Conformity Requirements: Merit System Requirements
Background
Title III of the Social Security Act (SSA) sets forth the provisions required in state laws in order for the Secretary of Labor to certify the state for grants for the administration of the state UC law. One of the requirements for certification is that the state have "methods of administration" that include a merit system. Some positions may be exempted from merit system coverage depending on whether the exempted positions are primarily policy making as opposed to primarily operational in scope.
Federal Law
Section 303(a)(1), SSA, provides that the Secretary may make no certification for payment to any state unless state law provides, as a method of administration, for "methods relating to the establishment and maintenance of personnel standards on a merit basis…"
Applicable standards are set out at 5 CFR 900.603, and require systems of personnel administration consistent with the following merit principles:
- Recruiting, selecting, and advancing employees on the basis of their relative ability, knowledge, and skills, including open consideration of qualified applicants for initial appointments.
- Providing equitable and adequate compensation.
- Training employees, as needed, to assure high quality performance.
- Retaining employees on the basis of the adequacy of their performance, correcting inadequate performance, and separating employees whose inadequate performance cannot be corrected.
- Assuring fair treatment of applicants and employees in all aspects of personnel administration without regard to political affiliation, race, color, national origin, sex, religious creed, age, or handicap, and with proper regard for their privacy and constitutional rights as citizens. This fair treatment principle includes compliance with federal equal employment opportunity and nondiscrimination laws.
- Assuring that employees are protected against coercion for partisan political purposes and are prohibited from using their official authority for the purpose of interfering with or affecting the result of an election or a nomination for office.
Authority for determining a violation of the merit system standards was transferred to the Office of Personnel Management (OPM) in 1971.
Frequently Asked Questions
1. Must all state UC positions be merit staffed?
No. The criterion to determine which positions are or are not required to be merit staffed is dependent on the type of position. States must first determine whether the position is primarily policy making as opposed to primarily operational, or whether the function is inherently governmental as opposed to commercial. Positions which are primarily policymaking may be exempted from the merit system. However, any position which involves the determination of whether or not a claimant will be paid, or which involves determining an employer's liability for contributions, must be merit staffed. In addition, all positions which involve hearing first level appeals must also be merit staffed.
2. May the state UC agency contract out administrative functions of the agency?
The state may contract out some, but not all, administrative functions. The merit system requirement in §303(a)(1) would prohibit contracting out "inherently governmental" functions. "Inherently governmental" functions are those that are "so intimately related to the public interest as to mandate performance by Government employees." The Department uses the definition of "inherently governmental functions" that applies to contracting out Federal functions when determining whether contracting out administrative functions is permitted. This definition is found in Office of Management and Budget (OMB) Circular A-76. (See UIPL 12-01 for a more detailed discussion.)
References
20 CFR Part 900.603 - requires system of personnel administration consistent with merit principles.
UIPL 12-01. - Contracting Out of Administrative Functions
OMB Circular A-76 (Revised May 29, 2003)