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2024 Unemployment Tax and Benefit Changes in Connecticut

February 12, 2024 by Wayne Rottger

The Connecticut Department of Labor made several changes effective in 2024 which may have an impact on employers and claimants in the state. The purpose for the changes is to address Connecticut’s Unemployment Trust Fund solvency following the COVID-19 pandemic. In January 2019, the unemployment rate in Connecticut was a mere 3.7%. By June 2020, the unemployment rate had soared to 9.8% due to the pandemic.

As of January 1, 2020, the trust fund balance was at $706,020,217 according to a report by the U.S. Department of Labor, Office of Unemployment Insurance, Division of Fiscal and Actuarial Services from February 2020. This report also provides a score on how well funded the balance is should a recession take place. On this same report, Connecticut’s score was below where it needed to be if a recession occurred. Considering the effect of the pandemic on employment was worse than any recession ever, the fund balance, like many states, was decimated.

To continue paying eligible workers who filed a claim for benefits, the Connecticut Department of Labor had to request an advance authorization via a Title XII loan. The loan had to be repaid, which fell squarely on the shoulders of employers who pay taxes to support the unemployment insurance program in every state.

The changes made due to Connecticut Public Acts 21-200 & 22-67 are anticipated to fill the gap in the trust fund so that future recessions will not have the same impact. There were changes made to tax issues as well as benefits issues.

The tax changes are as follows:

  • The taxable wage base increased from $15,000 to $25,000 and is subsequently indexed annually due to inflation. Every employer in the state must pay unemployment taxes on each employee’s earnings up to the taxable wage base (TWB). Since Connecticut increased its TWB by $10,000, this means employers are paying taxes on an additional $10,000 of earnings per employee.
    • To help offset the impact of the TWB increase, Connecticut reduced factors that make up the rate for the years 2024 through 2027.
  • There were changes made to the state’s minimum and maximum tax rates.
    • The minimum rate changed from 0.5% to 0.1%
    • The maximum rate changed from 5.4% to 10%
  • Some of the factors that make up the rate calculation were also changed.
    • The maximum fund solvency tax rate is reduced to 1% from 1.4%
    • The benefit ratio adjustment factor was also changed so that it has the possibility of a decrease based on certain factors.

The benefit changes are as follows:

  • Benefits paid to claimants through the voluntary Shared Work Program during high unemployment shall not be charged to experience rated base period employers.
  • Severance pay received by claimants will be disqualifying income for the period of the severance.
  • Vacation pay received by claimants at the time of dismissal will not be disqualifying income, however, if it is received during a shutdown period, it will be disqualifying income for the period received.
  • The minimum weekly benefit amount and minimum based period earnings are increasing but include factors that could potentially return them to what they are today.
  • Each day of absence without either good cause or notice to the employer constitutes a separate instance of willful misconduct which could potentially be disqualifying for the claimant.
  • The maximum benefit rate will be frozen from October 2024 through October 2028.

This communication was meant to make employers aware of changes that may impact business. As we learn of other legislation, we will keep you informed.

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