Restaurant Law Blog

Thursday, October 24, 2013

Your Unemployment Insurance Rates Are About to Increase

Due to the recession, New York State, like many other states, was forced to borrow from the federal government to sufficiently fund unemployment benefits for eligible recipients. Employers must now repay, with interest, all federal monies borrowed. The federal government will collect this money from employers through higher Federal Unemployment Tax Act (“FUTA” – which employers already contribute to) rates and interest assessments.  For these reasons, unemployment insurance reform was needed and has already started to take effect. 

Before I discuss the recent changes, it is important to have a general understanding of unemployment insurance in New York.  As you may know, employees who lose their jobs through no fault of their own may be eligible for unemployment insurance, which is funded by contributions from the employer. Employers in New York pay two types of unemployment insurance contributions: (1) The Federal Unemployment Tax Act (“FUTA”), and (2) the New York State Unemployment Insurance contribution.  The New York State Unemployment Insurance fund is responsible for paying weekly benefits to eligible recipients. However, as previously discussed, the state fund is currently insolvent. The following changes went into effect on October 1, 2013 and were created to help New York State pay back the federal government faster, saving employers from paying an additional $200 million in interest payments. 

The first change, effective as of October 1, 2013, punishes employers who fail to timely respond to the Department of Labor’s request for information regarding the former employee filing for unemployment benefits.  Previously, if an employee received benefits while an investigation was pending and it was later determined that this employee was not eligible, an employer’s account would be credited. However, now if an employee is late in responding to the Department’s request, the employer’s account will no longer be credited – even if it is determined that the employee was not eligible for the benefits paid to him/her.  

Additionally, as of January 1, 2014, the “wage base” used to calculate employer contributions will increase from $8,500 to $10,300, and will continue to increase each year. Employers pay Unemployment Insurance contributions on each employee’s earnings up to a certain threshold referred to as “the wage base.”  A copy of the Senate Bill underlying this changes can be found here

If you have questions about how these recent changes will affect your business, or if you need assistance responding to a request from the Department of Labor, contact the DiPasquale Law Group for a free consultation.

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