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Legislative Memo

BILL:

S.1624(Maziarz, et al./ A.3626(John)

  Support

SUBJECT:

U.C. Charges to Employers

 

DATE:

April 23, 2007

 

S.1624/A.3626 would amend subparagraph (2) of paragraph (e) of subdivision one of section 581 of the Labor Law, to provide that the separating (last) employer of a person who has filed a valid original claim for benefits, and whom would normally be charged 100% of the claimant's benefits for the first seven weeks of the claim, may apply to the Department of Labor to have benefit charges recalculated if the employer can demonstrate that he/she paid the claimant wages in an amount totalling under six weeks of benefits. If the employer so demonstrates, the Department of Labor would reduce the seven weeks of separating employer charges to the number of weeks which best matches what the separating employer had paid the claimant in compensation. The remainder of the first seven weeks of charges would be allocated among all base period employers on a proportional basis -- as is done with the eighth through twenty-sixth week charges.

Unemployment Compensation benefits are fully paid for by employers as a whole. There is no government subsidy nor employee contribution. The initial step in the process is to charge the benefits back to the employer accounts of those employers that had employed the claimant. Recognizing that a claimant must meet two criteria to establish a valid claim [namely, (1) a proper separation from employment and (2) a significant attachment to the workforce (work history)], the Labor Law charges the first seven weeks of benefit checks to the employer that provided the proper separation from employment (the separating employer) and the next nineteen weeks of benefit checks to the employers that provided the claimant's significant attachment to the workforce by employing the claimant in the claimant's base year of employment.

As with all formulae that apportion cost, the UC charging formula works well on balance; for example, often the separating employer who terminated the claimant's employment -- and thus provided half of the claimant's eligibility criteria -- did not employ the claimant during the claimant's base year (generally transpiring some four to sixteen months before the date of the claimant's termination by the separating employer). Thus, absent charging the first seven weeks of benefits to the separating employer, the separating employer would not be charged at all notwithstanding that the separating employer was responsible for providing one-half the claimant's UC eligibility.

Proponents of the immediate legislation note that blanket application of seven week charging to separating employers can result in UC charges to some separating employers higher than the total wages paid by the separating employer. As previously stated, if the seven week rule were simply abandoned in these instances, then the separating employer would be charged not at all despite providing half of the claimant's eligibility; moreover, the entire cost of the claimant's current benefits would fall solely on the shoulders of prior employers -- some of whom have not been involved with the claimant for well over a year.

S.1624/A.3626 provides a reasonable alternative that further evens out the solely employer-borne cost of Unemployment Compensation among employers that did in fact employ the claimant, while not legislating on the extremes.

Accordingly, The Business Council of New York State, Inc. requests the passage and enactment into law of Senate bill 1624 and Assembly bill 3626.