practice is supported by provisions of the Texas Government Code and rulings by the Texas Office of the Attorney General (OAG). Under §552.107(1), Texas Government Code, certain legal matters are considered privileged and thus are not subject to disclosure. The case analyses rendered by Commission appeals attorneys in furtherance of professional legal services to the Commission have been protected from disclosure under §552.107(1). Once OAG makes a decision for a governmental body concerning the disclosure of a specific, clearly delineated category of information, that governmental body need not seek future OAG decisions regarding its ability to withhold such information, provided the elements of law, fact, and circumstances on which the decision was based have not changed in subsequent information requests. Such rulings that a governmental body may rely on are known as "previous determinations." Before Texas enacted the law making UC information privileged--not public--for purposes of the Public Information Act, OAG granted the Agency two previous determinations. Both ruled that a confidential case analysis rendered by Commission appeals attorneys in furtherance of professional legal services to the Commission is an exception to disclosure, pursuant to Texas Government Code §552.107(1).

In these proposed rules, the Commission has chosen to maintain the status quo in Commission operations by:

- using the definition of public domain information set forth in 20 C.F.R. §603.2(c), as interpreted by the Commission and allowing appropriate Agency organization information, Texas UC law, and any Texas UC administration agreements to be released;

- continuing the practice of holding entire appeals records and decisions as confidential and not releasable; and

- continuing the current practice of releasing de-identified Commission-designated precedent case digests as statements of general applicability under the definition of public domain information.

Disclosure of confidential UC information is permissible under certain exceptions if authorized by state law and if such disclosure does not interfere with the efficient administration of the state UC law. Disclosure to individuals and employers of their own confidential UC information--provided it is for UC purposes--is required under 20 C.F.R. §603.6(a). For example, a claimant's UC information can be released to that particular individual; likewise, employer information can be disclosed to that specific employer. The federal regulations also permit disclosure of such information for non-UC purposes under certain specified circumstances. However, DOL makes clear that these disclosures for non-UC purposes must be subject to cost reimbursement, as grant funds may not be used to pay for such disclosure costs. These proposed rules allow claimants or employers access to their own UC information, even if the request is for non-UC purposes, subject to cost reimbursement, unless such access could conflict with the administration of UC such as releasing a confidential informant's name or attorney-client privileged information. The federal regulations also permit states to disclose confidential UC information, including identifying information, to an employer or claimant's agent, upon presentation of a written release from the particular individual or employer. Or, when a written release is impossible or impracticable to obtain, the agent can present such other form of consent as is permitted under state law.

Federal rules treat an elected official performing services for a constituent regarding UC matters as the individual's or employer's agent. DOL reasons that when an elected official is acting in response to a constituent's inquiry about a UC matter, such as that individual's UC claim, the elected official is acting on the individual's behalf and thus is effectively the individual's agent in resolving claim-related issues. But because elected officials may receive requests for assistance that do not specifically authorize the disclosure of confidential UC information--even though such disclosure is necessary for the official to adequately respond to the constituent--DOL revised its final rule to permit the elected official to present reasonable evidence of a request for assistance rather than the "written release." Reasonable evidence of a request for assistance might be a letter from the individual or employer requesting assistance or a written record of a telephone request from the individual or employer. DOL explained that in most cases a request for assistance from a U.S. congressman in reviewing a particular claim includes such reasonable evidence and it is unnecessary to request further evidence.

Attorneys retained in a UC matter to represent an individual or employer are also treated as agents of that individual or employer. Because DOL recognized an attorney has legal and ethical obligations, DOL agreed that an attorney's assertion that he or she has been retained to represent an individual or employer on a UC matter is sufficient to authorize the disclosure of the client's confidential UC information to the attorney.

As proposed herein, the Commission has chosen to treat confidential UC information as releasable to an agent when informed consent is obtained, including the allowable disclosures to:

- elected officials performing constituent services, upon presentation of a written release or reasonable evidence that the individual or employer has authorized such disclosure;

- attorneys retained for purposes related to state UC law, if the attorney asserts that he or she is representing the individual or employer; and

- other, non-attorney agents, such as an individual's representative or an employer service agent, provided the required consent is obtained.

Because of the greater potential threat to employer or individual privacy posed by an entity's collection, storage, maintenance, use, and possible misuse of confidential UC information, DOL believes that additional protections, such as a conditional written release, are necessary for these types of third-party disclosures. The federal rules impose certain requirements upon this category of disclosure, including:

- cost reimbursement;

- safeguard and security requirements;

- written, enforceable agreements;

- imposition of penalties for the misuse of data; and

- maintenance of systems sufficient to allow an audit.

The provisions of HB 2120 and SB 1619 impose criminal penalties for the unauthorized use of a claimant's or employer's identifying information, thus meeting a key element of the federal regulations. The Agency obtains written agreements to ensure the information will be kept confidential. These written agreements include provisions for:

- monitoring contractor usage of UC information (including site visits); and

- obtaining reimbursement of costs.

The Agency exchanges information with numerous contractors. Accordingly, certain threshold standards must be met by all third parties to ensure compliance with federal law. At a minimum, the third party must acknowledge that unauthorized release of the UC information could result in the imposition of criminal penalties. But, given the range of potential risks posed by different contractors, safeguarding the release of confidential information will require additional measures above the basic minimum federal standards. However, the Commission also recognizes the important role the Local Workforce Development Boards (Boards) play in administration of workforce programs. Accordingly, to facilitate Boards' oversight and administration of service delivery and eligibility determinations for workforce services, the Commission proposes to permit the release of otherwise confidential employer and claimant information to Texas workforce system contractors and Board contractors for the administration of workforce programs, as appropriate, pursuant to a written agreement containing the safeguards identified in 20 C.F.R. §603.9 and §603.10.

One effective approach--used in the Agency's current monitoring and safeguard agreements--is to perform an individualized risk assessment. Accordingly, these rules establish general categories and parameters to govern the authorized use of UC information, based upon a risk assessment of disclosure by a particular contractor. Likewise, the Agency will continue to draft individual agreements tailored to address such issues as the specific methods of release, the use of the information, and auditing requirements. Such contracting details are developed on an operational level, but will reflect the guiding principles reflected in these proposed rules.

Contractors of other local, state, or federal public officials may seek access to identifying information. The federal regulations define a public official as "an official, agency, or public entity within the executive branch of federal, state, or local government that has responsibility for administering or enforcing a law, or an elected official in the federal, state, or local government." As long as the use of this information is related to the administration of governmental or legal functions, the Commission will permit access to any contractor of any other local, state, or federal public official. These activities may include research related to the law administered by the public official. However, prior to releasing identifying information to any contractor of any public official, the Agency must:

(1) enter into a written agreement with the public official on whose behalf the agent or contractor will obtain information that holds the public official responsible for ensuring that the agent or contractor complies with the safeguards in 20 C.F.R. §603.9, and provides for termination if the state or state UC agency determines that the entity does not follow the safeguards in the agreement;

(2) ensure that appropriate monitoring, based on a risk assessment analysis that includes performing on-site inspections of the agency, entity, or contractor, is in place to ensure that the requirements of the state's law and the agreement to maintain confidentiality in contract required by 20 C.F.R. §603.10 are met;

(3) recoup the costs required to set up the agreement, provide the information, monitor the use, and investigate breaches of the agreement; and

(4) devote staff time to the above activities within the current full-time equivalent cap of the Agency.

The Commission proposes to permit release of otherwise confidential employer and claimant information to nonpublic contractors of federal, state, and local entities, but only on an individualized basis. Under the federal regulations, the Commission must ensure that all costs are recovered up front. Accordingly, these rules propose to allow a risk assessment analysis of each contractor's business practices and uses of confidential UC information, to ensure that where release is appropriate, contracts are tailored to each contractor.

Pursuant to the newly adopted federal regulations, an employer's or individual's agent may access the client's UC information to the same extent as the client, provided the agent first secures written authorization from the employer or individual the agent represents. However, the standards for release are quite different if the requesting entity is a non-agent third party. A non-agent third party lacks written authorization from the employer or individual and typically seeks access to confidential information for business or research purposes.

DOL's final rules recognize that additional protections are needed for releases to non-agent third parties because of the greater potential threat to employer or individual privacy posed by the entity's collection, storage, maintenance, use, and possible misuse of confidential UC information. In particular, DOL stressed that the purpose specified in the release must be limited to providing a service or benefit to the individual signing the release or to carrying out the administration or evaluation of a public program to which the release pertains; if the release does not meet these requirements, the state may not disclose confidential UC information under this exception to disclosure.

As noted above, HB 2120 and SB 1619 satisfy the federal criminal penalty requirements for misuse of UC data--under Texas law, unauthorized release of this information is a Class A misdemeanor. However, the Agency must ensure that requestors maintain sufficient systems to allow for audit of disclosed information and to allow the Agency to monitor the use, storage, and destruction of the information. Historically, the Agency has not provided such access because previously state law did not impose any criminal penalties for unauthorized use or release of UC information, and the cost and staff time necessary to ensure the non-agent complied with federal requirements was prohibitive. Although releases to non-agent third parties are subject to the same four safeguards applicable to government contractors, such releases are not statutorily mandated. Accordingly, the Commission has chosen to continue its current practice of allowing non-agent third parties access to confidential UC records only on a strict case-by-case basis, rather than on an ongoing or, in particular, electronic online basis. In each instance, as a comprehensive written agreement is developed, the costs of monitoring compliance and the risks of improper use must be fully evaluated and built into the agreement, as well as recovered in full up front.

As previously noted, 20 C.F.R. §603.6(a) requires disclosure to individuals and employers of their own confidential UC information, provided such is for UC purposes. Currently, disclosure of confidential UC information to parties is separately required under the terms of the Narcisco Gutierrez, et al. vs. TWC (Gutierrez) settlement. On August 13, 1998, a full and final settlement was implemented between the parties. In part, the settlement requires the Commission to provide "relevant separation and timeliness information in the Commission's custody, as a matter of routine, to both parties (the claimant and the employer) with the Notice of Hearing it currently sends out." Thus, prior to the hearing, the Agency must mail to both parties all fact-finding statements relating to the work separation and the appeal. Moreover, the Gutierrez agreement requires the mutual exchange of otherwise confidential information in hearings. The terms of the agreement are contractual, binding upon the Commission, and do not expire.

Proposing rules to explicitly allow the sharing of confidential identifying UC information addresses a unique challenge concerning release of certain information where the claimant has been a victim of family violence or stalking. Section 207.046(a)(2), Texas Labor Code, provides that a claimant is not disqualified from receiving UC if that individual left the workplace to avoid family violence or stalking, provided certain evidentiary standards are satisfied. Section 207.046(b), Texas Labor Code, provides, "except as provided by law," such evidence may not be disclosed to any person without the affected claimant's consent.

Arguably, §207.046(b), Texas Labor Code, could be read to prohibit the Agency from meeting Gutierrez requirements because the Agency likely lacks the claimant's consent to provide relevant separation information to both parties in some hearings. Conversely, failure to provide pertinent information to both parties prior to the hearing could hamper administrative process rights if both parties were not fully apprised of the issues prehearing, possibly resulting in inadequately prepared participants. Specifically allowing the sharing of this information with all hearing parties by rule satisfies Gutierrez without violating §207.046(b). Establishing this practice in rule will ensure the disclosure of UC records to a hearing party, meet the terms of the Gutierrez settlement agreement, and avoid any legal challenges related to the release of this information in such circumstances.

PART II. EXPLANATION OF INDIVIDUAL PROVISIONS

(Note: Minor editorial changes are made that do not change the meaning of the rules and, therefore, are not discussed in the Explanation of Individual Provisions.)

SUBCHAPTER B. BENEFITS, CLAIMS AND APPEALS

The Commission proposes the following amendments to Subchapter B:

§815.18. General Rules for Both Appeal Stages

Section 815.18(2) is reorganized as §815.18(2)(A).

New §815.18(2)(B) states that the Agency shall provide copies of the relevant separation and timeliness information in its custody to both parties with the Notice of Hearing, including:

(i) all information received from the parties in response to, or in protest of, a claim for unemployment insurance;

(ii) all fact-finding statements relating to the work separation; and

(iii) the appeal from the determination of the work separation.

SUBCHAPTER E. CONFIDENTIALITY AND DISCLOSURE OF STATE UNEMPLOYMENT COMPENSATION INFORMATION

The Commission proposes new Subchapter E, as follows:

§815.161. Scope and Purpose

Section 815.161(a) states that the purpose of the subchapter is to implement the federal regulations, 20 C.F.R. Part 603, and state law, Texas Labor Code, Chapter 301, Subchapter F, regarding the confidentiality, custody, use, preservation, and disclosure of unemployment compensation information.

Section 815.161(b) explains that this subchapter is limited to the confidentiality requirements in federal and state laws and regulations specifically regarding unemployment information. The section further states that additional limitations on the release, custody, use, preservation, and disclosure of information maintained in unemployment insurance records may be imposed by other laws and regulations.

Section 815.161(c) sets out that no right or obligation of the Agency, party to a claim, employer, or third party to invoke limitations or confidentiality requirements based on such separate laws or regulations is waived or limited by this subchapter. Additionally, this subchapter does not address any right or obligation a party to an unemployment compensation claim may have to redisclose unemployment insurance information regarding his or her own claim or unemployment insurance tax records obtained lawfully from the Agency.

§815.162. Definitions

Section 815.162 sets forth the definitions for terms used throughout Subchapter E of Chapter 815.

Section 815.162(1) defines "confidential unemployment compensation information" as unemployment compensation information in the records of the Agency, which includes identifying information regarding any individual or past or present employer or employing unit--including any information that foreseeably could be combined with other publicly available information to reveal identifying information regarding the individual, employer, or employing unit.

Section 815.162(2) defines "informed consent release" as a written grant of authorization that meets the requirements of §815.166 of this subchapter made by an individual or employer to a third party to allow access to confidential unemployment compensation information. When a written release is impossible or impracticable to obtain, the third party may present such other form of consent as is permitted by the Agency.

Section 815.162(3) defines "party" as the employer or claimant to whom the confidential unemployment compensation information relates, including a base period employer that has appealed a notice of chargeback regarding a specific claim. This term does not include any past or present employer or claimant who is not the subject of the particular claim, except an employer that appealed a notice of chargeback relating to an employee in the chargeback period.

Section 815.162(4) defines "public official" as:

(A) an official, agency, or public entity within the executive branch of federal, state, or local government that has responsibility for administering or enforcing a law; or

(B) an elected official in the federal, state, or local government.

Section 815.162(5) defines "unemployment compensation information" as information in the records of the Agency that pertains to the administration of the Texas Unemployment Compensation Act, including any information collected, received, developed, or maintained in the administration of unemployment compensation benefits, the unemployment compensation tax system or the unemployment compensation benefit and tax appeal system.

§815.163. Disclosure of Confidential Unemployment Compensation Information

Section 815.163(a) states that the Agency shall not disclose confidential unemployment compensation information except in compliance with federal law, state law, and this subchapter--but notwithstanding any other provision of this chapter.

Section 815.163(b) explains that the Agency shall not disclose confidential unemployment compensation information if such disclosure interferes with the efficient administration of the state unemployment compensation law. In evaluating interference with efficient administration, the Agency may consider factors including, but not limited to, the burdensomeness of the request and whether the request places an employer's or individual's privacy at unacceptable risk.

§815.164. Mandatory and Permissive Disclosures

Section 815.164(a) clarifies that the Agency shall disclose confidential unemployment compensation information if disclosure is necessary for the proper administration of the unemployment compensation program.

Section 815.164(b) explains that disclosure necessary for the proper administration of the unemployment compensation program includes, but is not limited to, disclosure required under 20 C.F.R. §603.6, as well as disclosure to claimants, employers, and third parties, as necessary, for purposes of unemployment administration and adjudication processes under this chapter.

§815.165. Exceptions to Confidentiality Requirements

Section 815.165(a) allows the Agency to disclose public domain information. For purposes of this section, public domain information is defined to include directory information about the organization of the state, the Commission, and appellate authorities, as well as the names and positions of officials and employees; information about the state unemployment compensation law (and applicable federal law), provisions, rules, regulations, and interpretations, including statements of general policy and interpretations of general applicability; and any agreement relating to the administration of the state unemployment compensation law. Commission-designated precedent case digests from which all individually identifiable information has been removed also constitute public domain information. But public domain information does not include information historically excepted from disclosure under the Public Information Act, Chapter 552, Texas Government Code, including, but not limited to, attorney/client privileged information; interagency memoranda containing advice, opinion, or recommendation to policy makers or decision makers; or other items historically excepted from disclosure under the Public Information Act.

Section 815.165(b) states that the Agency may disclose confidential unemployment compensation information about an individual or employer to that individual or employer, respectively, but in no event does this restrict the Agency from withholding information historically excepted from disclosure including, but not limited to, confidential informant or attorney-client privileged information, or tax audit techniques.

Section 815.165(c) provides that the Agency may disclose confidential unemployment compensation information, so long as the requestor provides a written release demonstrating informed consent signed by the individual or the employer whose records are requested, and if the written release demonstrated informed consent.

Section 815.165(d)(1) - (5) states that the Agency may disclose confidential unemployment compensation information, based on informed consent, to the following:

(1) An agent who acts for or in the place of an individual or an employer by the authority of that individual or employer if the agent presents a written release signed by the party to be represented. If a written release is impossible or impracticable to obtain, the Agency may accept other documentation sufficient to establish informed consent.

(2) An elected official performing constituent services, so long as the official presents reasonable evidence of authorization to obtain the information, such as a letter from the individual or employer requesting the elected official's assistance or a written record of a telephone request from the individual or employer that the individual or employer has authorized such disclosure.

(3) A licensed attorney retained for purposes unrelated to the state's unemployment compensation law; if the attorney provides a written statement declaring that he or she has been retained to represent the individual or employer, the requirements of a written release are met. An attorney retained for purposes related to the state's unemployment compensation law may assert that he or she is representing the individual or employer, and such assertion need not be in writing.

(4) A third party that is not acting as an agent, but only if that entity provides the Agency with a copy of an informed consent release consistent with the requirements of §815.166 of this subchapter.

(5) A third party seeking confidential information on an ongoing basis, only if that entity submits an informed consent release consistent with the requirements of §815.166. This requirement applies even if the third party is an agent seeking information on an ongoing basis.

Section 815.165(e) provides that the Agency may disclose confidential unemployment compensation information to a public official for use in the performance of his or her official duties, including the administration or enforcement of law or execution of the official responsibilities of a federal, state, or local elected official. Administration of law includes research related to the law administered by the public official. Execution of official responsibilities does not include solicitation of contributions or expenditures to or on behalf of a candidate for public or political office or a political party.

Section 815.165(f) states that the Agency may disclose confidential unemployment compensation information to a public official's agent or contractor if such disclosure is permissible under 20 C.F.R. §603.5(e) and only after evaluating the following factors:

(1) the potential threat to the employer's or individual's privacy posed by an entity's collection, storage, maintenance, use, and possible misuse of confidential unemployment compensation information;

(2) the costs associated with such disclosure;

(3) the agent or contractor's ability to comply with the requirements in 20 C.F.R. §603.9 regarding safeguards and security of confidential unemployment compensation information;

(4) the costs of enforcement, including investigation and assessment of penalties for misuse of data;

(5) the costs to develop, monitor, and maintain systems sufficient to allow audit of the information;

(6) the personnel, travel, and equipment expenses associated with periodic monitoring and on-site audits required by 20 C.F.R. §603.10; and

(7) whether the disclosure is for purposes of solicitation of contributions or expenditures to or on behalf of a candidate for public or political office or a political party.

Section 815.165(g) explains that the Agency may disclose confidential unemployment compensation information to parties for purposes of claims adjudications, hearings and appeals, consistent with this chapter.

Section 815.165(h) provides that the Agency may disclose confidential unemployment compensation information to a federal official for purposes of UC program oversight and audits, including disclosures under 20 C.F.R. Parts 29 and 601, as well as under 20 C.F.R. Parts 96 and 97.

Section 815.165(i) clarifies that the confidentiality requirements of this chapter do not apply to information collected exclusively for statistical purposes under a cooperative agreement with the Bureau of Labor Statistics (BLS). Further, this chapter's requirements do not restrict or impose any condition on the transfer of any other information to BLS under an agreement, or the disclosure or use of such information by BLS.

§815.166. Informed Consent Release

Section 815.166(1) - (5) allows the Agency to disclose confidential unemployment compensation information upon submission of an informed consent release as set forth in this section. An informed consent release is a written release that must be signed by the individual or employer, and must specify the following:

(1) The information to be disclosed;

(2) That the information will be obtained through access of state government files;

(3) The purpose or purposes for which the information is sought;

(4) That the information obtained under the release will be used only for that purpose or purposes;

(5) The individuals or entities that may receive the information; and

(6) A purpose limited to assisting the individual with obtaining a service or benefit, or meeting a federal or state law requirement for the administration or evaluation of a public program to which the release pertains.

§815.167. Subpoenas and Court Orders

Section 815.167(1) - (2) states that the Agency may disclose confidential unemployment compensation information in compliance with:

(1) a court order specifically requiring such disclosure; or

(2) a subpoena issued by a local, state, or federal official, other than a court clerk, provided the official possesses legal authority to obtain such information by subpoena under state or federal law.

§815.168. Charges for Disclosure of Unemployment Compensation Information

Section 815.168(a) requires the Agency to recoup the cost of providing unemployment compensation information consistent with 20 C.F.R. §603.8. It allows the Agency to charge actual charges and to set standardized charges for items routinely requested.

Section 815.168(b) states that the Agency may only release unemployment compensation information for non-unemployment compensation purposes to the following individuals if the unemployment compensation program is reimbursed and there is a written, enforceable confidentiality agreement:

(1) third-party requestors;

(2) public officials; and

(3) contractors of public officials, provided the public officials remain liable for the actions of the contractor.

PART III. IMPACT STATEMENTS

Randy Townsend, Chief Financial Officer, has determined that for each year of the first five years the rules will be in effect, the following statements will apply:

There are no additional estimated costs to the state and local governments expected as a result of enforcing or administering the rules.

There are no estimated reductions in costs to the state and to local governments as a result of enforcing or administering the rules.

There are no estimated losses or increases in revenue to the state or to local governments as a result of enforcing or administering the rules.

There are no foreseeable implications relating to costs or revenue of the state or local governments as a result of enforcing or administering the rules.

There are no anticipated economic costs to persons required to comply with the rules.

There is no anticipated adverse economic impact on small or microbusinesses as a result of enforcing or administering the rules.

Economic Impact Statement and Regulatory Flexibility Analysis

The Agency has determined that the proposed rules will not have an adverse economic impact on small businesses as these proposed rules place no new requirements on small businesses.

Our reasoning is strongly influenced by the requirements of 20 C.F.R. Part 603 (Federal Register, September 27, 2006), which provides in §603.8 that federal unemployment compensation grant funds may not be used to pay any of the costs of making any disclosure of unemployment compensation information, that the costs to a state unemployment compensation agency of processing and handling a request for disclosure of information must be calculated in accordance with the cost principles and administrative requirements of 29 C.F.R. Part 97 and OMB Circular No. A-87, and that the costs to a state unemployment compensation agency of making a disclosure of unemployment compensation information must be paid by the recipient of the information or another source paying on behalf of the recipient. We do not consider the requirement to recover the costs of making the disclosure of unemployment compensation information covered by these rules either a new requirement or a requirement of these rules, themselves, nor do we consider the requirement that the disclosure of this unemployment compensation information must be paid by the recipient of the information (or another source paying on behalf of the recipient) to be either a new requirement or one created by these rules.

Mark Hughes, Director of Labor Market Information, has determined that there is no significant negative impact upon employment conditions in the state as a result of the rules.

LaSha Lenzy, Director of the Unemployment Insurance Division, has determined that for each year of the first five years the rules are in effect, the public benefit anticipated as a result of enforcing the proposed amendments will be to ensure compliance with federal and state requirements.

The Agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the Agency's legal authority to adopt.

PART IV. COORDINATION ACTIVITIES

In the development of these rules for publication and public comment, the Commission sought the involvement of each of Texas' 28 Boards. The Commission provided the policy concept to each of the Boards for consideration and review. During the rulemaking process, the Commission considered all information gathered in order to develop rules that provide clear and concise direction to all parties involved.

Comments on the proposed rules may be submitted to TWC Policy Comments, Workforce Policy and Service Delivery, attn: Workforce Editing, 101 East 15th Street, Room 440T, Austin, Texas 78778; faxed to (512) 475-3577; or e-mailed to TWCPolicyComments@twc.state.tx.us. The Commission must receive comments postmarked no later than 30 days from the date this proposal is published in the Texas Register.

Subchapter B. BENEFITS, CLAIMS AND APPEALS

40 TAC §815.18

The amendment is proposed under Texas Labor Code §301.0015 and §302.002(d), which provide the Commission with the authority to adopt, amend, or repeal such rules as it deems necessary for the effective administration of Agency services and activities. Further, these rules are proposed under Texas Labor Code §301.085(b), which requires that, consistent with federal law, the Commission shall adopt and enforce reasonable rules governing the confidentiality, custody, use, preservation, and disclosure of unemployment compensation information. The rules must include safeguards to protect the confidentiality of identifying information regarding any individual or any past or present employer or employing unit contained in unemployment compensation information, including any information that foreseeably could be combined with other publicly available information to reveal identifying information regarding the individual, employer, or employing unit, as applicable.

The proposed amendment affects Texas Labor Code, Title IV.

§815.18.General Rules for Both Appeal Stages.

This section shall be applicable to appeals both to the appeal tribunal and to the Commission.

(1) Issuance of subpoenas.

(A) Subpoenas to compel the attendance of witnesses and the production of records for any hearing of an appeal may be issued at the direction of the Commission or its designee or an appeal tribunal. A subpoena may be issued either at the request of a party or on the motion of the Commission or its designee or the appeal tribunal. The party requesting a subpoena shall state the nature of the information desired, including names of any witnesses and the records that the requestor feels are necessary for the proper presentation of the case. The request shall be granted only to the extent the records or the testimony of the requested witnesses appears to be relevant to the issues on appeal.

(B) A witness subpoenaed to appear before an appeal tribunal, the Commission or its designee, or a court may be paid a fee and mileage for the appearance. The fee shall be $20 per day, and for miles necessarily traveled to and returning from a hearing, the rate per mile shall be at the rate provided for state employees in the State Appropriations [Appropriation] Act, or as otherwise required by law. The fee as provided in this section and the mileage shall be paid from the unemployment compensation administration fund upon proper certification of the appeal tribunal, the Commission or its designee, or the court, and upon certification of the witness that the fees and mileage are just, true, and unpaid.

(2) Provision of [Request for] Agency records [by a party].

(A) Upon the request of a party to a proceeding, the Agency shall provide copies of all records pertaining to that proceeding, except for records subject to privileges under state or federal law or regulation. Other Agency records shall be produced only if the party specifies the exact information desired, and the necessity of the records to allow the party to properly present its claim; the production of records shall be subject to confidentiality limitations and privileges under state or federal law or regulation.

(B) The Agency shall provide copies of the relevant separation and timeliness information in the Agency's custody to both parties with the Notice of Hearing, including:

(i) all information received from the parties in response to, or in protest of, a claim for unemployment insurance;

(ii) all fact-finding statements relating to the work separation; and

(iii) the appeal from the determination of the work separation.

(3) Representation before appeal tribunal and the Commission.

(A) An individual who is a party to a proceeding may appear before an appeal tribunal or the Commission or its designee.

(B) A partnership may be represented by any of its members or a duly authorized representative. Any corporation or association may be represented by an officer or a duly authorized representative.

(C) Any party may appear by an attorney at law or by any other individual who is qualified to represent others.

(D) The Commission or its designee or an appeal tribunal may refuse to allow any individual to represent others in any proceeding before it if the individual acts or speaks in an unethical manner or if the individual intentionally and repeatedly fails to observe the provisions of the Act or the rules of the Agency.

(4) Removing a party from a proceeding. The Commission or its designee or an appeal tribunal may, after an appropriate warning, expel from any proceeding any individuals, whether or not a party, who fail [fails] to comport themselves in a manner befitting the proceeding. The Commission or its designee or an appeal tribunal may then continue with the proceeding, hear evidence, and render a decision on the appeal.

(5) Appeal Information. An appeal tribunal decision sent to a party of interest, or the Commission's decision sent to a party, will include or be accompanied by a notice specifying the appeal rights of the parties, the procedure for filing further appeal, and the time period within which an appeal shall be filed.

(6) Retention of Decisions. Copies of decisions of the Commission and of appeal tribunals shall be kept in accordance with the approved records retention schedule.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on April 29, 2008.

TRD-200802262

Reagan Miller

Deputy Division Director, Workforce Policy and Service Delivery

Texas Workforce Commission

Earliest possible date of adoption: June 15, 2008

For further information, please call: (512) 475-0829

40 TAC §§815.161 - 815.168

The new rules are proposed under Texas Labor Code §301.0015 and §302.002(d), which provide the Commission with the authority to adopt, amend, or repeal such rules as it deems necessary for the effective administration of Agency services and activities. Further, these rules are proposed under Texas Labor Code §301.085(b), which requires that, consistent with federal law, the Commission shall adopt and enforce reasonable rules governing the confidentiality, custody, use, preservation, and disclosure of unemployment compensation information. The rules must include safeguards to protect the confidentiality of identifying information regarding any individual or any past or present employer or employing unit contained in unemployment compensation information, including any information that foreseeably could be combined with other publicly available information to reveal identifying information regarding the individual, employer, or employing unit, as applicable.

The proposed new rules affect Texas Labor Code, Title IV.

§815.161.Scope and Purpose.

(a) The purpose of this subchapter is to implement the federal regulations, 20 C.F.R. Part 603, and state law, Texas Labor Code, Chapter 301, Subchapter F, regarding the confidentiality, custody, use, preservation, and disclosure of unemployment compensation information.

(b) This subchapter is limited to the confidentiality requirements in federal and state laws and regulations specifically regarding unemployment information. Other laws and regulations may impose additional limitations on the release, custody, use, preservation, and disclosure of information maintained in unemployment insurance records.

(c) This subchapter does not:

(1) limit or waive any right or obligation of the Agency, party to a claim, employer, or third party to invoke limitations or confidentiality requirements based on such separate laws or regulations; or

(2) address any right or obligation a party to an unemployment compensation claim may have to redisclose unemployment insurance information regarding his or her own claim or unemployment insurance tax records obtained lawfully from the Agency.

§815.162.Definitions.

The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise.

(1) Confidential unemployment compensation information--Unemployment compensation information in Agency records, including identifying information regarding any individual or past or present employer or employing unit, or any information that foreseeably could be combined with other publicly available information to reveal identifying information regarding the individual, employer, or employing unit.

(2) Informed consent release--A written grant of authorization that meets the requirements of §815.166 of this subchapter made by an individual or employer to a third party to allow access to confidential unemployment compensation information. When a written release is impossible or impracticable to obtain, the third party may present such other form of consent as is permitted by the Agency.

(3) Party--The employer or claimant to whom the confidential unemployment compensation information relates. A party includes a base period employer that has appealed a notice of chargeback regarding a specific claim. A party does not include any past or present employer or claimant who is not the subject of the particular claim, except an employer that appealed a notice of chargeback relating to an employee in the chargeback period.

(4) Public official--

(A) An official, agency, or public entity within the executive branch of federal, state, or local government with responsibility for administering or enforcing a law; or

(B) An elected official in the federal, state, or local government.

(5) Unemployment compensation information--Information in the Agency's records that pertains to the administration of the Texas Unemployment Compensation Act, including any information collected, received, developed, or maintained in the administration of unemployment compensation benefits, the unemployment compensation tax system, or the unemployment compensation benefit and tax appeal system.

§815.163.Disclosure of Confidential Unemployment Compensation Information.

(a) The Agency shall not disclose confidential unemployment compensation information except in compliance with federal law, state law, and this subchapter.

(b) Notwithstanding any other provision of this chapter, confidential unemployment compensation information shall not be disclosed if such disclosure interferes with the efficient administration of the state unemployment compensation law. In evaluating interference with efficient administration, the Agency may consider factors including, but not limited to, the burdensomeness of the request and whether the request places an employer's or individual's privacy at unacceptable risk.

§815.164.Mandatory and Permissive Disclosures.

(a) The Agency shall disclose confidential unemployment compensation information if disclosure is necessary for the proper administration of the unemployment compensation program.

(b) Disclosure necessary for the proper administration of the unemployment compensation program includes, but is not limited to, disclosure required under 20 C.F.R. §603.6 and disclosure to claimants, employers, and third parties, as necessary, for purposes of unemployment administration and adjudication processes under this chapter.

§815.165.Exceptions to Confidentiality Requirements.

(a) The Agency may disclose public domain information. For purposes of this section, public domain information includes directory information about the organization of the state, the Commission, and appellate authorities, as well as the names and positions of officials and employees; information about the state unemployment compensation law (and applicable federal law), provisions, rules, regulations, and interpretations, including statements of general policy and interpretations of general applicability; and any agreement relating to the administration of the state unemployment compensation law. Commission-designated precedent case digests from which all individually identifiable information has been removed constitute public domain information. Public domain information does not include information historically excepted from disclosure under the Public Information Act, Chapter 552, Texas Government Code, including, but not limited to, attorney/client privileged information; interagency memoranda containing advice, opinion, or recommendation to policy makers or decision makers; or other items historically excepted from disclosure under the Public Information Act.

(b) The Agency may disclose confidential unemployment compensation information about an individual or employer to that individual or employer, respectively , but in no event does this restrict the Agency from withholding information historically excepted from disclosure, including, but not limited to, confidential informant or attorney-client privileged information, or tax audit techniques.

(c) The Agency may disclose confidential unemployment compensation information if the requestor provides a written release signed by the individual or the employer whose records are requested, and if the written release demonstrates informed consent.

(d) The Agency may disclose confidential unemployment compensation information, based on informed consent, to the following:

(1) An agent acting for or in the place of an individual or an employer by the authority of that individual or employer if the agent presents a written release signed by the party to be represented. If a written release is impossible or impracticable to obtain, the Agency may accept other documentation sufficient to establish informed consent.

(2) An elected official performing constituent services provided the official presents reasonable evidence of authorization to obtain the information, such as a letter from the individual or employer requesting the elected official's assistance or a written record of a telephone request from the individual or employer that the individual or employer has authorized such disclosure.

(3) A licensed attorney retained for purposes unrelated to the state's unemployment compensation law; if the attorney provides a written statement declaring that he or she has been retained to represent the individual or employer, the requirements of a written release will have been met. An attorney retained for purposes related to the state's unemployment compensation law may assert that he or she is representing the individual or employer, and such assertion need not be in writing.

(4) A third party that is not acting as an agent, only if that entity provides the Commission with a copy of an informed consent release consistent with the requirements of §815.166 of this subchapter.

(5) A third party seeking confidential information on an ongoing basis, only if that entity submits an informed consent release consistent with the requirements of §815.166 of this subchapter. This requirement applies even if the third party is an agent seeking information on an ongoing basis.

(e) The Agency may disclose confidential unemployment compensation information to a public official for use in the performance of his or her official duties, including the administration or enforcement of law or execution of the official responsibilities of a federal, state, or local elected official. Administration of law includes research related to the law administered by the public official. Execution of official responsibilities does not include solicitation of contributions or expenditures to or on behalf of a candidate for public or political office or a political party.

(f) The Agency may disclose confidential unemployment compensation information to a public official's agent or contractor if such disclosure is permissible under 20 C.F.R. §603.5(e) and only after evaluating the following factors:

(1) The potential threat to the employer's or individual's privacy posed by an entity's collection, storage, maintenance, use, and possible misuse of confidential unemployment compensation information;

(2) The costs associated with such disclosure;

(3) The agent or contractor's ability to comply with the requirements in 20 C.F.R. §603.9 regarding safeguards and security of confidential unemployment compensation information;

(4) The costs of enforcement, including investigation and assessment of penalties for misuse of data;

(5) The costs to develop, monitor, and maintain systems sufficient to allow audit of the information;

(6) The personnel, travel, and equipment expenses associated with periodic monitoring and on-site audits required by 20 C.F.R. §603.10; and

(7) Whether the disclosure is for purposes of solicitation of contributions or expenditures to or on behalf of a candidate for public or political office or a political party.

(g) The Agency may disclose confidential unemployment compensation information to parties for purposes of claims adjudications, hearings, and appeals, consistent with this chapter.

(h) The Agency may disclose confidential unemployment compensation information to a federal official for purposes of UC program oversight and audits, including disclosures under 20 C.F.R. Parts 29 and 601, as well as under C.F.R. Parts 96 and 97.

(i) The confidentiality requirements of this chapter do not apply to information collected exclusively for statistical purposes under a cooperative agreement with the Bureau of Labor Statistics (BLS). Further, this chapter's requirements do not restrict or impose any condition on the transfer of any other information to BLS under an agreement, or the disclosure or use of such information by BLS.

§815.166.Informed Consent Release.

The Agency may disclose confidential unemployment compensation information upon submission of an informed consent release as set forth in this section. An informed consent release is a written release that must be signed by the individual or employer, and must specify the following:

(1) The information to be disclosed;

(2) That the information will be obtained through access of state government files;

(3) The purpose or purposes for which the information is sought;

(4) That the information obtained under the release will be used only for that purpose;

(5) The individuals or entities that may receive the information; and

(6) A purpose limited to assisting the individual with obtaining a service or benefit, or meeting a federal or state law requirement for the administration or evaluation of a public program to which the release pertains.

§815.167.Subpoenas and Court Orders.

The Agency may disclose confidential unemployment compensation information in compliance with:

(1) a court order specifically requiring such disclosure; or

(2) a subpoena issued by a local, state, or federal official, other than a court clerk, provided the official possesses legal authority to obtain such information by subpoena under state or federal law.

§815.168.Charges for Disclosure of Unemployment Compensation Information.

(a) The Agency shall recoup the cost of providing unemployment compensation information consistent with 20 C.F.R. §603.8. The Agency may charge actual charges and may set standardized charges for items routinely requested.

(b) The Agency may only release unemployment compensation information for non-unemployment compensation purposes to the following individuals if the unemployment compensation program is reimbursed and there is a written, enforceable confidentiality agreement:

(1) Third-party requestors;

(2) Public officials; and

(3) Contractors of a public official provided the public official remains liable for the actions of the contractor.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State on April 29, 2008.

TRD-200802263

Reagan Miller

Deputy Division Director, Workforce Policy and Service Delivery

Texas Workforce Commission

Earliest possible date of adoption: June 15, 2008

For further information, please call: (512) 475-0829