Committee hears wide-ranging debate on Kansas UI modernization bill; KDOL raises implementation concerns

The Committee on Commerce, Labor and Economic Development opened a joint hearing on House Bill 2764, the Kansas UI Modernization and Conformity Act of 2026, with Philip Hayes presenting a technical overview and multiple stakeholders offering support and opposition. Hayes said the bill is structural and administrative, does not expand eligibility or benefit duration, and does not create new employer surcharges or tax groups. He described four core objectives: protect federal conformity, establish statutory guardrails, provide a lawful framework for employer-funded supplemental unemployment benefit plans (sub plans), and modernize more than 50 statutory sections for clarity and electronic administration.

Proponents argued the bill restores statutory clarity after a 2025 budget proviso that Hayes said had applied temporary unemployment rules unevenly, removed work-search requirements in some cases, and produced an estimated $10,000,000 in additional UI taxes in 2026 affecting roughly 60,000 employers. Hayes and William Wilkes of the Kansas Chamber said the measure protects trust-fund solvency, preserves employers’ federal tax credits, and reaffirms that substantive UI policy should be made in statute rather than by temporary budget language. Small-business testifier Huah Riley Jr. said the bill restores fairness for stable employers who faced rate-group changes after last year’s proviso.

Hayes gave particular attention to supplemental unemployment (sub) plans, which he described as voluntarily employer-funded supplemental payments that federal guidance treats as benefits rather than wages. Under the bill, the Kansas Secretary of Labor would evaluate written sub plans for federal compliance, plan filings would be required, and the bill would sequence benefit exhaustion so that sub payments can continue without improperly converting temporary unemployment into extended benefits. Committee members discussed examples, including a 75 percent employer sub-pay illustration Hayes used to explain mechanics.

Kansas Department of Labor Secretary Amber Schultz testified in opposition to the bill "as written," saying the 258-page draft revises or amends more than 50 statutes and contains vague or contradictory language that could affect determinations and appeals, impose unrealistic deadlines, require additional state funding, necessitate agency retraining, and risk federal conformity. Schultz said KDOL was not consulted on the bill text until late in the process and that her agency would provide a list of specific concerns for the committee’s review.

Labor-side witness Jake Miller told the committee he believed a prior compromise existed and said the printed bill differs from that compromise; he criticized the drafting process and argued the bill did not fully address how to "future-proof" temporary unemployment exemptions for all affected employers. Members of the committee said they expect amendments and technical work before the bill moves forward.

No formal committee vote on HB 2764 occurred during the hearing. The committee closed the HB 2764 hearing after oral proponents and opponents and proceeded to consider other bills.

What happens next: Committee members said they would work proposed amendments over the weekend and requested a list of KDOL’s concerns. The committee plans continued discussion and potential amendment before any final vote.