DOL Warns States on Unemployment Benefits for Strikers

On January 8, 2026, the U.S. Department of Labor’s Employment and Training Administration, Office of Unemployment Insurance, issued a memorandum with Q&As to help states maintain federal conformity and compliance when state law allows unemployment insurance (UI) benefits for workers who are unemployed due to a strike.

The memorandum is guidance (not a statute or regulation) and does not itself change state UI laws, but it explains the federal conditions states must apply to avoid conformity/compliance consequences.

This guidance is directed to state unemployment insurance administrators in states that allow unemployment benefits during strikes (commonly cited as New Jersey, New York, Oregon, and Washington) and should be treated as effective as of January 8, 2026, the date it was issued.

What Employers Need to Do

• Monitor UI Guidance in Strike-benefit States and Update Playbooks: An employer operating in a state that permits UI benefits during strikes should monitor state agency implementation because the federal memo emphasizes weekly monitoring of able/available/active work search and disallows blanket exemptions.

• Coordinate Return-to-Work Communications with a “Refusal Of Work” Lens: If an employer considers requesting that employees return to work during an ongoing labor dispute, the employer should anticipate that a refusal may prompt a state “refusal of work” adjudication and that the state may evaluate FUTA labor-standards factors in that analysis.

• Prepare HR and Labor Relations Teams for “Work Search” Verification Issues: Where state UI benefits are available to strikers, the federal memo emphasizes that claimants must demonstrate genuine work-search activity and cannot rely solely on union contact unless narrow hiring-hall criteria apply. Employers should ensure internal teams understand these distinctions when responding to agency inquiries or employee questions.

• Track “Strike vs. Lockout” Characterizations Under State Law: Because eligibility can vary depending on whether a work stoppage is characterized as a strike or a lockout under applicable state law, employers should incorporate that distinction into labor-dispute planning and communications.

Overview

1) Paying UI to Strikers is Not Automatically Prohibited Under Federal Law: The memorandum explains that there is not a per se federal prohibition on paying UI to striking workers and points to FUTA § 3304(a)(5) as the primary federal provision addressing labor disputes in this context.

2) The “Big Three” Eligibility Requirements Must Still Apply (No Blanket Carve-outs): The memorandum states that when a state pays UI to striking workers, claimants must still be:

• Able to Work
• Available for Work
• Actively Seeking Work

The memorandum ties these requirements to Social Security Act § 303(a)(12) and states that a state may not exempt individuals from them while remaining consistent with federal UI law.

3) Work Search Must be Real and Monitored Weekly: The memorandum emphasizes that states must require at least some evidence of work-search activity for each week benefits are claimed and must monitor weekly whether claimants meet the able/available/actively-seeking requirements.

It also directs states to verify that the job search is genuine and that the claimant has not withdrawn from the labor market, including where activities such as picketing occur to the exclusion of seeking other work.

4) “Staying in Touch with the Union” is Not Enough: The memorandum states that remaining in contact with the union alone does not satisfy the active work search requirement (unless the limited hiring-hall criteria apply).

5) Narrow Hiring-hall Pathway (Limited Criteria): The memorandum describes a narrow approach under which work search may be satisfied where all apply:

1. The worker is a member of a union with a hiring hall,
2. The worker is eligible for referrals (e.g., member in good standing), and
3. The worker complies with union requirements where the hiring hall is the only permissible way to seek work under the union contract or membership rules.

6) Return-to-Work Requests can Trigger a “Refusal of Work” Analysis: The memorandum explains that if an employer asks employees to return before the labor dispute is resolved and the employee refuses, the state may need to evaluate eligibility under state refusal-of-work rules, but it is fact-specific.

7) Blanket Exemptions for Strikers Create Federal Conformity Problems: The memorandum states that if a state law exempts striking workers from job search requirements, that would place the state in violation of federal unemployment compensation requirements.

8) Consequences DOL Flags for States (and the “Ripple” for Employers): The memorandum warns that a lack of substantial compliance can result in loss of Title III Social Security Act administrative grants.

It also notes that state conformity matters because employers’ FUTA tax credits depend on the state UI program’s continued compliance with federal requirements.

Why This Matters

UI Eligibility Rules for Strikers Can Affect Strike and Lockout Strategy: The memorandum highlights that state agencies may evaluate work-search activity and refusal-of-work issues weekly, which can influence how strike-related communications and return-to-work requests are handled.

Federal Conformity Can Affect Employer Tax Outcomes: The memorandum links state conformity to employer FUTA tax credits and warns states about the risk of losing federal administrative grants, which can create broader uncertainty in state UI administration.

Operational Compliance Expectations May Shift Quickly: For example, Oregon’s unemployment agency states that striking workers must complete at least one work-seeking activity weekly and notes that requirements “may change” due to ongoing discussions with the Department of Labor.

Key Risks for Employers

• Even if a state pays unemployment benefits to striking workers, the state must still apply the federal able-to-work, available-for-work, and active work-search rules—or risk federal penalties that can also affect employers’ federal unemployment tax credits.

• UI Administration Uncertainty and Program Risk: The federal memo warns states about potential loss of Title III administrative grants and underscores the importance of federal conformity for employer FUTA tax credits.

• Fact-specific Adjudications Tied to Labor Disputes: Return-to-work requests and refusal decisions can trigger fact-intensive determinations under state law, informed by FUTA labor standards.

Source Reference

• EO 14390 – Combating Cybercrime, Fraud, And Predatory Schemes Against American Citizens (March 6, 2026)

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