All posts by Wayne Rottger
As federal and state legislative sessions unfold, employers find themselves navigating a dynamic landscape of potential changes to unemployment taxes. This year, like many before it, has seen a flurry of activity with over 100 bills in various stages of consideration since January 1, 2024. Addressing Trust Balances and Solvency A recurring theme in these bills is the allocation of funds for state unemployment trust balances and programs. Across 10 states, legislation is under discussion proposing appropriations ranging from $2 million to nearly $90 million for bolstering respective unemployment insurance programs. This is particularly crucial for states with precarious trust fund balances that may not withstand economic downturns. According to the 2023 State Unemployment Insurance Solvency Report by the United States Department of Labor, only 16 states met the recommended minimum solvency standard by the end of 2023, unchanged from the previous year. Prior to the pandemic, this number stood at 31 states highlighting the significant impact of the pandemic. The risk of insolvency looms large for states ill-prepared to handle increased claims during recessions. Facing potential insolvency, states may resort to requesting advances via Title XII loans from the federal government. However, this solution comes with the obligation of repayment as evidenced by the experience of two states and one territory mentioned on the 2023 Federal Form 940, all of which lost a portion of their FUTA credit due to outstanding loans. Other Hot Topics: Labor Disputes, Weekly Benefit Amounts and Fraud The payment of benefits during labor disputes is another pertinent topic in recent legislative agendas. With labor disputes increasingly making headlines and disrupting economies, legislators in 10 states are deliberating on the current disqualification of unemployment benefits for claimants involved in such disputes. If proposed legislation passes, employees involved in labor disputes would be eligible to receive unemployment benefits. While this may not directly impact all employers, it could significantly affect tax account funds for those embroiled in labor conflicts. Legislators are also addressing claimant weekly benefit amounts and work search requirements to ensure accountability and prevent misuse of benefits. This includes initiatives to verify claimants' efforts in seeking employment such as following through with interviews and maintaining communication with prospective employers. Data integrity and fraud prevention remain key areas of focus. With fraud reaching alarming levels during the pandemic, states are taking proactive measures, aided by grants from the American Rescue Plan Act, to modernize their unemployment platforms and enhance detection capabilities. Several bills passed both state-level houses and senates and are eligible to be sent to respective governors for signature. Below are those states along with a synopsis and link to the bill: Colorado – HB 1189 This measure appropriates $76,527,050 for program costs related to unemployment insurance. New Mexico – HB 2 This measure appropriates $13,846,600 for unemployment insurance to administer an array of demand-driven workforce development services to prepare New Mexicans to meet the needs of businesses. These measures would more-so benefit claimants and their ability to file claims quickly and efficiently. Utah – HB 170 This measure addresses multiple issues: Claimant would be disqualified from receiving unemployment benefits if they fail to appear without good cause for a scheduled interview for suitable work. Claimant’s failure to accept within two days after the date the offer was sent, an offer of suitable work from an employer or the employment office as failure to accept suitable work. Develop and maintain a website for employers to access information and report potential fraud related to unemployment insurance claims. Virginia – SB 542 This measure makes an amendment to the VA Unemployment Compensation Act regarding labor dispute disqualification. It provides that a lockout by an employer will not constitute a labor dispute and locked out employees, who are otherwise eligible, will receive unemployment benefits unless one of the following occurs: Recognized or certified collective bargaining representative of the locked out employees refuses to meet with the employer under reasonable conditions to discuss issues giving rise to the lockout. There is a final adjudication under the federal National Labor Relations ACT (NLRA) that such representative refused to bargain with the employer in good faith. The lockout is the direct result of such representative’s violation of an existing collective bargaining agreement. Effective July 1 after enactment. In the ever-evolving landscape of unemployment law, staying abreast of statutory changes is essential for managing costs effectively. Stay tuned for more insights on this and other pertinent topics.
Changes to unemployment tax and benefits in Connecticut may affect employers as the state seeks to address its trust fund solvency.
Changes were made in 2023 to Form IA 12.3, a separation notice New York employers must provide their employees upon termination.
Experian Employer Services works extensively with states and has seen how technology has changed and improved this industry. Sometimes that is a positive change such as the State Information Data Exchange System (SIDES).
Read on to learn more about ways UI can affect your business and what actions to take to achieve compliance and safeguard your experience rating.
With the UAW on strike in three states, it's crucial to review how strike-related unemployment affects unemployment benefits for employers and employees.
18 states and the Virgin Islands are set to receive funding to modernize their state unemployment insurance systems. Here's how that affects employers.
Connecticut passed Public Acts 21-200 & 22-67 to help with repayment of a Title XII advance and shore up its unemployment trust fund.
Employers and third-party agents operating in Colorado have a new portal to manage their unemployment accounts.
NASWA has several recommendations for employers to maintain compliance while managing unemployment claims related to Maui wildfires.
Improve your understanding of unemployment insurance tax rates to responsibly control the costs associated with this payroll tax.
Unemployment insurance (UI) is a type of insurance that provides money to individuals on a weekly basis when they lose their job and meet certain eligibility requirements. Those who voluntarily quit or were fired for a just cause are usually not eligible for UI. However, someone separated from their job due to a lack of available work and at no fault of their own usually qualifies for unemployment benefits.Each state administers its own UI program, despite it being federal law. Unemployment benefits are primarily paid out by state governments and funded by specific payroll taxes collected for that purpose. States are free to determine the level of employer tax, the benefit level and their duration, as well as the eligibility criteria. While the U.S. Department of Labor oversees the program and ensures compliance within each state, employers need to understand different aspects of the UI program as well as the requirements for employer liability and employee eligibility. This overview will cover Washington State UI to help employers with local operations better understand the requirements. Washington State UI Tax Employers in Washington state are required to pay state unemployment taxes, administered by the Employee Security Department (ESD). Unlike the Federal Unemployment Tax Act (FUTA) demanding employers to pay unemployment taxes for employees who earned more than $1,500, employers need to pay Washington state UI tax for an employee regardless of their wages. The Engrossed Substitute Senate Bill (ESSB) 5061 was passed in February 2021 to help provide unemployment tax relief for businesses through 2025. The Washington state UI tax rate varies from company to company. The ESD usually sends out a tax rate notice in December for the following year and there are two factors that go into assigning the Washington state UI tax rate: Experience-based tax based on employers’ experience of paying unemployment benefits over the past four years; andThe social-cost tax covering the unemployment tax that cannot be recovered from a specific corporation, such as a company that went out of business. In 2022, the average Washington state UI tax rate was 1.36%. The experience tax rate has been capped at 5.4% while social tax is currently capped at 0.75% and will increase annually until it reaches 0.90% in 2025. Employers must pay Washington state UI tax on the first $62,500 of each employee’s wages, in addition to FUTA taxes. When it comes to filing and paying quarterly Washington state UI tax, employers can file online through the ESD portal, Employer Account Management Services (EAMS), SecureAccess Washington (SAW) account, or by mailing one of their original forms. Paper forms must be obtained through the ESD and cannot be copied due to a unique link used to scan information. To pay online, employers may choose to use EAMS or the ESD ePay portal. They can also pay by mail by requesting a payment voucher from the ESD. Washington state UI tax payments and reports are due every quarter by the last day of the month following the last day of each quarter. In other words: April 30;July 31;October 31; and January 31. Payments can be postmarked by the following business day if the due date falls on a weekend or holiday. Washington State UI Employee Eligibility In addition to determining employer liability for Washington state UI, ESD handles unemployment benefits and establishes eligibility on a case-by-case basis. Applicants must meet the following criteria to qualify for unemployment benefits: They must have lost employment through no fault of their own;They must have worked at least 680 hours during the base period or the first 12 months of the 15 months prior to filing a claim;They must be unemployed or partially employed and earning less than their weekly unemployment insurance benefits; andThey must be able, available and actively seeking work. To determine if workers are eligible for unemployment benefits ESD also examines the reason why they are unemployed or not working full time. As part of this process, ESD considers if applicants: Were laid off or discharged;Quit their job;Were discharged from the military;Are involved in a strike or labor dispute;Are on a leave of absence; orAre still working. Finally, ESD examines applicants’ availability for work for the weeks they claim. Workers cannot apply for unemployment benefits in Washington or file weekly claims if they did not work in this state during the past 18 months. The only exceptions are if they were in the military or worked for the federal government. Meeting UI Tax Requirements in Different States Many people mistakenly believe that unemployment benefits come from a fund paid into by employees, like Social Security or Medicare. However, employers almost entirely fund unemployment. Only three states, Alaska, New Jersey and Pennsylvania, assess unemployment taxes on employees, and it is a small portion of the overall cost. Each state has its own financing method and its own calculation to determine the tax rate employers pay, making the calculation of their organization’s unemployment tax rate a puzzle. This is especially true if an organization operates in multiple states with multiple tax finance methods. Given that higher tax rates have a long-term impact on employers, it is necessary to establish proactive measures to keep unemployment costs low. In addition to smart and prudent hiring, careful documentation, specific, actionable feedback given to employees and contesting unemployment claims, employers need to understand both federal and state requirements, including Washington state UI. To simplify this process, employers can rely on automated unemployment claims software and simplify UI claims management. As a result, they can reduce administrative burden, stay compliant with the necessary regulations and optimize state unemployment insurance tax savings.
Learn about effective ways to manage your unemployment insurance cost, improve employee retention and upgrade your human resource practices.
Learn how unemployment insurance affects employers across the country and what you can do to avoid UI overpayments and minimize costs.
States are notifying employers of new unemployment tax rates for 2023. Learn how this may affect your taxes, and steps you can take to reduce your rate.
Learn about different aspects of Pennsylvania unemployment compensation to stay compliant, and control UI costs in a more effective way.
This guide to UI employer liability and employee eligibility can help you reduce your Ohio unemployment employer tax risk and maintain compliance.
Learn more about UI employer liability and employee eligibility in Illinois to stay compliant with both state and federal regulations and reduce unnecessary costs.