President Obama's American Recovery and Reinvestment Act ("ARRA") includes up to $550 million for states struggling with depleted unemployment insurance funds. However, the Act contains conditions that could permanently change eligibility rules for benefits.

In order to qualify for stimulus funds, states will have to adopt two of four measures intended to expand benefits to persons who may not currently qualify. These measures include covering persons seeking part-time work, persons leaving jobs due to domestic violence, family care, military, or spouse relocation issues, coverage for long-term unemployed persons, and dependent allowances for unemployed persons with children.

For employers, the extension of benefits to part-time workers may have the most impact. Only about half of all states provide benefits to part-time workers, and many of those laws would have to be modified to meet ARRA's standards. North and South Carolina generally exclude benefits for persons seeking part-time work.

The new law does not define part-time employment, or set an hours threshold. ARRA does not state whether this definition extends to seasonal or event employees. Instead, the Secretary of Labor is charged with issuing administrative regulations that would define this term. DOL may issue interim regulations that will result in state legislative changes before employers have the opportunity to provide notice and comment.

A number of governors, including Gov. Sanford of South Carolina, have stated their intent to reject the stimulus funds relating to unemployment insurance.  Gov. Stanford takes the position that the underlying legislative changes will require new and expensive unemployment benefits long after the stimulus funds have been exhausted.

Interested employer should monitor their states' legislative responses to these new requirements.