Senate outlines changes to unemployment insurance rates, system

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BOSTON (STATE HOUSE) – Rates paid by Massachusetts employers to fund unemployment benefits would be essentially stabilized over four years under a new Senate proposal, with employers who conduct more layoffs seeing an increase and other employers seeing a drop in unemployment taxes.

The Senate plans to take up an unemployment insurance reform bill Thursday, legislating on a host of topics that affect people out of work and employers who finance the program.

“The Unemployment Insurance system in Massachusetts is not sensitive enough to employers with very poor records or very good records, and it does not recognize the unique patterns of our seasonal workforce,” Senate President Therese Murray said in a statement. “The current system serves as a considerable burden to our businesses and it is time for change. This bill will alleviate costs for employers, provide predictability to their budgets and foster an environment where jobs can grow and be created.”

The bill (S 2001) adjusts an experience rating table, allowing “stable” employers to pay lower rates, and requiring “chronic users of the unemployment system” to pay more, said Sen. Dan Wolf, the Senate chair of the Committee on Labor and Workforce Development. He said there is now a wider range of payments that employers can owe.

Under the new rates, the most stable employers would pay $153 per employee per year, while the worst-rated companies would pay $2,337 per employee annually.

“We’ve been calling for this kind of reform for the last several years, so I’m glad that we’re finally get around to taking up a bill,” said Senate Minority Leader Bruce Tarr. He said, “One of the most critical parts of this bill is going to be the table, the rate table, and whether or not it truly penalizes high employee turnover and rewards retention or not, and we’re still looking at that.”

The bill would freeze the unemployment insurance rates this year, an action business has been clamoring for, as the Associated Industries of Massachusetts warned in early January that inaction would cause the taxes due at the end of the first quarter to go up by 33 percent.

The legislation freezes rates in the years 2015-2017 at a new rate schedule, which Wolf said would essentially stabilize the rates for the next four years.

“For a good number of years we have been freezing the rate every year,” said Wolf, a Cape Cod Democrat. He said, “We believed that there were structural problems in the schedule.”

AIM spokesman Christopher Geehern said the business lobby is “very pleased with the immediate rate freeze proposal” and is studying the rest of the proposal, which has raised a “couple of concerns.”

The House and Senate have taken different tacks toward making changes to unemployment insurance, with the Senate keeping such changes out of a bill (S 1925) that raises the minimum wage to $11 per hour by 2016. At the time of the bill’s passage in November, Murray promised unemployment insurance would be taken up in New Year.

Speaker Robert DeLeo said in his biennial speech to members last week that the minimum wage would be raised and unemployment insurance would be reformed. House leaders have not yet detailed plans for either issue.

“How it will play out, I’m not sure. A lot of that will depend on the relationship between the branches, and the discussion will shortly ensue,” Tarr told the News Service.

Wolf said the taxable wage based will increase under the bill from $14,000 to $21,000 while the rates are lowered, and he said the new method will keep unemployment insurance funded at a healthy level.

“In effect, it’s revenue neutral in that we’ll collect the same amount in aggregate,” Wolf said. The changes to the rating table go into effect Jan. 1, 2015.

Along with rate changes, the Senate bill will close a “loophole” where owners of seasonal businesses have been able to collect unemployment in the months the business is closed, Wolf said.

“From what I’ve seen in the bill, there are some positive things regarding eligibility and regarding making sure that people don’t game the system,” said Tarr.

The bill also requires public contractors to ensure they do not owe back unemployment insurance payments, and it provides whistleblower protection for employees who testify about employers defrauding the system. Amendments are due Wednesday at 2 p.m.

Copyright 2014 State House News Service

 

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