Workers' Compensation Committee Update
Staff contact: Lev Ginsburg
July 25, 2013
2013 Unemployment Insurance Trust Fund Interest Assessment Surcharge Announced
New York employers are subject to an interest assessment surcharge. Each employer's surcharge amount is calculated using the wages subject to contributions for the current payroll year and multiplying those wages by the IAS rate of .15%. The maximum amount that employers will be assessed is $12.75 per employee. The announcement can be found at http://labor.ny.gov/ui/employerinfo/interest-assessment-surcharge.shtm
In an attempt to balance the competing goals of repaying the federal UI loans, adopting cost-savings reforms and increasing the state's maximum weekly benefit, this Spring, in the FY 2014 budget, New York adopted major reforms to the State's unemployment insurance system. Since New York's employers are already re-paying this debt through automatic increases in their federal taxes, the Business Council supported these measures, which will reduce overall business costs, and return the State's UI fund to long-term solvency.
UI taxes are “experience-rated.” An employer's UI tax is based on its own UI account balance (basically, benefits collected by former employees divided by the state UI taxes paid by the employer) and by the overall balance in the state's UI fund. Currently, UI taxes imposed on New York employers range from 0.9% for employers with best experience rating to a high of 8.9%. These rates are applied to the first $8,500 of each employee's annual pay (the taxable wage base). About one-third of all New York employers currently pay the 0.9% rate. Right now, the worst-rated employers in New York are paying $756 per job per year in state UI taxes, while the best-rated employers are paying $76.
To generate additional UI tax payments necessary to expedite repayment of federal borrowing, and bring the state fund into long-term solvency, the reform increased the taxable wage base to $10,300 in 2014, and to $13,000 by 2026. It also eliminated the six lowest tax brackets in the state's UI tax table, raising the tax rate for the best experienced-rated employers to 1.5%.
As cost-savings measures, the bill would increase the earnings required to qualify for UI benefits to 221 times the minimum wage. Benefits are now based on a claimant's two highest quarters of earnings in their base period, rather than the single highest quarter as previously in law. A claimant whose high calendar quarter is $4000 or less but greater than $3575 shall have a weekly benefit amount of one twenty-sixth of such high calendar quarter. The Department of Labor is developing regulations requiring a claimant to make systematic and sustained efforts to find work and setting standards for the proof of work search efforts, subject to random audit.
The law increased the maximum and minimum weekly benefits for claimants on a graduated scale. From October, 2014 through October 2018, the maximum benefit incrementally rises from $405 to $450. From October, 2019 through October, 2026, the maximum benefit incrementally increases from 36 percent of the average weekly wage to 50 percent. To avoid a return to federal borrowing, the statute provides that maximum benefits would not increase in any year when private sector jobs decrease in the first six months, or if the fund does not have sufficient resources to pay for scheduled benefit increases.