Recent changes to Unemployment Insurance affect employers who pay wages to employees. This reform was necessary because the Unemployment Insurance Trust Fund is insolvent. The Trust Fund holds the money that pays for weekly benefits. The state is forced to borrow from the federal government when contributions paid by employers are insufficient to pay benefits to workers. To cover increased costs during the recession, New York, like many other states, borrowed from the federal government. At the beginning of 2013, New York owed $3.5 billion. By law, employers are responsible for paying back this money, with interest, to the federal government. Charges by the federal government are billed to employers at a flat rate through higher FUTA rates and interest assessments. Without reform, the Trust Fund would have remained insolvent, unable to weather changes in economic conditions. As a result, high and unpredictable federal and state costs for employers would have continued.
As a result of the reform, it is anticipated that employers will be able to pay off the $3.5 billion debt to the federal government by 2016 - two years earlier than planned - reducing interest payments by nearly $200 million and saving employers about $400 million statewide. Reform restructures the Unemployment Insurance system to make it self-correcting and sustainable. As the risk of borrowing to pay benefits decreases and the Trust Fund returns to health, employers' contributions will decrease. New fraud detection and prevention measures will help combat Unemployment Insurance fraud. Reform will ensure that employers are not charged for a former employee's claim when the loss of employment was the employee's fault (for example, a voluntary quit or due to misconduct). Reform will require claimants to look for work more aggressively and thereby return to work quickly.
Reform Measures that Begin January 1, 2014:
Wage Base. Employers pay Unemployment Insurance contributions on each employee's earnings up to a certain threshold called the wage base. The wage base will be adjusted on January 1 of each year as follows:
2014 - $10,300 2021 - $11,800
2015 - $10,500 2022 - $12,000
2016 - $10,700 2023 - $12,300
2017 - $10,900 2024 - $12,500
2018 - $11,100 2025 - $12,800
2019 - $11,400 2026 - $13,000
2020 - $11,600
After 2026, the wage base will be adjusted annually on January 1st to 16 percent of the state's average annual wage.
Contribution Rate Schedules. Reform eliminates the six lowest contribution rates for employers. As the Trust Fund balance increases, contribution rates for all employers will decrease.
Requalification Standard. Claimants will have to earn 10 times their benefit rate in order to re-qualify for benefits after exhausting benefits or being disqualified for misconduct, a voluntary quit without good cause, or declining a job offer.
Dismissal or Severance Pay. If a claimant receives dismissal or severance pay that is greater than the maximum benefit rate, he or she will not be able to collect benefits.
Pension Payments. If a claimant is collecting a pension from an employer that is chargeable on the claim and that employer contributed to the pension, the claimant will not be able to collect benefits.
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